• No results found

Case No._165 of Shri V. P. Raja, Chairman Shri Vijay L. Sonavane, Member ORDER

N/A
N/A
Protected

Academic year: 2021

Share "Case No._165 of Shri V. P. Raja, Chairman Shri Vijay L. Sonavane, Member ORDER"

Copied!
190
0
0

Loading.... (view fulltext now)

Full text

(1)

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005. Tel. No. 022 22163964/65/69 – Fax 022 22163976

E-mail: mercindia@mercindia.org.in Website: www.mercindia.org.in

Case No._165 of 2011 IN THE MATTER OF

Petition filed by The Tata Power Company Limited- Distribution Business (TPC-D) for approval of its Multi Year Tariff Business Plan for the second Control Period (FY

2012-13 to FY 2015-16) Shri V. P. Raja, Chairman Shri Vijay L. Sonavane, Member

Date: 26 August, 2012 ORDER

Upon directions from the Maharashtra Electricity Regulatory Commission (Commission or MERC), The Tata Power Company Ltd.’s Distribution Business (TPC-D), submitted its application for approval of the Multi Year Tariff (MYT) Business Plan for the second Control Period from FY 2011-12 to FY 2015-16, under affidavit.

The Commission, in its First Amendment to Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 (hereinafter referred to as MERC MYT Regulations) dated 21 October, 2011, has specified that for the Generating Company or Transmission Licensee or Distribution Licensee for whom there is no order of exemption under Regulation 4.1 and if the Commission is satisfied that there is a difficulty in giving effect to the determination of tariff with effect from 1 April, 2011 under these Regulations and in the event tariff is required to be determined from 1 April, 2012 or any further period under these Regulations, the repealed Regulations in respect of the said tariff determination shall continue to be in-force, and the provisions of these Regulations shall not apply to the determination of tariff for the period till 1 April, 2012 or such further period.

Further, pursuant to the First Amendment to the MERC MYT Regulations, the Commission vide its letter dated 4 November, 2011 directed TPC-D to submit its Petition for approval of

(2)

Page 2 of 190 ARR for FY 2011-12, as per the MERC (Terms and Conditions of Tariff) Regulations, 2005 latest by 30 November, 2011. However, TPC-D is yet to submit the same as on date of issuance of this Order.

In view of the above, the Commission, in exercise of the powers vested in it under Section 61 and Section 62 of the Electricity Act, 2003 (EA 2003) and all other powers enabling it in this behalf, and after taking into consideration all the submissions made by TPC-D, issues raised during the Public Hearing, and all other relevant material, approves the MYT Business Plan for TPC-D for the second Control Period from FY 2012-13 to FY 2015-16 as under.

(3)

Page 3 of 190

Table of Contents

1 BACKGROUND AND BRIEF HISTORY ... 9

1.1 Evolution of Regulatory Regime for Distribution Tariff ... 9

1.2 MERC MYT Regulations ... 10

1.3 Petition for MYT Business Plan Approval, Admission of The MYT Business Plan Petition and Public Process ... 10

1.4 Organisation of the Order ... 12

2 OBJECTIONS RECEIVED, TPC-D’S RESPONSE AND COMMISSION’S RULING ... 13

2.1 Delay in Submission of MYT Business Plan Petition ... 13

2.2 Maintenance of Separate Accounts ... 14

2.3 Distribution Licence of TPC-D ... 14

2.4 Power Procurement Plan ... 16

2.5 Power Purchase from TPC-G ... 18

2.6 Power Purchase from Renewable Sources ... 20

2.7 Power Purchase Cost ... 21

2.8 Average Cost of Power Supply... 21

2.9 Standby Power from Lodhivali ... 22

2.10 Capital Expenditure on Network Roll Out plan ... 23

2.11 Cost of Parallel Network... 25

2.12 Distribution Losses ... 28

2.13 Transmission Losses ... 28

2.14 Number of Consumers ... 29

2.15 Classification of Consumers ... 29

2.16 Discrimination among consumers ... 30

2.17 Open Access Consumers ... 33

2.18 Customer Service Centres ... 34

2.19 Bill Payment Facility ... 36

2.20 Complaint regarding meters of Changeover Consumers ... 36

2.21 Non-Tariff Income ... 37

2.22 Income from other Business ... 37

2.23 Load Management Charges ... 38

2.24 Consumer Awareness ... 38

2.25 Supply Margin ... 38

2.26 Scenario Analysis ... 40

(4)

Page 4 of 190

2.28 Uniform Tariff ... 42

2.29 Power Factor Penalty ... 43

2.30 Participation of authorised Consumer Representatives in the proceedings ... 43

2.31 Wrong Use of Terminology in MYT Business Plan ... 44

2.32 Environmental Issues ... 44

2.33 Energy Accounting ... 45

2.34 Load Enhancement ... 45

2.35 Performance Indices ... 46

3 SALIENT FEATURES OF THE MYT BUSINESS PLAN PETITION ... 48

3.1 Applicability of this Order from FY 2012-13 to FY 2015-16 ... 48

3.2 Premise for Business Plan ... 49

3.3 Business Overview of TPC-D ... 50

3.4 MYT Business Plan Philosophy ... 57

3.5 Brief Decription of the MYT Business Plan Petition ... 59

3.6 Key Assumptions made by the Petitioner ... 60

4 MYT BUSINESS PLAN COMPONENTS ... 64

4.1 Market Assessment ... 64

4.2 Capital Investment Plan ... 68

4.3 Demand Side Management Plan ... 78

4.4 Organisation Structure ... 81

4.5 Human Resource Plan ... 81

4.6 Human Resource Development Plan ... 86

4.7 Risk Mitigation Plans ... 87

4.8 Risk Analysis and Mitigation ... 87

4.9 Environment Policy and Initiatives ... 88

4.10 Future Business Opportunities ... 89

4.11 Corporate Social Responsibility ... 89

4.12 Response to Business Challenges ... 89

5 ARR COMPONENTS UNDER MYT BUSINESS PLAN ... 91

5.1 Sales ... 92

5.2 Distribution Losses and Energy Input Requirement ... 112

5.3 Power Purchase Plan ... 115

5.4 O&M Expenses ... 140

5.5 Capital Expenditure and Capitalisation ... 142

5.6 Depreciation... 151

5.7 Interest Expenses ... 154

5.8 Return on Equity (RoE)... 160

(5)

Page 5 of 190

5.10 Contribution to Contingency Reserves ... 164

5.11 Demand Side Management and Other expenses ... 165

5.12 Income Tax ... 167

5.13 Non-Tariff Income ... 169

5.14 Aggregate Revenue Requirement of TPC-D ... 175

5.15 Approval Of MYT Business Plan Scenario ... 177

6 DIRECTIONS FOR FILING MYT PETITION FOR THE SECOND CONTROL PERIOD ... 186

6.1 Other Directions ... 187

APPENDIX -1 ... 188

(6)

Page 6 of 190 List of Abbreviations

A&G Administrative and General

ACA Asset Condition Assessment

ACOS Average Cost of Supply

AMR Automated Meter Reading

AMRI Automatic Meter Reading Infrastructure

APR Annual Performance Review

ARR Aggregate Revenue Requirement

ASAI Average System Availability Index

ATE Appellate Tribunal for Electricity

AT&C Aggregate Technical and Commercial losses

BEE Bureau of Energy Efficiency

BEST Brihanmumbai Electric Supply & Transport Undertaking

BLY Bachat Lamp Yojna

CAGR Compound Annual Growth Rate

CAIDI Customer Average Interruption Duration Index

CAIFI Customer Average Interruption Frequency Index

Capex Capital Expenditure

CERC Central Electricity Regulatory Commission

CGRF Consumer Grievance Redressal Forum

CMR Customer Relationship Management

CPD Coincident Peak Demand

CRC Customer Relationship Centre

CSR Corporate Social Responsibility

CSS Customer Substation

DAS Distribution Automation System

DCC Distribution Control Centre

DPR Detailed Project Report

DR Demand Response

DSM Demand Side Management

DSS Distribution Substation

DTR Distribution Transformer

EA 2003 Electricity Act, 2003

ECS Electronic Clearing System

EE Energy Efficiency

EPP Energy Efficiency Power Plant

(7)

