In this chapter, various elements of ARR filing namely expenditure, capital base, reasonable return, non-tariff income and revenue requirement etc. are analysed and the Commission’s order on each item is presented. The Commission has considered the views expressed by the members of SAC, intervenors, staff and the Licensee’s response thereto.
As per Section 27.2 of the Distribution licence granted to DHBVNL, the licensee is required to file its ARR for the ensuing financial year not later than 30th November each year. Also, as part of its obligations, it is required to make certain other filings during the year.
DHBVNL filed the ARR for FY 2005-06 for Distribution & Retail Supply business vide memo No. Ch-32/SE/RA-187/V-III dated 3.3.2005. The licensee in its ARR filing dated 3.3.2005 projected an uncovered revenue gap of Rs. 3255.29 million with a request that the uncovered gap may be converted into regulatory asset. The Commission declined to take the ARR filing on record as the conversion of revenue gap into regulatory asset was not acceptable to the Commission as already explained in Commission’s order dated 20.4.2005 on ARR for FY 2004-05. The Commission directed the licensee vide Memo No. 402/HERC dated 4.5.2005 to file an application for revision of tariff to cover the revenue gap within 15 days of issue of the letter. The Licensee, subsequently, submitted a Revised ARR for FY 2005-06 vide its Memo No. Ch-48/SE/RA-187/Vol-III, dated 24.6.2005, wherein DHBVNL has projected an Annual Revenue Requirement (ARR) of Rs. 25109.31 million consisting of Rs. 25816.29 million of expenditure and Rs. 28.83 million of reasonable return less Rs. 735.81 million of non-tariff income. The Licensee has taken into account a subsidy of Rs. 4997.63 million from the State Government and revenue (including subsidy) of Rs. 25109.31 million on the sale of 7345.87 million units for the Financial Year 2005-06. As per the Annual Revenue Requirement projections for D&RS Business for Financial Year 2005-06, the licensee has converted the difference between the ARR amount and the proposed revenue at current tariffs amounting to Rs. 4997.63 million into requirement for subsidy from the State Government thus showing no revenue gap. The licensee requested the Commission to take the Revised ARR for DHBVNL for FY 2005-06 on record. The supplementary information which was required to be filed within 15 days by the Commission vide its letter dated 17.8.2005, was provided by UHBVNL only on 20.9.2005.
It is thus clear that DHBVNL not only delayed the original filing but also the submission of supplementary information/data inordinately upsetting the Commission’s schedule to process the filing. The Commission has been constrained to pass its order on ARR for FY 2005-06 more than six months after its commencement, which, in fact, is an antithesis of regulatory regime. The licensee’s track record on account of delays was also unprecedented during FY 2004-05 too which resulted into passing of relevant orders (by the Commission) on 20th April, 2005 i.e. after the close of FY 2004-05. The Commission has viewed the above position very seriously and hereby directs the licensee to submit the ARR / tariff filings and subsequent data / information within the time frame specified by the Commission so that orders could be issued within 120 days from the date of receipt of original filing as called for under Section 64(3) of the Electricity Act, 2003.
During the public hearing on 5th October, 2005 on the Revised ARR for Distribution and Retail Supply business of DHBVNL for FY 2005-06, the Commission strongly felt about the delay in the submission of the metering plan including its implementation schedule (by the licensee) encompassing metering at the consumers’ premises and audit of electrical energy in their system. The distribution loss level, which continues to be very high and has remained practically unchanged over the last five years, is a matter of grave concern to the Commission. The Commission expressed its concern for the in-ordinate delay in establishment of Forum for redressal of grievances of electricity consumers and non-submission of time bound action plan to establish a State-Of-The-Art Area Load Despatch Centre to meet with its control and operational requirement. The Commission also expressed its dissatisfaction on the snail’s pace of progress on projects such as consumer indexing and G.I.S.mapping, prepaid metering and creation of computer network to implement the regulations on standards of performance for the distribution licensee.
In this chapter, DHBVNL’s proposal refers to the Distribution and Retail Supply Business Revised ARR filing made on 24.6.2005, additional information provided in response to the deficiency letter issued by the Commission or otherwise and the oral submissions made by the representatives of the Licensee during the public hearing.
In its consultative process, the Commission convened a meeting of State Advisory Committee (SAC) on 10.10.2005 and consulted its members about the proposed revenue requirement for Distribution and Retail Supply business filed by DHBVNL. The members of SAC raised various issues such as erratic power supply, high interruption level in the 33 KV and 11 KV distribution system, abnormally high distribution losses and low collection efficiency. The SAC unanimously concluded that the licensee needs to take urgent steps to submit the future ARRs well within time, improve upon the quantity and quality of supply to its consumers, bring down the distribution losses - both technical and commercial and improve upon its collection efficiency to realise its dues. Shri Anand Dev, CEDE, Northern Railway pleaded that the Railways in Haryana may be supplied electricity at the tariff close to NTPC rates. Shri Sharat C. Mahajan, Member (Power) BBMB expressed that the operation circle in UHBVNL / DHBVNL should function as a profit centre and the S.E. incharge of the circle should be fully accountable for its technical and commercial performance. Shri P.K.Dass, MD, HVPNL responded to the Railways’ demand for reduction in tariff by stating that mix of power available to a state greatly impacts its tariff and, hence, inter-state comparison is not appropriate. The issues such as Commissioning cost of service study, time bound action plan to put in place an effective energy audit scheme including cent per cent metering of consumers’ premises, establishment of State-of-the-art Area Load Despatch Centre and Forum for redressal of grievances of electricity consumers call for urgent and prompt attention of the Licensee.
The Licensee has requested for a number of waivers on different issues. The Commission observes that despite this being the seventh ARR filing by the Licensee, the information as required under the Guidelines for filing of Annual Revenue Requirement and the HERC Tariff Regulations (relating to filing of ARR) have not been furnished completely and, therefore, the Commission has to grant a number of waivers once again. These waivers were granted in the previous years too. The waivers are listed in Annexure - 1. The Commission had directed the licensee that while seeking for any waiver(s) in future, the specific action plan as well as the time frame of the licensee to comply with the directive(s) of the Commission, be provided. However, the Commission is pained to observe that the licensee has not complied with the direction.
The Commission has issued a numbers of directives in its previous ARR and Tariff orders. However, it has been observed that quite a few directives have not yet been implemented or partly implemented. A list of all such directives issued by the Commission, but not yet fully complied with by the Licensee is given in Annexure – 2. Several waivers requested by the Licensee are related to non-implementation of these directives. The Licensee should immediately take all the necessary steps for implementation of Commission’s directives.
