t.p. no. 1 of 2013 dated 20-06-2013
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Determination of Tariff for Generation and Distribution Order dated 20-06-2013
TAMIL NADU ELECTRICITY REGULATORY
COMMISSION----------------------------------------------------------------
Determination of Tariff for Generation and
Distribution
---------------------------------------------
T.P. No. 1 of 2013
Order dated: 20-06-2013(effective from 21-06-2013)
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Determination of Tariff for Generation and Distribution Order dated 20-06-2013
TAMIL NADU ELECTRICITY REGULATORY COMMISSION
(Constituted under section 82 (1) of Electricity Act 2003)
(Central Act 36 of 2003)
PRESENT : Thiru. K.Venugopal Member
Thiru. S.Nagalsamy Member
T.P. No. 1 of 2013
Date of Order: 20-06-2013
In the matter of: Determination of Tariff for Generation and Distribution
In exercise of the powers conferred by clauses (a), (c),(d) of sub-section (1) of section 62 and
clause (a) of sub-section(1) of section 86 of the Electricity Act 2003, (Central Act 36 of 2003) and
all other powers hereunto enabling in that behalf and after considering the views of the State
Advisory Committee meeting held on 26.4.2013 and after considering suggestions and objections
received from the public during the Public hearings held on 03.05.2013, 08.05.2013, 10.05.2013,
and 17.05.2013, as per sub-section (3) of section 64 of the said Act, the Tamil Nadu Electricity
Regulatory Commission, hereby, passes this order for Generation and Distribution Tariff.
This Order shall take effect on and from the June 21, 2013.
Sd/- Sd/-
(S. Nagalsamy) (K.Venugopal)
Member Member
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TABLE OF CONTENTS
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List of Abbreviations
Abbreviation Description
A & G Administration and General Expenses
ABC Aerial Bunched Cables
ABR Average Billing RateAPTEL Appellate Tribunal for Electricity
ARR Aggregate Revenue Requirement
CAGR Compounded Annual Growth Rate
CEA Central Electricity Authority
CERC Central Electricity Regulatory Commission
CFL Compact Fluorescent Lamps
CGS Central Generating Station
COS Cost of Supply
CPP Captive Power Plant
CSD Consumer Security Deposit
CWIP Capital Work in Progress
DA Dearness AllowanceEA Electricity Act
ED Electricity Duty
FRP Financial Restructuring Plan
FY Financial Year
GFA Gross Fixed Assets
G.O. Government Order
GPF General Provident Fund
GoTN Government of Tamil Nadu
HT High Tension
HVDS High Voltage Distribution System
kWh Kilo-watt Hour
LT Low TensionLTOA Long Term Open Access
MU Million Units
MW Mega-watt
MYT Multi-Year Tariff
NTI Non Tariff Income
O & M Operation & Maintenance
PF Power Factor
PLF Plant Load Factor
R & M Repair & Maintenance
O & M Operation & Maintenance
RoE Return on Equity
SLDC State Load Despatch CentreSTOA Short Term Open Access
T&D Transmission & Distribution
TANGEDCO Tamil Nadu Generation and Distribution Corporation Ltd.
TANTRANSCO Tamil Nadu Transmission Corporation Ltd.
TNEB Tamil Nadu Electricity Board
TNERC Tamil Nadu Electricity Regulatory Commission
ToD Time of Day
TP Tariff Policy
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A1:
INTRODUCTION
Preamble
1.1 Consequent to the enactment of the Electricity Regulatory Commissions Act 1998(Central Act 14 of 1998), the Government of Tamil Nadu (GoTN) constituted the
Tamil Nadu Electricity Regulatory Commission (TNERC) vide G.O.Ms.No.58,
Energy (A1) Department, dated 17-03-1999.
1.2 The Commission issued its firsttariff order (Order No 1 of 2002) under Section 29 ofthe Electricity Regulatory Commission Act, 1998, on 15-03-2003 based on the
petition filed by the Tamil Nadu Electricity Board (TNEB) on 25-09-2002.
1.3 Electricity Regulatory Commission Act, 1998 was repealed and the Electricity Act2003 (Central Act 36 of 2003) was enacted with effect from 10-06-2003.
1.4 The Commission notified the Tamil Nadu Electricity Regulatory Commission (Terms
and Conditions for Determination of Tariff) Regulations 2005 (herein after calledTariff Regulations) on 03-08-2005under Section 61 read with Section 181 of the Act.
1.5 The Commission issued separate order (Order No. 2 of 2006) on Transmissioncharges, Wheeling charges, Cross Subsidy surcharge and Additional surcharge on15-
05-2006, based on the petition filed by TNEB on 26-09-2005 under Section 42 of the
Act.
1.6 The Commission had issued its first Renewable Energy Tariff Order on 15-05-2006.Later in 2009, Commission has issued technology wise second Renewable Energy
Tariff Orders. Further on 31-07- 2012, the Commission issued its third Tariff Order
with respect to renewable energy sources.
1.7 The Commission notified the TNERC (Terms and Conditions for Determination ofTariff for Intra state Transmission / Distribution of Electricity under MYT
Framework) Regulations, 2009 (herein after called MYT Regulations) on 11-02-2009.
1.8 Subsequently, TNEB filed an application for determination of tariff with AggregateRevenue Requirement (ARR) for all functions on 18-01-2010, which was admitted by
the Commission after initial scrutiny on 09-02-2010. The Commission issued its
second Retail Tariff Order on 31.07.2010 (Order No. 3 of 2010).
1.9 TNEB was formed as a statutory body by the Government of Tamil Nadu (GoTN) on01-07-1957 under the Electricity (Supply) Act 1948.The Board was primarily
responsible for generation, transmission, distribution and supply of electricity in the
State of Tamil Nadu.
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1.10 Government of Tamil Nadu, in G.O (Ms) No 114 Energy Dept, dated 08-10-2008accorded in principle approval for the re-organisation of TNEB by establishment of a
holding company, namely TNEB Ltd and two subsidiary companies, namely Tamil
Nadu Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation
and Distribution Corporation Ltd (TANGEDCO) with the stipulation that the
aforementioned companies shall be fully owned by the Government.
1.11 Tamil Nadu Generation and Distribution Corporation Ltd. was incorporated on 01-12-2009 and started functioning as such with effect from. 01-11-2010.
1.12 Subsequently TANGEDCO filed tariff petition for determination of tariff forGeneration and Distribution for the year FY 2012-13, the Commission scrutinised and
reviewed the same. After a thorough review the thirdOrder of the Commission on
determination of Generation and Retail Tariff was passed on 30-03-2012 (Order No. 1
of 2012).
Tariff Filing
1.13 The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) hasfiled its application before the Commission on 19-02-2013 for final true-up and
approval of Aggregate Revenue Requirement (ARR) for the year 2010-11based on 5
months audited accounts, provisional true-up and approval of ARR for the year 2011-
12 based on provisional accounts, Annual Performance Review (APR) for the year
2012-13 based on estimates and its Multi Year Tariff petition for 2013-14 to 2015-16
along with tariff revision for 2013-14. There was a delay of 81 days in filing this
Petition and the Petitioner filed an Interim Application for condoning the delay of 81
days.
