order of west bengal electricity regulatory ... 2017-18.pdftariff order of wbsedcl for the year 2017...

ORDER

OF

WEST BENGAL ELECTRICITY REGULATORY COMMISSION

FOR THE YEAR 2017 – 2018

IN

CASE NO: TP – 65 / 16 - 17

IN RE THE TARIFF APPLICATION OF THE WEST BENGAL STATE

ELECTRICITY DISTRIBUTION COMPANY LIMITED FOR THE

YEAR 2017 – 2018 COVERING FIFTH CONTROL PERIOD

UNDER SECTION 64(3)(a)

READ WITH SECTION 62(1) AND SECTION 62(3)

OF THE ELECTRICITY ACT, 2003

DATE: 04.07.2018

Tariff Order of WBSEDCL for the year 2017 – 2018

CHAPTER – 1

INTRODUCTION

West Bengal Electricity Regulatory Commission 2

1.1 The West Bengal Electricity Regulatory Commission (hereinafter referred to as

the “Commission”), a statutory body under the first proviso to section 82(1) of the

Electricity Act, 2003 (hereinafter referred to as the “Act”), has been authorized in

terms of the section 86 and section 62(1) of the Act to determine the tariff for a)

supply of electricity by a generating company to a distribution licensee, b)

transmission of electricity, c) wheeling of electricity and d) retail sale of electricity,

as the case may be, within the State of West Bengal.

1.2 The West Bengal State Electricity Distribution Company Limited (hereinafter

referred to as WBSEDCL), is deemed to be a licensee under the Electricity Act,

2003 in terms of fifth proviso to Section 14 of the Act wholly owned by the State

Government and is engaged in the business of distribution of electricity within the

area of supply of WBSEDCL in the State of West Bengal and the distribution tariff

of WBSEDCL shall be determined by the Commission.

1.3 West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff)

Regulations, 2011 has come into effect from 29th April, 2011. The said Tariff

Regulations, 2011 was further amended by notifying the West Bengal Electricity

Regulatory Commission (Terms and Conditions of Tariff) (Amendment)

Regulations, 2012 in the extra ordinary edition of The Kolkata Gazette dated 27th

August, 2012 and West Bengal Electricity Regulatory Commission (Terms and

Conditions of Tariff) (Amendment) Regulations, 2013 in the extra ordinary edition

of The Kolkata Gazette dated 30th

1.4 In terms of definition contained in regulation 1.2.1 (xxx) of the West Bengal

Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations,

2011, as amended from time to time (hereinafter referred to as the ‘Tariff

July, 2013.



Regulations’), each control period after third control period shall be normally for a

period of five ensuing years or such other period of number of ensuing years as

may be decided by the Commission from time to time. The Commission vide his

order dated 04.05.2016 in Case No. SM-13/16-17 decided that the fifth control

period shall also be consisting of three ensuing years for the period from 2017 –

2018 to 2019 – 2020. But, after careful consideration of all relevant factors, vide

its order dated 14.12.2016 in Case No. SM-15/16-17 decided that the fifth control

period shall be for one year and consist of 2017 – 2018 only and vide its order

dated 14.12.2016 in file no B-11/20 decided that the last date for filing of tariff

petition for the fifth control period shall be 31.12.2016. WBSEDCL accordingly

submitted the petition for determination of tariff for the fifth control period

consisting of the year 2017 - 2018 on 22nd

1.5 On scrutiny of the application, it was observed that some documents required as

per regulation 2.5.2 and some Forms as prescribed in the different annexures as

per regulation 2.7.2 of the Tariff Regulations, were not submitted along with the

tariff application. Accordingly, WBSEDCL was requested to submit all those

documents/forms vide Commission’s letter no. WBERC/TP-65/16-17/2171 dated

27

December, 2016

th January, 2017. In reply, WBSEDCL submitted the required documents /

forms vide their letter No. REG/SERC/MYT 5th Control Period/479 dated 8th

1.6 The tariff application submitted on 22.12.2016 along with the information / data,

documents, forms submitted on 08.02.2017 as per Tariff Regulations (collectively

called as “tariff application”), were admitted by the Commission in case No.TP-

65/16-17 and communicated to WBSEDCL vide letter dated 20.02.2017 with the

direction to publish the gist of their tariff application, as approved by the

Commission, in the news papers and also in their website as per provisions of

the Tariff Regulations. The gist was, accordingly, published simultaneously on

February, 2017.



24.02.2017 in the news papers - (i) ‘Business Line’ (English), (ii) ‘Ekdin’

(Bengali), (iii) ‘Dainik Statesman’ (Bengali) and (iv) ‘Jansatta’ (Hindi). The gist

along with the tariff application and additional information / data submitted vide

letter dated 08.02.2017 were also posted in the website of WBSEDCL. The

publication invited the attention of all interested parties, stake holders and the

members of the public to the application for determination of tariff of WBSEDCL

for the fifth control period and requested for submission of suggestions,

objections and comments, if any, on the tariff application to the Commission by

20.03.2017 at the latest. Opportunities were also afforded to all to inspect the

tariff application and to take copies thereof. It is noticed by the Commission that

the approved gist published in the news papers are not in consonance with the

with the stipulations contained in its letter dated 20.02.2017, nor does it satisfy

the requirement for publishing a notice containing a gist of the tariff application in

the daily newspapers “widely circulated in your area” as specified in regulation

2.7.3 of the Tariff Regulations. WBSEDCL was, therefore, directed to publish the

gist afresh in newspaper “widely circulated in your area” vide its letter dated

15.03.2017. WBSEDCL was directed to publish a notice extending the last date

of submission of objections / suggestions / comments against the tariff

application for the year 2017 – 2018 in those newspapers where the gist of the

tariff application was earlier published on 24.02.2017.

1.7 WBSEDCL accordingly published on 23.03.2017 a notice duly approved by the

Commission regarding extension of due date for submission of objections and

suggestions against the tariff application for the year 2017 – 2018 upto

27.03.2017. The notice regarding extension of date of submission was also

posted in the official website of WBSEDCL.

1.8 Objections to / comments on the aforementioned tariff petition of WBSEDCL for

the fifth control period were received by the Commission from the following



objectors within the stipulated time i.e., 27.03.2017 and the same have been

recorded in a summarized form in Chapter 3 of the instant order.

I. Rashmi Metaliks Limited,

II. Organization of Indian Engineering Industry,

III. Rohit Ferro-Tech Ltd,

IV. Ankit Metal and Power Limited,

V. Modern India Concast Limited,

VI. All Bengal Electricity Consumers’ Association (ABECA).

1.9 Commission, vide letter dated 28.03.2017 requested WBSEDCL to submit

additional clarifications in regard to sales forecast, power purchase, load-

generation balance and cost of outsourcing. In reply to Commission’s letter dated

28.03.2017, WBSEDCL submitted the required clarification, as asked for, vide

their letter dated 12.04.2017.

1.10 The Commission determines the tariff in accordance with the Electricity Act, 2003

and the Tariff Regulations framed thereunder and for this purpose, the

Commission has estimated the expenditure for 2016 – 2017 to arrive at the

estimated expenditure / cost under different heads for the years 2017 – 2018.

1.11 The estimation made for 2016 – 2017 by the Commission shall not be construed

by WBSEDCL as admission of at least such estimated amount in APR for 2016 –

2017. On the other hand, if in APR any deduction is made then as a conclusion

from such decision one shall not expect that the impact of such deduction is to be

continued in fifth control period as this will tantamount to imposing a penalty for

infinite nature or double penalty for the same inefficiency.


CHAPTER – 2

THE CASE OF WBSEDCL


2.1 The applicant WBSEDCL has submitted the application for determination of

Aggregate Revenue Requirement (ARR) and tariffs for the fifth control period

covering the year 2017 – 2018 under MYT framework in accordance with the

Tariff Regulations. The applicant has projected the ARR and the tariffs for 2017 –

2018 under the fifth control period and has prayed for allowing the same. The

applicant has also prayed for other dispensations which are mentioned in

subsequent paragraphs.