Page 7 of 190

FBSM Final Balancing and Settlement Mechanism

FIT Feed In Tariff

FY Financial Year

GERC Gujarat Electricity Regulatory Commission

GET Graduate Engineer Trainees

GoM Government of Maharashtra

GFA Gross Fixed Assets

G, T & D Generation, Transmission and Distribution

HHU Hand Hold Units

HO & SS Head Office and Support Services

HT High Tension

IBSM Interim Balancing & Settlement Mechanism

IDC Interest During Construction

IoWC Interest on Working Capital

LMC Load Management Charges

LT Low Tension

kVA Kilo Volt Ampere

kW Kilo Watt

kWh Kilo Watt hour

kWp Kilo Watt peak

LCC Load Control Centre

LEC Licensed Electrical Contractor

MVA Mega-Volt Ampere

MCGM Municipal Corporation of Greater Mumbai

MERC Maharashtra Electricity Regulatory Commission

MMRDA Mumbai Metropolitan Region Development Authority

MOP Ministry of Power

MSEDCL Maharashtra State Electricity Distribution Company Ltd.

MSLDC Maharashtra State Load Despatch Centre

MSMED Act Micro, Small Medium Enterprise Development Act

MU Million Units

MW MegaWatt

MYT Multi Year Tariff

MERC Tariff Regulations MERC (Terms and Conditions of Tariff) Regulations, 2005

MERC MYT Regulations, 2011 MERC (Multi Year Tariff) Regulations, 2011

(8)

Page 8 of 190 Laboratories

NCPD Non-Coincident Peak Demand

OA Open Access

O&M Operation and Maintenance

OLA Outside Licence Area

PAN Permanent Account Number

PBT Profit Before Tax

PLF Plant Load Factor

PPA Power Purchase Agreement

R&M Repair and Maintenance

RE Renewable Energy

RInfra Reliance Infrastructure Limited

RoE Return on Equity

RPO Renewable Purchase Obligation

RPO Regulations MERC (Renewable Purchase Obligation, its Compliance and implementation of REC framework) Regulations, 2010

RPS Renewable Purchase Specification

SAIDI System Average Interruption Duration Index

SAIFI System Average Interruption Frequency Index

SBI PLR State Bank of India Prime Lending Rate

SLDC State Load Despatch Centre

SMP System Marginal price

TDS Tax Deducted at Source

TOD Time of Day

TOSE Tax on Sale of Electricity

TPC The Tata Power Company Limited

TPC-D The Tata Power Company-Distribution Business

TPC-G The Tata Power Company-Generation Business

TPC-T The Tata Power Company-Transmission Business

TTSC Total Transmission System Cost

TVS Technical Validation Session

USO Universal Service Obligation

VAT Value Added Tax

(9)

Page 9 of 190

1 BACKGROUND AND BRIEF HISTORY

A Petition has been filed by The Tata Power Company Limited (TPC), for approval of the MYT Business Plan for its Distribution Business (TPC-D), for the second Control Period from FY 2011-12 to FY 2015-16, under Section 61 and 64 of the Electricity Act, 2003 and Regulation 7 of the MERC MYT Regulations.

TPC-D has been granted a Licence by Government of Maharashtra (GoM) for the supply of electricity in Mumbai, vide resolution No.: IEA-2001/CR-10509/NRG-1 dated 12 July, 2001. After the enactment of Electricity Act 2003, the Commission had notified MERC (Specific Conditions of Distribution License applicable to TPC-D) Regulations, 2008, and on the basis of this licence TPC-D is entitled to sell, supply, and distribute electricity to the public for all purposes in accordance with the provisions of the Act, which is valid up to 15 August, 2014.

1.1 EVOLUTION OF REGULATORY REGIME FOR DISTRIBUTION TARIFF The Commission, in exercise of the powers conferred by the Electricity Act, 2003, notified the Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005, on 26 August, 2005. Subsequently, the Commission, considering the requests made by the Utilities, vide its Order dated 20 December, 2005 in the matter of Applicability of Multi Year Tariff Framework granted exemption for all the Utilities in Maharashtra from implementation of MYT framework for FY 2006-07. The Commission, in the said Order, stated that the Commission would determine the tariff under a Multi Year Tariff framework with effect from 1 April, 2007 instead of 1 April, 2006 as stipulated in MERC (Terms and Conditions of Tariff) Regulations, 2005 and accordingly, the first Control Period for MYT framework shall be the three financial years from 1 April, 2007 to 31 March, 2010. The Commission, at the start of the first Control Period issued the MYT Order for each Utility in the State, approving their ARR for each year during the Control Period. The Commission subsequently issued the Annual Performance Review (APR) Orders for each Utility in each year of the Control Period, which included truing up of the ARR of the past year or (n-1)th year, provisional truing up of the ARR of current year or nth year and determination of revised ARR/tariff for the ensuing year or (n+1)th year. The Distribution Utilities for which such Orders were issued include Maharashtra State Electricity Distribution Co. Ltd (MSEDCL), Distribution Business of The Tata Power Co. Ltd (TPC-D), Distribution Business of Reliance Infrastructure Ltd (RInfra-D), and Brihanmumbai Electric Supply & Transport Undertaking (BEST). The Commission has issued Orders determining such Distribution Tariff from time to time on an annual basis.

(10)

Page 10 of 190

1.2 MERC MYT REGULATIONS

The Commission, in exercise of the powers conferred by the EA 2003, notified the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011, (hereinafter referred as the MERC MYT Regulations, 2011) on 4 February, 2011. These Regulations are applicable for the second Control Period starting from FY 2011-12 to FY 2015-16. The said Regulations were amended vide notification dated 21 October, 2011 called Maharashtra Electricity Regulatory Commission (Multi Year Tariff) (First Amendment) Regulations, 2011.

As per the said Amendment, the Commission has specified that for the Generating Company or Transmission Licensee or Distribution Licensee for whom there is no order of exemption under Regulation 4.1 and if the Commission is satisfied that there is a difficulty in giving effect to the determination of tariff with effect from 1 April, 2011 under these Regulations and in the event tariff is required to be determined from 1 April, 2012 or any further period under these Regulations, the repealed Regulations in respect of the said tariff determination shall continue to be in-force, and the provisions of these Regulations shall not apply to the determination of tariff for the period till 1 April, 2012 or such further period.

1.3 PETITION FOR MYT BUSINESS PLAN APPROVAL, ADMISSION OF THE MYT BUSINESS PLAN PETITION AND PUBLIC PROCESS

Pursuant to notification of MERC MYT Regulations, 2011 on 4 February, 2011, the Commission vide letter dated 25 March, 2011 directed all Licensees and Generating Companies to submit their MYT Business Plan and MYT Petition for the Second Control Period from FY 2011-12 to FY 2015-16, latest by 31 March, 2011. TPC-D submitted its MYT Business Plan Petition for the second Control Period under affidavit on November 29, 2011.

