5 Conclusion

The Commission approves total Annual Revenue Requirement of UHBVNL for FY 2005-06 at Rs. 24295 million. This is equal to total expenditure of Rs. 25705 million minus non-tariff income of Rs. 1410 million. The total energy expected to be sold by UHBVNL shall be 6940 million units as against the licensee’s projected sale of 7984.9 million units.

The Commission has maintained its consistent approach of projection of consumption of metered agriculture pump sets on the basis of average Annual Load Factor (ALF) and that of un-metered agriculture pump sets on the pattern of consumption of metered agriculture pump sets. The sale figure of agriculture pump-set consumers for the FY 2005-06 comes to 2872 MU as against 3479.6 MU projected by the Licensee.

The licensee has projected a loss level of 29 % for FY 2005-06. However, as per the past trend, the Commission feels that this may not be achieved by the Licensee. Further, if the sales are projected at 29 % distribution loss level, the corresponding power would not be available in the grid. Hence the Commission has decided to base the calculation on 32.3% distribution loss, which corresponds to the power available in the grid (provision for which has already been made in the Commission’s order on ARR for transmission and bulk supply business for FY 2005-06 & bulk supply and transmission tariffs dated 10^th May 2005).

The licensee needs to take technical and administrative steps to bring down the distribution loss in its system. The Commission notes that the distribution loss during the last five years (FY 2001 to FY 2005) has remained in a narrow band of over 31% to over 35%, which, by any standards, is a thoroughly disappointing performance.

To promote efficiency as well as to protect the interest of the consumers, the Commission has directed the Licensee to progressively improve efficiency in operation, particularly in the areas where operations are inefficient at present i.e. high distribution losses, high receivables and low collection efficiency. There is urgent requirement to ensure cent percent metering at consumers’ premises and put in place an effective energy audit scheme for proper accounting of energy in the licensee’s distribution and sub-transmission system. There has been inconsistency in the matter of submitting extremely vital data such as distribution losses and category-wise sale of energy for last five years by the licensee. The Commission wishes to convey its anguish at this sorry state of affairs and directs the licensee to develop a credible database which is of immense importance to the Commission and the licensee as well.

There is a necessity to conserve electricity by adopting the DSM measures. This will be beneficial for the Licensee as well as consumers.

Although the Commission has issued several directives to the Licensee to ensure efficient and professional management of the utility, the Commission notes with regret that these have not been fully complied with. Non-compliance of the directives is a serious violation of regulatory authority and cannot be condoned for long. The licensee should, therefore, take up all directives issued by the Commission and make sincere efforts to implement them. The various directions given by the Commission to the Licensee in its previous orders but not yet fully complied with are listed in Annexure – 2 and directives given in this order are listed in Annexure – 3.

The licensee has issued cetain sales circular impacting the tariff approved by the Commission. The Commission disallows the adverse financial impact of these sales circulars issued without its approval on the ARR for FY 2005-06. The Commission is of the considered view that the measures covered by these sales circulars can only be implemented by the State Government as per Section 65 of the Electricity Act, 2003. The State Government shall compensate the licensee to the extent of any adverse financial impact of such circulars as long as these circulars remain effective.

The receivables of the Licensee are continuously increasing. The total receivables have increased from Rs. 532.52 crores as on 31.3.2000 to Rs.1300.50 crores as on 30.9.2004. The domestic consumers account for 58.54% of the total receivables as on 31.03.2004. The receivables due from Non-domestic consumers are also on a higher side.

The licensee needs to establish a State-of-the-art Area Load Despatch Centre without delay for effectively carrying out its operational activities. The timely completion of the project is considered essential keeping in view UHBVNL’s obligation to afford " open access" to its consumers having 15 MVA and above load with effect from 1.10.2006. The project of consumer indexing and GIS mapping which are progressing at a snail’s pace too need to be vigorously pursued to ultimately cover the whole of licensed area. Infact the licensee need to formulate a well integrated IT policy to harness the benefits that can accrue to it by the Information Technology.

It is about two years that the Commission directed the licensee to introduce pre-paid card meters after ascertaining the merits & demerits/difficulties of such a concept. The licensee has reported no explicable reasons(s) for this apathy. The licensee may frame the scheme and implement it forthwith and without any further delay.

The licensee is required to take steps for implementation of Availability Based Tariff (ABT) in the State by April, 2006 as called for in the National Electricity Policy.

Human resource is an essential partner in developing and executing organisational strategy. Without a planned and systematic approach to Human Resource Management, organisational goals cannot be achieved in an efficient and cost effective manner. The Commission directs the license that its Human Resource Management Plan be expedited.

The Electricity Act, 2003 provides for taking measures conducive to efficient and transparent working of the power sector along with protecting the interests of the consumers. Section 42 of the Act provides for establishing a Forum for redressal of grievances of consumers within 6 months from the appointed date. The licensee has shown no inclination to adhere to the above provision on one ground or the other. The Licensee is also obliged to comply with the regulation on standards of performance and the Electricity Supply Code. The licensee must ensure full compliance of the Act and Commission’s order and regulations.

On the basis of current tariff rates, the licensee is expected to collect revenue of Rs.16286 million. This leaves a net revenue gap of Rs.8009 million, which is to be provided as subsidy by the Government of Haryana for agriculture pump-set consumers. The Government is also required to pay the arrears of deferred subsidy outstanding in the books of the licensee as on 31.3.2005 along with interest. The Government of Haryana has already made a budgetary provision of Rs 1256 crore towards subsidy for FY 2005-06 and the amount actually received by the licensee(s) may be adjusted as per the order(s) of the Commission. Excess provision of subsidy, if any, available with the licensee 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 (including interest) outstanding in the books of the licensee as on 31.3.2005 under intimation to the Commission.

This order is signed, dated and issued by the Haryana Electricity Regulatory Commission on 9^th November 2005

Date : 9^th November, 2005

Place : Panchkula