2.2 WBSEDCL has projected the ARR for the year 2017 – 2018 at Rs 1912327.00

lakh and the average cost of supply for 2017 – 2018 at 755.00 Paise / kWh. The

reasons for enhancement of tariff are stated as follows:

i) The Fuel Cost Adjustment (FCA), Monthly Fuel Cost Adjustment (MFCA) and Monthly Variable Cost Adjustment (MVCA) payable to different

agencies for purchase of power has increased considerably.

ii) Due to increasing network, improved customer service facilities and price index expenses towards Repair & Maintenance (R&M), outsourcing cost

due to maintenance and operation of new line and substations, spot

billing service, mobile maintenance service and zonal call centre, etc. has

increased.

iii) Increase of employee cost considering impact of 7th

iv) Probable enhancement of transmission charges payable to WBSETCL.

Pay Commission.

v) Increase in CTU charges due to implementation of Point of Connection (POC) charge mechanism by CERC.



2.3 It is also submitted by the applicant that the Commission may consider rise in

price index and consumer base, rise in power purchase cost and operating cost

resulting in increased cost of business.

2.4 It is stated by the applicant that while determining the ARR for the year 2017 –

2018 under the fifth control period, all infrastructure investment and power

procurement plan have been made assuming that all consumers under

WBSEDCL area will continue with power supply from WBSEDCL.

2.5 WBSEDCL has claimed that with fast growing / expanding distribution network,

additional consumers are being added with WBSEDCL system during the last

few years. It is stated that based on trend of increase in number of consumers in

last five years, consumers’ strength of WBSEDCL has been projected for the

year 2017 – 2018. The consumption of different categories of consumers during

the year 2017 – 2018 stated to have been estimated as per CAGR of

consumption during the last four years of the respective category of consumers

in the following manner:

� For LT & HT (Domestic, Commercial, Public Bodies) and LT (Industrial,

Irrigation, Public Lighting), CAGR of consumption during the last four years.

� For Commercial Plantations, Construction Power and Others, the

consumption during 2015 – 2016 has been considered.

� 1% annual increase during the year 2018 in HT Industrial category has been

considered due to introduction of various incentives.

2.6 Total sale of energy to own consumers of WBSEDCL has been projected as

25327.00 MU in the year 2017 – 2018. Distribution loss has been projected on

the normative basis at a level of 17.50% for 2017 – 2018.



2.7 The applicant has also projected sale of energy to other licensees viz. CESC

Limited, Damodar Valley Corporation (DVC), The Durgapur Projects Limited

(DPL) and India Power Company Limited (formerly known as DPSC Limited)

(IPCL) during the year under the control period. The projection of sale of energy

to CESC Limited stated to have been made on the basis of drawal trend by

CESC Limited during the year 2016 – 2017 at a level of 10 MU for the year 2017

– 2018. The projection of sale of power to DVC has been projected to be 5 MU

during the year 2017 – 2018. The projection of sale of power to DPL as stated to

have been estimated at 20 MU for 2017 – 2018 as per drawal trend of DPL. The

sale of power to IPCL stated to have been estimated at 40 MU during the year

2017 – 2018 as per the drawal trend of IPCL during the year 2016 – 2017.

2.8 In terms of an agreement signed between the Govt. of West Bengal and Govt. of

Sikkim, the applicant has claimed that 20% of the sent out generation from

Rammam Hydel station Stage-II shall be supplied to Government of Sikkim

during the year 2017 – 2018. Accordingly, energy to be supplied to Government

of Sikkim has been estimated at 50 MU during the year 2017 – 2018.

2.9 WBSEDCL projected power purchase requirement based on the factor as

specified in 2.5 to 2.8 above and the cost of power purchase has been

considered based on the bill of respective generating stations during the month

of August, 2016 or the tariff petition/application where available or from the price

as projected by the generating companies.

2.10 WBSEDCL has submitted the projection of the energy balance that has been

arrived based on the estimated consumption, loss in distribution system of

WBSEDCL and loss in transmission system of WBSETCL at the normative level

as per Tariff Regulations. It is also submitted that the petitioner has to consider

the loss in central and state grid, as applicable.



2.11 Sale of incidental surplus energy to the persons other than consumers and

licensees during 2017 – 2018 has been estimated by the applicant to be at a

level of 7102 MU. In view of the present poor and unpredictable condition of

power market, the price for such power sale has been considered at pool rate of

power purchase of respective year. No projection has, however, been made by

WBSEDCL towards banking of power through swap arrangement for the year

under the control period. WBSEDCL may have to swap out power during real

time operation during the year 2017 – 2018.

2.12 WBSEDCL has two main hydel power stations situated at Rammam and

Jaldhaka. Based on same PLF as in 2015 – 2016 with auxiliary consumption, the

generations for the year 2017 – 2018 from Rammam hydel power station and

Jaldhaka Stage – I hydel power station has been projected as 251.46 MU and

136.62 MU respectively.

2.13 WBSEDCL also has a pumped storage project at Purulia. WBSEDCL submitted

that, the Purulia Pumped Storage Project (PPSP) provides spinning reserve and

utilized as and when required to meet the system demand. Annual gross

generation at a level of 1055 MU has been projected for the year 2017 – 2018

according to the system requirement and considering optimum utilization of the

surplus power during the off peak hours.

2.14 WBSEDCL stated to have 10 (ten) small / micro hydel generating stations and

the generation from those generating stations are projected as generation from

renewable sources of energy. While projecting the generation from those

generating stations, it is stated that the generation from all such generating

stations have been estimated based on previous trend. The generation from the

small / micro power stations has been projected at 141.63 MU for the year 2017

– 2018.



2.15 WBSEDCL is maintaining a diesel generating plant at Rudranagar in Sagar

Island which was earlier supplying power to the consumers at Sagar Island. The

load at Sagar Island is now being catered through grid. No generation has been

projected from the diesel generating station for the year under the control period.

2.16 WBSEDCL has installed grid connection solar PV plants (10 kW) each at 92

schools out of 100 Government and Government aided schools in different

districts in October, 2015. WBSEDCL has also commissioned 10 MW solar PV

project at Teesta canal bank in August, 2016. Some more solar PV projects are

in pipe line of either finalization or consideration for commission during the year

under control period. The annual generation from those new solar power stations

is project at a level of 75.250 MU considering 13% CuF.

2.17 WBSEDCL is continuing to purchase power from different agencies namely West

Bengal Power Development Corporation Ltd. (WBPDCL), The DPL, IPCL,

Damodar Valley Corporation (DVC), NTPC Ltd. (NTPC), NHPC Ltd (NHPC) and

PTC Ltd (PTC). It is also submitted that conventional power will also be

purchased directly from the new units of WBPDCL, NTPC, NHPC, DVC and

other generators and from electricity traders to meet the system demand of

WBSEDCL during the fifth control period. WBSEDCL will also purchase power

from different renewable and co-generation sources of energy during the ensuing

years under the fourth control period.

2.18 The planning of power purchase has been claimed by WBSEDCL to have been

done keeping in view the following aspects:

a) Estimated system demand for the ensuing years based on the projected load

growth.



b) Maximum generation that may be available from the hydel power stations of

WBSEDCL.

c) Commitment to meet the peak system demand.

d) Requirement of pumping energy for optimum utilization of PPSP to meet the

system demand.

e) Effort to keep spinning reserve as per regulation to meet emergency situation

while sudden break down of any unit occurs.

WBSEDCL has claimed that besides purchasing power through grid system, they

will also purchase some quantum of power in radial mode from DVC at Asansol,

Burdwan and other areas, from DPL (at 33 KV & 11 KV) in and around Durgapur

area and from DPSC (at 11 KV) at Asansol area, Govt. of Sikkim (at 11 KV) at

Rangpoo area and WBREDA (at 11 KV) at Frezerganj area for catering its own

consumers during the year under the fifth control period

2.19 It is stated by WBSEDCL that the net generation to be available from the existing

generating stations of WBPDCL have been computed based on the projection

received from WBPDCL. As per the projection of WBPDCL, the net energy to be

available from KTPS, BKTPS, BTPS, STPS, SgTPS (Units I & II) and SgTPS

(Units III & IV) is 5018.00 MU, 7164.00 MU, 1676.00 MU 3651.00 MU, 2409.00

MU and 3250 MU respectively.