Subsequently, the Commission vide email dated 24 December, 2011 communicated the preliminary data gaps identified in the Business Plan. The Commission scheduled a Technical Validation Session (TVS) on TPC-D’s Petition for approval of MYT Business Plan for FY 2011-12 to FY 2015-16 on 27 December, 2011, in the presence of Consumer Representatives authorised under Section 94 (3) of EA 2003 to represent the interest of consumers in proceedings before the Commission wherein TPC-D was directed to submit the replies to the preliminary data gaps along with the revised MYT Business Plan within one week to ten days of the TVS. The list of individuals, who participated in the Technical Validation Session, has been provided in Appendix-1. Subsequently, the Commission vide email dated 28 February, 2012 and 28 March, 2012 communicated additional data gaps identified in the MYT Business

(11)

Page 11 of 190 Plan Petition and also directed TPC-D to submit additional information and clarifications on the issues raised during the TVS. TPC-D filed the revised MYT Business Plan Petition vide its letter dated 9 April, 2012 after incorporating all required information, with the following main prayers:

Approve the MYT Business Plan for the Distribution Business of the Tata Power

Company Ltd. for the Control Period (FY 2011-12 to FY 2015-16) in accordance with Paragraph 7 of the Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011.

Condone any inadvertent omissions/ errors/ shortcomings and permit Tata Power

to add/ change/ modify/ alter this filing and make further submissions as may be required at a future date.

Any other relief that the Hon’ble Commission may deem fit.”

The Commission admitted the Petition of TPC-D on 17 April, 2012. In accordance with Section 64 of the EA 2003, the Commission directed TPC-D to publish its MYT Business Plan Petition in the prescribed abridged form and manner, to ensure adequate public participation. The Commission also directed TPC-D to reply expeditiously to all the suggestions and objections received from stakeholders on its Petition. TPC-D issued the Public Notice in newspapers inviting suggestions and objections from stakeholders on its MYT Business Plan Petition. The Public Notice was published in Hindustan Times (English), The Indian Express (English), The Financial Express (English), Loksatta (Marathi) and Pudhari (Marathi) newspapers on 20 April, 2012. The copies of TPC-D’s Petitions and its summary were made available for inspection/purchase to members of the public at TPC-D’s offices and on TPC-D’s website (www.tatapower.com). The copy of the Public Notice and Executive Summary of the Petition was also available on the website of the Commission (www.mercindia.org.in) in downloadable format. The Public Notice specified that the suggestions and objections, either in English or Marathi, may be filed in the form of affidavit along with the proof of service on TPC-D.

The Commission received written suggestions and objections on various issues. The Public Hearing was held on 19 May, 2012 at 10:00 hours at Rangsharda Natya Mandir, Bandra Reclamation, Bandra (W), Mumbai 400 050.

(12)

Page 12 of 190 The Commission has ensured that the due process as contemplated under the law to ensure transparency and public participation was followed at every stage meticulously and adequate opportunity was given to all the persons concerned to file their say in the matter.

Various suggestions and objections that were raised on TPC-D’s Petition after issuance of the Public Notice both in writing as well as orally during the Public Hearing, along with TPC-D’s response and the Commission’s rulings have been detailed in Section 2 of this Order.

1.4 ORGANISATION OF THE ORDER

This Order is organised in the following five Sections:

Section 1 of the Order provides a brief history of the quasi-judicial regulatory process undertaken by the Commission. For the sake of convenience, a list of abbreviations with their expanded forms has been included.

Section 2 of the Order lists out the various suggestions and objections raised by the objectors in writing as well as during the Public Hearing before the Commission. The various suggestions and objections have been summarized issue-wise, followed by the response of TPC-D, and the rulings of the Commission on each of the issues.

Section 3 of the Order summarises the salient features of the MYT Business Plan Petition filed by TPC-D.

Section 4 of the Order discusses the MYT Business Plan components, Key issues and Commission’s Ruling on the same.

Section 5 of the Order details the views of the Commission on the projection of ARR components as submitted by TPC-D for the purpose of MYT Business Plan Approval.

Section 6 of the Order provides necessary directives to TPC-D for filing MYT Petition for the second Control Period.

(13)

Page 13 of 190

2 OBJECTIONS RECEIVED, TPC-D’S RESPONSE AND

COMMISSION’S RULING

2.1 DELAY IN SUBMISSION OF MYT BUSINESS PLAN PETITION

Shri. Sandeep Ohri, one of the authorised Consumer Representatives for this Case, submitted that in the present Petition, TPC-D is seeking ‘approval’ for its MYT Business Plan for the second Control Period of five years from FY 2011-12 to FY 2015-16, however, the first year, i.e., FY 2011-12 is already over. He asked TPC-D to submit the reasons for such delay.

TPC’s Response

TPC submitted that it is pertinent to note that the MERC MYT Regulations, 2011, which stipulate the submission of five-year MYT Business Plan, were notified on February 4, 2011. TPC submitted that the said Regulations required submission of a five-year Business Plan from FY 2011-12 to FY 2015-16 based on the norms approved in these Regulations. Further, a detailed plan for the proposed capex and capitalisation for the Control Period was to be submitted to the Commission along with several other Forms that were to be filled as a part of MYT Business Plan. TPC submitted that such detailed Plan requires lot of deliberation and it has submitted the MYT Business Plan in October, 2011 (however, the Commission directed TPC-D to submit the MYT Business Plan in the form of a Petition, which was submitted by TPC-D on 29 November, 2011) after putting considerable amount of time and effort.

Commission’s Ruling

Pursuant to notification of the MERC MYT Regulations, 2011 on 4 February, 2011, the Commission vide letter dated 25 March, 2011 had directed all Licensees and Generating Companies to submit their MYT Business Plan and MYT Petition for the Second Control Period from FY 2011-12 to FY 2015-16, latest by 31 March, 2011.

As regards treatment of the submissions made by TPC-D for FY 2011-12 under this MYT Business Plan, the Commission vide its letter dated 4 November, 2011 directed TPC-D to submit its ARR and Tariff Petition for FY 2011-12 as per MERC (Terms and Conditions of Tariff) Regulations, 2005. However, TPC-D has not complied with this direction and has not filed its Petition for approval of ARR for FY 2011-12, in accordance with MERC (Terms and Conditions of Tariff) Regulations, 2005. The Commission has issued certain directions in this regard to TPC-D in the relevant Sections of this Order, regarding submission of ARR for FY 2011-12.

(14)

Page 14 of 190 2.2 MAINTENANCE OF SEPARATE ACCOUNTS

Shri Raksh Pal Abrol, Shri Vinayak G. Joshi, and Nagari Nivara Parishad enquired whether TPC-D has complied with Regulation 71 of MERC MYT Regulations, 2011, which specifies separation of accounts for Wires and Retail Supply Business and also provides for preparation of “Allocation Statement” for these Businesses. They enquired from TPC if it has been maintaining separate accounts for its Wires and Supply Business.

TPC’s Response

TPC-D submitted that the present Petition is for approval of MYT Business Plan of TPC-D in which it has presented separate computation of Fixed Charge for Wires Business and Supply Business and the issue of preparation of ‘Allocation Statement’ shall not arise in this case.

Commission’s Ruling

TPC-D has submitted its projected expenses relating to Wires Business and Supply Business separately in the MYT Business Plan Petition in accordance with the MERC MYT Regulations, 2011, and as prescribed in the Formats for the Control Period.

As regards the Allocation Statement, the Commission is of the view that the same is not required in case of the present Petition which is for approval of MYT Business Plan of TPC-D and is not a Tariff Petition. TPC-TPC-D will be required to submit the same, along with its MYT Petition, while seeking truing up of expenses and revenues for the respective years.

2.3 DISTRIBUTION LICENCE OF TPC-D

Shri Sandeep N. Ohri submitted that TPC-D’s Distribution Licence expires in two years, i.e., August 15, 2014, and in such a scenario if the MYT Business Plan Petition is approved by the Commission it will imply automatic ‘renewal’ of its licence. He further submitted that the Electricity Act, 2003 does not permit renewal of Licence and the same has already been showcased in the case of RInfra. He further submitted that TPC-D may not apply for a fresh Distribution Licence, and in this scenario, the significance of approving the MYT Business Plan Petition at this stage may have to be considered.

