CASE NO. 18 of 1998

Shri S.C. Mahalik, Chairman
Shri A. R. Mohanty, Member
Shri D. K. Roy, Member

Dates of argument : 13.10.98
Date of Order : 21.11.98

ORDER

Grid Corporation of Orissa Limited (Gridco, for short) is the holder of the "The Orissa Transmission & Bulk Supply Licence, 1997 (No.2/97)". The said Gridco has submitted an application on August 17, 1998 under the provisions of Section 26 of the Orissa Electricity Reform Act, 1995 (Reform Act, 1995) for approval of a Bulk Supply Tariff (BST) for sale of electricity to Distribution & Retail Supply Licensees in Orissa and a Transmission Tariff for use of transmission services.

2.0 Meanwhile, Gridco, the holder of the "The Orissa Distribution & Retail Supply Licence, 1997 (No.1/97)" has restructured itself by incorporating four wholly owned subsidiary companies to take over the business of distribution and retail supply in the State of Orissa while retaining the Transmission as well as Bulk Supply business. These four subsidiary distribution companies have filed applications to the Commission for grant of Distribution & Retail Supply Licences. Therefore, a Bulk Supply Tariff is needed to determine the rate at which power will be sold by the Transmission & Bulk Supply Licensee to the distribution licensees.

2.1 The proposal under sub-section (4) of Section 26 of the Reform Act, 1995 was submitted by Gridco on 17.08.98 giving details of calculation of estimated revenue requirement for 1998-99 and charges proposed to be levied to meet the same.

2.2 The proposal of Gridco was discussed in a meeting of the Commission Advisory Committee held for the purpose on 08.10.98 and the views expressed by the Members of the Committee have been taken into consideration by the Commission.

2.3 A notice was published by the Commission in several local newspapers on two consecutive days outlining the tariff proposal and calling for objections from interested persons. The objectors were required to submit their objections in quadruplicate to the Commission with the fifth copy of the said objection to be served on Gridco. The notice called on the interested parties to peruse further details of the proposal in the corporate office of the Gridco so as to enable them to submit their objections. It also stipulated that objectors, if they so wished, should indicate their desire to be heard in person. A total of four objections were received against Gridco's proposal on Bulk Supply Tariff.

2.4 After receiving the objections, the Commission published a notice informing that a hearing on the proposal of Bulk Supply Tariff would take place on 13th October'98.

2.5 The hearing was held accordingly on 13th October'98 in the office of the Commission. The Reform Act, 1995 does not require the Commission to hold public hearing on tariff application. The Commission, however, adopted the procedure of inviting objections from the interested persons and held a hearing to ascertain the views of a larger section of the public and for greater transparency.

2.6 At the outset of the hearing, learned Advocate Mr. K.N. Jena appearing on behalf of M/s. Orissa Consumers Association, Cuttack, raised certain preliminary objections and sought the Commission's orders before proceeding with the hearing. Commission heard the views of Gridco on such objections and pronounced its decision on 13.10.98 not admitting the objections to the maintainability of the application. Commission observed that detailed reasons for rejection of the objections would be incorporated in the final order on tariff.

2.7 In his preliminary objections, the learned counsel Mr. Jena mainly stated that the application filed by the licensee was fit to be rejected at the outset on the following grounds:-
(i) Provisions under section 57-A of Electricity (Supply) Act, 1948 read with the provision of Reform Act, 1995 contemplate that charges for the supply of electricity, once fixed, shall be in operation for three years. As such, revision of tariff within a year would be without authority of law.
(ii) When persons other than Gridco or private entrepreneurs had not yet been granted licence, Gridco was not entitled to ask for an unbundled tariff for bulk supply and transmission on the premature assumption that its responsibility will be confined to these two activities only. It was alleged that the application sought to defraud the consumers, as companies which had been floated were fake companies. They had no financial standing, had no paid up share capital and had no bank account and infrastructure to carry on the business of distribution and supply. Higher tariff was proposed to cover up Gridco's inefficiency, maladministration, and loss arising mainly due to extravagant expenditure.
(iii) From 01.04.97 to this date, the licensee has already revised tariff indirectly twice and hence the present application was unreasonable enough to be rejected.
(iv) Licensee had failed to comply with the conditions of licence. As such, it should not be allowed any indulgence to revise the tariff until and unless it fulfilled the conditions of licence and complied with the orders of Orissa Electricity Regulatory Commission.

2.8 The first objection refers to Section 57-A of Electricity (Supply) Act, 1948. We have considered the provisions of Section 57-A of the Act, 1948 with particular reference to sub-clause (c) and (e) of sub-section (1) of Section 57-A as quoted by Mr. Jena. We find that these provisions are applicable only to charges for electricity recommended by a Rating Committee and approved by the State Govt. and stipulate that such charges for supply of electricity shall be in operation for such period not exceeding three years as the State Govt. may specify in the order. Sub-section (7) of Section 26 of the Reform Act, 1995 annuls the constitution of a Rating Committee, making the aforesaid provisions of the Electricity (Supply) Act, 1948 inapplicable in this case. We hold that the preliminary objection by the learned counsel provided under Section 57-A of the Act, 1948 is without merit as the said provision is inapplicable in tariff proceeding under Section 26 of the Reform Act, 1995.