2.20 As it is learnt by WBSEDCL that the COD of unit III of the SgTPS has been

achieved in July 2016 and COD of unit IV of SgTPS was expected in January

2017. The capacity charges and energy charges for all the existing generating

stations of WBPDCL for the year 2017 – 2018 have been estimated by

WBSEDCL considering the same as in August, 2016 including MFCA for the

respective generating station.



2.21 WBSEDCL has projected the purchase of power from DPL at 132 kV, 33 kV and

11 kV during the year 2017 – 2018 considering the trend of drawal by them from

DPL during 2016 – 2017 and the cost of such power purchase has been

estimated as per existing rate along with MVCA claimed by DPL in the month of

August, 2016.

2.22 The applicant has submitted that any revision of tariff in respect of WBPDCL,

DPL and IPCL for the year 2017 – 2018 by the Commission have an impact in

power purchase prices projected by WBSEDCL and that may be considered

while determining the power purchase cost of WBSEDCL for the year under the

fifth control period.

2.23 WBSEDCL has planned to purchase power also from NTPC Limited, NHPC

Limited and Damodar Valley Corporation (DVC) besides purchase of power from

WBPDCL, DPL, CESC Ltd and IPCL. WBSEDCL shall also purchase power

from other generating stations on commissioning of those generating stations

during the year 2017 – 2018 to meet their load growth. The price of power

purchase is considered as per tariff applicable to the respective generating

companies, wherever available or from the price as projected by the generating

companies. The applicant submitted to consider selling price as may be allowed

by the CERC in the tariff order of NTPC Ltd., NHPC Ltd, DVC and other

generators for the respective years while passing tariff orders in respect of

WBSEDCL for the year 2017 – 2018 if the tariff order in respect of those

agencies are issued before the tariff order for WBSEDCL are passed by the

Commission. The applicant also submitted that the proposed power purchase

price from all thermal power stations are exclusive of impact arising out of FCA or

MFCA or MVCA (in case of radial power) and any hike of power purchase cost

due to hike in FCA, MVCA and MFCA may be allowed to be claimed from

consumers and licensees through MVCA.



2.24 It is proposed that any hike in power purchase cost of WBSEDCL due to hike in

FCA, MVCA and MFCA of the generating stations be allowed to claim through

MVCA from the sale to own consumers and licensees in the State.

2.25 WBSEDCL has estimated own consumption at the offices and substations for the

year 2017 – 2018 at 52 MU. WBSEDCL have projected 3350 MU to be procured

through purchase of short term power generally in the months of April and March

in order to bridge the gap between supply of power and system demand which

usually occurs during those months. WBSEDCL submitted that in order to fulfill

the Solar and Non-Solar RPO, the projection of short term purchase has been

estimated at 138 MU and 266 MU respectively during the year 2017 – 2018.

WBSEDCL also stated that in the event of sale price of surplus power in the

power market becoming not cost effective, the surplus power is being banked

through swap management for utilization of this surplus power effectively to

contain the idle capacity charge as well as to maintain grid discipline. The actual

banking of power under swap arrangement will be considered during FPPCA

application for 2017 – 2018.

2.26 WBSEDCL has also projected purchase of power from different new

conventional and non-conventional power plants during the year 2017 – 2018. As

per projection, the power purchase from Dagachhu HEP and Assam Power

under new conventional power plant is 360 MU and 3.50 MU respectively.

Similarly, WBSEDCL plans to purchase solar power from SECI and VGF scheme

or other such schemes of Government of India to fulfil its RPO. WBSEDCL has

indicated its solar power requirement for RPO to the tune of 100 MW during the

year 2017 – 2018.

2.27 Considering the projected sent out generation from its own generating stations,

power purchase from different agencies and the projected sales, energy



consumption at own premises, WBSEDCL has projected the energy balance for

the year 2017 – 2018.

2.28 The applicant has projected Rs.1408931.00 lakh as power purchase cost for the

year 2017 – 2018. This power purchase cost includes the cost of purchase of

estimated quantum of infirm power from the units under stabilization.

2.29 WBSEDCL projected Rs. 66447.00 lakh for Central Transmission Utility (CTU)

charges for the year 2017 – 2018 for transmission of WBSEDCL’s share of

power from the central sector generating stations and other generators outside

the State through the transmission system of CTU. However, the charges paid to

the CTU in actual will be claimed in the APR for the respective year.

2.30 Transmission charges payable to WBSETCL for the energy required to be

transmitted by the petitioner through WBSETCL system has been projected as

Rs. 110606.00 lakh for the year 2017 – 2018. However, WBSEDCL has claimed

Rs. 2034.00 lakh as SLDC charges during the year 2017 – 2018. ERPC charges

for the year 2017 – 2018 have been projected at Rs. 385.00 lakh. The system

operation charges payable to POSOCO have been estimated by WBSEDCL at

Rs. 543.00 lakh for 2017 – 2018.

2.31 An amount of Rs. 151746.00 lakh has been estimated as employee-cost for the

year 2017 - 2018. It is submitted that due to demographic and geographic

considerations, WBSEDCL is to maintain minimum level of employees to provide

service to its consumers. In the backdrop of the growing consumer strength and

augmentation of the distribution infrastructure, WBSEDCL has planned to

augment its manpower strength during the year 2017 – 2018. The manpower

strength during the year 2017 – 2018 has been planned to be 16363.



2.32 15% hike has been considered in salary and allowances due to pay revision in

line with the 7th Pay Commission during the year 2017 – 2018 with a

retrospective effect from 1st January, 2016. The applicant has considered a D.A

hike @ 4% for 2017 – 2018. Moreover, increase in pay in respect of normal

increment of employee-cost has been considered @ 3% on the basic and grade

pay during the year 2017 – 2018. Other employee expenses are projected in

proportion to the manpower strength. WBSEDCL has further claimed that

terminal benefits are calculated based on the actuarial valuation of pension,

gratuity and leave encashment benefits. As per actuarial valuation made in 2016,

the projected pension and gratuity liability increased at a CAGR of 3.23%

assuming future salary inflation rate of 6% per annum. Hence, growth rate of

3.23% over the expenses for 2016 – 2017 has been considered to arrive at the

figures for 2017 – 2018. In order to accommodate impact of the 7th

2.33 The applicant has projected Operation and Maintenance (O&M) expenses

including Repair & Maintenance (R&M) cost for the year 2017 – 2018 at

Rs.135317.00 lakh, out of which, O&M expenses for generation is 6314.00 lakh

and for distribution function is 129003.00 lakh. WBSEDCL has claimed that

distribution assets and consumer strength of WBSEDCL are increasing rapidly

due to DDUGJY programme and other work such as R-APDRP, National

Cyclone Risk Mitigation Project, etc. at different parts of their operational area. In

order to deliver power with reasonable quality parameters and to reduce

instances of outages for the widely scattered large consumer base, the

expenditure of R & M works of WBSEDCL has been increased. The O&M

expenses during the year 2017 – 2018 have been estimated considering the

consumer growth and general inflation level.

Pay

Commission, an increase of 15% over the expenses in 2015 – 2016 has been

considered during 2016 – 2017.



2.33.1 Operation and Maintenance (O&M) expenses for generation: WBSEDCL

submitted that in order to arrive at the O&M expenses for generation hydro plants

for the year 2017 – 2018, they have considered increase of 3 year CAGR on the

O&M expenses for the years 2014 – 2015 to 2016 – 2017 approved by the

Commission based on per MW basis as per the Tariff Regulations. For O&M for

Solar, WBSEDCL has considered Rs. 7 lakh per MW with escalation of 5.72% as

per CERC Renewable Energy tariff order dated 30th March, 2016. WBSEDCL

has estimated Rs. 4943.00 lakh on account of O&M for Hydro and Rs. 398.00

lakh for Solar.

