The licensee has considered an amount of Rs. 4997.63 million as subsidy from the Government of Haryana in its filing. The amount of subsidy is directly dependent on the electricity units supplied to the agriculture pump set consumers. The Commission has estimated the agriculture pump set consumption in line with the methodology adopted by it in its previous orders and as elaborated at para 4.10.1. The licensee has not filed a tariff application for the year under review. Cost of service calculation has also not been submitted by the Licensee.

As per section 65 of the Electricity Act, 2003, in case the State Government requires the grant of subsidy to any consumer or class of consumers, it shall pay the same in advance. In case the payment is not made in accordance with the provisions of the said section, the tariff fixed by the Commission shall be applicable from the date of issue of this order. Also, as per section 61 of the Electricity Act 2003 and the Tariff Regulations of the Commission, the embedded cost of service to each consumer category forms the basis of fixation of tariff for that consumer category. The licensee has neither filed any cost of service nor a tariff application for the year under review.

As the ARR for the two distribution zones in Haryana is being worked out separately, the Commission has worked out the estimated cost of service and the subsidy amount separately for each distribution Licensee (UHBVNL and DHBVNL) for FY 2005-06.

Based on the approved consumption figures for FY 2005-06, the total revenue from current tariff comes to Rs. 19179 million. This leaves a shortfall of Rs. 4306 million when compared with the approved Aggregate Revenue Requirement for the year. Based on the estimation of cost of service, the approved tariffs for domestic and agriculture pump-set consumers are non compensatory i.e. these categories are incurring a deficit of Rs. 1398 million and Rs. 6422 million respectively. The amount of cross subsidy generated by other consumer categories is to the extent of Rs. 3514 million. The revenue gap of Rs. 1398 million in case of domestic category is fully covered from this cross subsidy, leaving an amount of Rs. 2116 million to cross subsidise the agriculture pump-set consumers. This cross subsidy adjustment leaves a net revenue gap of Rs. 4306 million which is to be provided as subsidy by the Government of Haryana towards the agriculture pump-set consumers. Based on the Commission’s estimated cost of service and keeping in view the provisions of the above Act, the subsidy amount in respect of DHBVNL works out as depicted in table 4.28:

The State Government has already made a budgetary provision of Rs. 12560 million towards subsidy for FY 2005-06. Out of this, an amount of Rs 8009 million has been allocated to Uttar Haryana Bijli Vitran Nigam Limited vide the Commission’s order dated 09/11/2005. Out of the balance remaining, Rs. 4306 million is allocated to DHBVNL. Excess provision of subsidy, if any, available with the licensees after inter-company adjustment between UHBVNL and DHBVNL for their respective share of subsidy as per orders of the Commission for FY 2005-06, shall be adjusted against the deferred subsidy outstanding in the books of the UHBVNL as on 31.3.2005 under intimation to the Commission.