On similar lines, Shri Raksh Pal Abrol also submitted that Section 14 of the EA 2003 does not empower the Commission to amend the expired licence and only a fresh licence for 25 years can be issued under this Section.

(15)

Page 15 of 190 Shri Ramchandra Narayan Patkar, Shri Arun Jagtap, and Smt. Shreeya Kulkarni representing Siddhi Electricals submitted that in the month of August 2011, the Commission has rejected the Licence Application of four Companies namely, Torrent, Indiabulls, Lanco and MSEDCL stating that:

“it does not conform to aspects relevant to grant of distribution license, on account of lack of action plan for geographical coverage and time frame for rolling out its own distribution network in the area of supply for which the license is sought for.”

Smt. Kulkarni further submitted that if TPC-D is a Distribution Licensee under the provisions of the Electricity Act, 2003 then the basis on which the Applications of above mentioned four Companies were rejected should be applicable to TPC-D also. She enquired whether the Commission can initiate proceedings for cancellation of TPC-D’s licence on the basis that it does not have a full fledged network and has also failed to submit a roll out plan.

TPC-D’s Response

TPC submitted that it has considered the implication of the expiry of the licence in the MYT Business Plan and it has been assumed that the licence of TPC-D would continue (through re-application) till the end of the Control Period and beyond.

Commission’s Ruling

The Commission has taken into account the objectors' concerns regarding the expiry of TPC’s distribution licence since, there is no provision under the Electricity Act, 2003 for the renewal of the Distribution Licence. However, for the purpose of MYT Business Plan, the Commission has assumed that the Business is an on-going business, and is approving the Business Plan for the Control Period from FY 2012-13 to FY 2015-16 subject to grant of licence to TPC for distribution of electricity after expiry of its current licence. Further, the issues relating to grant of Distribution Licence to TPC-D beyond August 2014 would be addressed, based on TPC-D's Application and after following due regulatory process.

As regards network development in Mumbai Suburbs, the issue of changeover and network addition by TPC-D was the subject matter of another proceeding before the Commission in Case No. 151 of 2011, and the Commission has issued its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D has to ensure that the rulings of the Commission in Case No. 151 of 2011 are complied with and supply is given to consumers in accordance with the provisions of the EA 2003 and the applicable Rules and Regulations. Further, the Commission directs TPC-D to submit details of capital expenditure for network development separately for RInfra and BEST area. It is clarified that network development by TPC-D in BEST area is subject to the proceedings in Civil Appeal No. 4223 of 2012 pending before the Hon’ble Supreme Court.

(16)

Page 16 of 190 2.4 POWER PROCUREMENT PLAN

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that the MERC MYT Regulations, 2011 specifies the manner in which the Power Procurement Plan for the MYT Period needs to be considered by the Commission. They submitted that the Regulations give an impression that it is imperative for the Distribution Licensee to identify the source of power while submitting the Power Procurement Plan. Shri Vinayak Joshi further submitted that bilateral power purchase and purchases from imbalance pool cannot be part of the Power Procurement Plan, however, TPC-D has submitted that these two sources account for 10% of the total requirement. He requested the Commission to direct TPC-D to identify the source of supply while approving the Power Procurement Plan. He further requested the Commission to disallow bilateral power purchase and purchase from Imbalance Pool as the same is not envisaged in MERC MYT Regulations, 2011. He added that dependence on short-term power purchase sources leads to unrestricted power purchase at higher price and ultimately the consumer is made to bear the high cost.

It was further suggested that if 75% of the average demand and 25% of the peak demand is considered as base for the power purchase quantum, it will provide around 10% cushion and the Distribution Licensee will not have to resort to unrestricted short-term procurement even if 10% of the identified sources fail to deliver power.

He further asked the Commission to direct TPC-D to include the following in its MYT Business Plan:

i. Plans regarding augmentation of its existing generation capacity over next five years. ii. Plans for setting up new generation plants in India over next five years.

iii. The likely increase in the Generation capacity in the country over the next five years which will be available for sourcing the power for Mumbai Licence area.

Shri Sandeep Ohri and Shri Raksh Pal Abrol submitted that from the Power Procurement Plan shown in the Petition, it is observed that though the allocated capacity from TPC-G has remained constant at 985 MW from FY 2012-13 to FY 2015-16, an increase of 12.5% in MU terms has been shown in the MYT Business Plan Petition. They enquired regarding the basis for showing an increase in MU from 5100 MU in FY 2012-13 to 5740 MU in FY 2015-16 when the allocated capacity in MW is expected to remain constant at 985 MW from FY 2012-13 to FY 2015-16.

Shri Bapat submitted that oil prices have changed 14 times in two years while the Bank Rate has changed 12 times in 15 months. He added that the coal prices have already risen and in

(17)

Page 17 of 190 such scenario, estimation of power purchase cost and tariff for five years is not very meaningful.

Shri Ponrathnam, Shri George John, Shri Mahesh Vaswani and advocate Shri Arun Jagtap submitted that the Commission had directed TPC-D to explore all the possible sources for procuring reliable power at reasonable rate and TPC-D should be considerate about protecting consumer interest and supply electricity at reasonable rates to all the consumers.

TPC-D’s Response

TPC-D replied that bilateral power purchase contracts are essentially in the nature of short-term contracts of less than one year, hence, it is difficult to identify the short-short-term sources of power, i.e., the bilateral power purchase for the entire five year Control Period, as a part of this MYT Business Plan.

TPC-D further submitted that it has considered that about 4% of the total power purchase quantum would be available through the Imbalance Pool, which is based on its experience during the period from April 2011 to September 2011. TPC-D added that in any case, even if the power available through the Imbalance Pool is considered to be a part of short-term bilateral power purchase, it will not have any impact on the power purchase cost as the rate considered for both, i.e., bilateral power purchase and Imbalance Pool, is the same.

TPC-D submitted that it has not been able to understand the relevance of considering 75% of the average demand and 25% of the peak demand for the computation of power purchase quantum, as suggested by the objector. TPC-D clarified that it has computed its energy requirement at G < > T interface and has planned its power purchase accordingly.

TPC-D further submitted that in case of forced outage of generation capacity, it has proposed for an arrangement of standby power from MSEDCL and Tata Power-Lodhivali. TPC-D added that if additional quantum of up to 10% of the total requirement is tied up through long-term sources, as suggested by the objector, it will only add to the fixed cost of power purchase and therefore, it has not proposed any additional reserve capacity and it would await the directions of the Commission in this regard.

TPC-D added that it does not have any generation capacity and it does not plan to set up any generation capacity during the MYT Control Period. TPC-D submitted that most of its power requirement is met through power purchase from TPC-G, details of which have been provided in the MYT Business Plan.

(18)

Page 18 of 190 TPC-D submitted that it appreciates the request of the Objector to include information about the likely increase in the generation capacity in the country over the next five years, which will be available for sourcing power for the Mumbai Licence area. However, this requires a detailed study of all the generation capacities coming up in the country and their likelihood of commissioning during the MYT Control Period. TPC-D further submitted that this will also require estimating demand growth in the country to estimate the surplus/deficit capacity and will be a separate exercise in itself, which may not be a part of the MYT Business Plan. TPC-D added that it awaits the direction of the Commission in this regard.

TPC submitted that it has identified the sources of power purchase for the MYT Control Period and the same have been listed in the MYT Business Plan Petition. TPC further submitted that it has in the MYT Business Plan Petition, submitted the justification with respect to the estimation of power purchase rates from various sources.