2.33.2 Repair and Maintenance (R&M) expenses for distribution function: WBSEDCL

submitted that repair and maintenance expenses are a part of the core

distribution activities which reflect the expenditure incurred in respect of

maintenance of the distribution assets. WBSEDCL also submitted that the ratio of

R&M expenses to the O&M expenses for distribution is considered to be equal to

the 2015 – 2016 level, adjusted by a year-on-year growth from the 2014 – 2015.

Additional expenses are considered on account of IT implementation.

Accordingly, the projected figure for R&M expenses for the year 2017 – 2018 is

32831.00 lakh.

2.33.3 Administrative and General (A&G) expenses for distribution function: WBSEDCL

submitted that A&G expenses are a part of the core distribution activities which

reflect the expenditure associated with the necessary administrative support to

be arranged in order to ensure execution of the electricity distribution activities in

a smooth and uninterrupted manner. WBSEDCL also submitted that A&G

expenses are projected at the CAGR from 2012 – 2013 to 2015 – 2016 (i.e.,

6.5%) over the value of 2015 – 2016.. Additional expenses are considered on

account of IT implementation. Accordingly, the projected figure for A&G

expenses for the year 2017 – 2018 is 18348.00 lakh.



2.33.4 WBSEDCL claimed an amount of Rs. 6123.00 lakh for 2017 – 2018 Rs. for

establishing and maintaining communication network set up for the complaint

management mechanism as per West Bengal Electricity Regulatory Commission

(Standard of Performance) Regulations, 2010 under the head Lease Rental.

2.33.5 WBSEDCL has claimed Rs. 351.00 lakh considering the present trend under the

head Complaint Management Mechanism to meet the expenses for – i) toll free

telephone for registering grievances at ZCC, ii) SMS charge for forwarding

grievance to Mobile Van, iii) rental charge for IVRS system, iv) separate

telephone facility at each customer care centre and v) antitheft toll free telephone

charges.

2.33.6 WBSEDCL has claimed Rs. 56790.00 lakh for the year 2017 – 2018 under the

fifth control period towards outsourcing cost.

2.33.7 WBSEDCL has claimed Rs. 1128.00 lakh towards insurance premium for the

year 2017 – 2018 considering an annual growth rate equal to the average of the

past 3-year and 4-year CAGR (i.e., 18%).

2.33.8 An amount of Rs. 14407.00 lakh has been estimated as expenses towards Rates

and Taxes. It is submitted that due to increase in number of consumers, the

number of office establishments, i.e., CCC, Divisional Manager Office have been

increased and the tax on the establishments has also been revised / increased

by civic bodies from time to time. The effect of such hike in rates and taxes has

been considered. The CAGR for rates and taxes was 37% during the year 2016 –

2017 over the year 2015 – 2016. Therefore, rates and taxes for 2017 – 2018 has

been increase at a CAGR of 37% over the year 2016 – 2017. It is further

submitted that Goods and Service Tax (GST) is likely to be implemented during

the year 2017 – 2018 as per the declaration of Government of India and hence

the proposed rate of GST on rates and taxes are not assessable at the moment.



Impact, if any, of GST on rates and taxes shall be claimed at actuals in APR

petition for the respective year.

2.34 The applicant has claimed Rs. 2500.00 lakh towards bad debt for the year 2017

– 2018 for waiver of LPSC of Water Resource Development Department

(WRDD). However, bad and doubtful debts will be considered on actual basis in

the APR of respective year.

2.35 The applicant has stated that the capitalization of expenses for employees cost,

interest, administrative and other expenditure under the construction activities

are made for the year 2017 – 2018 following the existing policy of WBSEDCL.

2.36 WBSEDCL has projected Rs. 49096.00 lakh towards interest on borrowed

capital, Rs. 30600.00 lakh towards repayment of 1st

2.37 WBSEDCL has projected Rs. 11500.00 lakh for the year 2017 – 2018 under the

head interest on security deposit payable to the consumers.

installment of pension trust

bond, Rs. 10404.00 lakh towards interest on Pension Bonds and Rs. 2420.00

lakh towards other finance charges for the year 2017 – 2018. The applicant has

provided the computations showing actual amounts of interest chargeable in

revenue accounts in the Form-C to Annexure – 1 in Volume – IIB of their petition.

2.38 Cost of depreciation of assets of WBSEDCL which will be in service during the

years 2017 – 2018 stated to have been computed following depreciation

schedule as per Annexure – A in the Tariff Regulations and projected at Rs.

69810.00 lakh. The details of the calculation of depreciation have been given in

the Form – B to Annexure – 1 in Volume – IIB of their petition.

2.39 WBSEDCL has not claimed any amount under the head advance against

depreciation for 2017 – 2018.



2.40 Regarding interest on working capital requirement, WBSEDCL has submitted

that, based on the directive of the Commission vide paragraph 8.11 of its tariff

order for 2008 – 2009, the average security deposit of permanent consumers

(excluding provision for security deposit) for the ensuing year 2017 – 2018 has

been considered for utilization as working capital for the respective year. The

gap, if any, between the normative working capital requirement and the average

security deposit, is required to be considered as working capital requirement for

the year and the interest thereon be claimed as per provisions of the Tariff

Regulations. WBSEDCL, however, has not claimed any amount as interest on

working capital during the year under the control period.

2.41 The applicant has not claimed any amount towards reserve for unforeseen

exigencies for the year 2017 – 2018 under the fifth control period. WBSEDCL

stated that Reserve for Unforeseen Exigencies will be considered if invested as

per direction of Commission in the APR of respective year.

2.42 The applicant has not considered any provision for net DSM charges payable for

the year 2017 – 2018. However, WBSEDCL prayed to consider DSM charges on

actual basis in the APR of respective year.

2.43 WBSEDCL has projected Rs. 201.00 lakh towards contingent expenses under

the head ‘other debits’ for the year 2017 – 2018. However, the expenses under

this head will be claimed at actuals in the APR of the respective year.

2.44 WBSEDCL has not considered any provision for special allocation for the year

2017 – 2018. However, special allocation will be considered on actual basis in

the APR of respective year.



2.45 WBSEDCL has estimated the provision for Minimum Alternative Tax (MAT) for

the years 2017 – 2018 considering MAT rate 21.3416% which is the effective tax

rate for 2015 – 2016.

2.46 WBSEDCL has projected the return on equity at Rs. 44700.00 lakh for the year

2017 – 2018 under the control period stated to be considered on pre-tax basis on

the permitted returns @ 16.5% on the average equity base as per the Tariff

Regulations. It is submitted that no new equity addition for the year 2017 – 2018

has been considered.

2.47 WBSEDCL has proposed to release the balance amount of Rs. 22140.00 lakh

against the payable arrear arisen out of tariff order dated 30.12.2011 for new

units of WBPDCL. WBSEDCL has also requested to release an amount of Rs.

30091.26 lakh against the balance payable FCA of WBPDCL for the year 2012 –

2013 as per the order of the Commission dated 11.12.2014 in respect of

WBPDCL. WBSEDCL has referred a letter no. 148-PO/O/VS/55-30/2016 dated

5th September, 2016 issued by the Government of West Bengal wherein a grant

of Rs. 191607.00 lakh equivalent to outstanding loan and interest was extended

to WBPDCL, which may be considered for adjustment against the APR & FCA of

WBPDCL for the years 2013 – 2014 to 2015 – 2016. WBSEDCL has claimed a

sum of Rs. 76483.00 lakh towards carrying cost on the amount claim amount of

APR and FPPCA for the year 2013 – 2014 onwards considering the interest rate

as per SBI PLR of 14.05% as on 1st

2.48 Total expenditure of Rs.2097241.00 lakh has been computed by the applicant

and after excluding the revenue earned from other income, from bulk supply and

supply to Sikkim, expenses attributable to export and taking into account the

benefits passed on to the consumers, interest credit on depreciation and taking

into account the part release of regulatory assets and carrying cost as proposed

April, 2016.



by them the annual revenue required from sale of energy to its consumers has

been estimated by the applicant at Rs. 1912327.00 lakh for 2017 – 2018.