1.14 The Commission has written three letters to TANGEDCO directing them to file theTariff Petition for FY 2013-14. Copies of letters dated 8thJanuary 2013, 21stJanuary2013 and 8
thFebruary 2013 are placed as Annexure I. After hearing the submissions
of TANGEDCO, the Petition was admitted on 21-02-2103 after condoning the delay
and registered as T.P. No 1 of 2013. Copy of the admission order is placed as
Annexure II
Procedure Adopted
1.15 Regulation 7 (2) of Tariff Regulation specifies the following:The applicant shallpublish, for the information of public, the contents of the application in an abridged
form in English and Tamil newspapers having wide circulation and as per the
direction of the Commission in this regard. The copies of Petition and documents filedwith the Commission shall also be made available at a nominal price, besides hosting
them in the website.
1.16 The public notice containing the salient details with regard to the petition wasapproved and communicated to TANGEDCO on 28-02-2013, with a direction to
arrange publication of the notice in news papers and it was published on 02-03-2013.
The written objections/suggestions/views from stakeholders were invited by 02-04-
2013.
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1.17 The TANGEDCO published the public notice in the following newspapers on March02, 2013.
a) The New Indian Express (English Daily);b) The Deccan Chronicle (English Daily);
c) Dinamani (Tamil Daily) andd) Makkal Kural (Tamil Daily)
1.18 The Petition was placed before the State Advisory Committee on 26-04-2013. The listof Members who participated in the meeting is detailed as Annexure III to this Order.
1.19 The list of stakeholders who have submitted written objections/suggestions/viewsregarding the petition in response to the public notice are detailed in Annexure IV and
Objections/suggestions/views are included in Chapter A2.
1.20 The Commission conducted public hearing at the following places on the dates noted
against each:
Date Day Place Venue
03-05-2013 Friday ChennaiTamil Isai Sangam, Raja Annamalai Mandram, (Near
High Court),5, Esplanade Road, Chennai- 108
08-05-2013 Wednesday TiruchirappalliKalaiarangam Thirumana Mahal,
(Near central bus stand), Tiruchirappalli
10-05-2013 Friday Madurai
Platinum Jubilee Hatsun Aauditorium, Tamil Nadu
Chamber of Commerce and Industry, 178-B
Kamarajar Salai, Madurai
17-05-2013 Friday Coimbatore Corporation Kalaiarangam, R.S. Puram, Coimbatore
1.21 The lists of participants in each public hearing, is attached as Annexure V to thisOrder. The views / comments / objections raised by the participants are discussed in
Chapter A2.
The Electricity Act, 2003, Tariff Policy (TP) and Regulations
1.22 Section-62 of the Act stipulates the guiding principles for determination of Tariff bythe Commission and mandates that the Tariff should progressively reflect cost of
supply of electricity, reduce cross-subsidy, safeguard consumer interest and
recover the cost of electricity in a reasonable manner.
Section-62 (1) of Act states as under:
Section-62 (1):
1. The Appropriate Commission shall determine the tariff in accordance with provisions ofthis Act for
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a. supply of electricity by a generating company to a distribution licensee: Providedthat the Appropriate Commission may, in case of shortage of supply of electricity,
fix the minimum and maximum ceiling of tariff for sale or purchase of electricity
in pursuance of an agreement, entered into between a generating company and a
licensee or between licensees, for a period not exceeding one year to ensure
reasonable prices of electricity;
b. transmission of electricity ;
c. wheeling of electricity;
d. retail sale of electricity.
Provided that in case of distribution of electricity in the same area by two or more
distribution licensees, the Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling of tariff for retail sale of
electricity.
Similarly, the objectives stipulated in the Tariff Policy are as under:
4.0 Objectives of the policy
The objectives of this tariff policy are to:
a. Ensure availability of electricity to consumers at reasonable and competitive rates;
b. Ensure financial viability of the sector and attract investments;
c. Promote transparency, consistency and predictability in regulatory approachesacross jurisdictions and minimise perceptions of regulatory risks;
d. Promote competition, efficiency in operations and improvement in quality of supply.
1.23 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission inexercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff
Orders.
Transfer scheme
1.24 The proposal for Assets Transfer and Employee transfer called as Tamil Nadu
Electricity Board (Reorganization and Reforms) Transfer Scheme 2010 was notifiedby the Government of Tamil Nadu vide G.O. (Ms).No.100 Energy (B2) Department
dated 19th Oct 2010 with the effective date of implementation as 1st Nov 2010. Based
on the above notification TNEB has been re-organized from 1st Nov 2010.
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1.25 This Transfer Scheme is provisional and addresses various issues like transfer ofassets, revaluation of assets and partly addresses the issue of accumulated losses. This
Transfer Scheme envisages deployment of staff of the erstwhile TNEB to
TANGEDCO and TANTRANSCO. The Commission in its earlier Tariff Order No. 3
of 2010 dated 31-07-2010 had suggested in line with the National Electricity Policy
(para 5.4.3) and Tariff Policy that the accumulated losses should not be passed on tothe successor entities and financial restructuring has to be resorted to clean up the
Balance Sheet of the successor companies and allow them to start on a clean slate so
that the successor entities could start performing better. The statutory advices that
have been sent to the Government of Tamil Nadu in this regard are appended as
Annexure VI. The Commission has also issued a statutory advice with regard to the
establishment of a separate Generating Company and establishment of four
Distribution Companies so that the performance of these companies can be improved
and efficiently monitored, which will enable proper investments and growth of the
individual company. This document is appended as Annexure VII.
1.26 Subsequently, as per the request of TNEB Limited, the second provisional transfer
scheme was notified by the State Government vide G.O. (Ms.) No.2, Energy (B2)department, dated 2nd January 2012 with amendment in the restructuring of Balance
Sheet of TNEB for the successor entities i.e. TANGEDCO and TANTRANSCO,
considering the audited balance sheet of TNEB for FY 2009-10 and it had extended
the provisional time for final transfer of assets and liabilities to the successor entities
of erstwhile TNEB up to 31st October 2012. The same has been appended as
Annexure VIII.
1.27 This Transfer Scheme is also provisional and is subject to revision. The transactionsfor 7 months i.e. from 1st April 2010 to 30th October, 2010 do not get reflected in the
opening balance sheet of the TANGEDCO as specified in the Transfer Scheme.
Impact of Provisional Balance Sheet:
a) According to Rule 9 (1) of Transfer Scheme, 2010 issued on 19th October 2010, the
transfer of assets and liabilities under the scheme is provisional and will be made final
upon the expiry of 12 months from the effective date of transfer.
b) The date was extended through notification dated 3rd January 2012 for additional 1
year i.e. upto 31st October 2012 for final transfer of assets and liabilities to successor
entities of erstwhile TNEB.
c) As on the date of filing of this petition, TANGEDCO and TANTRANSCO has sought
permission for extension of 6 months i.e. up to 30.04.2013 for final transfer of assets
and liabilities to successor entities of erstwhile TNEB and the same has beenapproved by GoTN through G.O.Ms(23) dated 8
th March 2013 (Annexure IX).