Commission’s Ruling

The detailed analysis of power purchase expenses for the period from FY 2012-13 to FY 2015-16 is given in Section 5.3 of this Order. TPC-D should take all measures to ensure that the power purchase expenses are optimised. Further, as mentioned earlier, the Commission has directed TPC-D to submit its ARR for FY 2011-12 as per the MERC Tariff Regulations, 2005 as a separate section in its MYT Petition for FY 2012-13 to FY 2015-16.

2.5 POWER PURCHASE FROM TPC-G

Shri Bapat submitted that in Table No. 8 of the Executive Summary, TPC-D has indicated that the power purchase rates from TPC-G are projected to increase from Rs. 4.54/kWh in FY 2011-12 to Rs. 5.25/kWh in FY 2013-14, and again reduce to Rs. 4.12/kWh in FY 2015-16. He asked TPC-D to submit the reasons for this change in the rates of power purchased from TPC-G.

Shri Sandeep Ohri submitted that Fixed Charges of TPC-G Unit 8 are projected to increase from Rs. 107 Crore in FY 2011-12 to Rs. 170 Crore in FY 2015-16. He enquired as to why the total Fixed Charges of Unit 8 are projected to increase by 28% in the first year, i.e., from Rs. 214 Crore in FY 2011-12 to Rs. 274 Crore in FY 2012-13, whereas subsequent increase is negligible, i.e., to Rs. 283 Crore in FY 2015-16.

Shri Sandeep Ohri further submitted that similarly, the Energy Charges of Unit 8 of TPC-G are also projected to increase from Rs. 215 Crore in FY 2011-12 to Rs. 335 Crore in FY 2015-16. He enquired as to why the total Energy Charges are projected to increase by 24% in

(19)

Page 19 of 190 the first year, i.e., from Rs. 430 Crore in FY 2011-12 to Rs. 531 Crore in FY 2012-13, whereas subsequent increase is negligible, i.e., to Rs. 559 Crore in FY 2015-16.

TPC’s Response

TPC-D replied that the rate of power purchase from TPC-G has been considered based on TPC-G's MYT Business Plan Petition submitted for approval to the Commission. TPC-D further submitted that TPC-G has proposed to convert Unit 6, which is presently run on Oil and RLNG, to a coal-fired Unit and since, coal is a relatively cheaper fuel, it is expected that the cost of generation from FY 2015-16 will reduce. Hence, TPC-D has projected a reduction in the cost of power purchase from TPC-G from that year.

As regards the significant increase in the Fixed Charges and Energy Charges of Unit 8, TPC submitted that the increase is on account of the increase in capacity contracted from Unit 8. TPC submitted that in FY 2011-12, only 200 MW (average) (100 MW to TPC-D and 100 MW to BEST) from Unit 8 was contracted on regulated basis during FY 2011-12 and therefore, Fixed Charges of Rs. 214 Crore proposed by TPC-G for FY 2011-12 are for a capacity of 200 MW of Unit 8; whereas the Fixed Charges in the future years are for 250 MW capacity, hence, a substantial increase in Fixed Charges is felt between first and second year of the Control Period.

Further, the Energy Charges equivalent to 200 MW of regulated capacity have been considered in FY 2011-12, whereas capacity considered for FY 2012-13 onwards is the entire installed capacity of 250 MW. Hence, the difference between Energy Charges in FY 2011-12 and FY 2012-13 appears to be substantial.

Commission’s Ruling

The Commission has approved the MYT Business Plan of TPC-G through Order dated 9 August, 2012 in Case No. 166 of 2011, on the basis of which TPC-G is required to file a MYT Petition for the second Control Period. The cost of power purchase from TPC-G has to be considered in accordance with the tariffs to be approved for TPC-G's various Units on the basis of the above-said MYT Petition to be filed by TPC-G. Further, as explained by TPC-D, the increase in the incidence of Fixed Charges and Energy Charges payable to Unit 8 of TPC-G over the years, is on account of increase in the Contracted Capacity from Unit 8.

(20)

Page 20 of 190 2.6 POWER PURCHASE FROM RENEWABLE SOURCES

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that in the past it has been seen that none of the Distribution Licensees are in a position to fulfil their RPO obligations and the gap is met by short-term power purchases. They further suggested that since the dependence on short-term power purchase sources are not good as far as consumer interest is concerned, hence, the Commission should reconsider the RPO obligations, keeping in view the past performances and overall scenario in India. They added that it would be prudent to include only 50% of the target RPO, i.e., 3.5% to 4.5% from RPO while the balance should be from identifiable sources.

Shri Bapat submitted that from the MYT Business Plan, it is observed that the power purchase from renewable sources is projected to increase from 430 MU in FY 2011-12 to 660 MU in FY 2013-14 and 738 MU in FY 2015-16, and it is doubtful whether such quantum of Renewable Energy would be available.

Shri Ulhas Chaudhary suggested that the Renewable Energy sources for Mumbai should be generated in Mumbai by using the rooftops.

TPC’s Response

TPC-D submitted that it has always been meeting its RPO except in FY 2010-11. TPC-D submitted that it has provided its proposed plan to procure power from Renewable Energy sources and details of RE power tied-up in the MYT Business Plan Petition. TPC-D further submitted that the REC market is developing and is expected to mature over a period of time and the same is expected to facilitate TPC-D in meeting the RPO for the untied quantum. TPC-D also added that it has purchased about 188,390 RECs (equivalent to RE component for 188.39 MU) in FY 2011-12.

TPC-D submitted that it agrees with the suggestion that generation through rooftop solar should be explored in Mumbai. TPC-D added that in line with its commitment towards promotion of renewable energy, it has set up a 60 kWp rooftop solar (installed at Carnac Bunder) through Tata Power-Solar at preferential tariff determined by the Commission.

Commission’s Ruling

The detailed analysis of projected power purchase expenses for FY 2012-13 to FY 2015-16 including purchase from RE sources are given in Section 5.3 of this Order. Moreover, the RPO obligations have been specified under separate Regulations, viz., MERC (Renewable Purchase Obligation, Its Compliance and Implementation of REC Framework) Regulations 2010 and cannot be amended through this process.

(21)

Page 21 of 190 2.7 POWER PURCHASE COST

Shri Vinayak Joshi submitted that the cost of incremental unit in FY 2011-12 is Rs.7.88/ kWh, which is projected to increase to Rs.8.22/ kWh and Rs.10.59/ kWh in FY 2012-13 and FY 2013-14, respectively. He submitted that there is no explanation for the increase in power purchase cost in the MYT Business Plan except the working in Form-2. He further added that TPC-D has submitted the share of Utility in the cost of generation without giving details of PPA between TPC-D and TPC-G and also the Power Purchase Plan submitted by TPC-D provides no information about the obligations of TPC-D under PPA with TPC-G to purchase the additional units at such a high incremental cost.

TPC’s Response

TPC submitted that the approach followed by the Objector for computing the increase in power purchase cost is incorrect, as the increase in power purchase cost is primarily on account of two factors, viz., (i) increase in quantum of power purchase, and (ii) increase in rate of power purchase. TPC-D submitted that the Objector has not taken into account the increase in rate of power purchase, and therefore, the computations leads to distorted figures of marginal power purchase cost.

TPC-D submitted that it has provided details of capacity contracted (in MW) by TPC-D from TPC-G and TPC-D’s share (in MU) in total generation of TPC-G on page 72 of the MYT Business Plan Petition. TPC-D added that the cost of power to be purchased from TPC-G is considered same as that presented by TPC-G in its MYT Business Plan Petition.

Commission’s Ruling

The detailed analysis of power purchase expenses for the period from FY 2012-13 to FY 2015-16 are given in Section 5.3 of this Order.

