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GUJARAT ELECTRICITY REGULATORY COMMISSION AHMEDABAD

TARIFF ORDER

Case No.897/2006

Gujarat Energy Transmission Corporation Limited (GETCO)

31st March 2007

i

C O N T E N T S Chapter Title Pate No.

1 Introduction 1

2 Summary of GETCO Tariff Petition 5

3 Brief Outline of objections raised, response

of GETCO and Commission’s comments

7

4 Compliance of Directives 23

5 Transmission System of GETCO and its

performance

31

6 Annual Transmission Charges 41

7 Directives 59

ii

List of Tables

Table No.

Title

1. Project Annual Transmission Charges

2. Net Annual Transmission Charges Projected by GETCO

3. Transmission System of GETCO – 2005-06

4. Network Additions during the years 2006-07 & 2007-08

5. Existing capacity of GETCO – 2005-06

6. Loading of Transmission System

7. Likely load addition during 2006-07

8. Likely loading of GETCO Transmission System – 2007-08

9. Availability of GETCO Transmission System

10. Energy input and drawal and Transmission loss – 2005-06

11. Projected Energy Transmission & Losses – 2007-08

12. Proposed Capital Expenditure – 2007-08

13. Funding of Capital Expenditure – 2007-08

14. Final Opening Balance Sheet of GETCO

15. Manpower Cost

16. Projected Repair and Maintenance Expenses

17. Administrative and General Expenses 2007-08

18. O&M Charges

19. O&M Charges Approved by the Commission

20. Loans and Interest on Loans

21. Interest on loan approved by the Commission

22. Calculation of Depreciation FY 2007-08

23. Assets Capitalization and Depreciation approved by the Commission - 2007-08

24. Calculation of Advance Against Depreciation by GETCO 2007-08

25. Interest on Working Capital

26. Interest on Working Capital Approved by the Commission-2007-08

27. Return on equity claimed by GETCO

28. Return on Equity Approved by the Commission

29. O&M charges for dedicated Transmission Lines

30. Details of Other Income

31. Annual Transmission Charges

32. Annual Transmission Charges – 2007-08

iii

BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION AT AHMEDABAD

Case No. 897/2006

Date of Order 31st March 2007

Quorum

Shri G. Subba Rao (Chairman)

Dr. Man Mohan (Member)

ORDER

1. INTRODUCTION

1.1 Back ground

The Government of Gujarat unbundled and restructured the Gujarat Electricity

Board with effect from 01.04.2005. The Generation, Transmission and Distribution

businesses of the erstwhile Gujarat Electricity Board were transferred to seven

successor companies. The seven successor companies are as follows:

i) Gujarat State Electricity Corporation Limited (GSECL) – A Generation

Company.

ii) Gujarat Energy Transmission Corporation Limited (GETCO) – A

Transmission Company

Four Distribution companies

iii) Dakshin Gujarat Vij Company Limited (DGVCL)

iv) Madhya Gujarat Vij Company Limited (MGVCL)

v) Uttar Gujarat Vij Company Limited (UGVCL)

1

vi) Paschim Gujarat Vij Company Limited (PGVCL)

and

vii) Gujarat Urja Vikas Nigam Limited (GUVNL) – A Holding Company and it

is also responsible for purchase of electricity from various sources and

supply to Distribution Companies.

1.1.2 The Government of Gujarat vide notification dated 3rd October 2006 notified the

final opening balance sheets of the transferee companies as on 1st April 2005,

containing the value of assets and liabilities, which stand transferred from erstwhile

Gujarat State Electricity Board to the transferee companies including Gujarat Energy

Transmission Corporation Limited (GETCO). Assets and liabilities (Gross block,

loans and equity) of Transmission facilities of GEB have been considered by the

Commission based on the Financial Restructuring Plan (FRP) approved by

Government of Gujarat. The last petition filed by GETCO was prepared considering

on as available basis FRP data. The present petition (second petition) has

incorporated the latest FRP data to arrive at the assets and liabilities of Transmission

facilities. The company has started functioning w.e.f. 1st April 2005 with an opening

Balance Sheet as on 1st April 2005 notified by the State Government on 3rd October

2006.

GETCO gave a presentation on its proposal to the Commission on 18th January

2007. The Commission obtained further information and clarifications from

GETCO. GETCO furnished supplementary information after the presentation and

also further information / data as required by the Commission on a detailed study of

the petition.

1.2 PUBLIC NOTICE AND PUBLIC PARTICIPATION PROCESS

1.2.1 The Public Notice regarding Petition No.897/2006 was published by GETCO in the

Indian Express (English daily) and Sandesh (Gujarathi daily). Through this notice,

the public were invited to forward objections and suggestions on the petition. The

public notice in the newspapers were published on January 3rd, 2007 and time was

given to the public up to February 3rd, 2007 for forwarding their suggestions /

objections.

2

1.2.2 The Commission has received six objections to the petition filed by the GETCO.

The Commission considered these objections received and sent communication to

the objectors inviting them to take part in the public hearing process by presenting

their views in person before the Commission. Each objector was provided with a

time slot on the days of public hearing from 19th to 22nd February 2007 for

presenting their views on GETCO petition before the Commission at the Court Hall,

Commission’s office in Ahmedabad. The names of persons and organizations who

filed these objections are as follows:

1. Laghu Udhyog Bharati Gujarat, Ahmedabad.

2. Indian Wind Energy Association, New Delhi.

3. Gujarat Alkalis and Chemicals, Vadodara.

4. Gujarat State Fertilizers and Chemicals Limited, Vadodara.

5. Torrent Power Limited, Ahmedabad.

6. Mr Raj Tillan.

All the above persons presented their objections during public hearing also. The main issue which objector raised about this petition and GETCO’s responses to

these at the public hearing are briefly outlined in chapter-3.

1.2.3 Taking into account the following responses, the Commission condones the delay in

filing the tariff petition by GETCO and other successor entities of GEB.

Government of Gujarat has notified opening balance sheet of all companies on the

basis of FRP in the month of October 2006. Hence Accounts for the year 2005-06

were finalized in the month of November / December 2006 and the petition for the

year 2007-08 was to be prepared and submitted on the basis of finalized Accounts

for the year 2005-06.

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1.2.4 State Advisory Committee Meeting

A meeting of the State Advisory Committee (constituted under Section-87 of the

EA, 2003) was convened on 9th February 2007. A presentation was made on the

petitions of GSECL/GETCO and four Discoms. The Chairperson of

GUVNL/GSECL/GETCO had made a presentation on the salient features of the

ARR petitions.

4

2. Summary of GETCO Tariff Petition

2.0 Summary of GETCO Tariff Petition

Gujarat Energy Transmission Corporation (GETCO) submitted the petition on 28th

December 2006 seeking approval for Annual Revenue Requirement and

determination of Transmission charges for the year 2007-08. The transmission

charges are to be recovered mostly from Gujarat Urja Vikas Nigam Limited

(GUVNL). GUVNL purchases power from GSECL, Central Sector Generating

Stations, IPPs and other sources and supplies to the Distribution Companies and

licensees in Gujarat GUVNL has an agreement with GETCO for transmission of

power from GSECL generating stations, IPPs, input points of Power Grid

Corporation and other interconnecting points for supply to DISCOMs and licensees.

The transmission charges are also recoverable from the other users of the

Transmission network of GETCO.

GETCO has projected a Revenue Requirement of Rs.98826 lakhs for the year 2007-

8 as detailed in Table-1 below:

Table-1

Project Annual Transmission Charges (Rs. lakhs)

Sl.No. Details Cost (Rs.lakhs)

1. Employee Cost 218882. Repairs and Maintenance 58583. Administrative and General Expenses 40564. ULDC charges 15365. Depreciation 167706. Advance Against Depreciation 60267. Interest on loans 206398. Interest on Working Capital 19999. Return on Equity 2370610. Total Fixed Costs 10247711. Less Expenses Capitalized 198112. Total Transmission charges 100,49613. Less other income 167014. Net Annual Transmission charges 98826

5

The projected transmission charges per MW per day based on capacity to be

handled would be as under

Table-2

Net Annual Transmission Charges Projected by GETCO

Sl.No. Particulars Unit 2007-08

1. Loading of Transmission System as TSA MW 9981

2. Capacity for calculation of transmission charges

MW 9981

3. Cost of Transmission Rs. lakhs 98826

4. Proposed Transmission Charges Rs./MW/day* 2705

Rs./MW/month 82514

5. Existing Transmission Charges Rs./MW/day 2832

6. Increase proposed (%) (-)04.47

* 366 days in 2007-08

The ARR indicated above is exclusive of income tax, incentives, any statutory taxes,

levies, duties, cess, any other surcharges etc.

GETCO sought Commission’s approval for -

(1) The Net Annual Transmission charges proposed at Rs.98826 lakhs.

(2) Transmission charges @Rs.2705 per / MW/per day.

(3) Operation and Maintenance Charges from users of dedicated transmission lines.

(4) Capital Expenditure proposed.

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3. Brief Outline of Objections raised, Response of GETCO and Commission’s Comments

3.1 The summary of objections raised by various objectors, response of GETCO and the

comments of Commission are briefly given below:

I. Objector / Objectors: Laghu Udyog Bharati, Ahmedabad.

The objections raised briefly are:

1. Fixing of transmission charges

There is no need to make any change in the transmission charges. If ARR

projections are made on realistic basis then there would be no gap.

2. O&M charges

In the case of Transmission lines feeding dedicated consumers, all expenses are

covered while computing ARR inclusive of O&M charges. This will be a case of

double charging. The demand for O&M charges is not in accordance with the

Electricity Act, 2003 and the GERC guidelines. As such it is required to be quashed.

3. Parallel operation charges

As GETCO is not in a position to show what its system PF is and what the CPP’s

supply PF is the reason given for low PF of CPPs is imaginary.

4. Transmission losses

GETCO has not been able to achieve 4.27% transmission losses approved by the

Commission for 06 – 07.

Reduction of loses can be achieved by taking up Energy Audit.

5. Depreciation:

7

The presentation of GETCO for depreciation is incorrect. The Commission may look

into this aspect, since many lines, transformers and substations have completed

their useful life.

6. Energy Audit

(i) Existing meters are not functioning properly. High accuracy meters need to

be provided on all feeders to assess feeder wise losses.

(ii) GETCO shall itself seek accreditation as certified energy auditors and

establish its own energy audit wing of Bureau of Energy Efficiency (BEE)

Certified Energy Auditors. All the steps of energy saving measures shall be

taken under the guidance of its energy audit wing.

7. Reactive compensation

(i) GETCO should provide adequate reactive compensation by installing static

capacitors etc to meet the reactive power requirements of the system to improve

the voltage levels and reduce transmission losses.