2.49 With projected revenue requirement of Rs. 1912327.00 lakh from sale of

25327.00 MU of energy to its own consumers, the average cost of supply per unit

has been computed by the applicant at 755.00 paise / kWh for the year 2017 –

2018.

2.49.1 It is stated that CESC draws power occasionally from WBSEDCL to meet power

shortage when CESC fails to arrange such power from other sources. CESC was

asked to project their requirement of power during the year 2017 – 2018, but no

reply has been received from CESC. In such circumstances, the sale of power to

CESC has been estimated at 10 MU during the year 2017 – 2018. CESC has yet

to execute a fresh PPA with WBSEDCL for two part tariff. In view of above,

WBSEDCL proposed that CESC should intimate at least one/two month in

advance the demand for power from WBSEDCL and also proposed to supply

such scheduled power to CESC at single part tariff at an energy charge of Rs.

6.96 per kWh, average 33 KV industrial tariff under CESC area in 2016 – 2017.

However, for drawal of power more than the scheduled demand or sudden

requirement of power, WBSEDCL proposes 30% more than the above stated

energy charge of Rs. 6.96, i.e., Rs. 9.05 shall be payable by CESC.

2.49.2 WBSEDCL also proposed to sell power to DVC on single part tariff at a rate of

Rs. 6.96 per kWh and Rs. 9.05 per kWh following the methodology proposed for

consideration of sale rate for CESC, since no rate has been determined by the

Commission for sale to DVC by WBSEDCL. This is for the reason that no PPA

has been executed between WBSEDCL and DVC regarding two part tariff.

2.49.3 The applicant has also proposed to sale power to IPCL and DPL on single part

tariff basis at an energy rate of Rs. 5.40 per kWh and Rs. 4.63 per kWh



respectively with a further proposal of 30% higher tariff for the same reason as

that of CESC.

2.50 Changes proposed by WBSEDCL in their tariff for 2017 – 2018 are as follows.

(I) As a part of demand side management to encourage the 33 kV and 132

kV industrial consumers reduce their drawal of load in peak period and to

shift the load to off-peak period the following rebates shall be allowed:

a) a rebate equivalent to the difference of the following two will be

allowed,

i) Demand charge calculated as per regulation 4.3.6 of the

Tariff Regulations; and

ii) Demand charge computed based on the maximum

demand of normal \

b) Similarly for the above consumers keeping their maximum

demand during off-peak period within 150% of contract demand, a

rebate equivalent to the difference of the following two will also be

allowed:

period or maximum demand of peak

period or contract demand in case of off-peak period or

85% of contract demand whichever is higher, if those

industries keep their maximum demand during off-peak

period within 150% of contract demand.

i) Additional demand charge calculated as per regulation

4.7.2 of Tariff Regulations; and

ii) Demand charge computed .based on the methodology for

additional demand charge for the normal and peak period



will be as per regulation 4.7.2 of Tariff Regulations but

there will be no additional demand charge applicable for

off-peak period.

c) Similarly for the above consumers keeping their maximum

demand during off-peak period within 150% of contract demand, a

rebate equivalent to the difference of the following two will also be

allowed:

i) Load factor rebate computed as per the rates without

considering the additional kWh and KVA drawn during off-

peak period over contractual demand; and

ii) Load factor rebate computed as per the rate.

All the above rebates are effective from the month of April, 2017 subject

to the condition that payment is made within the due date.

(II) Treatment of Life line category consumers:

It has been observed that some of the domestic consumers of WBSEDCL

(with contract demand not more than 0.3 KW) consume more than 75

units during some quarters and consume less than 75 units for other

quarters. Accordingly whenever such a domestic consumer consumes

less than 75 units in a quarter, such consumer is billed at the tariff of Life

Line Consumer for that particular quarter. For other quarters wherein the

consumption of the domestic consumer exceeds 75 units, the consumer

is billed at the tariff of Domestic (Urban) or Domestic (Rural) category as

the case may be.



WBSEDCL submits that the Commission has created such a provision of

Life Line Consumers in order to make electricity affordable to those poor,

consumers who don’t have the capability to afford electricity at the normal

rates. In this respect, WBSEDCL submits that increased electricity

consumption by this domestic consumer beyond 75 units / quarter should

debar them for availing life line category tariff for increased consumption

in its house hold.

WBSEDCL appeals before the Commission to consider such consumers

as either domestic (rural) or domestic (urban) and not as Life line for the

future years if the quarterly consumption for such domestic consumer

(having CD < 0.3 kW) exceeds 75 units taking average of energy

consumption of last 12 months.

(III) Minimum Charge of various consumer categories:

WBSEDCL submits that Minimum charges on consumers will guarantee a

certain amount of Revenue for part-recovery of fixed charges for

WBSEDCL. WBSEDCL has PPAs with generators based on demand of

the consumers to keep power supply uninterrupted. Thus, WBSEDCL has

to pay fixed cost to the generators even without drawal of power from the

generators due to lesser system demand.

In view of the above, WBSEDCL proposes Minimum charge for various

categories of consumers with revision in Minimum charge for categories

as shown in the Form 3.7 of Annexure-3 of Volume-IV.

WBSEDCL submits that the proposed Minimum charges should be

applicable as per regulation 4.13 of notification no.48/WBERC dated

25.04.2011, the same is reproduced below for ready reference:



“Minimum Charge shall be applicable when the sum of energy

charge and fixed charge including rebate/surcharge (except

rebate for timely payment) is less than the minimum charge for the

billing period"

(IV)

WBSEDCL submits that it collects meter rent from its consumers for

meters installed by WBSEDCL at its cost. Meter Rent paid by consumers

was last revised by WBERC via tariff order of 2010-11 dated 30.12.2011,

WBSEDCL proposes revision in Meter Rent as shown in the Form 3.7 of

Annexure-3 of Volume-IV.

Meter Rent:

(V)

WBSEDCL submits that other charges are borne by consumers due to

Meter testing charge and Disconnection / re-connection of supply at

consumer premises. Such charges are collected from the consumer by

WBSEDCL if the activity is undertaken due to consumers fault and not

otherwise.

Such charges borne by the consumers were last revised by WBERC via

tariff order of 2010-11 dated 30.12.2011. WBSEDCL proposes revision of

these charges as the cost borne by WBSEDCL for such Meter testing and

Disconnection / reconnection of supply has gone up considerably since

2011-12.

Other charges - Meter testing and Disconnection / Re-connection

Charges:



The existing and proposed Meter testing charge and Dis-connection / re-

connection of supply charges is shown in the Form 3.7 of Annexure-3 of

Volume-IV

(VI) In the backdrop of reduced electricity consumption by the 33 kV and 132

kV industrial consumers of WBSEDCL, WBSEDCL proposed a scheme

for revenue enhancement through increased sale to 33 kV and 132 kV'

industrial consumers, the scheme is enclosed as Annexure 8 of Volume

5. The scheme may be continued till issuance of the tariff order for 2017-

18. Rates mentioned in this scheme may be considered for modification

for the year in accordance with the tariff order of 2017 – 2018.

(VII) Tariff for Military Engineering Services (MES) applicable for High and

Extra-high voltage has been proposed to be applicable for LV&MV

consumer (50 KVA and above but upto 125 KVA).

(VIII) Presently off-peak period means the time period from 11 pm to 6 am.

Considering demand position of WBSEDCL system, WBSEDCL proposes

to increase off-peak period for industrial consumers with supply of 33 kV

onwards as 11 pm to 8 am and normal period as 8 am to 5 pm for

consideration of Commission and shall be applicable after two months of

issue of tariff order.