2.8 AVERAGE COST OF POWER SUPPLY

Shri George John submitted that the MYT Business Plan Petition contains mostly technical explanations, which a normal consumer is unable to understand. He submitted that the Average Cost of Supply being higher than the average cost of generation is not acceptable since, the distribution losses are included separately and the wheeling charges are also billed separately. He submitted that he had recomputed the Average Cost of Supply (AcoS) for TPC-D for the entire Control Period from FY 2011-12 to FY 2015-16 and requested the Commission to consider and approve the same. He also suggested that TPC-D may be requested to give comparable figures for the past two years in a column to the left for reference as done in Balance Sheet, etc., while publishing the Public Notice for ARR/APR/Truing up,

(22)

Page 22 of 190 Shri Bapat enquired regarding the reasons for projected increase in Average Cost of Supply from Rs. 5.85/kWh in FY2011- 12 to Rs. 6.65/kWh in FY 2013-14 and then a decrease in FY 2015-16 to R. 5.97/kWh.

TPC’s Response

As regards the suggestion with respect to smoothening of the increase in Average Cost of Supply over the future years, TPC-D submitted that it may always be prudent to recover the cost of supply in the year it is incurred rather than deferring it, as it adds the interest burden in future years. TPC added that the decision regarding the same lies with the Commission at the time of tariff determination.

TPC submitted that it has used an effective and rational basis for projecting each component of the cost of supply during the MYT Control Period. TPC-D submitted that the assumptions and the norms considered for projection of Average Cost of Supply (ACOS) have been explained in detail in the MYT Business Plan Petition and the changes in the ACOS can be appreciated only after analyzing the changes in the individual components of the ACOS.

Commission’s Ruling

The Commission has analysed in detail all the components of the ARR and hence, the ACOS, as detailed in subsequent Sections of this Order. However, the actual ARR for the Control Period will be approved as part of the MYT Order based on the MYT Petition to be filed by TPC-D, and the ACOS will also be calculated in the MYT Order, and has not been computed in the present Order.

2.9 STANDBY POWER FROM LODHIVALI

Shri Bapat submitted that in the Executive Summary of the MYT Business Plan, TPC-D has cited that on September 29, 2011, 1275 MW of generation was unavailable and help was taken from Lodhivali for 32 MW and around 150 MW of load was shed. He enquired from TPC-D regarding the gap between 1275 MW and 182 MW, which has not been accounted for.

Shri Raksh Pal Abrol submitted that TPC-D should not be allowed the projected standby charges since, as it is having its own standby arrangement, it does not require to pay for the same to MSEDCL and also does not have any PPA with RInfra for power supply. He further added that since TPC-D has terminated its relations with RInfra and also TPC-G has set up its own Power Generation Plant for outages purpose at Trombay Thermal Power Station, RInfra

(23)

Page 23 of 190 can have their own arrangement for standby and the consumers of TPC-D should not be burdened with these charges.

TPC’s Response

TPC-D submitted that in its MYT Business Plan Petition, it has mentioned that generation capacity of 1275 MW was not available to service the entire Mumbai Licence Area, on the particular day. However, to compensate for this loss, generation from other Units was picked up and power was drawn from the intra-State system. In spite of this, there was a shortage of about 180 MW which was partially addressed through 32 MW from Lodhivali and partially through rotational load shedding.

Commission’s Ruling

The Commission’s observations and ruling as regards standby support from Lodhivali are detailed in Section 5.3 of this Order.

2.10 CAPITAL EXPENDITURE ON NETWORK ROLL OUT PLAN

As regards the capital expenditure on the network roll out plan, Shri Vinayak Joshi and Nagari Nivara Parishad submitted that TPC-D, in its MYT Business Plan, has not indicated clearly the total capital investment required to complete the network roll out plan as envisaged by the Commission, i.e., replacing the usage of RInfra’s network and for the proposed new development in RInfra’s licensed area. They submitted that the MYT Business Plan also does not reflect the impact of completion of the network roll out plan on the supply cost of TPC-D as the elements will include additional expenses like depreciation, interest, ROE, R&M cost, HR cost, etc. Shri Ramchandra Narayan Patkar also submitted that TPC-D has failed to submit the network roll out plan in its MYT Business Plan Petition.

Shri Vinayak Joshi requested the Commission to approve a Capital Investment Plan, which in the long run will not be detrimental to the interest of the consumers and such Plan should ensure efficient, co-ordinated, and economical distribution system when implemented. Shri Manoj Mishra submitted that TPC-D, in its MYT Business Plan, has mentioned that there are no specific guidelines on network development in the same area by two parallel licensees for optimum network, yet it continues to undertake capital expenses for network laying.

Shri Mahesh Vaswani, Advocate, High Court, asked TPC-D to submit its detailed network development plan for its huge licence area in Mumbai. He submitted that the network development should be first done for existing consumers and then new consumers. He further suggested that TPC-D should submit its roll out plan in slum areas and should proportionately

(24)

Page 24 of 190 lay out its network in both low growth areas and high growth areas instead of just focussing on network development in high growth areas.

Shri Ganesh Khankhar, ALMANAC and Smt. Shreeya Kulkarni representing Siddhi Electricals, submitted that from the Network Development Plan of TPC-D, it has been observed that TPC-D has proposed to lay network only in areas where there is growth and enquired whether Universal Service Obligation was not applicable to TPC-D.

Shri Rakshpal Abrol enquired from TPC-D whether it has approached the State or Municipal Authorities for allocation of space or any developers of societies or commercial and industrial estates to provide land for setting up CSS and DSS that have been proposed in its MYT Business Plan.

Shri Bapat also submitted that as a Distribution Licensee, TPC-D (under universal obligation to supply) will have to cater to any and all prospective consumers. The challenges TPC will face would be to include laying of distributing and service mains cables in congested areas and narrow by lanes (e.g. Kalbadevi, Masjid Bunder) where Utilities – water, telephone cables, have choked up. He further submitted that the distribution substations will occupy/require space, which is very scant if at all available.

TPC’s Response

TPC-D submitted that it has submitted the network development schemes to the Commission for its approval by submitting a Detailed Project Report and the network of TPC-D has been laid based on the schemes approved by the Commission. Further, the issue of duplication of network has to be analysed based on a greater study by a competent authority as well as the obligations of a Distribution Licensee under the provisions of the Electricity Act 2003 and other Regulations.

TPC-D clarified that ‘Growth area’ as mentioned in the MYT Business Plan does not mean high end consumer areas, rather, it indicates areas where load is increasing rapidly and network augmentation is required to meet the growing load. TPC-D added that network rollout with a focus on growth areas may ensure optimum network development.

TPC-D submitted that it has been applying to both MMRDA and MCGM for allotting the space for DSS in the City Development Plan. TPC-D further submitted that it is also approaching various developers and builders for allocation of space for DSS and CSS, and agreed with the observation as regards the challenges faced by TPC-D in this regard.

(25)

Page 25 of 190 As regards the network roll-out plan, TPC-D replied that it has submitted an optimistic network rollout plan, which can be seen on page 424 to page 442 of the MYT Business Plan Petition.

Commission’s Ruling

The Commission has approved the Capital Investment Plan based on the in-principle approved schemes and in accordance with the MERC MYT Regulations, 2011. However, the Commission has made its observations in this Order regarding the network roll out plan and capitalisation projected during the MYT Control Period in Section 5.5 of this Order.

This issue of changeover and network addition by TPC-D was the subject matter of another proceeding before the Commission in Case No. 151 of 2011, and the Commission has issued its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D has to ensure that the rulings of the Commission in Case No. 151 of 2011 are complied with and supply is given to consumers in accordance with the provisions of the EA 2003 and the applicable Rules and Regulations. Further, the Commission directs TPC-D to submit details of capital expenditure for network development separately for RInfra and BEST area.