(ii) GETCO has not submitted the PF of the system, feeder-wise, the details of auto

control of reactive power and savings actually made.

Response of GETCO:

1. The estimation of ARR has been submitted on the basis of established norms.

The proposed transmission charges work out to be lower compared to the

prevailing charges.

2. O&M charges are not included in the calculation of transmission charges.

However, actual revenue realized will be considered under other income and the

ARR will be adjusted to that extent in future.

3. The petition for approval for Parallel Operation Charges is before the

Commission and hence, the impact of POC has not been considered in this

petition.

4. The actual status of the Transmission losses is 4.35%, which is lower than in

some other states - Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further

reduction of losses is difficult despite sincere efforts being made to reduce the

loss and hence the loss of 4.35% has been proposed.

8

5. GETCO has not furnished the O&M charges, Supervision charges in respect of

dedicated lines.

6. Depreciation shall be computed according to norms (terms and conditions of

tariff) of CERC/GERC till 90% of the Historical cost of the asset.

Depreciation has been estimated with the consideration of actual position of

assets notified by the government in the opening balance sheet.

7. GETCO has not responded to the issue relating to energy audit.

8. In compliance to the directives, the installation of reactive compensation is being

implemented

Commission’s Comments:

GETCO has not responded to the issue relating to conduct of energy audit. It is necessary to conduct energy audit feeder-wise to arrive at realistic losses and take necessary steps for loss reduction. The Commission considered the other issues raised by the objector and the response of GETCO later in the order.

II. Objector / Objectors: Indian Wind Energy Association, New Delhi.

The objections raised are:

1. O&M charges from dedicated users of transmission system:

There is no provision in GERC Regulations or orders to levy O&M charges from

dedicated users of Transmission lines.

(i) The Commission shall direct the GETCO to substantiate its proposal to levy

such charge within the regulatory framework.

(ii) If O&M charges are levied, it would amount to excess recovery

(iii) Any charges or tariff shall reflect cost and have certain basis for recovery of

underlying costs.

(iv) The Commission may direct the GETCO to furnish cost data and revenue

collected for 2005-06 and 2006-07.

(v) It would not be appropriate to recover O&M charges for dedicated transmission

lines based on O&M norms of GERC and they may be determined at 15% of

O&M cost norm as proposed by the GETCO.

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(vi) The wind energy developers would need to adequately compensate for O&M

costs associated in the evacuation infrastructure.

2. Supervision charges

(i) The Commission may direct the petitioner to furnish details of supervision

charges during 2005-06 and 2006-07 as the connected transmission lines are

old and depreciated.

(ii) Supervision charges of 15% shall be levied only on labor component and not

on capital equipment cost of the evacuation infrastructure with a ceiling limit

that Labour component shall not exceed 5% of capital cost.

(iii) The petitioner should furnish details of revenue earned by way of levy of

supervision charges during 2005-06 and 2006-07.

Response of GETCO:

The Indian Wind Energy Association raised issue, which pertain to concessions etc

to promote non-conventional energy (wind farms). These may be de-linked from the

tariff hearing and considered separately.


Regarding Supervision Charges, during the course of hearing, GUVNL

representative mentioned that the issue of Supervision charges was taken up with the

Government as the Indian Wind Energy Association (InWEA) had represented

before the Government. In a High level meeting headed by the Chief Secretary,

Government of Gujarat, it was decided that the Supervision Charges for Wind

energy generators may be reduced to 7.5% from 15%. As such this issue is already

been redressed, the Commission feels that there is no need to relook at this stage.

The other points which the Indian Wind Energy Association raised are examined

later in the order.

III. Objector/Objectors: Gujarat State Fertilizers & chemicals Ltd. Vadodara.

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1. Applicability of transmission charges:

The proposed transmission charges cannot be made applicable to the intervener

mutatis mutandis to an ordinary consumer as the intervening transmission lines are

financed by intervener company. The cost contribution by the intervener company

cannot be ignored. The Commission shall provide some relief to the intervener

company for its contribution.

Though a double circuit line is laid to the intervener’s manufacturing unit, power

supply is not being made on that line. Hence the rate of depreciation proposed is

unreasonable and unjustified.

2. Methodology and calculation of ARR:

a) Depreciation

Rate of depreciation proposed is not correct, it is unreasonable and

unjustified as the connected transmission lines are old and depreciated.

b) Return on equity

The return on equity cannot be considered for determining transmission

charges in the case of intervener who has certain assets financed.

c) O&M and other charges

Except O&M charges, no other charges can be levied on the intervener.

d) Income – tax

Income tax on surplus revenue generated cannot be and should not be under

equity and law be passed on to the consumers / beneficiaries including

intervener, from whom the revenue is generated.


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The proposed increase in transmission losses from 4.27% to 4.35% may not be

allowed and the same may be fixed at 4.12% or such lower percentage.


The levy of parallel operation charges, in addition to existing contract demand

charges, wheeling charges and transmission losses may not be permitted.

5. Supply of power

The petitioner is supposed to supply of power to the intervener as per the MOU with

GSFC.

Response of GETCO:

1. The intervener might have invested for grid connectivity at the required point.

It is well settled that the transmission assets established are the properties of the

licensee concerned, notwithstanding that a part of the cost of establishing the

same is contributed by any consumer.

2. The capital base of the petitioner is according to the transfer value and

financials which the Government of Gujarat notified. And this is a statutory

notification binding on all. Accordingly, for all purposes including for the

determination of the amount on which depreciation is to be allowed, the above

values have to be considered. The allegations to the contrary are wrong and are

denied.

3. The equity as given by the government is considered at the beginning of FY

2005-06 to arrive at the return on equity.

4. The intervener is also utilizing the transmission network of petitioner by virtue

of permitted allocations and therefore should be treated at par with other users

of the transmission network and has to be charged at par with others. The actual

position of assets as notified by the government in the opening balance sheet

has been considered for the purpose of depreciation.

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5. The weighted average rate for depreciation for FY 2005-06 works out to be

3.37%.

6. Income tax recovery has been proposed as in the GERC (Terms and Conditions

of tariff) Regulations, 2005.

7. The actual status of the Transmission losses is low compared to other states for

instance Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further reduction

of losses is difficult despite sincere efforts being made and hence the loss of

4.35% has been proposed.

8. A petition is pending for the approval of Parallel Operation Charges is before

the Commission and the impact of same has not been considered.

9. Under Open Access Regulations, 2005, there cannot be discrimination among

the beneficiaries.

Commission’s Comments: The issues raised by the Intervener / Objector regarding depreciation and return on equity on consumer contribution will be examined with reference to the Regulations. As a separate petition has been filed by the GSFC in some of the above matters, it will be decided after hearing the parties.

IV. Objector/Objectors: Gujarat Alkalies & Chemicals Ltd. Vadodara.


1. Applicability of transmission charges:

The proposed transmission charges cannot be made applicable to the intervener

mutatis mutandis to an ordinary consumer as certain transmission lines supplying

power to their Vadodara Complex are financed by intervener company.

2. Methodology and calculation of ARR:

a) Depreciation

Rate of depreciation proposed is unreasonable and unjustified as the

transmission line feeding the load is more than 30 years old.

b) Return on equity:

13

The return on equity cannot be considered for determining transmission

charges in the case of intervener company as certain assets have been

financed by them.

c) O&M and other charges

Except O&M charges, no other charges can be levied on the intervener.

d) Income – tax

Income tax on surplus revenue generated cannot be and should not be under

equity and law be passed on to the consumers / beneficiaries including

intervener, from whom the revenue is generated.


The proposed increase in transmission losses from 4.27% to 4.35% may not be

allowed and the same may be fixed at 4.12% or such lower percentage.


The levy of parallel operation charges, in addition to existing contract demand

charges, wheeling charges and transmission losses may not be permitted.

8. Supply of power

The petitioner is supposed to supply of power to the intervener in accordance with

the MOU entered between the erstwhile GEB and GPPCL and participating

industries.

Response of GETCO:

1. The intervener might have invested for the grid connectivity at required point. It

is well settled that the transmission assets established are the properties of the

14

licensee concerned, notwithstanding that any part of the cost of establishing the

same is contributed by any consumer.

2. The capital base of the petitioner is according to the transfer value and financials

notified by the Government of Gujarat, which is a statutory notification binding

on all. Accordingly to all intents and purposes including for the determination of

the amount on which depreciation is to be allowed, above value has to be used.

The allegations to the contrary are wrong and are denied.

3. The equity as given by the government is considered at the beginning of FY

2005-06 to arrive at the return on equity.

4. The intervener is also utilizing the transmission network of petitioner by virtue

of permitted allocations and therefore should be treated at par with other users of

the transmission network and has to be charged at par with others. The actual

position of assets as notified by the government in the opening balance sheet has

been considered for the purpose of depreciation.

The weighted average rate for depreciation for FY 2005-06 works out to be

3.37%.

5. Income tax recovery has been proposed as in the GERC (Terms and Conditions

of tariff) Regulations, 2005.

6. The actual status of the Transmission losses is low compared to some other

states for example, Uttar Pradesh (4.97%) and Andhra Pradesh (6.02%). Further

reduction of losses is difficult despite sincere efforts being made and hence the

loss of 4.35% has been proposed.

7. A petition for the approval of Parallel Operation charges is pending before the

Commission and the impact of same has not been considered.

8. Under Open Access Regulations, 2005, there cannot be discrimination among

the beneficiaries.


The issues raised by the intervener / objector regarding depreciation and return on equity on consumer contribution will be examined with reference to the Regulations. As a separate petition has been filed by the GACL in some of the above matters, it will be decided after hearing the parties.

V. Objector/Objectors: Torrent Power Ltd. Ahmedabad

The objections raised in brief are:

15

1. Energy balance

The energy sent out to Ahmedabad and Surat as also the energy accounted by

DISCOMs are not tallying with actuals. The Commission should therefore direct the

petitioner to provide reconciliation of energy balance to arrive at a correct figure of

transmission losses.

2. Transmission losses:

(i) The Commission may approve transmission losses for 2007-08 after arriving at

current level of transmission losses, after reconciling the actual figurers for

2005-06 and estimated figures for 2006-07 and 2007-08.

(ii) The Commission may direct the petitioner to clarify whether transmission

losses calculated are upto 66 kV only or include the losses of 11 kV feeders

supply for power to DISCOMs.

(iii) The Commission may direct the petitioner to provide the details of voltage

level – wise transmission losses.

3. Transmission charges

(i) The Commission may determine recovery of transmission charges on voltage

level basis also.

(ii) The Commission may consider the revenue from O&M charges and parallel

operation charges while determining the transmission charges.