TANGEDCO and TANTRANSCO have now sought an extension for another six
months i.e. upto 31st October 2013 for final transfer of assets and liabilities to
successor entities of erstwhile TNEB and the same has been addressed to the GoTN
for approval and notification.
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d) In the absence of availability of opening balances based on the final Notification of
GoTN, as per transfer scheme, TANGEDCO has considered the opening balance as
per the provisional transfer scheme notified on 2nd
January 2012.
1.28 Hence, Commission is of the view that once the final transfer scheme is notified by
the State Government, the impact due to revision in the opening balance of FixedAssets, Loan and Equity may have to be revisited and accounted during the tariff
determination process of the concerned year.
Unbundling of TNEB - 1stNovember 2010
1.29 TNEB was unbundled on 1.11.2010. Consequently it started functioning as twoseparate entities namely TANGEDCO and TANTRANSCO. While TANGEDCO
was made responsible for generation and distribution, TANTRANSCO was made
responsible for transmission activities within the State.
1.30 The Commission in its Tariff Order issued on 31st July 2010 as well as 30th March2012 had indicated that the accumulated losses upto the date of unbundling will have
to be dealt with in accordance with the National Electricity Policy and Tariff Policy.
The Commission had also clearly indicated that any losses incurred after 1.11.2010
only are being dealt with in various Tariff Orders subsequent to unbundling. In this
connection, the Commission would like to extract the following three paragraphs from
the Tariff Petition filed by TANGEDCO for the financial year 2013-14.
10.19.6 As per the Tariff Order, the Honble Commission had expressed a view that
the accumulated losses up to the date of unbundling will have to be dealt with in
accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The
provisions of the National Electricity Policy and Tariff Policy envisages that the gap
at the time of unbundling will have to be sorted out by financial restructuring andsupport from the Government rather than passing on the accumulated losses to the
successor entities.
10.19.7 In line with the National Tariff Policy, National Electricity policy and as per
the Tariff Order dated 30th March 2012, TANGEDCO have not claimed any relief on
account of accumulated losses prior to unbundling on 1-11-2010 in the given petition.
The similar stand was taken in the earlier petition also.
10.19.8 The proposal of TANGEDCO is to create regulatory assets for the
unrecovered deficit post unbundling only. TANGEDCO would like to submit that even
though it has requested for creation of regulatory asset of the amount which is
unrecovered deficit after claiming part as a tariff hike, all efforts has been undertakento reduce such deficit and are under process to carry out Financial Restructuring
Plan under the guidance of State Government.
1.31 The revenue gaps arising subsequent to unbundling were dealt with as RegulatoryAsset in the Order of the Commission dated 30th March 2012 and is being discussed
again in this Order.
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Brief Note on Tariff Filing and Public Hearing
1.32 In this Order Commission has dealt with important matters such as tariff schedule,new capacity additions by TANGEDCO, Regulatory Asset Amortisation etc.
1.33 The Commission appreciates the concerns expressed by various stake holders both inthe written comments submitted by them to the Commission as well as the concerns
expressed during the Public Hearings held at Chennai on 3rd
May 2013, Tiruchirapalli
on 8th
May 2013, at Madurai on 10th
May 2013 and at Coimbatore on 17th
May 2013.
1.34 The Commission directs TANGEDCO to properly monitor the on-going projects sothat they get commissioned without further delay. The projects which were scheduled
to get commissioned last year have not been commissioned so far and have to be
commissioned at the earliest. TANGEDCO should also ensure that the
TANTRANSCO completes all the associated transmission system for evacuation of
power from the generating stations which are getting commissioned during the year
2013-14 so that power generated from the generating stations are transmitted up to the
load centres without any bottle necks. The TANGEDCO should ensure that the poweravailable at the sub-stations is taken up to the consumption points by way of
appropriate distribution system. All these capacity addition as well as system
strengthening plans will have to be carried out through a well structured business plan
and individual schemes catering to the need of the business plan. All such plans and
schemes shall be submitted in accordance with the Terms and Conditions of Tariff
Regulations 2005, MYT Regulations as well as Licensing Conditions to the
Commission.
1.35 The submission for approval in this regard so far has been unsatisfactory. TheCommission has been addressing the utilities by way of letters as well as by way of
directions. The compliance to such letters and directions will have to be taken
seriously and must be met without fail.
1.36 Further, list of correspondence with TANGEDCO in regard to data gaps and repliesfurnished are given in Annexure X.
1.37 Various suggestions and objections that were raised on TANGEDCOs Petition afterissuance of the Public Notice both in writing as well as during the Public Hearing,
along with TANGEDCOs reply and the Commission's views have been detailed in
Chapter A2 of this Order.
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1.38 Unmetered supply in the State relates mainly to agriculture and hut consumption.TANGEDCO has been assuming the AT&C loss level by arriving at the consumption
of agriculture and huts. This issue was also a subject matter of Appeal before the
Honble Appellate Tribunal of Electricity. In its last two orders, the Commission has
estimated agricultural consumption based on the CEA formula. The Commission had
also directed TANGEDCO to furnish sample data of the metered connections foragricultural supply for FY2012-13. The data so provided was analysed, and it was
observed that the average consumption per HP had increased by 9.2% over that of FY
2011-12. Based on this data the average hours of supply per day amounted to 3.67
hrs/day which is marginally higher than that for FY 2011-12. The Commission
recognizing the fact that FY2012-13 was a year of severe shortage of power along
with being a drought year, took the view that it is improbable that the agricultural
supply hours could have been higher than that of the previous year. Hence the
Commission has assumed the average consumption per HP at the same rate as in
FY2011-12. Based on the same data the energy requirement for agriculture has been
estimated for the second control period. Similarly, estimates have been made for
consumption by huts duly reflecting the number of huts with and without televisions
and also factoring in the consumption on account of distribution of free CFL lamps,mixers, grinders and fans.
1.39 TANGEDCO in its petition this year has proposed tariff hike for two categories ofconsumers namely Hut and Agriculture Category, tariff rates and conditions for all
other categories is proposed to be as per prevailing tariff order dated 30th March
2012.
Fixed Charges for Tariff Category LT-1B for Hut Consumers to be increasedfrom Rs. 60/Month/Service to Rs. 125/Month/ Service.
Fixed Charges for Tariff Category LT-IV for Agriculture Consumers to beincreased from Rs. 1750/HP/Annum to Rs. 2500/HP/Annum.