2.11 COST OF PARALLEL NETWORK

Shri Sandeep Ohri, Smt. Amruta Deshmukh, and Shri Jaywant T. Lad submitted that since RInfra has agreed to share its network with TPC-D, it would not be appropriate to burden the consumers by laying parallel network in such areas and subsequently require the consumers to pay more for the network for which they have already paid once.

Shri Manoj Mishra, Shri Shripad Kamlakar Kulkarni, and Shri Raj Kumar Sharma representing ALMANAC, submitted that laying of parallel network would be against the principle of economical utilization of resources, which would add up to the infrastructure cost and ultimately the consumers will have to bear the brunt with rise in tariff every year.

Shri Vinayak Joshi and Nagari Nivara Parishad submitted that the additional cost because of completion of network roll out plan will be more than the “wheeling charges” that are being paid to RInfra and in such a scenario, the additional cost will not be justifiable compared with the wheeling charges that the changeover consumers are paying to TPC-D. Referring to RInfra’s objection regarding laying of parallel network by TPC-D as stated in the Tariff Order dated 29 July, 2011, Shri Vinayak G. Joshi enquired about the impact of complete parallel network of TPC-D, on RInfra’s Wires cost and the extent to which the network of both the Licensees will remain under-utilized once 100% network roll out is completed by TPC-D in the area of RInfra. He further enquired from the Commission if it has undertaken

(26)

Page 26 of 190 any exercise to ensure that the two parallel networks, which will come into existence, will be optimum and beneficial to the consumers and will further help the two Distribution Licensees to fulfil the obligations under Section 42(1) of the Electricity Act, 2003.

Shri Jacob from Maine Electrical Works, Minerva Premise Co-Op. Soc. Ltd. and Shri Bapat enquired if TPC-D has proposed to lay a parallel network in BEST’s licence area similar to that in RInfra’s licence area. Shri Bapat also enquired about the wheeling and cross subsidy surcharge applicable to such consumers.

Shri Raksh Pal Abrol submitted that the distribution licence of RInfra expired on August 15, 2011. He submitted that the cost of laying the distribution system up to the meter of consumers has already been recovered by RInfra (30% prior to installation and balance during the licence period under the approved Tariff charged). He enquired whether RInfra is still entitled to have the wheeling charges and wheeling losses through TPC-D after August 15, 2011. He added that there is no clarification about the levy of wheeling losses and wheeling charges applicable after August 15, 2011 and cross subsidy provided to the consumers. He further submitted that TPC-D should clarify this issue in its MYT Business Plan.

Shri Ponrathnam submitted that if the load as envisaged in the MYT Business Plan is not achieved, the Wheeling Charges may shoot up depending upon the load factor of the network. He further submitted that in today’s scenario wherein consumers are burdened with wheeling charges, wheeling losses, regulatory asset charge and cross subsidy surcharge, the consumers who opt for supply from TPC-D find TPC-D’s wires cheaper. He added that in case the Wheeling Charges of TPC become higher than the Wheeling Charges of RInfra, it will result in reduction of load on TPC’s Wires, which will further enhance the wheeling charges for TPC.

Shri Ravindra K. Kadam submitted that although the power supply from TPC-D is cheaper compared to that of RInfra, yet the changeover consumers have to pay higher bills on account of wheeling charges.

TPC’s Response

TPC-D submitted that it has proposed the network development schemes to the Commission for its approval by submitting a Detailed Project Report and the network has been laid based on the schemes approved by the Commission. TPC-D further submitted that the issue of duplication of network has to be analysed based on a study by a competent authority after

(27)

Page 27 of 190 considering the obligations of a Distribution Licensee under the provisions of the Electricity Act 2003 and other Regulations.

As regards laying of parallel network in RInfra’s Licence area, TPC-D submitted that the same is the subject matter of Case No. 151 of 2011, which is presently sub-judice before the Commission; hence, it would not comment on the same.

TPC-D further submitted that for the purpose of MYT Business Plan, it has not considered a scenario of using the network of BEST for the purpose of wheeling in the parallel licence area. However, whether it is allowed the use of network of BEST for wheeling the supply of TPC-D will depend on the Judgment of the Hon’ble Supreme Court in respect of the appeal filed by BEST against the ATE’s Judgment dated April 4, 2012 in Appeal No. 149 of 2010 and further, the same will also depend on the Order, if any, passed by the Commission for implementation of the Supreme Court’s Judgment.

As regards laying of network in South Mumbai area, TPC-D submitted that in the Order passed by the Hon’ble Supreme Court dated 10 May, 2012 in Civil Appeal No. 4223 of 2012 wherein for the interim, Tata Power-D is not allowed to acquire any new consumer and release electric supply in South Mumbai area, which is covered by licence area of BEST. In view of this stay order, TPC-D is restricted from laying network in the South Mumbai area.

Commission’s Ruling

Section 2(17) of the EA 2003 mandates a "Distribution Licensee" to operate and maintain a distribution system for supplying electricity to the consumers in his area of supply and Section 42(1) mandates that the duty of a distribution licensee is to develop and maintain an efficient, co-ordinated and economical distribution system in his area of supply and to supply electricity in accordance with the provisions contained in the said enactment. Hence, a distribution licensee is mandated to “develop”; “operate” and “maintain” a distribution system for supplying electricity to the consumers in his area of supply. The act of supplying electricity to the consumers in the area of supply cannot be dehors the duty to “develop”; “operate” and “maintain” a distribution system.

Hence, the Act requires each Distribution Licensee to have its own distribution system for supplying electricity to consumers in its area of supply. TPC also will have to set up its own distribution network in its area of supply, and the utilisation of the existing distribution network of RInfra-D for supplying to change-over consumers is only an interim solution, till such time TPC sets up its own network. The issue of network roll out by TPC-D in the Licence area common to RInfra and TPC, and duplication of network was the subject matter of another proceeding before the Commission in Case No. 151 of 2011, and

(28)

Page 28 of 190 the Commission has issued its Order in Case No. 151 of 2011 on 22 August, 2012. TPC-D is required to abide by the rulings of the Commission in Case No. 151 of 2011.

2.12 DISTRIBUTION LOSSES

Shri Raksh Pal Abrol and Shri Sandeep Ohri showed their concern regarding the increasing trajectory of distribution losses projected by TPC-D and asked TPC-D to submit the reasons for the doubling of distribution losses during the Control Period from FY 2011-12 to FY 2015-16.

Shri Mahesh Vaswani submitted that on one hand, TPC-D has been rejecting supply to low-end consumers and on the other hand, supply to the same low-low-end consumers have been cited as the reason for increasing distribution losses. He added that the Distribution Licensees should submit the details of the distribution losses incurred.

Aishwarya Builders & Developers and Mr. Raj Kumar Sharma representing ALMANAC suggested that as TPC-D’s existing network is very limited, it can design/plan new network in a more efficient and modern way to avoid/reduce losses. They further submitted that TPC-D, in its Business Plan, has projected higher losses with increase in sales and since the projected losses are increasing by around 80% (1.25% to 2.25%) it will have a direct implication on tariff resulting into a tariff hike.

TPC-D’s Response

TPC submitted that it has projected an increase in distribution loss of 0.25 % per annum keeping in mind the projected addition of network to the existing network. TPC requested the Commission to consider the appropriate loss level, for making projections.

Commission’s Ruling

For the purpose of the MYT Business Plan, the Commission has approved the distribution losses trajectory as discussed in Section 5.2 of this Order.

2.13 TRANSMISSION LOSSES

Shri Ulhas Chaudhari suggested that TPC-D should supply 218 MW hydro power to MSEDCL for supply to agricultural and BPL category consumers and in turn it can procure power from Uran Gas Project. He added that this will help in reducing the transmission loss.

