3.0

GRIDCO'S PROPOSAL

3.1

GRIDCO is a constituent of the Eastern Regional Electricity Board of India and holds the Bulk Supply and Transmission License for the State of Orissa. It owns an EHT network for transmission of power from the various generating stations within the State as well as for interconnection with the neighbouring regions of the country. It purchases power from the generators for supply of bulk power to four DISTCOs within the State for retail supply to their consumers, export of power to the needy states in the country through bilateral agreements and sometime to meet the ancillary power requirement of the captive power plants, connected with the system.

3.2

Physical Projections

3.2.1

The actual average maximum demand met by GRIDCO for the year 2000-01 estimates for the FY 2001-02 and FY 2002-03 to cater to the requirement of the various distribution companies as projected by GRIDCO are as given in Table : 1.

Table : 1
Demand projection
(Figures in MVA)

3.2.2

The energy requirement for the distribution companies for FY 2001-02 and FY 2002-03 as reported by GRIDCO for DF-2 of the BST and RR application is given in Table : 2.

Table : 2
Energy Projection
(Figures in MU)

3.2.3

GRIDCO in para 3.5 of their BST application for FY 2001-02 and that of FY 2002-03 has stated that due to existing uncertainties in the sale of energy outside the state, the sale to other states has not been considered in the BST application and RR application. Subsequently, in the clarifications to queries of Director (Tariff), GRIDCO has stated that total estimated sale to APTRANSCO during FY 2002 would be 716.41 MU and about 1400 MU to APTRANSCO and Karnataka in FY 2003. On 30.3.2002, GRIDCO has stated that subject to fresh agreement with APTRANSCO and Northern Region and resolution of wheeling constraints there may be an estimated sale of 2376 MU in FY 2003.

3.3

Revenue Requirement for FY 2001-02

3.3.1

To carry out its various activities, GRIDCO is required to meet the cost of power purchase of the generators and the cost of transmission to cover expenses on account of employees, administration and general expenses, repair and maintenance expenses, depreciation, interest on loan, appropriation to contingency reserve and reasonable return based on the methodology prescribed in the Sixth Schedule to the Supply Act 1948 (TRF-5). It has also to cover the cost of transmission loss in the system as well as the cost of capital to meet the requirement of new investment to improve and ensure the system reliability and quality of power supply.

3.3.2

GRIDCO earns its revenue through bulk supply tariff from the four distribution companies, from export of power outside the state, sale of power to sources other than the DISTCOs through ancillary services and from wheeling charges for utilisation of its transmission system for transmission of power to other regions of the country and CPPs for loads at distant places. The summary of the proposals filed by GRIDCO is given in Table : 3 (TRF-5 of clarification).

Table : 3
Revenue Requirement For 2001-02
(Rs. in Crore)

3.3.3

For the FY 2001-02, GRIDCO submits that there has been an unusual upsurge in the cost of power purchase from the Central Generating Station. The cost of power purchase of OHPC has increased substantially in FY 2001-02 due to interest on convertible bonds and conversion of bonds to equity which was envisaged in transfer scheme notification issued by the Government of Orissa on 01.4.96 under the provision of OER Act, 1995 at the time of restructuring of the power sector. Further, the purchase of low cost of power from the Captive Power Plant of NALCO became lesser due to Ash Pond problem.

3.3.4

GRIDCO in its BST application for FY 2001-02 has requested for acceptance of Rs.108.25 Crore on account of arrear dues and Rs.60.13 Crore relating to power procurement for the financial year 2000-01 due to variation in drawal from different sources and Rs.47.83 Crore on account of increase in fixed cost of Central NTPC stations, TTPS and PGCIL and electricity duty of Rs.29 lakh for OHPC which was not previously claimed.

3.3.5

A summary of the proposal of GRIDCO’s expected revenue for FY 2001-02 and FY 2002-03 is given in Table : 4 (TRT 24-2001-02, TRT 23-2002-03).