(IX) The fixed charge/ demand charge in Rs/KVA/Month for consumers has

been proposed as shown in the Forms 3.2 & 3.3 of Annexure-3 of

Volume-IV. The demand charge shall be applicable to different categories

of consumers as per rates as shown in above tariff schedule on the basis

of recorded demand as specified in regulation 4.3.3 of the Tariff

Regulations subject to the conditions specified in the Tariff Regulations.



When a new consumer gets connected to the system, the computation of

fixed charge or demand charge for that month shall be made pro-rata for

the number of (

(X) All other terms & conditions of tariff have been proposed to remain

unaltered and are provided in the Annexure 3 of Volume IV of the

Application.

days of supply in that particular month.

(XI) Other terms and conditions are proposed to be remained unaltered.


CHAPTER - 3

OBJECTIONS AND SUGGESTIONS


3.1 Suggestions, objections and comments on the tariff application of WBSEDCL for

the fifth control period covering the year 2017 – 2018 have been received within

27.03.2017 i.e., the due date from the persons are mentioned in paragraph 1.10

of Chapter-1. The main points of the suggestions, objections and comments etc.

relevant to the instant tariff petition are summarized in the following paragraphs

in this chapter. The Commission’s views on the objections, comments etc. are

also recorded in this Chapter.

3.2 Modern India Con-Cast Limited have stated a number of issues which are

discussed below:

3.2.1 Operation and Maintenance Expenses: During 2015 – 2016, 2016 – 2017,there is a large expansion of distribution network through implementation of

different Rural Projects related to distribution. Moreover there is large volume of

replacement of meters – namely from electro mechanical to hybrid / static etc.

and continuous replacement of meter involves a large increase in distribution

expenses. Since a large chunk of distribution system, commissioned under

various district project, and being almost new, maintenance expenses requires to

be reviewed and should not be allowed on normative basis. Otherwise it will not

be possible to arrest regular increase in tariff, while power purchase cost has

reached to an uncontrollable limit, particularly when market price of power is low.

The modality of fixing the normative value of O&M expenses in view of addition

of new assets requires to be reviewed. It often takes time to submit and issue of

order on APR.

The above point has been noted by the Commission and will be duly addressed

in the subsequent chapter.



3.2.2 Employee expenses: The pay commission report is yet to be submitted. Since the tariff petition is for 2017-2018, any impact on implementation of pay

commission shall be recovered separately. The reason is due to high tariff of

WBSEDCL compared to the most of the other States in India. High ATC Loss

should not be compensated in any manner through the increase of tariff. In fact

pay structure of the employee as well as the Board of Directors should be based

on performance in line with MNC and not in line with Government of Public sector

undertaking.

The above points have been noted by the Commission and will be taken care of

in the relevant portion of the tariff order. However, the employee cost will be

admitted as per the provision of Tariff Regulations, subject to prudence check by

the Commission.

3.2.3 Pension Fund: Pension fund appears to be a welfare scheme of the licensee. WBSEDCL is not a Govt. institution. All the employees are not in the same

pension scheme. Any cost on account of pension should be incurred by the

licensee out of its profit and the same should not be a pass through.

The Commission has dealt with the issue suitably in subsequent chapter.

3.2.4 Outsourcing expenses: Outsourcing expense should have a prudence check. Cost of outsourcing is 67% of direct employee cost which should be reduced.

Such expenses are being checked prudently as per the Tariff Regulations at the

time of determination of APR for the respective year.

3.2.5 Interest on working capital: Since the Bank rate is decreasing, the principles of considering the rate of interest on working capital should be changed & it should

be at actual subject to truing up through APR.



The rate of interest on working capital is being allowed by the Commission as per

the rate prevailing on 1st

3.2.6 Carrying costs: Normally any deficit in cash or working capital is managed through grants/Govt. aid/borrowings from financial institution etc. Consumers

bear the burden of loan or borrowing from financial institution in terms of interest.

Allowing carrying cost in addition to interest burden will put extra burden to

consumers of all category. As such carrying cost should not be allowed, since

the licensee is a profit making utility, should absorb the carrying cost of its own.

April of the previous year for which the tariff order is

determined, subject to truing up through APR as per regulation 5.6.5 of the Tariff

Order.

The Commission has noted the contents.

3.2.7 Bad Debts: Consumers are already heavily burdened with high tariff. Any Bad Debt should not be a pass through in the ARR. Any loss due to it should be

compensated by Govt. of West Bengal or adjusted with the regulatory Assets.

The Commission goes by the Tariff Regulations framed as per the Electricity Act,

2003 which only allows such amount of bad debts as actually has been written

off, subject to a ceiling of 0.5%.

3.2.8 Compensations paid by licensee: Compensation to outsiders, loss of obsolete store materials, compensation of Power Trader should not be allowed, as the

same will be a reward to inefficiency.

The Commission does not allow the compensation amount as a pass through

element in tariff as per provisions of Tariff Regulations.



3.2.9 Report on Power for All (PFA):

(i) WBSEDCL submitted report on Power for All to Govt. of West Bengal in

consultation with M/s Deloitte India Ltd. As such all relevant data should

be in line with this.

The projections are generally being made in the Tariff petition in

accordance with the Tariff Regulations. However, the Commission has

taken a note of it.

(ii) As per report of Power For All (PFA), energy input requirement is 34118

MU against energy sale volume of 25993 MU with total peak demand

6152 MW. With the vast network (Transmission) strengthening, at higher

voltage, transmission loss should be reduced & impact of the same, may

require less input.

While computing the transmission loss, the Commission follows the

norms stipulated in the Tariff Regulations.

(iii) In line with PFA, Employee Cost – with escalation @ 10% YOY,

considering CPI, AG cost escalation @ 6% should be considered @ 1%

of GFA.

The Commission has noted the comment.

(iv) Depreciation for new assets should be considered as 5.28% in line with

PFA.

While computing depreciation in the tariff order, the Commission follows

the provisions as laid down in the Tariff Regulations.



3.2.10 Sale to other distribution licensees: As none of the other distribution licensee has intimated WBSEDCL, their requirement, projection of sale to other Licensee

should be considered nil.

The Commission has noted the comment.

3.2.11 Power purchase cost: Power purchase cost should be computed based on prevailing tariff, not based on tariff petition of ISG, POSOCO and CTU etc.

Requirement of Power as per PFA is 34118 MU. The average cost of power

purchase may be considered as 350 P/KWH less by 2% rebate. Accordingly

Power Purchase Cost for sale to consumers shall be Rs 11702 Cr.

The Commission does not find any valid logic in objector’s estimation of power

purchase cost for sale to consumers. The Commission determines power

purchase cost based on the provisions given in the Tariff Regulations and on its

decision felt to be the best.

3.2.12 Purchase of power from Renewable and co-generation sources: While average power purchase cost is around Rs. 350 P/KWH, WBSEDCL is reluctant

to pay the cap price of Co-Gen power i.e. @ 334 P/KWH, thereby depriving this

green power producer & discouraging to inject the same in the grid. Tariff model,

built in the PPA for Co-gen power should be quashed & CERC model should be

implemented.

The above comments are related to RE Regulations and do not attract the Tariff

Regulations which is followed for preparation of tariff order. However,

Commission will give direction to the licensee to fulfill their RPO obligations.



3.2.13 Power purchase from WBPDCL:

(i) R&M work of BTPS 5th

(ii) Generation from KTPS first 3 units appears to be uncertain due to penal

action taken by Green Tribunal. Generation from other 3 units need to be

maximized.

unit has been done & it should supply regularly the

rated capacity as the investment cost is very high. The available

generation from other units of BTPS i.e. 4X60 MW should confirm to

around 55% considering Renovation and Modernization work.

(iii) However, the performance of WBPDCL appears not in order in spite of a

lot of investment under R&M Programme. There should be more penal

measure, unless the generator is able to achieve a good performance as

required by the system. It is to be kept in mind, that a good performance

in the matter of available generation will reduce the net power purchase

cost. As such any bad performance should be reflected in the pay

structure of the employee as well the Board of director.