TPC-D’s Response

TPC-D submitted that the hydro power has been tied up with TPC-D and BEST and hence, it may not possible to supply to agriculture consumers in MSEDCL area. TPC-D further

(29)

Page 29 of 190 clarified that the transmission loss will not be altered, even by swapping the power sources, as the transmission loss is the composite figure for the entire State of Maharashtra.

Commission’s Ruling

Firstly, this issue is not within the scope of the present Petition, which has been filed by TPC-D for approval of its MYT Business Plan, whereas the suggestion relates to diversion of the hydro generation capacity of TPC-G. Secondly, the Hon'ble Supreme Court has ruled that the Generating Company is free to enter into Power Purchase Agreements with whomsoever it chooses to do so, hence, no directions can be given to TPC-G in this regard. Thirdly, the suggested measure will not help in reducing the transmission losses, as electricity is supplied by displacement method, and the electricity generated is consumed locally, with the energy accounting being done by MSLDC.

2.14 NUMBER OF CONSUMERS

Shri Raksh Pal Abrol submitted that TPC-D has not mentioned its consumer base in its MYT Business Plan. Further, TPC-D has only been able to add about 2,50,000 consumers in Mumbai suburbs after 15 October, 2009, out of 27,00,000 consumers in Mumbai Suburbs.

TPC-D’s Response

TPC-D submitted that it has provided the estimated addition of consumers in Form 3.2 of the MYT Business Plan Petition. TPC-D submitted that it has estimated a total of about 4,28,000 consumers to either changeover or switchover from other Licensees to TPC-D by FY 2015-16.

Commission’s Ruling

As regards consumer base, TPC-D has projected the number of consumers as given in Form F3.2 of the MYT Business Plan Petition. Further, as regards addition of consumers in Mumbai Suburbs, the Commission has considered addition of 50,000 residential consumers (consuming 0-300 units per month on an average) every year from FY 2012-13 to FY 2015-16. The detailed analysis of the sales approved by the Commission for the period from FY 2012-13 to FY 2015-16 is given in Section 5.1 of this Order, which includes the details of number of consumers considered against each consumer category.

2.15 CLASSIFICATION OF CONSUMERS

Shri Sandeep Ohri and Shri Ponrathnam, submitted that classification of consumers into direct consumers, new consumers and switchover consumers is a new terminology introduced in the Business Plan Petition by TPC-D and the same is not in compliance with Section 62(3) of the Electricity Act, 2003.

(30)

Page 30 of 190 Shri Ponrathnam asked TPC-D to submit the basis on which it has categorized the consumers as commercial and industrial, when historically it had only one category, viz., Non-domestic category. Shri Raksh Pal Abrol also submitted that the Commercial Categories and Industrial Categories have not been defined under any notified Regulations or under the Tariff Policy and have been imposed separately. He further submitted that no provision of law has been quoted for defining the Commercial and Industrial Consumers and that no NOC is applicable for these consumers defined under any applicable Central Act or State Act.

TPC-D’s Response

TPC submitted that it has not proposed a new category of ‘switchover consumers’ and the classification has been done only for the purpose of arriving at the demand projections based on the anticipated demand of various consumer categories.

TPC submitted that the objection regarding categorisation between commercial and industrial categories raised by the objector is outside the scope of the present Petition, which is for the approval of MYT Business Plan and not for tariff determination.

Commission’s Ruling

It may be noted that though the Commission has considered the classification between 'changeover' and 'switchover' consumers for the purposes of projections as elaborated in Section 5.1 of this Order, this should not be seen as approval or acceptance by the Commission for this classification.

2.16 DISCRIMINATION AMONG CONSUMERS

Shri Anil Palande, Shri Dinesh Tripathi, Shri Shaikh Gayasuddin, Shri Ganesh Khankar and some others submitted that TPC-D is cherry picking its consumers and is not willing to accept applications given by small consumers, and is only interested in taking big giants. They submitted that this policy adopted by TPC-D hinders the growth of competition in the sector and deprives the consumers of the benefits arising out of such competition.

On similar lines, Shri Vikram Patel submitted that on the one hand, TPC-D rejects the applications of low-end consumers citing excuses like space requirement for substation and on the other hand, commercial and industrial consumers are proactively approached to give power supply without asking space for substation. He added that TPC-D’s policy of cherry picking is evident from its consumer mix wherein maximum consumers are either of commercial category or industrial category while very few consumers belong to the residential category. He requested the Commission to derive some formula by way of which

(31)

Page 31 of 190 all the residential subsidized consumers may be divided equally between the three Distribution Licensees in the suburban area.

Shri Hussain Khan, Shri Dinesh Tripathi, Shri Sunil Chavan, Shri Sanjeet Singh, Shri Namdev Malore, and Smt Sneha Wadke, submitted that TPC-D has rejected the changeover and switchover applications of many low-end consumers mostly residing in the slum areas from Borivali East, Malad, Kandivali, etc., without any valid reasons leading to violation of the Universal Service Obligation by the Distribution Licensee, and also depriving the poor people of cheaper power available in the suburban area of Mumbai.

Shri Balkrishna.S. Amre, Shri Sikander, Shri Deepak Israni, Smt. Vandana Sable, and some others, submitted that many changeover applications have been rejected by TPC-D on the grounds like non-submission of requisite documentation such as PAN Card as identity proof from low income people, category wise consumption, no network in particular areas, space requirement for substation, etc.. They enquired whether it is compulsory to produce a PAN Card as identity proof and why Ration Card was not being accepted by TPC-D towards identity proof. Shri Yadav enquired whether there are some guidelines from the Commission to accept/reject the changeover applications on the basis of category wise consumption.

Shri Chandrakant Mudras, and Smt Sheetal Shah submitted that TPC-D should focus more in improving consumer awareness regarding various requirements for changeover and switchover, etc., so that the consumers do not have to face rejection of applications on the basis of incomplete or improper documentation.

AWESIS Electronics & Electricals submitted that TPC-D should open its office in slum areas to educate the low-end consumers regarding various benefits it is giving to its consumers.

Shri Shaikh Gayasuddin suggested that TPC-D should provide supply to changeover consumer on the basis of photocopy of the RInfra bill only.

TPC-D’s Response

TPC-D submitted that in compliance with the Interim Order of the Commission in Case No. 50 of 2009 dated October 15, 2009, TPC-D requires the necessary documents from the consumers (including changeover consumer).

TPC-D submitted that it accepts any one of the several documents listed in its Application Form as a proof of identity, which also includes Photo Pass and Voter’s Identification Card, and clarified that PAN card is not the only identity proof accepted by it from consumers.

References

Related documents

Process Improvement and the Balanced Scorecard Stakeholder/ Core Competencies Internal Processes People, Learning &amp; Growth Resources Mission Promote professional development of

Among patients with severe COVID-19 on supplemental oxygen but not on mechanical ventilation or ECMO, the IDSA panel suggests treatment with five days of remdesivir rather than

Relative farm income variance is lower in Quebec than all other provinces, which may reflect higher levels of government support for agriculture in addition to the actual

In particular, we document 3 stylized facts: (1) Over the last forty years, state investment tax incentives have become increasingly large and increasingly common among states;

Although banks are not majority owned by foreign investors, increased foreign ownership is expected to have a substantial impact on domestic bank performance.. 3 Following

Results on the statement below respondents being asked whether they were able to fully access and operate iTax system indicated that 18.2 of the respondents disagreed that

In 2019 the Trump administration has supplemented its trade war with new negotiations, including talks with the European Union, the United Kingdom, and Japan.. While these talks

Small-scale traders from neighbouring countries travel long distances as they purchase cheap Chinese goods at Kamwala Market to resell in their local shops and stalls?. For example,