Table : 4
Expected Revenue charges 2001-02 & 2002-03
(Rs. in Crore)

3.4

Recovery of cost through Bulk Supply Tariff for FY 2001-02

3.4.1

GRIDCO proposes to set the BST to recover the full cost of supply of Rs.2309.58 Crore based on a two-part tariff structure comprising demand charges and energy charges. It envisages that 48.03% of its total cost is fixed in nature involving dedicated stations like TTPS, OPGC, the cost of Transmission and the reasonable return aggregating to Rs.1109.39 Crore. The variable component is estimated to be 51.97% totaling to Rs.1200.19 Crore to cover the cost of power purchase from the Hydro stations, the variable costs of TTPS, OPGC, Captive Power Plants and the total cost of Central Stations along with a pass through of the additional power purchase cost for the financial year 2000-01 accrued on account of departure from the volume of power purchase and the mix of power purchase approved by the Commission for that year.

3.4.2

For recovery of the entire cost, GRIDCO has projected two alternative options (Table 34 of BST application FY 02).

Table : 5
Tariff Structure Options

3.4.3

In proposing the structure, GRIDCO has stated that realisation of fixed cost payable to the generators should be ensured to meet its obligation to generators and maintain the system stability. This could be possible only by designing the demand charges for recovery of the entire fixed cost through it. However, as full cost recovery entails a steep rise for the purpose of this application, GRIDCO proposes to fix it at the level of Rs.250/- per KVA.

3.4.4

GRIDCO has been billing to the distribution companies the demand charge on the basis of simultaneous maximum demand for each month. GRIDCO has submitted that till the contract demand is finalised with the distribution companies, the demand to be billed in a month will be the higher of the SMD of the month or the difference between the SMD billed during the months in the financial year upto the month of billing based on the SMD approved by Commission in the tariff order.

3.4.5

GRIDCO has assessed the revenue receipt from demand charges based on a total Simultaneous Maximum Demand (SMD) of 1746.098 MVA is given in Table : 6.

Table : 6
Computation of Demand Charges

3.5

Energy Charges
As explained in the table above, after deduction of the revenue earnings from demand charges, balance revenue requirement is proposed to be realised through energy charges, the computation of which is shown in Table : 7.

Table : 7
Computation of Energy Charges (2001-02)

3.6

Over Drawal Charges

GRIDCO follows the principle of least cost procurement of power to minimize the total cost of generation. Any excess drawal from the procurement plan provided by the DISTCOs will force GRIDCO to procure power from the costlier sources not covered in the revenue requirement finalised by the Commission. GRIDCO has drawn the attention of the Commission to the BST approval order for the 2000-01 where the Commission had approved that higher cost resulting from any drawal in excess of the projected requirement by DISTCOs would be charged as a year end adjustment to cover the marginal cost of power purchase plus transmission charges and transmission losses. GRIDCO has sought for approval of the same provision in the order for this tariff application of 2001-02 with a stipulation that GRIDCO may be allowed to raise the bill for overdrawal automatically.

3.7

Delayed payment surcharge

GRIDCO has proposed levy of delayed payment surcharge @ 2% per month for payments received after the period of 30 days from the date of submission of the bills in line with the existing provisions in the BST order of 2000-01.

3.8

Rebate

Corresponding to the delayed payment surcharge, GRIDCO has also proposed a rebate of 2% of the amount of the monthly bill, if payment is made in full within 48 hours of the presentation of the bill, 1.5% rebate, if a minimum of 85% out of billed amount is paid within 48 hours and 1% rebate on the balance amount if paid in full within 15 days of the presentation of the bill. For full payment made within 15 days from submission of in bill, a rebate of 1% may be allowed.

3.9

Carry forward of revenue gap

GRIDCO has prayed that the proposed BST may be made applicable from Feb. 1, 2002 and any gap between the approved revenue requirement for FY 2002 and the revenue realised may be approved as a carry forward for adjustment during the future years.

3.10

Transmission tariff

3.10.1

GRIDCO has estimated that the full cost of transmission including reasonable return will come to Rs.621.73 Crore. On the basis of its cost estimate, the calculation of transmission tariff proposed by GRIDCO is given in Table : 8.