4. Transmission tariff:

The Commission may consider the reasonableness of expenditure while

determining the transmission charges so as not to burden the consumers.

GETCO Response:

1. According to the accounting method of SLDC, the energy purchased by AEC

and SEC during April to November was being accounted under the heads of

UGVCL and DGVCL respectively. However, the energy purchased by AEC and

SEC during December to March was accounted under the heads of GUVNL.

16

Thus, the energy balance has been checked and there is no discrepancy in

computation of overall transmission loss as the total energy balance remained

unchanged.

2. Based on the actual figures of transmission for the year 2005-06, energy balance

is as follows:

Energy received – 51170 MUs.

Energy sent – 48946 MUs.

Transmission losses – 2224 MUs.

Percentage losses – 4.35%

Transmission losses are worked out up to L.V. side of power transformers

only.

The transmission losses are not being computed and accounted on voltage

level basis.

3. Parallel operation charges are yet to be determined by the Commission and

hence that impact has not been considered. However, revenue realized from

this shall be taken under the income and the ARR would reduce to that extent

in the future.

4. The voltage level losses are not available. But the transmission charges have to

be kept uniform independent of voltage.

Commission’s Comments

The issues raised by the objector have been examined and appropriate decisions are

taken while determining the transmission charges. Suitable directions will also be

issued to the petitioner to conduct proper energy audit to arrive at voltage-wise

losses.

VI. Objector/Objectors: Raj Tillan

The objector has raised a number if issues, some are related to the present tariff

petition and some for seeking additional information/clarifications in general from

GETCO.

The objections related to the present petition are briefly summarized below:

17

1. It is not disclosed in the tariff petition whether GUVNL is a trading licensee. If

under the restructuring scheme of the Government of Gujarat, GUVNL gets the

status of a sole holding company of the unbundled entities and a deemed trading

licensee, the same is not tenable in terms of section 131 of the Electricity Act

2003.

2. Diluting the concentration of conflicting function (Regulatory and Commercial)

is one of the main aims of Electricity Act 2003. Segregation of licensee and

utility should have been done since 1st June 2004 when the Government of

Gujarat declared GETCO as the State Transmission Utility.

3. The revenue requirement for FY 2007-08 is Rs. 10,058 million whereas the same

was Rs. 8430 million in the previous year. This translates to a growth of 19.2%

not in line with a modest load growth of 4%.

4. The details of revenue break up from core and non-core business is not given.

Further it would be helpful to know the accounting of inadvertent flow of energy

from CPPs or wind generation and if this goes in reducing the transmission

losses or otherwise.

5. The details of O&M charges from dedicated transmission users is missing

6. The Commission may direct the petitioner to make a full and unshielded

disclosure that they are not charging parallel operation charges.

7. Considering month wise availability, the months with the highest and the months

with the lowest line availability may be shown. Whether availability calculation

includes planned shutdown or otherwise.

8. The load growth is too low. It is essential to justify the low load growth.

9. The wheeled units stated are 1538 MU. It is not clear if these units are from CPP

or purchased units from CPP or inadvertent flow or sum of all.

10. Most of the transmission lines have bi-directional flow. This means double

counting of transmission capacity. How is transmission capacity defined?

18

11. The transmission losses are shown to be lower than that of Uttar Pradesh or

Andhra Pradesh. This does not give a true picture as the calculation of the same

depends on many factors like degree of loading vis-à-vis capacity, configuration

of network, relative location of generating stations and load etc.

12. O&M cost being critical, comparison must be made with equally well-managed

utilities from neighboring states.

13. The renovation and modernization expenditure should be disallowed, as the asset

value does not justify this expenditure.

14. For exercise on energy balance, energy audit looks a good idea but high cost

meters may be deployed only when low losses are being reduced further.

15. Performance of metering under the operating condition does not measure up to

the required accuracy as the burden on CT and PT are quite high.

16. The petitioner should furnish cost data for reactive power before allowing for

charging the same.

In addition certain suggestions are also made by the objector.

Response of GETCO:

Some of the objections listed above are also raised by other objectors for which GETCO has responded as narrated earlier.

The response of GETCO to the objectors are given here briefly.

1. As the Intervention Petition is vexatious, GETCO is dealing with certain specific issues which are related to GETCO. In

this affidavit not venturing into other aspects of the Intervention Petition which have no relevance to the petition filed by

GETCO. However, specifically deny all the allegations, imputations and insinuations contained in the Intervention

Petition.

2. The Annual Revenue Requirements and consequently the tariff for GETCO are

to be decided according to the provisions of the Electricity Act, 2003, to the

extent applicable the provisions of the Gujarat Electricity Industry Re-

organization and Reforms Act, 2003 (the State Act), the Rules and Regulations

framed therein and taking into account the National Electricity Policy and the

Traffic Policy notified by the Central Government under section 3 of the

19

Electricity Act, 2003. The Intervenor cannot raise issues on various policies or

as to the structure of re-organization adopted in the State of Gujarat under the

provisions of the Electricity Act, 2003. Reference to the policy adopted in the

United States of America or otherwise in other countries are totally irrelevant

and outside the scope of the jurisdiction of this Hon’ble Commission in the

present petition.

3. In accordance with the provisions of the Electricity Act, 2003, GETCO is

entitled to claim tariff and charges, namely, the transmission charges, parallel

operation / grid support charges, re-active energy charges and any other charges

related to the utilization of the services of GETCO or for the benefit derived by

any person by use of the transmission system and the facilities of GETCO. If the

contention of the Intervenor is that some of the services rendered by GETCO do

not fall within the purview of the Electricity Act, 2003, the implication would be

that GETCO is free to refuse to give such services and GETCO cannot be

compelled to provide such services by any Order passed by this Hon’ble

Commission. In that event, such services would be covered by section 41 of the

Electricity Act, 2003, namely, other businesses of GETCO and, therefore,

GETCO is free to charge the beneficiaries of such services any amount as

GETCO may consider appropriate. It is, therefore, not correct on the part of the

Intervenor to contend that GETCO is obliged to provide certain services as the

Transmission Utility but at the same time GETCO is not entitled to either claim

tariff from the Hon’ble Commission for such services or otherwise is not entitled

to claim charges from the beneficiaries of such services under the Bilateral

Agreement. The arguments to the contrary raised by the Intervenor are self-

defeating and have no merits.

4. GUVNL and DISCOMs are licensees and are entitled to approach this Hon’ble

Commission for their respective tariff and charges. The present petition is

confined to the tariff and charges payable for the services rendered by GETCO.

5. In the present petition before this Hon’ble Commission, GETCO has impleaded

GUVNL as Respondent in view of the fact that the transmission services

pertaining to transmission and conveyance of electricity to the distribution

system and network is undertaken by GETCO and such services are not

20

provided by GUVNL. It is wrong and denied that there is any collusion between

GETCO and GUVNL as alleged.

6. GETCO is not trading in electricity. GETCO performs only transmission

services for which it is entitled to claim tariff and charges. The allegations to the

contrary are specifically denied.

7. The present petition has been filed for determination of Annual Revenue

Requirements of GETCO. Based thereon, the applicable tariff needs to be

determined to meet the Annual Revenue Requirements.

8. GETCO is the State Transmission Utility and is the main transmission company

in the State of Gujarat. The status of GETCO is recognized under section 39 of

the Electricity Act, 2003. GETCO is also undertaking the statutory functions of

the State Load Despatch Centre in terms of Section 33 of the Electricity Act,

2003. In terms of section 14 of the Electricity Act, the State Transmission Utility

is deemed to be the transmission licensee. There is no need as at present for

segregation of the functions of the licensee and the transmission utility. GETCO

has been notified by the Government of Gujarat as the State Transmission

Utility. It is for the Government of Gujarat to consider as to whether any other

entity should be notified as such as either the State Transmission Utility or to

operate the State Load Despatch Centre. The issue raised by the Intervenor in

this regard in the present petition is wholly outside the purview of the present

proceedings.

9. GETCO has filed the revenue requirements in the format prescribed by the

Hon’ble Commission. GETCO has given all the requisite details. It is wrong and

denied that GETCO has concealed any particulars. The allegations in this regard

made by the Intervenor are specifically denied.

10. The transmission lines of GETCO are being used for the purpose of transmission

of electricity of GUVNL and are also available to open access consumers in

accordance with the regulations framed by the Hon’ble Commission. In any

event these issues sought to be raised by the Intervenor are totally outside the

21

purview of the present proceedings. GETCO is acting in accordance with the

regulations framed by the Hon’ble Commission.

11. The issues sought to be raised by the Intervenor on the various provisions of the

Transfer Scheme and arrangements made are again outside the purview of the

present proceedings.


Various issues raised by the objector and the response of the GETCO are examined and appropriate decisions taken by the Commission while determining the transmission charges.

22

3.2 Other Objections / Issues

The Union Territory of Dadra & Nagar Haveli, Silvassa and Union Territory of

Daman & Diu

GETCO raised the issue of non receipt of transmission charges from the Union

Territory of Dadra & Nagar Haveli and also from Union Territory of Daman & Diu

for the use of GETCO transmission system for transmission of Central Sector Power

to them. GETCO has also made the Union Territory of Dadra & Nagar Haveli and

the Union Territory of Daman & Diu as respondents to this petition. During the

course of hearing representative of abovementioned Union Territories asked for time

to submit objection in the above matter. The Commission gave time up to 15th

March 2007. However, for the above matter, the Union Territories filed separate

petitions (No. 910-911/2007); the Commission will address this issue separately.

Pro-rata Charges:

Some of the objectors stated during the hearing that recently GETCO has issued a

Commercial Circular No. 1 wherein they have proposed to recover pro-rata Charges

depending upon the voltage level. The Objectors further mentioned that the LT, HT

and EHT consumers are the consumers of Distribution Licensee and not of the

GETCO. Therefore GETCO has no authority to recover such Pro-rata Charges. They

also stated that earlier erstwhile GEB was charging a Development Charge of Rs.

900/KVA which is now discontinued. With this new circular it appears that the

earlier Development charge is now reintroduced and these charges are

comparatively high.

The GETCO has replied to this objection stating that they are investing in the

Transmission System and if don’t get such charges than development of

Transmission System would have adversely affected. They have also mentioned

about the relevant provision of the Regulation No. 9 of 2005.

Commission’s View:

23

As this issue required detailed analysis, the Commission is of the view that this can be looked into separately at the later stage. However, GETCO was requested to reconsider this issue on its own. Now it has been informed to the Commission that the Pro-rata Charges have been reduced from around Rs. 1070-1770 to around at Rs. 815-850 per KVA.