1.40 The cost of entire consumption on account of huts as well as on account ofagricultural consumption is being borne by the Government of Tamil Nadu by way of
subsidy under Section 65 of the Electricity Act 2003. In this matter, GoTN has given
commitment letter No. 2369/A1/2013 dated 10th
June 2013 detailing provision of
tariff subsidy to LT IB and LT IV categories of electricity consumers. GoTN has also
stated that the budget provision for necessary additional expenditure has already been
made in the budget for the year FY 2013-14 and a formal order of GoTN in this
regard will be issued shortly. The commitment letter received from GoTN is placed at
Annexure XI. The GoTN has further clarified vide letter No. 2369/A1/2013 dated
10th
June 2013 that the subsidy for other category of consumers as provided in FY2012-13 would continue for FY 2013-14 and necessary G.O will be issued separately.
This letter has been appended as Annexure XII.
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Applicability of Order
1.41 This Order will come into effect from 21-06-2013. The Generation and Retail Tariffcontained in this order will be valid till 31-03-2014. TANGEDCO shall file necessary
petition in accordance with the Regulations in a timely manner to enable the
Commission to pass the next Tariff Order in time.
Layout of the Order
1.42 This Order is organised into seven Chapters:
Chapter A1 provides details of the tariff setting process and the approach ofthe Order;
Chapter A2 provides a brief of the Public Hearing process, including thedetails of comments of various stakeholders, the Petitioners response and
views of the Commission thereon;
Chapter A3 provide details/ analysis of the final true up for FY 2010-11,provisional true-up for FY 2011-12 and annual performance review for FY
2012-13;
Chapter A4 provides analysis of the petition for determination of theAggregate Revenue Requirement for FY 2013-14 to FY 2015-16;
Chapter A5 provides details of determination of Open access charges andRetail Supply Tariff for all consumer categories, and the approach adopted by
the Commission in determining the tariff;
Chapter A6 gives the tariff schedule applicable for the consumers; and
Chapter A7 provides details of the Directives of the Commission forcompliance by TANGEDCO.
1.43 The Order contains the following Annexure, which are an integral part of the TariffOrder.
Annexure I Copies of letters written to TANGEDCO directing them to filethe Tariff Petition for FY 2013-14
Annexure II Copy of the admission order
Annexure III The list of participants at the State Advisory Committeemeeting.
Annexure IV The list of stakeholders who have submittedobjections/suggestions/views regarding the petition in response to the public
notice.
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Annexure V The lists of participants at each public hearing.
Annexure VI Copy of the statutory advices given by the Commission sent tothe Government of Tamil Nadu.
Annexure VII Copy of statutory advice of the Commission regarding theunbundling of TANGEDCO into a separate Generating Company and four
Distribution Companies.
Annexure VIII Copy of second provisional transfer scheme as notified bythe State Government vide G.O. (Ms.) No.2, Energy (B2) department, dated
2nd January 2012.
Annexure IX Copy of extension for finalization of transfer scheme upto 30th
April 2013 notified by the State Government vide G.O.Ms(23) dated 8th
March
2013
Annexure X List of letters of TANGEDCO with regard to data gaps andreplies.
Annexure XI Copy of Commitment letter received from GoTN for providingthe tariff subsidy to Agriculture and Hut consumers.
Annexure XII Copy of Letter received from GoTN extending the subsidy forother category consumers in FY 2013-14.
Annexure XIII Copy of Letter received from GoTN regarding amortizationof regulatory asset.
Approach of the order
1.44 Commission in its last order had stated that the Capital Account and the RevenueAccount has not been maintained separately in the course of operation of TNEB and
an attempt is being made in this order to segregate the same to bring financial
discipline in the successor entities.
The Commission has adopted the Multi Year Tariff (MYT) approach for tariff
determination since its tariff order in FY 2010-11. The first control period of 3 years
was upto FY 2012-13, during which time the Commission has issued two tariff orders
during FY 2010-11 and FY 2012-13. The second control period spanning 3 yearsstarts this year i.e. in FY 2013-14 and is upto FY 2015-16.
1.45 The extract from the relevant portion of the TNERC (Terms and Conditions forDetermination of Tariff for Intra state Transmission / Distribution of Electricity under
MYT Framework) Regulations, 2009 regarding control period is extracted below.
3). Multi year Tariff framework
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i) Control Period
The control period under the MYT framework shall be for a duration of 3 years. The
year preceding the first year of the control period shall be the base year.
1.46 The broad approach adopted in this order is given below:
The Commission has taken into consideration the second provisional transferscheme as notified by the State Government vide G.O. (Ms.) No.2, Energy
(B2) department, dated 2nd January 2012 with amendment in the restructuring
of Balance Sheet of TNEB for the successor entities i.e. TANGEDCO and
TANTRANSCO.
The Commission has referred to the audited accounts of TANGEDCO for FY2010-11 (5 months) for truing up the expenses of the utility. The Commission
has undertaken a review of the various performance parameters as well as the
controllable cost factors. Based on the assessment the Commission have
arrived at the allowable ARR and revenue recovered by the utility. Also,Commission for the comparison purposes arrived at the approved figures for
FY 2010-11 (5 months) in its last order on a pro-rata basis.
The same exercise has been undertaken for the provisional true-up for FY2011-12 based on the provisional accounts and the ARR and revenue
recovered for the year have been arrived at.
For the FY 2012-13, Commission sought actual figures for the year fromTANGEDCO. Based on the information so obtained and based on provisions
of the Tariff regulation as well as trend in the approved costs in the previous
two years, the ARR and revenue recovered have been arrived at.
For the Second control period between FY 2013-14 to FY 2015-16 theCommission has extended the rationale adopted for allowing/ disallowing
various controllable components of the ARR for the first control period, to
project the ARR for the second control period and determine tariff for FY
2013-14.
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A2:
STAKEHOLDERS COMMENTS, TANGEDCOS REPLY AND
COMMISSIONS VIEW
2.1 The following section summarizes the views/ objections/ suggestions given bystakeholders in writing as well as at the public hearings. TANGEDCOs reply to these
views/ objections/ suggestions and the Commissions view on the same.
1.
General Issues
Stakeholder Comments
2.2 Commission is requested to appoint a consultant to study the entire operations andfinances of TANGEDCO to identify improvements that are needed to comply with the
Act & various policies and rules made there under.
2.3 Commission must direct Transfer of Assets & Liabilities to be completed by end ofJune 2013 and Audited Accounts as on 31.3.2013 prepared and published by
31.08.2013
2.4 The impact of FRP on the tariff is to be spelt out and the said agreement must bepublicised.
2.5 Commission to engage a Cost Accountant to make inter firm comparisons. Request toconsider Pan India and Abroad firms for costs of TANGEDCO, fix benchmark cost
and performance standards.
2.6 Financial Accounting, Cost Accounting Code & systems of TANGEDCO should bepublished so that it helps make meaningful comments on the petition.
2.7 Commission must reiterate that Generation and Distribution functions ofTANGEDCO should be separate. Unless this is done the costs of generation and
distribution cannot be accurately ascertained.