Table : 8
Transmission Tariff

3.10.2

GRIDCO has proposed that fixation of transmission tariff for the CPPs at 52.8 paise/unit will defeat the very purpose of setting up of CPPs which are considered as second cheapest source of power to GRIDCO at present. Hence, for encouraging installation of more number of CPPs in the State, the wheeling charges to the CPPs for transportation of power to their sister units may be fixed at 17.5 paise/unit in line with the wheeling charge being levied for MPSEB and other states for wheeling of power through interstate transmission lines. However, in the Annual Revenue Requirement application of FY 2002-03, GRIDCO has calculated miscellaneous receipts on account of wheeling to CPP @ 31 paise/unit.

3.11

Transmission Loss

3.11.1

GRIDCO projects transmission loss of 4.6% for FY 2001-02 calculated in the net method on the basis of actual energy exchange in the GRIDCO's transmission system for the FY 2000-01. GRIDCO proposes to reduce transmission losses @ 0.2% per annum successively from FY 02-03 as submitted in its business plan.

3.11.2

Accordingly, for the year 2002-03, GRIDCO projects transmission loss of 4.4% in their Annual Revenue Requirement application.

3.12

Summary of Tariff filing of 2001-02

3.12.1

GRIDCO in DF-22 of their application has sought for approval of Bulk Supply Tariff comprising :-

1. Demand charges @ Rs.250 per KVA/month

2. Energy charges @ 156.10 paise/unit on energy supplied

3. Charges for overdrawal in demand and energy

4. Delayed Payment Surcharge as proposed

5. Rebate as proposed

6. Duty and Taxes - Electricity duty levied by Government of Orissa and any other statutory levy/duty imposed under law shall be charged over and above tariff

Transmission tariff covering:-

1. Wheeling charges @ 17.5 paise/unit

2. Transmission loss @ 4.6%

3. Delayed Payment Surcharge

4. Duty and taxes as applicable

3.13

REVENUE REQUIREMENT FY 2002-03

3.13.1

GRIDCO in their revenue requirement filed for FY 2002-03 has submitted that the forecast of monthly energy requirement and maximum demand has been provided by CESCO, WESCO and NESCO. In respect of SOUTHCO, energy requirement has been assessed based on the historical average demand, addition of new railway traction loads, and commissioning of new grid sub-station at Akhusingh and Parlakhemundi. On the above basis, the company wise energy requirement and demand assessment has been made by GRIDCO.

3.13.2

In their latest submission to the Commission in response to queries of Director, Tariff on 30.3.2002, GRIDCO has stated that NESCO has in the meantime revised the projected energy and KVA demand vide letter dt.26.3.2002. In their latest projection, NESCO has requested for 2291.20 MU and 378.85 MVA for FY 2002-03. SOUTHCO has also projected energy as 1682.39 MU and demand as 275.40 MVA.

3.13.3

For the purpose of calculation of expected revenue, GRIDCO has considered the existing rate of BST.

3.13.4

For determination of revenue requirement, GRIDCO has taken into consideration the quantum of power purchased from the various generating stations, the cost of transmission and contribution to the contingency reserve after giving a credit of miscellaneous receipts on account of wheeling of power to the CPPs and wheeling to other states GRIDCO has assessed a deficit of Rs.645.86 Crore on the aforesaid basis given in Table : 9.

Table : 9
Revenue Requirement for FY 2002-03
(Rs. in Crore)

3.13.5

GRIDCO has stated that the Commission may approve the annual requirement of Rs.2300.08 Crore for the FY 2002-03. Further, recovery of additional cost on account of statutory increase, if any, passed as surcharge on to GRIDCO by various generators & PGCIL on account of OERC/CERC orders may be allowed.

3.13.6

On 18.03.2002, GRIDCO during the hearing prayed that since the financial year 2001-02 would possibly be over by the time the new tariff would be in force, the Commission may kindly consider the cost as well as deficits of the FY 2001-02 along with the revenue requirement application of GRIDCO for FY 2002-03 while deciding the Bulk Supply Tariff and Revenue Requirement for FY 2002-03.

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