The Commission noted the comments. While determining the power purchase

cost of WBSEDCL, the capacity charge payable by WBSEDCL for each

generating station of WBPDCL is being considered based on the reduced

projected Plant Availability Factor.

3.2.14 Sale of surplus Power:

(i) As per PFA, Energy availability during FY 18 is 37723 MU and surplus

will be 3605 MU. Again peak demand is 6152 MW, against availability of

7029 MW i.e. a surplus of 877 MW. Any surplus of power / energy may

be traded in the market. As per CERC report average realization of sale

through Traders is Rs. 411 P/KWH. As such Power purchase cost shall



be considered as Rs. 12940 Cr. After 2% rebate that may be availed as

per PPA if payment is made within due date.

The entire expenditure and income of the licensee for a particular year is

being checked prudently at the time determination of APR for the said

year. Therefore, the comments of the objector regarding trading of excess

power are being dealt at the time of APR determination. Regarding power

purchase cost, the view of the Commission is already given at paragraph

3.2.11 above.

(ii) Profits, if any, from sale to persons other than own consumers shall be

deducted from Gross ARR. However, if sale price / market price is less

than pool power purchase cost, some alternative means for assured

income may be invested, so that burden due to loss of revenue for sale at

low price may be avoided.

The Commission takes care of the comments as per the provisions of the

Tariff Regulations while determining tariff order/APR.

(iii) As there appears to be a surplus power, except some incidental

requirement, requirement of power purchase from market should not be

considered through.

The Commission noted the contents.

3.2.15 Alternative means to dispose surplus power instead of Banking of Power :

(i) Banking of Power may be avoided as it involves cost due to open access

charges & losses, interest cost of energy purchased. It is better that

surplus power may be sold through trader, allowing open access to the

interested buyer. A model may be built up as here under. Some high



value consumer, who may have a variable demand, who may be captive

generator also or who intend to be group captive owner may opt to buy

such surplus power through trader at some concessional rate, if open

access is allowed under this model.

(ii) Trader should have PPA with a person who may be consumer of the

licensee.

(iii) Interested buyer shall be allowed short term open access with a provision

for ABT complaint meter for energy accounting and power to be sold on

schedule basis.

(iv) Buyer should draw power over and above Contract Demand.

(v) If it is an additional power, over and above contract demand then there

shall be no Cross Subsidy Surcharge (CSS). Otherwise CSS will be

applicable along with additional surcharge.

(vi) Price should be fixed in between night off peak power and average price

of power in the Power market.

(vii) This will enable WBSEDCL –

� to avoid Open Access Charges & Loss due to sale to person other than

own consumers and Licensees,

� the demand for Open access approval for import by consumers from a

source other than the licensee concerned,

� additional revenue on account of wheeling charge and



� backing down may be avoided and full utilization of generation

capacity.

The objector has sought for certain change in Tariff Regulations. It may be put on

record that the Tariff Regulations were finalized through previous publication.

Having received suggestions, objections and comments the Commission in

exercise of its delegated legislative power duly considered the matter in details

and framed such regulations and the regulations were notified in the Kolkata

Gazette. In tariff determination proceedings once the regulations are framed by

the Commission, there is no scope to review or change such statutory norms in

tariff determination proceedings. Accordingly, the comments for change in the

Tariff Regulations are not considered. Thus, such issue will not be dealt in

subsequent chapter further.

3.2.16 Reduction of distribution loss:

(i) Distribution Transformer failure in the district varies in the range of 4% to

10%. It should be brought down.

(ii) Reduction in ATC loss level, in districts particularly Birbhum, Beharampur

and Malda needs special attention. However, Technical loss can be

improved through religious implementation of distribution project, i.e.

DDUGJY, IPDS, RAPADRP & RGGVY. A lot of investment around Rs.

9056 Cr, up to financial year 2018-19, is under process. Entire

investment is funded through grants.

(iii) WBSEDCL should take initiative religiously to improve distribution loss

through Condition Monitoring for preventive maintenance, Transformer

Transaction Management System, Feeder Length Reduction, Feeder

Segregation, Use of Amorptious core DTR installation, Re-conductoring,



Installation of AB cable etc. Further commercial Loss to be reduced a lot.

Consumption analysis is required at Field level to identify loss area.

The Commission has already taken various steps with the licensees in

different forum for reduction of AT&C / Distribution losses. However,

necessary directions are being given to the licensees for energy audit /

loss audit.

3.2.17 Regarding proposal for increase in Fixed Cost:

(i) Consumers are paying charges effectively under 3 part tariff scheme i.e.

Demand Charge or fixed charge, energy charge & MVCA. A lot of

irregularities may be found out, if consumption pattern is religiously

analyzed for each of the consumers. This is because, the connected load

(CD) / declared capacity, in a large number of cases will reflect that those

are, not appropriate and commensurate with their consumption volume. It

is the general experience that almost all categories of consumers have

declared their contract demand, not commensurate with their

consumption. Majority of household consumers have suppressed

contract demand, thereby licensees fixed cost recovery is not

commensurate with their drawal petition of the consumers. If each of the

consumers is put under scanning it will be found that there is no need to

increase the fixed cost. It is the inefficiency and lack of initiative of the

management to set right the issue, considering it to be difficult. Rather

they want to find an easy solution, for loss of revenue in this regard, by

increasing tariff in the form of fixed cost. Hon’ble Commission may quash

the demand in increase in fixed cost. Moreover, charges of fixed cost of

house hold have been increased within a short span. It should not be

further increased rather leakage in this area should be arrested.



The Commission has noted the contents and will give appropriate

directions to the licensee. However, the fixed charge / demand charge is

allowed as per provisions of the Tariff regulations.

(ii) Again some of the households have more than one meter which are

overlooked by the licensee. In turn the recovery of energy charge under

slab rate is low. A loss in this case, automatically put burden on energy

rate. Licensee should be directed to reduce loss under above cases.

The comments are noted.

(iii) As WBSEDCL have to off-take minimum drawal, even after backing down

of generation, in the event of low demand, subject to the technical limit of

the generating unit, minimum drawal of all consumers should be

guaranteed in terms of charges.


(iv) WBSEDCL has executed lot of PPA, considering a very optimistic

perspective planning. It was considered granted that there would be an

industrial revolution in West Bengal and a surge of demand.

Unfortunately, the revolution is yet to take place but the obligation of PPA

for drawal of power remain. This ill-considered planning of the then

management of WBSEDCL has not yet been highlighted. As such

consumer should not be burdened with increase in fixed cost to protect

the inefficiency.

The Commission has noted the comments. Commission will consider the

fixed cost of generating stations from which the power are being

purchased by WBSEDCL as per their PPA to the extent of sale of power



by WBSEDCL adjusted with normative T&D losses. Any incidental

surplus has been considered to be sold at average power purchase cost.

3.2.18 Regarding other Tariff Proposals:

(i) Reference to the report on Power for All, West Bengal. Table – 14, the

anticipated peak demand is 6152 MW while Peak availability including

Renewable is 7029 MW i.e. there may remain 877 MW surplus during

Peak Hours. Now WBSEDCL should rethink whether they would like to

sale surplus evening power at in the market depriving its own consumer

setting Peak hour tariff at high level. This is against natural justice. As

such to boost industrial sale, tariff for the peak hour of high valued

industrial consumer should be kept low at a reasonable level and to

compensate the loss of revenue tariff for normal period may be revised.


(ii) Any changes of existing rate / charges, terms and conditions as proposed

in the tariff petition shall not be allowed as the same shall be considered

through amendment of existing tariff regulation. The stake holders should

be given opportunity to put up their views/suggestions and objection.

The Commission has noted the comments.

(iii) There is a proposal for change TOD timing, through increase in off-peak

period, it does not indicates, how the loss of revenue due to increase in

off period will be compensated.

The Commission has not considered any change in TOD timing due to

non-submission of any loss benefit analysis by the licensee.



(iv) Any loss in revenue due to implementation of rebate scheme on

additional Load Factor rebate, Maximum demand charge for 33 KV/132

KV industrial consumers, or in multiple licensee area shall not be a pass

through.