24

4. Compliance of Directives

4.1 Compliance of Directions issued by the Commission.

The Directives issued by the Commission in its Tariff Order dated 6th May, 2006 and their compliance by GETCO are detailed below: Directive 1: Transmission Plan

GETCO shall prepare transmission plan for XI Plan Period and submit for approval of the Commission. The plan shall cover (i) the transmission lines required for evacuation of power from new generating stations coming up in the State and input points of PGCIL to transmit the power to various load centers in the State (ii) System augmentation required to improve the reliability of the system, reduce the loss, and improve the voltage levels etc. The transmission plan shall be supported by cost benefits analysis.

Compliance / Action Taken :

Transmission plan for XIth plan period is under preparation and the same shall be submitted to the commission on its finalization GETCO shall keep in mind the specific points mentioned in the directives.

Comments of the Commission:

The Transmission plan may be submitted early.

Directive-2: Energy Audit

GETCO is managing transmission system covering 400, 220, 132 and 66 kV voltages. High accuracy meters shall be provided on all the feeders to assess feeder-wise loss, transformation loss at each sub-station. This will help in identifying high loss feeders / areas to take corrective action to reduce the loss. The energy audit will also bring up whether the meters provided for EHV consumers (66 kV and above) are functioning properly. The status of providing meters on all the feeders, the analysis of the data obtained based on meter readings, voltage-wise and feeder-wise losses and feeders which have high level of losses and action initiated to reduce the loss shall be submitted to the Commission by 30th September 2006.

Compliance / Action Taken:

The installation of high precision static meters on the feeders at all sub stations is in final stage of completion. The common polling software for automatic polling of the meter data into substations PC is also under installation at the sub satiations. The

25

performance of pilot common polling software for automatic polling the data is under observation. Feeder wise loss and transformer loss at each substation is presently being monitored at Sub station / division level and immediate corrective actions are being taken in consultation with the next higher authority for controlling the same within range of 3%. Further the losses are being consolidated circle wise and overall losses are analyzed. Based on this analysis, lapses are identified and the same are attended immediately.

The status of providing such meters is as under: • Out of 14231 nos. of high accuracy static meters received till date, 12476 nos.

of meters are installed and

• Order for 1700nos. of meters and its accessories is already placed.

• Procurement of balance computers with UPS ,Printers etc is also under

process.


Action taken in providing high accuracy meters is noted. Based on the metering provided, feeder-wise and voltage-wise losses may be arrive at. Directive – 3: R&M of Transmission System

It would be necessary to refurbish the transmission system including replacement of conductors on certain transmission lines, upgrading of transmission lines, replacement of aged, obsolete switch gear etc. Action Plan for the R&M of transmission system shall be submitted to the Commission by September 2006.


R & M of the transmission has already been taken up. Brief details of the activities that have been initiated for R & M work are as under: 1. One to one replacement:

Orders have been placed for the equipments for one to one replacement for Phase – I 2006-07 and Phase – II 2007-08. The expenditure for Phase – I for 2006-07 is Rs. 20.86 Crores. Out of 8 (Lots) orders M /s ABB (Lots III) have already started supply of 66 kV breakers and their installation. So far inspection of 67 Nos. of breakers is carried out. The installation work is under progress. 2. Strengthening of 132 KV bus at 220 KV Ranasan s/s

The estimated amount for this work is Rs. 7.16 crore. Civil work has already been started. The drawings for bus structure are under process of approval. The tenders are invited. The procurement of equipment is under progress. 3. Providing of 66KV breakers, CTs at various substations:

At some of the substations 66 KV breakers & CTs are not provided in the initial stage. Hence Rs. 4 crore is allocated in the budget for providing 66 Kv breakers

26

and CTs during the year 2006-07. Some of the breakers and CTs have been allotted from available stock in construction store. For balance requirement, procurement is under process. 4. Replacement of equipments against old equipment, augmentation of substation capacity, strengthening of EHV line by replacement of conductor, earth wire, insulator etc. The work of strengthening of 132KV line is completed and the work of balance 66 KV line will be completed by November 2006 for R&M work. The augmentation of substations will be carried out based on availability of transformers. Also the old equipment considered for replacement will also be replaced during the year 2006-07 on availability of equipment. Specific budget provision made for this work is Rs. 17.42 crores. 5. Purchase of equipment for condition monitoring of s/s, Hotline maintenance, safety purpose: The safety articles viz hand gloves , helmets , earthening rods, safety bolts etc are inspected and DI is issued. Balance quantity is expected for inspection shortly. The work orders for testing equipments are already placed and materials for the same will be available. For balance testing equipments, tenders are to be invited.


Action taken on R&M of transmission system is noted.

Directive – 4: Modernization of State Load Dispatch Centre

With the unbundling of GEB, providing open access on transmission system, and proposed introduction of intra-state ABT, the role of State Load Dispatch Centre will be critical in managing the system. Action shall be taken for modernization / augmentation of the Load Dispatch Centre if any required to meet the requirements. Compliance / Action Taken:

Unbundling of GEB has resulted in the creation of various companies in addition to the two licensees (TPAECo., SECo.). Providing open access on transmission system and introduction of intra state ABT is being implemented according to GERC order. A state of the art SLDC and ALDC have been set up consisting of the following:

• 3 nos. ALDCs are set up at Jambuva, Gandhinagar & Jetpur under ULDC

scheme for effective control and supervision of intra-state transmission system.

So each ALDC will exercise the control and supervision of transmission system

of their respective jurisdiction.

• ALDCs will also exercise the monitoring of drawl of power by DISCOM

under the intra state ABT regime. Necessary infrastructure which includes

setting up of SCADA system, Computer system etc. has been created.

27

• The ABT meter data processing for the purpose of energy accounting will be

routed through ALDC. Necessary computer hardware / software in this regard is

installed and are under testing at ALDC.

• For effective system operation and control of the respective jurisdiction, SCADA

system is installed at each ALDC, which provides on line real time data and

facilitate network analysis. ALDCs will also exercise the monitoring of Drawl of

power by DISCOM under the intra state ABT regime with the help of SCADA

system.

• The staff setup has been strengthened at SLDC/ALDC to address open access

& ABT issues effectively. The existing setup of SLDC is evaluated regularly to

plan & to meet the requirements in respect of efficient operation, address

regulatory requirements, WRLDC requirements etc.

• The infrastructure for the implementation of Intra-state ABT is setup at SLDC

level for the purpose of Scheduling ,Energy Accounting and providing open

access & storage of relevant data which includes setting up of server based

computer system.

• It would be noteworthy to mention here that upgrading of SLDC will be a

continuous process rather than one time set up in new era.


Action taken is noted. It is stated that three ALDCs are being established for 4 (four) DISCOMs. It is presumed that Jambua ALDC would serve DGVCL and MGVCL. Ultimately the control of ALDCs shall be handed over to the respective DISCOMs.

Directive – 5: Data Management

With the providing of open access on transmission system, the users of transmission system may require on line data on the capacity margin available on the transmission system periodically. Such data shall be made available on line to the users of transmission system. It is understood that there is a proposal to allocate the power purchase agreements (PPA) to various DISCOMs and GUVNL and also introduction of intra-state ABT requires enormous data made available to all stakeholders. GETCO / SLDC shall compile all the data required and make it available to all stakeholders for smooth operations of system. Action taken shall be reported to the Commission.

28


Providing open access on transmission system to various users and introduction of intra state ABT require enormous data to be handled and processed in order to make available in desired format to various stakeholders and open access users. It includes on line data of the capacity margin available on transmission system, various schedules like Declaration, Entitlement, Drawl, etc. It has to cover larger time horizon while handling this data. To make this available to all stakeholders, including open access users for smooth operation, designing of independent website for SLDC, which will be maintained and updated by SLDC, is under progress. The following actions have been taken:

1. Domain has been registered as www.sldcguj.com and web space is acquired.

2. Details of the information to be posted is under preparation and information flow

is being finalized for ease of all users of the system.

3. Extensive help of IT department is taken for design and development of the

website and to handle and process large amount of data.


Action taken is noted. The data should be kept continuously updated.

Directive – 6: Audited Accounts

GETCO shall submit the Audited Accounts for the year while filing the tariff petition in future.


Finally audited accounts shall be submitted on finalizing the same by statutory auditor and CAG. As of now, GETCO has submitted this petition on the basis of provisional annual accounts for FY 2005-06. Comments of the Commission: Action taken is noted. The accounts may be got audited by CAG early.

29

http://www.sldcguj.com/

Directive – 7: Metering

GETCO shall install 0.2 class meters suitable for ABT at the interface points for accounting the energy supplied to the DISCOMs since DISCOMs handle 11 kV and below. It would be fairly large number of interface points (supply points) between GETCO and DISCOMs and it would be necessary to provide metering at all the inter-face points. GETCO and DISCOMs may jointly identify the metering points and provide required number of meters. The details of interface metering points and status of metering shall be provided to the Commission. Action Taken / Compliance:

The Installation of 610 nos. of 0.2 S class ABT Compliant meters at identified interface points on the basis of boundary metering concept has been completed. Discom / Licensee wise details are as under: Sr. No. Licensee Meters 1 DGVCL 180 2 MGVCL 178 3 UGVCL 96 4 PGVCL 133 5 Torrent AEC 5 6 Torrent SEC 18 TOTAL 610


Action taken is noted. Balance metering if any may be completed early.

Directive – 8: Reactive Compensation

GETCO shall provide adequate Reactive Compensation by installing static capacitors etc. to meet the reactive Power requirements of the system to improve the voltage levels and reduce Transmission Losses. Action taken/ Compliance:

Following actions have been performed in compliance with above directive: 1. At present GETCO have installed following reactive compensation instruments in the system as on 31.03.2006.

• Shunt Capacitor – 3922.5 MVAr

• Bus Reactor – 350 MVAr

• Line Reactor – 200 MVAr

2. The procurement action for providing 4x25 MVAr bus reactor is already initiated, which are to be installed at 220KV bus as Pannandhro, Nakhtrana, Nani Khakhar and Anjar.

30

3. The system study for installation of reactive compensation in western region is carried out by WRPC. A meeting of study committee was held on 16.05.2006 to discuss the HT Shunt capacitor requirement in Western Region. As an out come of the study report, it is informed by WRPC that requirement of capacitor bank for GETCO system during 2006-07 is NIL.


GETCO made a provision of Rs.463 lakhs for providing shunt capacitors during 2007-08. The requirement of reactive compensation may be reviewed in the context of observation of WRPC that such requirement during 06-07 is NIL and action taken to provide required compensation during 2007-08.