2.8 Commission to write to GoTN to drop Electricity tax as it distorts the tariff system.
2.9 Directives of Commission are not being adhered by TANGEDCO. TNERC isrequested to monitor the directives individually and intensively and make
TANGEDCO fall under the groove measure, monitor and manage and understand
that such directives are only for the performance improvements. Commission to direct
TANGEDCO to give a time bound plan to implement directives of the Commission
over the years. The progress report should be publicized at the end of each calendarquarter.
2.10 Power injected by OA consumers into the Grid to be deducted from their recordedconsumption when there is load shedding at the consumer end
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2.11 From the balance sheet of TANGEDCO it is noted that the current liabilities are morethan the current assets resulting in management of working capital requirement with
the current liabilities in which case inclusion of interest on working capital for the
total current assets is not correct and fair as no funds was actually deployed.
2.12 TNERC must also take strong action to curb tendency of non-performance both in thetechnical and financial fronts, if necessary by levying a fine say Rs.500.00 millionsfrom TANGEDCO. There is precedence with MERC on this score, to bring about a
disciplined approach. TANGEDCO is trying to play the same game as it has done a
couple of years back not asking for a tariff revision and requesting creation of
Regulatory Assets. TNERC may well earmark this fine from the revenues of 2013-
14 for certain specific purpose of improving normative parameters, which have
exceeded beyond limits.
2.13 TANGEDCO should have consumer representation within its organisation.
2.14 Commission to make a provision for instituting comprehensive and integrated
Information Management system within TANGEDCO
2.15 Commission to have a consumer advocacy cell based on KERC model.
2.16 Benefits of financial restructuring plan have not been furnished in the petition.
2.17 Tamil version of the Tariff Petition shall be made available.
2.18 Uninterrupted power supply shall be given in the night period.
2.19 TANGEDCO shall aggressively implement the demand side management.
2.20 Energy conservation shall be encouraged by using modern equipments. Renovationand modernization shall be undertaken in distribution lines.
2.21 Uninterrupted power supply shall be given to the farmers.
2.22 This public hearing should be conducted in two ways by the Commission.
To assess the performance and the ways to identify how to provide quality serviceby the TANGEDCO to public.
To increase the tariff.
2.23 White paper statement should be released about the TANGEDCOs accumulated loss.
2.24 White paper statement should be released about the future generation plan and how tomitigate this loss in future.
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2.25 Privatization of distribution particularly distribution in the city is mandatory as per thedirection dated 05-10-2012 issued by the Ministry of Power. It seems that
restructuring plan for TANGEDCOs accumulated loss has been announced and the
Government of Tamil Nadu has accepted the plan. This plan should be under
consideration.
2.26 Commission to pass an order to keep Deemed Demand concept in respect of thirdparty power.
2.27 Commission to insist on TANGEDCO to publicize the facts of agreement betweenGovernment and TANGEDCO as far as restructuring the losses are concerned
2.28 Identify ways to compensate the loss of TANGEDCO, rather than transferring thesame to Government.
2.29 Vacancies of Wiremen and other subordinate employees of TANGEDCO should befilled in all the TANGEDCO offices to provide good service to the public.
2.30 Smart meter system which is now used in foreign countries should be nowimplemented in Tamil Nadu. The consumers who consume power during peak hour
should be charged more.
2.31 It is stated that power can be produced at a cost of Rs.2.14. However, high costpower at the rate of Rs.17 to 18 is purchased from the private parties even after
restrictions by the Commission. The power purchase from high cost power stations
has been supplied to the MNCs at a lower cost.
2.32 Uninterrupted power supply should be given to the agricultural services as given inSEZ and in Chennai. All power generated at Neyveli, Kudankulam etc. to be given to
Agriculture in Tamil Nadu.
2.33 Uninterrupted power supply given to the MNCs shall be stopped.
2.34 Freebies were announced by the Government without considering the power shortageand without proper planning. The Commission should have pointed out the issue.
2.35 LED Street lighting is important in system T & D loss reduction. Recognize cleantechnologies like LED lighting and consider a preferential tariff
2.36 For energy conservation purpose LED lights may be fixed in all the streets of the
Villages, Towns, and cities instead of using tube lights.
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TANGEDCOs Reply
Appointment of consultant
2.37 The accounts of TANGEDCO are being audited by a firm of qualified chartered
accountants as per the requirements of the companies Act 1956.In addition to theabove, being a government company the functioning of TANGEDCO is also subject
to commercial and expenditure audit by the Accountant General. Moreover, the
Honble TNERC is vetting the tariff petition filed by TANGEDCO by appointing a
reputed consultancy firm. Hence, the necessity to appoint a consultant to go into the
entire operations and finances of TANGEDCO does not arise.
Final Transfer Scheme
2.38 The Board has approved the proposal to seek extension of time by another six monthupto 30th October 2013 for final transfer of assets and liabilities to the successor
entities of erstwhile TNEB and the proposal is under the consideration of Government
of Tamil Nadu. Steps are being taken to complete the audit of annual accounts for theFY 2012-13 and to place the same before the AGM of TANGEDCO on or before
30.09.2013 which is the time limit prescribed under the provisions of the companies
Act 1956.
Compliance of Directives
2.39 The status of progress on directives issued by Honble TNERC in tariff order dated30th March 2012 has been furnished in the tariff petition filed before the Honble
TNERC on 19th February 2013. The details of these directives are available on the
TNERC website.
Financial Restructuring Plan
2.40 At the time of submission of tariff petition to the Honble TNERC, the FRP processwas in its initial stage and hence the impact of the same could not be taken into
consideration in the tariff petition. The given details of the FRP are still being worked
out and if the same is finalised before the issuance of Tariff Order it will be submitted
to the Honble TNERC for its consideration.
Cost Accounting system of TANGEDCO
2.41 Each generation and distribution utilities in India have their own power source owing
to their geographical location. Hence, comparing the cost of TANGEDCO with otherutilities may not by itself give the desired results. However, steps are being taken to
conduct the cost audit by a qualified cost Accountant as per the requirements of the
Companies Act,1956.
Comparison with Other Utilities
2.42 The contention of the stake holder that the cost needs to be compared with other staterequires consideration of the following issues:
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(a)The difference in power generation mix and consumer mix
(b)Power purchase expenses considering the diversity in the sources.
(c)Geographical diversity in the state considering the key point that TANGEDCO
is supplying electricity to wide spread area of Tamil Nadu as compared toother states of India.
(d)Differential policies adopted by the State Government in relation to industrial,economic and agricultural sector.
(e)Considering the above parameters the comparison should be made on commonparameters.
Bifurcation of Generation and Distribution Function
2.43 These are the suggestion from the stake holders to the Honble Commission.
Electricity Tax
2.44 TANGEDCO submits that the issue relating to dropping of electricity tax does notcome within the purview of tariff revision exercise. It is a policy decision to be taken
by the Government of Tamil Nadu.
OA consumption to be deducted from recorded consumption
2.45 TANGEDCO submits that there is no such provision under the Act as well as in theRegulations notified by the Commission.