The Commission noted the contents and shall be dealt with at the time of

preparation of tariff.

(v) The Commission has introduced a new scheme through the notification

dated 8.02.2017 whereby the difference of the price between DVC and

WBSEDCL has been kept at 50 paise. Presently the price of DVC stands

at Rs. 4.30 per unit for 132 KV DVC consumers whereas the price for

WBSEDCL is Rs. 6.10 per unit for its 132 KV consumers. Hence, the

rebates have to be increased for load enhancement so that the difference

between DVC and WBSEDCL is kept not more than 50 paise per unit.

The Commission has noted the contents. .

3.2.19 Whatever cost has been incurred in terns of FCA, MFCA or MVCA during FY 16-

17, shall be considered for ARR calculation. Implication of Tariff revision of

ISGS/CTU etc. should be taken in account through FPPCA.

Commission has noted the comment and specific direction will be given in the

tariff order in this regard as per provisions of the Tariff Regulation.

3.2.20 Over and above, M/s Modern India Con-Cast Limited have made some additional

important points to note.

i) WBSEDCL fails to comply direction of the Hon’ble Commission as they

have not implemented Energy audit in its organization. Some penal

measure is required in terms of tariff.



ii) Generation is PPSP for 2017-18 with PAF 98% has been considered in

the same level of 2015-16 i.e. 1055MU when PAF was 76.57%. It may

be noted that with PAF 90.78% generation was 1416 MU. As such

correction should made accordingly i.e. we can get around 400MU more

peak power from PPSP.

iii) WBSEDCL has not yet participated in UDAY scheme which is beneficial

to the Licensee and in turn consumer will also be benefitted.

iv) Cost of Backing down of generation and sale of surplus power in the

unregulated volatile market at an average rate of Rs 2.72 p/kWh indicates

poor and inefficient power purchase plan.

v) Increased R&M cost indicated poor maintenance plan and condition

monitoring.

vi) Any waiver of LPSC should not be a pass through a tariff.

vii) WBSEDCL may purchase power from market after having an exercise for

cost benefit analysis where there should be a net gain in the process.

viii) WBSEDCL realize Minimum Charges in terms of Fixed cost / Demand

charge. Though in the tariff petition, WBSEDCL, cleverly, has not given

any annexure of computation of fixed cost / Demand charge, the increase

in consumer base has largely increased. In the process of computation

for average billing rate (ABR), there should not any adjustment on

account of Rebate / Penalty etc. Average energy rate may be computed

after assured revenue income on account of Fixed cost / Demand charge.

Power purchase cost may also be computed without rebate / penalty.



ix) Format 1.10 does not contain the contracted capacity/installed capacity.

Moreover there is no information about hour of operation and Backing

down of generation. They same should be incorporated for having a clear

view of operation and power procurement planning efficiency.

x) Similarly the formats do contain any information of category wise total

consumer, contract demand and the demand met. The same should be

incorporated. This will enable to have a check on the fixed cost / demand

charge that should have been realized.

The Commission has taken note of the above comments and shall deal with the

same, wherever required as per the Tariff Regulations, in the subsequent

chapter.

3.3 M/s Ankit Metal & Power Limited, M/s Rohit Ferro-Tech Limited, Organization of

Indian Engineering Industry and Rashmi Metaliks Limited have submitted their

printed objections with same contents as that of Modern India Con-Cast Limited

against the tariff proposal of WBSEDCL for the year 2017 – 2018. Since the

objections submitted by the above four stakeholders are same with the

objections submitted by M/s Modern India Con-Cast Limited and that they are

already dealt with as above, the objections of above four stakeholders are not

dealt here separately.

3.4 All Bengal Electricity Consumers’ Association (ABECA) has made the following

suggestions:

3.4.1 ABECA commented that if the tariff proposal of the WBSEDCL is allowed then

there will be a further tariff hike of 65.68 paise per unit including MVCA of 23

paise per unit. Besides this tariff hike both the W.B.P.D.C.L. and W.B.S.E.D.C.L.

off and on enhances tariff on the plea of MVCA / MFCA etc. The entire system is

nothing but to enhance the tariff which will affect 1.50 Crores of Electrical



Consumers of West Bengal and there will be a further inflation in the state and

prices of all goods and services will be increased. Small traders, small scale

industrial units and cultivation in Agriculture will be badly affected and will

virtually close down their activity. This cannot be let loose.

3.4.2 In the gist of Tariff Proposal the W.B.S.E.D.C.L. said that the reasons of increase

of tariff are (i) increase of power purchase cost; (ii) Increase of Transmission

charges; (iii) Increase of employee cost; (iv) Increase of interest on loan; (v) O. &

M. expenses increase; (vi) Release of Regulatory asset etc. ABECA is to state

that the reasons stated in the gist of tariff for 2017-18 are not tenable. The

reasons are as follows:

3.4.2.1 Increase of power purchase cost:

It may be stated here that the W.B.S.E.D.C.L. purchase the power from the

W.B.P.D.C.L. The W.B.S.E.D.C.L. submitted the increased tariff for 2017-18 to

the commission and as per proposal they demanded the increase of average

cost of supply at 9.88 paise per unit.

ABECA already submitted the objection on the enhanced tariff proposal. The

W.B.E.R.C, has not yet allowed the enhanced proposal of the W.B.P.D.C.L.

Moreover W.B.S.E.D.C.L. and the W.B.P.D.C.L. are the Government enterprise.

Previously there was one company i.e. W.B.S.E.B. Then there would be one tariff

for W.B.S.E.B. But due to the evil affect of 2003 Electricity Act for the break up of

W.B.S.E.B. into three Government companies, viz. (i) Generation Company (ii)

Transmission Company and (iii) Distribution Company. The enhancement of tariff

of these three companies imposed a burden of severe tariff hike collectively on

the shoulder of the ultimate consumers and thereby brings an inflationary

situation in West Bengal and the production of Agriculture and Small Scale

Industry will be hampered and in addition to this there will become another



increase of unemployment in the state. Hence we strongly object the tariff hike

proposal of the W.B.S.E.D.C.L. for 2017-18.

In this context, the Commission likes to mention that at the time of preparation of

tariff order of any licensee, the Commission allows expenditure based on the

provisions of the Tariff Regulations and after prudence check of the proposed

expenditure.

3.4.2.2 Increase of Transmission charges – The reason stated herein above at para

3.3.2.1 above holds goods here also.

The Commission’s views remain same as that of paragraph 3.3.2.1 above.

3.4.2.3 Increase of Labour cost - The imposition of fixed charge and fixed cost in the

Tariff is projected on the higher side. Already 6% growth rate of estimated

Energy Sale to its own consumer of W.B.S.E.D.C.L. is allowed by the

commission in the tariff order dated 28-10-2016 for 2016-17 and considering this

inflated rate of Energy Sale the commission allowed the Aggregate Revenue

Requirement of Rs. 1829944.36 Lakh in 2016-17 which includes Labour Cost

also. Hence a mere annual increment of the employees. Nothing more

enhancement on this

The Commission in the direction to W.B.S.E.D.C.L. in the tariff order dated 28-

10-2016 at page 50 para 4.9 (i) directed a detail breakup showing total

expenditure and employee strength against each level of all categories of

employees including the whole time directors of the Board. If any function of

other companies also then the allocation of cost among the companies shall be

shown separately and distinctly against each level." The direction of the

commission is to be complied within 31st March 2017.

item for which the enhancement of tariff hike is not

reasonable.



From the direction of the Commission it is quite clear that the W.B.S.E.D.C.L. failed to provide the required information relating to employee cost. Hence the proposal of tariff hike on the plea of increase of employee cost is not tenable. As such we oppose the tariff hike of the W.B.S.E.D.C.L. for 2017-18.

The Commission has noted the comments and will be dealt with in subsequent

paragraphs

3.4.2.4 In

order of west bengal electricity regulatory ... 2017-18.pdftariff order of wbsedcl for the year 2017...

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