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5. Transmission System of GETCO and its performance

5.1 Transmission system

GETCO owns and operates EHV transmission system of voltages comprising 66 kV

to 400 kV in the State. The transmission of GETCO consists of the following

transmission lines and sub stations as given in Table-3 below:

Table – 3

Transmission System of GETCO – 2005-06 S.N Voltage EHV lines (cKt km) EHV substations (Nos.) 1 400 kV 1841 8 2 220 kV 11149 63 3 132 kV 4550 48 4 66 kV 16555 721 5 Total 34095 840

GETCO proposes to add the following transmission lines and sub stations during the

years 2006-07 and 2007-08.

Table – 4

Network Additions during the years 2006-07 & 2007-08

FY 06-07 FY 07-08 Sr. No.

Voltage Class No. of

Substations Transmission

line in Ckt KM

No. of Substations

Transmission line in Ckt KM

1 400 kV 1 241.00 0.002 220 kV 3 406.00 120.003 132 kV 0 0 0.004 66 kV 46 458.00 45 450.00Total 50 1105.00 45 570.00

5.2 Transmission System Capacity

32

GETCO has submitted in its petition that the capacity of the transmission system

was 15,686 MVA in the year 2005-06. The circle wise details of the connected

capacity in MVA is given in Table-5 below:

33

Table – 5

Existing capacity of GETCO – 2005-06

Name of circle 2005-06 (Actual) MVA

Navsari 1,842 Bharuch 774 Jambuva 1,535 Nadiad 2,017 Mehsana 2,127 Palanpur 2,215 Gondal 1,573 Amreli 1,420 Anjar 990 Junagadh 1,188 Asoj 7 Total 15,686

GETCO proposed additional transmission capacity during 2006-07 & 2007-08 as

below:

Particulars 2006-07 2007-08

Total circuit Km. 1105 570

MVA addition 2170 1250

The total transmission capacity by 2007-08 would be as below:

Particulars 2005-06 2006-07 2007-08

Transmission Lines Total circuit Km. 34095 35200 35770

Capacity of the system (MVA) 15686 17856 19106

5.3 Loading of Transmission system

It is submitted by GETCO that its transmission has been connected mainly to the

following sources

- GSECL generating stations

- Independent Power Producers (IPPs)

- Central Power Stations (PGCIL input points)

- DIU, Daman and Dadra & Nagar Haveli capacity

- Wind farms for wheeling of power

34

The power injected in the GETCO system from various stations / sources is supplied

to GUVNL (for supply to the Four Distribution Companies, Ahmedabad Electricity

Company (AECO), Surat Electricity Company (SECO), Kandla Port Trust) and

captive power users. The power allocated to DIU, Daman and Dadra and Nagar

Haveli from Central Generating Stations is transmitted and delivered through

GETCO system.

The total connected load (Generation) to the GETCO system for the year 2005-06 is

given in Table – 6 below as submitted by GETCO in the Petition.

Table – 6

Loading of Transmission System S.N Stations Rated

capacity MW Aux Con (%) Gujarat

Share Capacity Loss (%)

Total mW on GETCO system

A GSECL Plants 1 Ukai TPS 850 9 850 - 772 2 Ukai HPS 305 0.4 305 - 304 3 Gandhinagar TPS 870 10.5 870 - 778 4 Wanakbori TPS 1470 8.9 1470 - 1339 5 Sikka TPS 240 11 240 - 214 6 Kutch Lignite TPS 215 13 215 - 188 7 Dhuvaran TPS-Old 534 13 534 - 467 8 Kadana Hydro 242 1 242 - 240 9 Utran Gas Based 135 3 135 - 131 10 Dhuvaran Gas – Stage

I & II 176 3 176 - 170

Total of GSEC 4603 B IPPs 1 ESSAR 300 3 300 - 292 2 GPEC 655 3 655 - 636 3 GIPCL Stage – II 160 3 160 - 155 4 GIPCL – SLPP 250 10 250 - 226 5 GSEG 156 3 156 - 151 6 GIPCL Stage – I 145 2 145 - 142 7 GMDC 250 10 250 - 225 Total of IPPs 1828 C Share from Central

Sector

1 NPC – Tarapur 1&2 320 10 160 5 137 2 NPC – Kakrapur 440 13 128 5 106 3 NPC – Tarapur 3&4 1080 10 274 5 234 4 NTPC – Kobra 2100 8 371 5 324 5 NTPC – Vindhyachal 2260 8 483 5 420 6 NTPC – Kawas 656 3 191 5 176 7 NTPC – Jhanor 657 3 241 5 222 8 SSNNL – Hydro 1450 0.5 232 5 219 9 NTPC – Vindhyachal 500 7.5 133 5 117 Total of Central

Sector 1956

D Firm captive Capacity

25

E Diu, Daman, Dadra & Nagar Haveli

520

35

F Wheeling Capacity for Captive Power Plants (excl. parallel generators)

530

Total MW connected to GETCO for FY 05-06

9461

In addition, wind farm capacity of approx. 288 MW is also connected to the GETCO

system.

In addition to the above the following loads (Generation) are likely to be connected

to the GETCO system during 2006-07 and 2007-08.

Table – 7

Likely load addition during 2006-07 Stations Rated

capacity (MW)

Gujarat Share(MW)

Aux Con (%)

Transmission Loss (%)

Total mW on GETCO

system

GSECL stations Kutch Lignite TPS 75 75 9.50% 0.00% 67.88Dhuvaran VIII CCPP 43.45 43 3.00% 0.00% 42.15

Central Sector Stations NTPC Kahalgaon 500 31 6.00 5.00% 27.68Expected capacity addition during FY 06-07 137.70

Likely load addition during 2007-08 Stations Rated

capacity (MW)

Gujarat Share(MW)

Aux Con (%)

Transmission Loss (%)

Total MW on GETCO

system

Central Sector Stations NTPC Vindhyachal - III

500 133 7.5% 5.00% 116.87

NTPC - Kahalgaon 500 61 6.0% 5.00% 54.47NTPC – Sipat Stage - II 100 239 7.5% 5.00% 210.02Expected capacity addition during FY 07-08 381.37

Summing up the likely loading of GETCO Transmission System by GSECL

stations, Central Generating Stations, IPPs, Captive Units and loading from DIU,

Daman and Dadra & Nagar Haveli the overall position in 2007-08 would be as given

in Table-8 below:

Table – 8

36

Likely loading of GETCO Transmission System – 2007-08 S.N Stations / Source Loading (MW) 1 GSECL Stations 47142 Central Generating Stations 23653 IPPs 18274 Firm Captive capacity 255 DIU, Daman, Dadra & Nagar Haveli 5206 Wheeling capacity for captive power plants 530 Total 9981

In addition, wind farm capacity of approx 320 mW is likely to be connected to the

GETCO system.

Commission’s view

It is seen that the total capacity to be handled by GETCO Transmission System

would be about 9981 mW by 2007-08. The transmission system is capable of

transmitting entire power from generating stations and other sources including the

additional capacity likely to come up during 2006-07 and 2007-08 to the DISCOMs

and others.

5.4 Availability of the Transmission System

The performance parameters of the system as submitted by GETCO for the years

2003-04 to 2007-08 are given in Table – 9 below:

Table – 9

Availability of GETCO Transmission System

Particular 2003-04(Actual)

2004-05(Actual)

2005-06(Actual)

2006-07 (Projected)

2007-08(Projected)

400 kV lines 99.04% 99.10% 99.05% 99.05% 99.05%220 kV lines 98.73% 98.90% 98.86% 98.86% 98.86%132 kV line 98.98% 99.24% 98.79% 98.79% 98.79%66 kV line 99.51% 99.67% 99.57% 99.57% 99.57%Substations 99.84% 99.84% 99.67% 99.67% 99.67%

Commission’s view

GETCO operates only AC system and the reliability as submitted is over 99% which

is higher than the norm (98%) specified by the Commission.

5.5 Regulations of the Commission for Operation Norms

37

Commission has specified the following parameters relating to Transmission in the

Regulations issued.

i) Allotted Transmission Capacity

“The allotted capacity to a long term transmission customer shall be sum of the

generating capacities allocated to the long term transmission customer from

generating stations and the contracted power, if any, provided further that GEB

is under going unbundling and restructuring, the provisions of these

regulations should be applicable of separate transmission company,

GEB/Successor DISCOMs shall have deemed allocation till the time a formal

capacity allocation is made”.

ii) Target Availability for recovery of full transmission charges

a) The target availability of System: 98%

b) HVDC bi-pole links and HVDC back to back stations: 95%

iii) Auxiliary Consumption in Substation

The charges for auxiliary energy consumption in the substation for the purpose

of air conditioning, lighting, technical consumption etc shall be borne by the

transmission licensee as part of its normative operation and maintenance

expenses.

iv) The Financial Parameters - interest on loans, depreciation, return on equity etc

are in line with those applicable to generation company.

5.6 Transmission Loss

The energy transactions through GETCO systems during 2005-06 as furnished by

GETCO is given in Table – 10 below:

Table – 10

Energy input and drawal and Transmission loss – 2005-06

Generation Plant MUs Received

GSECL 24,886IPPs 11,283CPPs 1,538

38

Central Sector 13,210Non Conventional Sources 253Total Energy Received 51,170

Name of Company MUs sent

GUVNL(for Bulk Licensees) 1,188DGVCL 10,912MGVCL 5,979UGVCL 12,201PGVCL 14,984Div, Daman, Dadra Nagar haveli 3,673Total 48,937Auxiliary Consumption 9Gross Energy sent out 48,946

39

Thus, total transmission losses for the GETCo for FY 05-06 is shown below: Particular MUs

Total MUs received 51,170Gross Energy Sent Out 48,946Transmission Losses 2,224Transmission Losses 4.35%

Transmission loss profile The loss profile during the last few years is furnished by GETCO as below:

Year Loss (%) 2000-01 4.30 2001-02 4.44 2002-03 4.34 2003-04 4.41 2004-05 4.39 2005-06 4.35

GETCO has submitted that the transmission loss is effectively under control for the

last several years due to series of steps taken by the company. The steps taken

include

- Installation of additional Transmission lines and sub stations

- Installation of shunt capacitors at 11, 22 and 66 kV level

- Upgradation of lines to higher voltages

- Upgradation of the line capacity by higher capacity ACSR conductors

- Replacement of old electromechanical meters by computer compatible static

meters

The Commission has approved the transmission loss of 4.27% for 2006-07.

GETCO stated it had taken a number of steps as mentioned above. But that the

growth of the connected load on the system is in the order of 8%, and has to be

mainly fed by 66kV network. GETCO also submitted that the transmission loss

levels in other states are of the order of 5% to 6% and that the loss level even in the

400 / 220 kV system of Western Region ranges from 4.5% to 5%.