Levy of Demand Charges
2.46 The demand charges are intended to cover the fixed cost of TANGEDCO includinginterest, depreciation employee cost, repair and maintenance cost etc., and hence even
if there is no power supply the demand charges would be levied. The recovery of
fixed charges does not have any relevance to the hours of supply or the quantum of
energy supplied.
2.47 The Honble APTEL in appeal No:257 of 2012 preferred by The Southern India MillsAssociation (SIMA), Coimbatore against the Tariff Order No:1 of 2012
dated:30.03.2012 issued by the Honble TNERC has upheld the order of TNERC
with regard to levy of demand charges.
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Negative balance in Shareholders funds
2.48 As per the Tariff Order, the Honble Commission had expressed a view that theaccumulated losses up to the date of unbundling will have to be dealt with in
accordance with Para 5.4.3 of the National Electricity Policy and Tariff Policy. The
provisions of the National Electricity Policy and Tariff Policy envisages that the gapat the time of unbundling will have to be sorted out by financial restructuring and
support from the Government rather than passing on the accumulated losses to the
successor entities.
2.49 In line with the Tariff Policy, National Electricity policy and as per the Tariff Orderdated 30th March 2012, TANGEDCO have not claimed any relief on account of
accumulated losses prior to unbundling on 1-11-2010 in the given petition.
Supply of power to MNCs
2.50 There is no concession in tariff for the MNCs. Only uninterrupted power supply with
the tariff on par with other consumers is given.
Energy Efficiency Measures
2.51 TANGEDCO is taking steps to replace incandescent bulbs with CFLs in Villupuramand Kanyakumari districts. The same will be duplicated in other districts. Out of the
cost of Rs 60/- per CFL, TANGEDCO will pay Rs 45/- and consumer will pay Rs
15/-.
Commissions View
2.52 The Commission appreciates the concerns expressed by various stake holders both inthe written comments submitted by them to the Commission as well as the concerns
expressed during the Public Hearings held at Chennai on 3rd
May 2013, Tiruchirapalli
on 8th
May 2013, Madurai on 10th
May 2013 and Coimbatore on 17th
May 2013.
Transfer of Assets & Liabilities
2.53 The Transfer of Assets & Liabilities was to be completed by 30th April 2013. ButTNEB has sought for another 6 months extension from the Govt. The Commission is
of the opinion that this has to be completed at the earliest. The Commission directed
the utility to complete it as soon as possible through GoTN.
Financial Restructuring Plan
2.54 Commission would like to clarify that this issue can be examined only when the finalFRP scheme is submitted to the Commission.
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Segregation of Generation and Distribution business
2.55 Opinion of Commission on segregation of generation and distribution function wasconveyed as statutory advice on 27
th October 2010 which is annexed in this tariff
order.
Tamil Version of Petition must also be available
2.56 Commission has already given a direction on this matter to TANGEDCO for makingthe Tamil version of the Petition available.
Impact of freebies doled out by Government
2.57 Commission would like to reiterate that it functions within the powers derived fromthe Electricity-Act 2003 and cannot interfere in the policies of GoTN
Energy Efficiency and Demand Side Management
2.58 Demand Side Management is an effective tool to meet the demand supply positionin the short term. Being a cheaper option, it helps in meeting the demand as compared
to capacity addition. Also, it enables to reduce the carbon emission and defers the
investment to subsequent years.
2.59 It is necessary to create awareness among users for promoting Energy Conservationand Demand Side Management.
2.60 TANGEDCO should motivate the domestic and agriculture sector to adopt DSMmeasures. Awareness has to be created for using Star Labelled Appliances which may
cost more but would pay back by way of energy saving.
2.61 To facilitate DSM measures in the state, the Commission has notified the DSMregulation on 26
th February 2013. TANGEDCO is to submit relevant schemes for
implementing DSM and Energy Efficiency schemes to the Commission as specified
in the Regulation.
2.62 Use of CFLs should be encouraged with adequate arrangement for disposal ofunserviceable CFLs.
Restriction & Control
2.63 Various issues raised by stakeholders relating to Supply Code Regulations and R&COrders do not fall under the purview of present exercise of Tariff determination.
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Working Capital
2.64 Current liabilities are due to non payment of dues by TANGEDCO. HoweverCommission cannot assume that TANGEDCO will default and accordingly not allow
for any working capital. For the purpose of this order Commission is allowing
working capital based on norms laid out after considering available consumer securitydeposits.
Tax Exemption
2.65 On suggestions regarding waiving off electricity tax during the period of R&Cmeasures, the Commission would like to specify that Electricity Generation Tax or
Electricity Consumption Tax is in the domain of Government of Tamil Nadu.
Quality of Supply
2.66 As regards uninterrupted power supply, the Commission directs TANGEDCO to
maintain quality of supply as specified in Tamil Nadu Electricity DistributionStandards of Performance Regulations, 2004 as amended in which it specifies that
3. Quality of Service
Quality of service means providing uninterrupted, reliable electric supply at
stipulated voltage and frequency, which will be the end result of its planning,
designing of network, operation and service management to ensure stability in supply
and prompt compliance of consumers complaints on metering and billing. The supply
with frequent power failure, fuse of calls, voltage fluctuations will not ensure
continuity in supply. These factors determine the degree of satisfaction of the
consumers.
2.67 Also, the Commission feels that if the capacity addition would be on time, asdiscussed in later chapters, the power supply situation should improve in the second
control period leading to improved supply hours.
2.68 TANGEDCO is also required to take all necessary steps to ensure quality of service asper regulations.
2.
Delay in filing
Stakeholder Comments
2.69 The inordinate delay on the part of TANGEDCO had been condoned by theCommission. We regret that this should not have been done and instead the
Commission could have suo motu revised the tariff. There is precedence of this type
in one of the orders of West Bengal Electricity Regulatory Commission.
2.70 The tariff petition which had to be filed in November 2012, has been filed only inFebruary 2013. The reason for the delay shall be informed to the public.
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TANGEDCOs Reply
2.71 The delay in filing of the tariff petition has been caused mainly because of thefollowing reasons.
The Financial Restructuring Plan (FRP) which was notified by theGovernment of India on 5
th October, 2012 was in the process of being
finalized with multitude of meetings with various bankers during the months
of October, November and December of 2012.
Thereafter the audit of accounts for the year FY 2011-12 was under processand was completed by 31
stJanuary 2013.
Commissions View
2.72 Commission had been monitoring the filing of the petition vis--vis the due date offiling it i.e. 30
th November 2012. The commission had through two letters to
TANGEDCO, called for immediate filing of the ARR and tariff petition. The petitionwas eventually filed on 19
thFebruary 2013. After hearing the submissions made by
TANGEDCO, the Commission condoned the delay in filing this petition. The
Commission has directed TANGEDCO to file its petition for ARR and tariff for the
next year by the appointed date.
3.
O&M Expenses
Stakeholder Comments
2.73 Inter-firm comparison of costs especially O & M costs for TANGEDCO should be
done.