GETCO projected the Transmission loss levels for the year 2007-08 as given in

Table-11 below:

40

Table – 11

Projected Energy Transmission & Losses – 2007-08 Particulars 2005-06 2006-07 2007-08 Energy sent into GETCO 51170 55126 57143Energy sent out from GETCO 48946 52728 54658Escalation for energy sent 8% 4%Transmission losses 2224 2398 2486Transmission losses (exc. Wheel) 4.35% 4.35% 4.35%

Commission’s view

The Commission has fixed the Transmission loss level at 4.27% for the year

2006-07, but GETCO submitted that they could not achieve the target in spite of

effective measures taken. GETCO further submitted that loss level would be 4.35%

due to heavy loading on 66 kV system.

It is observed that the transmission system in most of the states comprises 400 KV,

200 kV and 132 kV voltage levels. GETCO system has a large 66 kV network in

which loss levels would generally be high. It is observed that the transmission levels

in other states are of the order of 4.5% to 6%.

In view of the above, the Transmission loss for 2007-08 is approved at 4.35%. However

GETCO is directed to make efforts reduce the loss level.

5.7 Capital Expenditure Plan

GETCO proposes capital expenditure of Rs. 40771 lakhs during the year 2007-08

for capacity additions by erection of new transmission lines and sub stations,

renovation and modernization and augmentation of transmission system, as below:

Table – 12

Proposed Capital Expenditure – 2007-08 S.N Particulars Capital Expenditure

(Rs. lakhs) 1 Capital Expenditure for addition of new lines & sub

stations – 220 kV systems 3900

2 Capital expenditure for additional lines and sub stations – 66 kV systems

19215

3 Installation of shunt capacitors 4684 Addition of transformer capacitors 9088

41

5 Renovation, Modernization and Augmentation of the systems

8100

Total 40771 The capacity addition covers the establishment of new sub stations and connected

transmission lines to meet existing and future load demand. The capital expenditure

is planned

- to reduce the load on existing sub stations and transmission lines for reducing

loss level

- to meet the demand growth

- to reduce the loading on connecting 11 kV feeders to maintain better voltages

- to build additional 66 / 11 kV sub-stations for bifurcating 11 kV feeders for

reduction of distribution losses

- to improve system reliability

- to install shunt capacitors at 11, 22 and 66 kV levels at the 66 kV sub-stations.

In the petition GETCO has furnished in the petition circle wise additional

transmission lines and sub stations planned, renovation & modernization and

augmentation of transmission system programmed.

Commission’s view The capacity addition to transmission system, its renovation & modernization and

augmentation is a continuous process. Such efforts necessary for meeting increasing

load growth all over the state, for reducing losses and for improving the quality of

supply with minimum of inescapable interruptions and adequate voltages,

particularly over the large 66 kV system. In view of the need for capacity additions,

R&M and Augmentation of system for meeting the growing demand, the

Commission approves the capital expenditure plan for 2007-08.

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5.8 Funding of Capital Expenditure

GETCO has furnished the structure of funding of the proposed capital expenditure

as below:

Table – 13

Funding of Capital Expenditure – 2007-08 S.N Particulars Funding 2007-08

(Rs. lakhs) 1 Estimated capital expenditure during the year 40771 2 Debt (70%) 28540 3 Equity (30%) 12231

The interest on loans and return on equity are regulated based on the above structure

of funding.

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6. Annual Transmission Charges

6.0 Status of GETCO

GETCO has become operative from 1st April 2005 on unbundling of GEB into

Generation, Transmission and Distribution entities. GETCO, the Transmission

Company, has become operative with an Opening Balance Sheet as on 1st April

2005 to be notified by the State Government. The State Government has since

notified the final Opening Balance Sheets as on 1st April 2005 based on the

Financial Restructuring Plan (FRP) approved by the State Government. The Final

Opening Balance Sheet is given in Table – 14 below:

Table - 14

Final Opening Balance Sheet of GETCO (Rs. crores)

Particulars as on 1st April 2005 GETCO Assets Gross Fixed Assets Less: Acc. Depreciation

4052.86-616.11

Net Fixed Assets (A) 3436.74Capital Works in Progress (B) 564.56Assets not in use 0.48Deferred costs 1.85Investments 1.25Investment in successor entities 0.00Total other assets (C) 3.59Net stocks 126.97Net receivables from sale of power 0.00Cash and Bank balance 0.68Loans and Advances 16.08Sundry receivables 18.42Total current Assets (D) 162.16Subsidy receivable from GoG (E) 0.00Total Assets (A+B+C+D+E) 4167.06LIABILITIES Equity capital Surplus / (Deficit)

1557.51

Total Net worth (A) 1557.51Total Long Term Loans (B) 1392.92

44

Total Short Term Loans (C) 943.33Security deposits from consumers (D) 0.02Total Current Liabilities (E) 273.27Total Liabilities (A+B+C+D+E) 4167.06

6.2 Annual Transmission Charges

The Annual Transmission Charges for a Transmission Company cover all the fixed

annual costs, which include:

• Interest on Loans

• Depreciation and advance against depreciation

• Interest on Working Capital

• Operation and Maintenance Expenses

- Employee cost

- Repair and Maintenance expenses

- Administrative and General Expenses

- State Load Despatch Centre costs

• Return on Equity

• Taxes, if any.

GETCO has projected the Net Annual Transmission charges at Rs.98826 lakhs for

the year 2007-08. GETCO submitted the actuals for the years 2004-05 and 2005-

06 based on the Annual Accounts and projections for the year 2006-07 and 2007-

08.

The transmission costs projected by GETCO are analyzed and discussed further in

this chapter.

6.2.1 Operation and Maintenance Expenses

GETCO has claimed Operation and Maintenance expenses under the following

heads:

• Employee cost

• Repair and Maintenance expenses

• Administrative and General Expenses

45

GETCO has not claimed the O&M charges on the norms specified in Commission’s

regulations but claimed an increase of 5% over the actuals for the year 2005-06 in

respect of Employee cost and Administration and General charges. The Repairs and

Maintenance charges are projected with 8% escalation.

The claims of GETCO under various heads of O&M charges are discussed below:

46

Employees Cost

GETCO projected the employee cost at Rs.21,888 lakh for the year 2007-08.

The employees cost comprises salaries, bonus, terminal benefits in the form of

pension and gratuity, leave encashment and staff welfare expenses, GETCO has

projected an increase of 5% for the financial years 2006-07 and 2007-08 over the

actuals of 2005-06. The employees cost for 2007-08 is projected as detailed in

Table – 15 below:

Table - 15

Manpower Cost (Rs. lakhs)

Particulars 2004-05(Actuals)

2005-06(Actuals)

2006-07 (Projected)

2007-08(Projected)

Employees cost 18784 19853 20846 21888

Increase (%) (5.69) (5.0) (5.0)

Repairs and Maintenance (R&M) Expenses

GETCO has projected the Repair and Maintenance expenses at Rs.5858 lakhs for

the year 2007-008.

The Repair and Maintenance expenses comprise mainly normal maintenance,

spares etc. The R&M expenses are a function of and directly related to the age

and wear and tear of the assets. The company has projected the expenses for

2006-07 and 2007-08 at 8% over the actuals for 2005-06, as in Table - 16 below:

Table - 16

Projected Repair and Maintenance Expenses (Rs. lakhs)

Particulars 2004-05 (Actuals)

2005-06(Actuals)

2006-07 (Projected)

2007-08(Projected)

Repair and Maintenance expenses

2648 5022 5424 5858

The company explained that the high rate of 89.67% during 2005-06 is more

indicative of actual cost as expenses shown in earlier years were allocated costs

arrived from the erstwhile GEB Accounts based on certain assumptions which also

overlooked certain expenses. It is submitted that in view of the vintage of the

system, it requires periodic and more frequent repairs. The company has

considered the R&M expenses for 2005-06 as base and projected an 8% increase

47

for the years 2006-07 and 2007-08. It is submitted that the R&M expenses are

about 1.22% of gross fixed assets.

Administrative and General Expenses

GETCO projected the Administrative and General Expenses at Rs.4056 lakhs for

the year 2007-08.

The Administrative and General expenses mainly comprise rents, telephone and

other communication expenses, professional charges, conveyance and traveling

expenses.

The company projected the expenses with an increase of 5% for 2006-07 and

2007-08 over 2005-06 actuals as detailed in Table - 17 below:

Table - 17

Administrative and General Expenses 2007-08 (Rs. lakhs)

Particulars 2004-05 (Actuals)

2005-06(Actuals)

2006-07 (Projected)

2007-08(Projected)

Administrative and General Expenses

3078 3679 3863 4056

Increase (%) - 19.57 5.00 5.00

Unified Load Dispatch Centre (ULDC) Charges

It is submitted that these charges have to be paid for 15 years at the rate of Rs.128

lakhs per month to Power Grid Corporation of India Limited (PGCIL) for

participation in the Unified Load dispatch Scheme executed by PGCIL. The

charges are effective from 2005-06. The charges for 2006-07 and 2007-08 would

be at the same level of Rs. 128 lakhs per month.

In the total O&M charges claimed by GETCO are as given in Table - 18 below:

Table - 18

O&M Charges (Rs. lakhs)

Sl.No. Particulars 2005-06 2006-07 2007-081 Employees cost 19853 20846 218882 Repair and Maintenance Expenses 5022 5424 58583 Administrative and General Expenses 3679 3863 40564 ULDC charges 256 1536 1536 Total 28,810 31,668 33,338

48

GETCO submitted that the O&M charges claimed are far less than the O&M

expenses allowable to the Transmission Company according to the norms, which

the Commission specified.

Commission’s view GETCO has requested 5% increase for 2006-07 and 2007-08 over the actuals for

2005-06 for employees cost and Administrative and General Expenses and 8%

increase over 2005-06 actuals for Repair and Maintenance expenses. The actuals

for 2005-06 given in the petition are verified with the Accounts for 2005-06. It is

found that the actuals for Employees cost and Repair and Maintenance expenses

are as provided in the Annual Accounts, but in the case of Administrative and

General Expenses the amount in the Annual Accounts is Rs.3341 lakhs as against

Rs.3679 lakhs indicated by GETCO. The costs for 2006-07 and 2007-08 are

regulated based on the actuals in the Annual Accounts for 2005-06.

ULDC charges are to be paid to PGCIL for setting up Unified Load Despatch Centre

which includes SLDC for the State.

The increase of 8% requested for R&M expenses is justified since the vintage of

transmission system involves greater maintenance. The R&M expenses work out

to about 1.22% of gross fixed assets and are well within the normally accepted

norm of 2%.

The increase of 5% case employees cost and Administrative and General

Expenses and 8% increase in R&M expenses in considered reasonable. The O&M

charges as approved by the Commission are given in Table - 19 below:

Table - 19

O&M Charges Approved by the Commission (Rs. Lakhs)

Sl.No. Particulars 2007-08 1 Employees Cost 21888 2 R&M Expenses 5858 3 Administrative & General Expenses 3683 4 ULDC charges 1536 Total 32965

O&M charges are approved by the Commission at Rs.32965 lakhs as against Rs.33338 lakhs claimed by GETCO.

49

6.2.2 Loans and Interest on Loans

GETCO has projected the interest on loan, and guarantee charges at Rs.20639

lakhs for the year 2007-08.

The company submitted that they have taken, the actual interest and financial

expenses during the year 2005-06 as the basis for estimation of interest on loans

for the year 2007-08. The capital expenditure during 2006-07 and 2007-08 has

been assumed to be funded at a normative loan-equity ratio of 70:30 in accordance

with GERC Regulations to arrive at the outstanding loan for 2007-08.

The interest has been calculated at weighted average rate of 8.59% for existing

loans and 8.5% for new loans.

For purpose of repayment, the tenure of the loan has been assumed as 10 years

for all the GETCO loans. Guarantee charges have to be paid to the State

Government on the loans which have been transferred from erstwhile GEB and no

new loans are taken on the basis of Government Guarantee. There is no increase

in this cost. The loans and interest there on as calculated by GETCO are given in

Table - 20 below:

Table - 20

Loans and Interest on Loans (Rs. lakhs)

Particulars 2005-06Audited

2005-06 Audited

2006-07 Audited

2007-08Projected

Opening Loans A 215,221 233,807 233,638 227,960

Addition during year B 11,139 101,418 17,402 28,540

Repayment during year C - 101,587 23,080 23,070

Closing Loans D=A+B+C 226,359 233,638 227,960 233,430

Average Loans E=(D+A)/2 220,790 233,723 230,799 230,695

Interest on Loans F=E*J 20,619 22,917 19,833 19,800

Guarantee charges G 839 839 839Total Financing cost H=F+G 23,756 20,672 20,639

Average tenor of the loan 10.0 years

Cost of additional loans I 8.50% 8.50%

Weighted average Rate of Interest

J 8.59 8.58%

50

Commission’s view

As mentioned earlier, GETCO has commenced its business from 1st April 2005, with

Final Opening Balance Sheet notified by the State Government. The loans and

interest calculations furnished by GETCO have been examined.

The opening loans are according to opening balance sheet as on 1st April 2005 and

Annual Accounts for 2005-06.

The average interest rates on existing loans at 8.58% and on additional loans at 8.50%

are considered reasonable.

The additions to loan during 2006-07 and 2007-08 are in line with the capital

expenditures approved by the Commission as shown below.

(Rs. lakhs) Year Loan (70%) Equity (30%) Total

2005-06 17640 7560 25200

2007-08 28540 12231 40771

The interest on loan for 2007-08 is arrived at as in Table – 21 below:

Table – 21

Interest on loan approved by the Commission

(Rs. lakhs) Sl.No. Loan 2007-08

1 Opening Loans A 227960

2 Addition Loan B 28540

3 Repayment C 23070

4 Closing Loans D: (A+B-C) 233430

5 Average Loan E: (A+D)/2 230695

6 Interest on loans @8.58% (EX. 8.58/100) 19800

7 Guarantee charges G 839

8 Total Financing cost (F+G) 20639

51

The Commission approves the interest on loans and guarantee charges at Rs. 20639

lakhs for 2007-08, as projected by GETCO.

6.23 Depreciation and Advance Against Depreciation

(a) Depreciation GETCO has claimed Rs.16770 lakhs as depreciation for 2007-08. It is submitted

that the actual position of assets as notified by the State Government in the final

Opening Balance Sheet has been considered. The actual assets movement of

2005-06 has been considered to arrive at the depreciation value for 2007-08.

It is stated that 50% of capital works in progress for the respective year is assumed

to be capitalized in the next financial year and further that the capitalized expenses

which are reduced from operating expenses of a given year are added to the total

assets for that year.

GETCO also stated that the depreciation has been calculated considering

CERC/GERC norms for various blocks of assets, except block of vehicles and

SLDC assets, for which depreciation has been provided as in the Company Act

provision. The weighted average depreciation rate works out to 3.37% for the year

2005-06 and the same has been adopted for 2007-08.

The Depreciation as worked out by GETCO is given in Table - 22 below:

Table - 22

Calculation of Depreciation FY 2007-08 (Rs. lakhs)

Particulars 2005-06Audited

2006-07 Projected

2007-08Projected

Gross Fixed Assets at the beginning of the year 405,246 443,708 482,851

Closing 75,669 91,298 108,069

New Additions during year 38,462 39,143 28,528

Net Fixed Assets 368,039 391,553 403,310

52

Capital Expenditure in Progress 61,752 53,094 65,338

Depreciation 14,320 15,629 16,770

Weighted Average Rate of Depreciation 3.37% 3.37% 3.37%

Estimated Capital Expenditure during year (without aid)

24,860 40,771

Capital Expenditure (with aid under scheme)

5,625

Total Capex 30,485 40,771

53

Commission’s View:

The Commission has examined the depreciation claimed by the Company. The

Commission approves the gross fixed assets as provided in the final opening

balance sheet and additions during the subsequent years. The rates of

depreciation claimed based on CERC / GERC norms for transmission assets are

also approved. Based on the depreciation rates adopted, the depreciation is arrived

at as given in Table - 23 below:

Table - 23

Assets Capitalization and Depreciation approved by the Commission - 2007-08

(Rs. lakhs) S.N. Details Approved by the

Commission for 2007-08 1. Gross fixed assets at the beginning of the year 482851 2. New Additions during the year 28528 3. Fixed assets at the end of the year (1+3) 511379 4. Average Assets 497115 5. Weighted average rate of depreciation 3.37% 6. Depreciation on the average Assets (4x5) 16770

Depreciation for transmission is approved at Rs. 16770 lakhs as claimed by GETCO.

b) Advance Against Depreciation

GETCO claimed an amount of Rs.6026 lakhs as advance against depreciation for

the year 2007-08 to meet debt service obligations.

The company has worked out advance against depreciation considering the total

depreciation and repayment in the respective year and cumulative depreciation and

cumulative repayments in the year 2007-08. These are considered with a ceiling of

1/10 of the outstanding loans. The calculation of advance against depreciation for

the year 2007-08 as worked out by GETCO is given in Table-24 below:

Table - 24

Calculation of Advance Against Depreciation by GETCO 2007-08

Sl.No. Particulars 2007-08

1. 1/10 of the Loan (s) 22796 2. Repayment of the Loan (s) as considered for

working out interest on loan 23070

54

3. Minimum of the above 22796 4. Depreciation during the year 16770 5. Advance against depreciation (3-4) 6026

GETCO submitted that the amount of depreciation based on CERC norms is less

than the loan repayment amount during the year (which creates cash constraint)

and hence claimed advance against depreciation. The company has requested the

Commission to approve advance against depreciation.

Commission’s view

The Commission has examined the claim of GETCO for advance against

depreciation, as the loan repayment during the year is more than the depreciation

claimed by them for the year.

The Commission has approved the depreciation according to rates prescribed by

CERC and the depreciation works out to be less than the loan repayment as detailed

below:

(Rs. lakhs) Sl.No. Particulars 2007-08

1. Loan repayment 23070

2. Depreciation 16770

3. Advance Against Depreciation 6300

According to the Commission’s regulations, the transmission licensee is eligible for

advance against depreciation computed in the manner given below:

AAD = Loan Repayment amount as in Regulation 55 (i) subject to a ceiling of

1/10th of loan amount as in Regulations (53) minus depreciation according to

schedule.

Provided further that advance against depreciation in a year shall be restricted to the

extent of difference between cumulative repayment and cumulative depreciation

upto that year.

The company has come into existence from 1st April 2005. The cumulative

repayment is much more than the depreciation upto the year.

55

The company has claimed the difference between 1/10th of loan and the depreciation

available, which works out to Rs.6026 lakhs as against Rs.6300 lakhs, the difference

between loan repayment and depreciation during the year.

The Commission approves an amount of Rs.6026 lakhs as Advance Against

Depreciation for 2007-08.

6.2.4 Interest on working capital

GETCO has claimed Rs.1999 lakhs towards interest on working capital for the year

2007-08. The working capital requirement is said to be worked out on normative

basis based on norms specified in the regulations issued by the Commission.

The company assumed the rate of interest on working capital is at 7.88% which is

existing weighted average rate of interest from Commercial Banks.

Maintenance Spares have been considered on the basis of 6% escalated value over

the last year’s maintenance plus 1% of the value of assets that are added in the given

year.

The interest on working capital which GETCO calculated is given in Table - 25

below.

Table - 25

Interest on Working Capital (Rs. lakhs)

2004-05 2005-06 2006-07 2007-08Particulars Norms Provisional Audited Projected Projected

O&M expenses One month 2043 2639 2778Maintenance spares

1% of HC with 6% escalation

3947 5235 5834

Receivables 2 months of total transmission charges

15808 15020 16749

Total Working Capital

21798 22894 25362

Rate of interest 10.25 7574 7.88 7.88Interest on Working Capital

2234 1804 1999

56

Commission’s view

The Commission has examined the request for working capital based on the O&M

expenses approved by the Commission as detailed in Table - 26 below:

57

Table – 26

Interest on Working Capital Approved by the Commission – 2007-08 (Rs. lakhs)

S.N Particulars Norm Working Capital

1 O&M expenses One month 2747 2 Maintenance spares Historical cost with

6% escalation 5834

3 Receivable Two months 16404 4 Total Working Capital 24985 5 Rate of interest 7.88% 6 Interest on Working Capital 1969

6.2.5 Return on Equity

GETCO claimed an amount of Rs. 23706 lakhs towards Return on equity for the

year 2007-08.

GETCO submitted that after final notification of FRP plan for GETCO, equity and

liabilities were allocated to GETCO as on 1st April 2005. The equity as given in

opening balance sheet for 2005-06 is taken into account. GETCO also provided the

equity and reserves position for the years 2006-07 & 2007-08.