2.74 In the O & M expenses, the employee cost is projected to increase by 50% (Table 83).The norm for the industry needs to be checked.
2.75 The Government of Tamil Nadu has accepted the loss of TANGEDCO of aboutRs.25,512 Crores as on 31.11.2010. But the Government has not agreed to take the
pension liability of the employees and termed it as employee expenses. If it is
considered as employee expenses the same can be passed on to the tariff which may
affect the public. Therefore, the Government shall take the pension contribution as a
liability. The Commission shall direct the TANGEDCO to implement the directions
given in 2010.
TANGEDCOs Reply
2.76 The employee expenses submitted in the tariff petition for FY 2012-13 is based on theactual expenses incurred. The Honble Commission in its last tariff order had
approved the employee cost for TANGEDCO based on the apportioning of expenses
between TANGEDCO and TANTRANSCO. The industry norms cannot be compared
due to the geographical diversity in the state and for the reasons that electricity is
being supplied to widespread areas within the state of Tamil Nadu.
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Commissions View
2.77 Commission is guided by following regulations
2.78 Regulation-25 of TNERC Tariff Regulations:
25. Operation and Maintenance Expenses
The operation and maintenance expenses shall be derived on the basis of actual
operation and maintenance expenses for the past five years previous to current year
based on the audited Annual Accounts excluding abnormal operation and
maintenance expenses, if any, after prudence check by the Commission. The
Commission may, if considered necessary engage Consultant / Auditors in the process
of prudence check for correctness.
The average of such normative operation and maintenance expenses after prudence
check shall be escalated at the rate of 4% per annum to arrive at operation and
maintenance expenses for current year i.e. base year and ensuing year.
The base operation and maintenance expenses so determined shall be escalated
further at the rate of 4% per annum to arrive at permissible operation and
maintenance expenses for the relevant years of tariff period.
2.79 However as submitted by TANGEDCO, Commission is of the view that it is notappropriate to project the expenses for the next control period based on the actual
expenses incurred prior to unbundling of power utilities. Hence in this order
Commission projects the O&M expenses for next control period based on the audited
accounts for FY 2010-11 and provisional accounts for FY 2011-12.
2.80 Commission acknowledges the usefulness of benchmarking of O&M expenses andcomparison with other utilities, however considering the fact that the utilities in the
state are still in transition such comparison will not be of much help in the early stages
of restructuring.
4.
Fuel Cost and FPAC
Stakeholder Comments
2.81 Increased use of oil by TANGEDCO is increasing the fuel cost and TNERC needs tospecifically pay attention. TANGEDCO should be asked to justify the fuel
consumption rates and costs by comparing with those of other similarly placed
utilities in India.
2.82 TANGEDCO should have submitted the Petition for Fuel Price Adjustment Charges(FPCA). It is said that it has been granted an extension of time of four months. It has
not been complied with. The Commission has asked for its readiness to submit the
same.
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2.83 TANGEDCO to justify the fuel consumption rates vis-a-vis other utilities in India andcompare costs of its coal thermal plants vis-a-vis Central Generating stations.
TANGEDCOs Reply
2.84 The claim for FPCA will be filed once the power situation in the state improves andR&C measures are lifted.
Commissions View
2.85 Adjusting FPAC charges in the middle of the year has been allowed by the ElectricityAct 2003 under section 62 sub section 4, which states:
No tariff or part of any tariff may ordinarily be amended, more frequently than once
in any financial year, except in respect of any changes expressly permitted under the
terms of any fuel surcharge formula as may be specified.
2.86 Also, the APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) hasstated that
(vi) Fuel and Power Purchase cost is a major expense of the distribution Company
which is uncontrollable. Every State Commission must have in place a mechanism for
Fuel and Power Purchase cost in terms of Section 62 (4) of the Act. The Fuel and
Power Purchase cost adjustment should preferably be on monthly basis on the lines of
the Central Commissions Regulations for the generating companies but in no case
exceeding a quarter. Any State Commission which does not already have such
formula/mechanism in place must within 6 months of the date of this order must put in
place such formula/ mechanism.
2.87 Hence in line with the in principle approval of the implementation of the FPCAmechanism in the State, the Commission has decided not to allow the 4% escalation
in fuel price as sought for by TANGEDCO in its petition for the current MYT period.
TANGEDCO shall file quarterly FPCA petitions to the Commission to recover the
actual cost of fuel incurred and the actual cost of power purchase, if the same are in
variance from the figures approved in this Tariff Order.
2.88 Therefore, the Commission clarifies that FPAC exercise is important and should beimplemented and it is irrespective of annual tariff increase.
2.89 TANGEDCO was allowed to withdraw FPCA Petition for filing a corrected Petition.
However, they did not do it and filed the Tariff Petition beyond the due-date. Afterthe issue of this order, TANGEDCO shall file FPCA Petition every quarter as no
escalation has been considered for future power purchase and fuel price adjustment.
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5. Generation and Power Purchase
Stakeholder Comments
2.90 TANGEDCO should explain how NLCs 600 MW station of the same vintage as
Ennore is functioning well. In the context TANGEDCO should refer the coal handlingissues to NTPC. Cost from TANGEDCO plants is higher when compared to CGS i.e.
the cost of power purchase from TANGEDCOs own power is Rs. 4.36 p.u where as
cost of power purchase from Central Generating stations is only Rs. 3.01 p.u. This
shows that TANGEDCOs fuel management is inefficient.
2.91 TANGEDCO should be asked to give cost comparison of its coal based generatingstations with those of CGS to justify higher prices.
2.92 In estimating the Capital Costs, capitalization of the new plants shows greatdivergence (Table 63). MTPS III has a cost of about Rs 6 Crores per MW while
NCTPS Stage II has a cost of Rs 4.85 Crores. The difference needs to be explained.
2.93 Power Generation in TANGEDCOs own plants like Valathur and Mettur is gettingdelayed. Action shall be taken to speed up the works.
2.94 Delay in starting generation in existing power generation stations like Mettur,Valuthur, Kuthalam etc. should be explained.
2.95 TANGEDCO to present the actual conditions of Mettur 600 MW plant before thepublic so as to know the status of money spent
2.96 There is no need for private power generation. Government should make
arrangements for own generation.
2.97 Power cut has been reduced due to 3000 MW generated by the Wind Mills. But windmills are not permitted to generate and due to that about 1000 MW is wasted. On the
other hand 40% power cut still exists. High frequency is stated to be the reason for not
permitting the wind mills to generate. Action should be taken to utilize the entire
power generated by the wind mills during May to September.
2.98 It has been announced that Sandynallah Hydro Electric Project will be completed in10 years to meet the variations in the wind generation. The project shall be completed
within a short span of time.
2.99 The power generated by the wind mills is consumed by various consumers in differentdistricts. The wind energy has to be adjusted for peak hour, non peak hour and
normal hours. It is doubtful whether the accounting of wind energy is done properly
by the TANGEDCO. Since it is not possible to take readings in the large number of
wind mills, readings furnished by the consumers may be used for billing resulting in
huge loss to the TANGEDCO. The Commission shall form rules and regulations for
adjustment of generation from wind mills.
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2.100 Commission in the last tariff order directed TANGEDCO not to purchase power fromthe four private parties GMR, PPN, Samalpatti and Madurai power corporation. But
TANGEDCO has purchased power from the four private parties. It may be clarified
whether the Commission is functioning as a spectator or regulator. Power was
purchased at a higher cost.
2.101 Automatic meter reading facility shall be provided in the wind mills to properlyaccount the wind generation.
2.102 The entire power i.e. 100% share from the Kudankulam, Kalpakkam and Neyveli hasto be allotted to Tamil Nadu. 2 Reactors are ready in Kudankulam and the total
capacity of 2000 MW of power can be generated. But only 950 MW was allotted for
Tamil Nadu.
2.103 New projects should be taken up to increase own generation and provideuninterrupted power supply instead of purchasing costly power from private players.
2.104 In Tamil Nadu quality of coal is very bad. Purchasing this kind of bad quality coal isthe only the reason for less generation. This should be avoided.
TANGEDCOs Reply
2.105 Till 2006, 2007 there was no shortage of power as there was no gap between thedemand and supply. After 2006, 2007 the demand increased due to economic
development and boom in the IT sector. Power plants cannot be installed within a
few months. For installing a 1 MW plant, it costs Rs 5 to 5.5 Crores/MW and takes
minimum of 4 years after work is started. Therefore, plans were drawn to install
power plants. The NTPC Vallur plant and North Chennai plant will come up by next
month. The NLC JV plant of 1000 MW is underway and will come in by end of the
year. By then, the demand will be equal to supply.
2.106 In the year 2012-2013, own thermal power stations performed well. Due to failure ofmonsoon, performance of hydro power stations were affected badly. Kuttalam gas
station has been put into service after attending the major repair work.
2.107 The coal prices in domestic and international market have witnessed hike during thepast and accordingly projection have been made in the tariff petition. The details of
fuel prices and cost have been submitted in the tariff petition.
2.108 About 4000 MW will be available as additional generation, power cut problem may
be resolved gradually and will be lifted by December 2013.
2.109 MTPS and NCTPS are allotted on the basis of EPC contract. The tenders wereselected on the basis of international competitive bidding. The foreign components
involved in MTPS (Rs.1914 Crores) is much more than the foreign component in
NCTPS projects (370.95 Crores) and hence, the cost per MW is higher.
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2.110 Power purchase from the IPPs is resorted to only to meet the demand especiallyduring summer and examination time. Even this got approved from TNERC
subsequently.
Commissions View
2.111 The Central Generating Stations viz. Kudankulam, Kalpakkam and NLC will notcome under the jurisdiction of the Tamil Nadu Regulatory Commission or under the
State Government. Hence, the views submitted in relation to these stations are not
within the purview of this State Commission.
2.112 The Commission directs the TANGEDCO to properly monitor the on- going projectsso that they are commissioned without further delay.
2.113 The TANGEDCO should also ensure that the TANTRANSCO completes all theassociated transmission system for evacuation of power from the generating stations
which are getting commissioned during the second control period, so that power
generated from the generating stations are transmitted up to the Load Centers withoutany bottle necks. Necessary upgradation of the distribution system shall also be done
by TANGEDCO for effectively carrying power to the consumers
2.114 TANGEDCO has not provided necessary information for approving capital cost.Commission is provisionally accepting the TANGEDCO submission.
2.115 As regards the generation cost of new capacity addition, the Commission directedTANGEDCO to file separate petition for the approval of capital cost and tariff
determination of new power plants. However, the Commission in this Tariff Order for
the purpose of power purchase has provisionally considered the fixed and variable
charges for new power plants.
2.116 Commissions Open Access Regulation 2005 specifies that open access customershall provide metering arrangement as per the applicable CEA regulation and meters
should have facility to communicate the readings to SLDC or as may be specified by
the Commission.
2.117 Cost comparison between ISGS and TANGEDCO generating stations has to be onlike to like basis. While most of the CGS are pit ahead stations, the generating stations
of TANGEDCO are load centre stations.
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6. AT&C Losses
Stakeholder Comments
2.118 TANGEDCOs argument in 3.29.8 in petition related to lesser computed Agricultural
consumption and revision of T&D loss trajectory is flawed. Neither a representativestudy was done for establishing norms for agricultural consumption per HP of
connected load, nor any metering has been done to assess and a thumb rule was
adopted so far for this purpose. No serious study has been done by TANGEDCO to
identify the 11 KV/22 KV feeders and take corrective action. In this context
Commission should allow T & D loss at 18% as claimed by TANGEDCO in the past.
2.119 The average purchase cost of power for TANGEDCO is Rs.3.77 per unit inclusive ofwheeling cost of 21.98 paisa per unit. The average tariff realized per unit from HT I
A Category consumers (Industries) is Rs 6.95 and that of HT III Category of
consumers (Commercial) is Rs 7.98. A huge burden is put on them destroying their
competitiveness and economic efficiency.
2.120 Committee should be formed to reduce the loss of TANGEDCO and limit should befixed in respect to the loss.
2.121 Efforts should be taken to reduce the T&D loss every year.
2.122 Misuse of tariff with dishonest intention is booked under theft of energy. Misuse ofenergy shall be booked under section 126 and bypassing the meters shall be booked
under theft of energy.
2.123 Electricity theft should be curtailed.
2.124 Agricultural related activities like nursery is booked under theft. The ElectricityBoard is booking the farmers under theft and even when represented to the District
Collector, the District Collector was also not in a position to help.
2.125 Loss incurred by TANGEDCO is due to theft of electricity and not due to freeelectricity provided to the farmers.
TANGEDCOs Reply
2.126 The agricultural consumption submitted in the tariff petition is based on 5% samplemeter reading as per the methodology adopted by the Honble TNERC in its last tariff
order dated 30th March 2012.
2.127 Theft of power is least in Tamil Nadu. To reduce the theft of energy, at Regional level17 enforcement squads under the control of the Inspector General of Police (IGP) is
operating and a Flying squad under the control of Chairman, TANGEDCO is
functioning. Squad comprising of Ex-servicemen are being utilized to detect the
power theft in the state.
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2.128 Distribution loss cannot be avoided which is around 20% now. To reduce thedistribution loss improvement work such as establishment of substation and
strengthening of lines are being taken.
Commissions View
2.129 The Commission initiated suo-motu proceedings against TANGEDCO for noncompliance in the matter of T&D loss determination as directed by it and the Honble
APTEL. The Commission in the absence of scientific study for loss determination,
has fixed the T&D loss level at 16.4% for FY 2013-14 and has clarified that it shall
assume loss percentage at 16% and 15.6% for FY 2014-15 and FY 2015-16
respectively, if necessary scientific study is not done