For the capital expenditure where there is no aid available, equity at the rate of 30% of the capital expenditure, is considered as addition to the existing equity for the years 2006-07 & 2007-08. Average of opening and closing equity is considered to calculate the return on equity. The return on equity as claimed by the company for the year 2007-08 is given in Table - 27 below

Table – 27

Return on equity claimed by GETCO (Rs. lakhs)

Component 2005-06 2006-07 2007-08Opening Equity Capital A1 155752 155752 163210Addition during the year A2 0 7458 12231Closing Equity A3 = A1 + A 2 155752 163210 175441Average Equity B = (A1 + A2) / 2 155752 159481 169326Opening Free Reserves B 1 - 779 23106Addition during the year B 2 779 22327 23706Closing Free Reserves B 3 = B1 + B2 779 23106 46812Average Reserves C = (B1 + B3) / 2 390 11943 34959Total Average Equity D = B + C 155752 159481 16932614% Return on average Equity

E = B*14% 779 22327 23706

58

Commission’s view

GETCO has become operative from 1st April 2005. The equity of the company on

the day of formation (1st April 2005) was Rs. 155,752 lakhs in the opening balance

sheet. The reserves to the extent of 30% investment of the capital expenditure for the

years 2006-07 & 2007-08 are considered as additional equity for purpose of

claiming return on equity. The rate of return claimed at 14% is in accordance with

the provisions in the Regulations of the Commission. The reserves are much more

than the additional equity invested in capital works. Since the capital structure of the

company is with a debt equity ration of almost 60:40 it is considered reasonable to

limit the return on equity at 10% instead of 14%. The Commission therefore

approves the Return on equity at Rs.16933 lakhs as given in Table-28 below:

Table – 28

Return on Equity Approved by the Commission (Rs. lakhs)

S.N Component Return on equity 2007-08 1 Opening equity 163210 2 Addition during the year 12231 3 Closing equity (1+2) 175441 4 Average equity (1+2) / 2 169326 5 Return on equity @ 10% 16933

The Commission approves the return on equity at Rs.16933 lakhs for the year 2007-08 against Rs.23706 lakhs claimed by GETCO.

Income Tax

GETCO submitted that in accordance with the terms and conditions of tariff, tax on

the income stream of the Transmission Licensee from its core business, shall be

computed as an expense and shall be recovered from the beneficiaries. GETCO

proposed to recover the tax from the beneficiaries.

GETCO stated that the tax to be passed on to the beneficiaries / consumers on the

basis of income tax assessment under the Income Tax Act 1961, as certified by the

Statutory Auditors, shall be adjusted every year.

Commission’s view

59

In accordance with the regulations of the Commission, the Income Tax paid on the

basis of Income Tax Act will be treated as expense and passed on to the beneficiary

(ies). The company has not claimed income tax likely to be paid as an expense in the

petition and hence it is not considered at this stage. It will be allowed in ARR as and

when claimed by GETCO.

6.2.6 O&M charges from dedicated users of Transmission Lines

GETCO submitted that it looks after the Operation & Maintenance (O&M) of

dedicated transmission lines setup by certain users.

GETCO proposes to recover such O&M charges from dedicated consumers based on

norms of O&M expenses for a transmission licensee specified in the Commission’s

Regulations as detailed in Table - 29 below

Table – 29

O&M charges for dedicated Transmission Lines

2007-08 O&M expenses (Rs. in lakh per CKt. Km) 0.255 O&M expenses (Rs. in lakh per bay) 31.63

GETCO has not quantified the revenue likely to be realized from such charges

Commission’s view

The organizations / consumers of dedicated transmission lines have strongly

objected to the recovery of O&M charges based on the norms specified by the

Commission. Some of them even stated that there is no case for recovery of O&M

charges for dedicated transmission lines as beneficiaries are already paying the

O&M charges for the entire transmission system.

The Commission is of the view GETCO is attending to the O&M of the dedicated

transmission lines, they have to be compensated for the expenditure incurred in

attending to this work. Commission however considers that it is not reasonable to

claim the charges based on the norms specified by the Commission’s regulations.

GETCO may continue the existing practice. This will be examined separately and

appropriate decision will be taken.

60

6.2.7 Revenue from Other Income

GETCO has earned revenue from other sources in FY 2005-06 which include interest on staff loans, interest on investments, income from sale of stores etc. The other income which GETCO projected for 2007-08 is given in Table - 30 below:

61

Table – 30

Details of Other Income (Rs. lakhs)

2005-06 2006-07 2007-08 Audited Projected Projected

Interest on staff loans & advances 170 170 170Income from investments 1 - -Interest from consumers - - -Sale of scrap, stores etc 1167 500 500Miscellaneous Receipts 1974 1000 1000Income from sale of Fixed Assets 186 - -Total 3498 1670 1670

Commission’s view

Commission considers the projection of other income as reasonable. A

Transmission Company has limited sources of other income particularly when it is

not undertaking trading and when there are no open access consumers. The other

income is approved at Rs. 1670 lakhs for the year 2007-08.

62

6.2.8 Annual Transmission Charges

The Annual Transmission Charges as projected by GETCO for the year 2007-08 and

approved by the Commission are summarized in Table - 31 below

Table – 31

Annual Transmission Charges (Rs. lakhs)

S.N Particulars Projected by GETCO

Approved by the Commission

1 Employees cost 21888 218882 Repair & Maintenance expenses 5858 58583 Administration & General expenses 4056 36834 ULDC charges 1536 15365 Depreciation 16770 167706 Advance against Depreciation 6026 60267 Interest on loans 20639 206398 Interest on working capital 1999 19699 Return on equity 23706 1693310 Total fixed costs 102477 9530211 Less Expenses capitalized 1981 198112 Total Transmission charges 100496 9332113 Less Other income 1670 167014 Net Transmission charges 98826 91651

Commission approves the Net Annual transmission charges of Rs. 91651 lakhs for

the year 2007-08. The charges are to be recovered from the users of the

Transmission network of GETCO.

6.2.9 Recovery of Annual Transmission Charges

GETCO submitted that the transmission charges for intra – regional system payable

for a month by a long – term transmission customer of that transmission system are

arrived at by the following method

n = ∑

T C i _ T R S C X C L

i= 1 1 2 S C L

63

Where

TCi = Annual Transmission Charges for the i th project in the state• n Number of projects in the state

TRSC Amount equivalent to 75% recovery of transmission charges for the

month from short term transmission customers.

CL Allotted Transmission capacity to the long term transmission customer.

SCL Sum of the allotted transmission capacities to all the long term transmission customers of the state transmission systems.

GETCO proposes to recover full Annual Transmission Charges approved by the

Commission in accordance with the above mentioned formula with entire GETCO

system considered as a single project. Thus the transmission charges shall be

calculated on monthly basis inline with following formula:

= T C i _ T R S C X C L

1 2 S C L

• Computed in accordance with clause 4.6

64

Commission’s view

GETCO has a contract with GUVNL for transmission of entire power from GSECL

stations, PGCIL input points, IPPs, CPPs etc., from where GUVNL purchases power

to be sold to DISCOMs and other licensees in the state. In addition some of the other

customers use transmission system. All the users of the transmission network of the

GETCO have to pay the transmission charges as approved by the Commission.

The average loading capacity to the transmission system, the Annual Transmission

Costs and Transmission Charges as approved by the Commission are given in Table

- 32 below:

Table – 32

Annual Transmission Charges – 2007-08 S.N

Details

Unit

Charges projected by

GETCO

Charges approved by the

Commission 1 Likely maximum loading

of the Transmission system

MW 9981 9981

2 Net annual transmission cost

Rs. lakhs 98826 91651

3 Transmission charges Rs./MW/day 2705 2510*

4 Transmission charges Rs. /MW/month 82514 76521

*Based on 366 days for 2007-08.

Long-term contracts should be signed by GETCO with the concerned consumers /

users (other than Licensees / DISCOMs) in respect of their MW demand for the

purpose of levy of Transmission charges at the above rates.

65

7. Directives

7.1 GETCO has initiated action on the directives issued by the Commission in the last

tariff order. In this chapter, the Commission reiterates some of the directives and

issues some fresh directives.

Directive – 1: Energy Audit

The need for energy audit in the transmission system is reiterated.

Action is initiated by GETCO in providing high accuracy meters on feeders to arrive

at feeder wise losses etc. is noted.

The metering on balance feeders may be completed early and feeder-wise and

voltage-wise losses arrived at. This will help in identifying the high loss feeders and

in taking effective steps for loss reduction.

Directive – 2: Transmission loss

GETCO could not bring down losses to 4.27% during 2006-07 as directed by the

Commission and requested for loss level of 4.35% for 2006-07 and 2007-08. The

reason for increase of the loss level has also not been given to ascertain the

justification. Load flow studies should be done to establish the reason for such an

increase. It must be possible to reduce the loss level by effective energy audit on all

feeders.

Energy audit helps in identifying the feeders where the losses are high and remedial

measures can concentrate on such feeders. Attempt shall be made to bring down the

losses to 3% level gradually as indicated by GETCO.

66

Directive – 3: Intra-State ABT and Interface Metering Commission has already issued orders for implementation of intra state ABT and

action is already initiated by the utilities. It is understood that trial operations are

being conducted. Identification of interface points and proper monitoring and control

mechanism should be in position for effective implementation of ABT and for

avoiding over drawal from Regional system and consequent heavy UI charges.

Action taken for effective implementation of intra state ABT should be reported.

Directive – 4: Reactive Compensation

It is reported that in accordance with WREB study additional reactive compensation

is not required for Gujarat System during 2006-07. Since load growth is a

continuous process, action should be taken to get the studies conducted and provide

reactive compensation required for the system in coordination with DISCOMs so as

to improve the voltage levels and reduce losses.

Directive –5: Transmission Plan

It is stated that the Transmission Plan for XIth Plan is under preparation. This needs

to be finalized early and submitted to the Commission along with cost benefit

analysis.

Directive –6: Transmission System of GETCO

At present GETCO manages at present transmission system comprising 66, 132, 220

& 400 kV voltage levels. The 66 kV system is fairly large consisting of 721 Nos. 66

/ 11 kV Sub Stations and 16,555 Ckt. Km. of Transmission lines. It is proposed to

add 91 Nos. Sub Stations and about 900 kM Transmission lines, during 2006-07 and

2007-08. It would become too large to permit effective management. 66 kV is

almost a distribution voltage. In most of the States, system at 33 kV and below is

considered as distribution voltage. Gujarat does not have 33 kV and in its place it is

66 kV. It is considered desirable to handover 66 kV to Distribution companies for

better coordination and for taking prompt action in attending to outages, etc and to

have proper planning.

67

The feasibility of implementing the above may be examined and reported. The

transfer of 66 kV to a DISCOM on pilot or experimental basis may also be

considered for evaluating its practicability.

COMMISSION’S ORDER

The Commission approves the Transmission charges for GETCO for 2007-08 as

below:

Annual Transmission Cost (Rs. lakhs) 91651

Transmission Capacity (MW) 9981

Transmission Charges Rs./MW/Day 2510

Transmission Charges Rs./MW/month 76521

This order shall come into force with effect from 1st April 2007.

Sd/- G. Subba Rao

Chairman

Sd/- Dr. Man Mohan

Member

68

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