2.9 The second objection raised by the learned counsel relates to premature filing of bulk supply tariff when persons other than Gridco or other entrepreneurs have not been granted licence. The Commission has carefully considered this issue. The Commission observes that the mandate of the Reform Act, 1995 is to provide for avenues for participation for private sector entrepreneurs in the electricity industry. Gridco, the holder of the Distribution & Retail Supply Licence, has carved out four zones of distribution to cover the State of Orissa and has incorporated four subsidiary companies corresponding to those zones with Gridco as the holding company. Further, Gridco as the licensee for Distribution & Retail Supply has initiated action proposing divestment of the shares of these subsidiary companies to private sector. Gridco's action in this regard is consistent with the Reform Act, 1995. Further, Gridco, the holder of Transmission & Bulk Supply Licence, has applied for a bulk supply tariff to coincide with the aforesaid action related to hiving off its distribution & retail supply business to subsidiary companies. The terms of licence granted to Gridco authorises it to supply energy to other licensees for distribution by them and therefore, Gridco is entitled to file the revenue requirement and tariff charges for bulk supply of energy to distribution and retail supply licensee and also charges for transmission of electricity. In the scheme of restructuring consistent with the provisions of the Act, Gridco has planned to retain only transmission and bulk supply activities subject to approval of OERC. If subsidiary companies obtain licence for distribution and retail supply, Gridco shall be entitled to charge only bulk supply tariff and transmission charges whereas the holders of distribution and retail supply licences can charge tariff for supply in all other respect. Hence, the existing composite tariff has to be unbundled and separate tariff has to be approved by the Commission for bulk supply and for transmission. Even if Gridco did not propose to divest itself of distribution activities, there was need for unbundling tariff as a natural corollary to functional unbundling envisaged in the Reform Act. The need of fixing separate tariff is all the more necessary as separate companies have applied for distribution and retail supply licence. Therefore, it is perfectly in order for Gridco, holding the licence for Transmission & Bulk Supply, to file the revenue requirement and charges for supply of energy to distribution and retail supply licensees coming up in future.

2.10 The third objection on the ground that tariff has been revised on three occasions since 01.04.97 is not based on facts. The objection has not been amplified by the learned counsel. It is noted that there has been no tariff revision since 01.04.97 till date. The provisions of law in Section 26 of the Reform Act, 1995 make it mandatory for the licensee to file revenue requirement for the ensuing financial year. Gridco has done so and, in fact, has filed it rather late.

2.11 The fourth preliminary objection raised by the learned counsel relates to debarring the licensee from revising the tariff until and unless it fulfils the conditions of the licence and complies with the order of the Commission. The Commission observes that non-compliance or inadequate compliance of the licence conditions, if any, is a separate issue which cannot hold up scrutiny of tariff filing on which the Commission is bound by law to pass orders within ninety days. Elaborate provisions exist in the Reform Act, 1995, to deal with non-compliance or violation of licence conditions. The filing of revenue requirement is a statutory requirement of the licensee as provided in sub-section (4) of Section 26 of the Reform Act, 1995 and, therefore, this function must not be mixed up with other issues. The Commission, therefore, does not admit any of the above preliminary objections raised by the learned counsel and has to continue with tariff proceedings.

3.0 GRIDCO'S PROPOSAL

3.1 Gridco's proposal for bulk supply tariff for sale of electricity to Distribution & Retail Supply Licensees envisages a total sale of 10241.8 million units during the year 1998-99 in order to meet the demand of distribution companies. Gridco, the holder of "The Orissa Transmission & Bulk Supply Licence, 1997 (No.2/97)" proposes to purchase 10814.97 MU on the assessment of transmission loss of 5.3% on EHT system. The financial implications of the aforesaid transaction are as under:

In their proposal, Gridco have shown accumulated past losses to the end of the year 1996-97 and estimated loss of 1997-98 as Rs.543.10 crores. They have estimated their recoverable expenses as (Rs.1597.26 + Rs.543.10) Rs.2140.36 crores. At a glance, the revenue requirement for bulk supply as proposed by Gridco is indicated below :

For the purpose of determination of revenue requirement of the proposed bulk supply tariff, the accumulated loss of Rs.543.10 crores is not proposed to be recovered through the BST. Gridco proposes recovery only of Rs.1597.26 crores over a one-year period.

3.2 Bulk Supply Tariff
Gridco proposes to set the BST to recover the full-embedded cost of supply of Rs.1597.26 crores, excluding the accumulated loss of Rs.543.10 crores over a one-year period. It proposes to charge a two part BST comprising:-

(a) Demand charge
(b) Energy charge

The demand charge is proposed to be levied on the simultaneous maximum demand over a one-month period of the licensee. The maximum demand will be derived by summing the recorded demand at all the contracted points of supply for each Distribution & Retail Supply Licensees every half-hour. Demand charge will reflect the fixed costs associated with power purchase and transmission. The fixed cost of power purchase relating to capacity charge is defined in Power Purchase Agreements made by Gridco with Generating companies. Costs related to transmission system are assumed to be of fixed nature. The costs of metering, billing and providing related customer services are proposed to be included in the demand charge itself. The demand charge has been designed to recover all the cash liabilities of the revenue requirement. Such costs account for 77% of the total fixed costs (excluding accumulated loss). The demand charge calculated on the basis stated above is proposed to be levied at Rs.300/KVA/month on the simultaneous maximum demand of the licensee over a one-month period.

3.3 The energy charge as proposed by Gridco comprises the following :
(a) The residual fixed cost of generation not recovered through demand charge.
(b) The variable cost of power purchase.
(c) The transmission loss estimated at 5.3% of input energy. This is the same loss level as in 1997-98.
These costs are used to calculate the proposed energy charge of Rs.0.8166/unit on an embedded cost basis.

3.4 Gridco have proposed a fuel and power purchase price adjustment formula in terms of the provisions of Section 26(6) of Reform Act, 1995.

3.5 Gridco have also proposed a surcharge of 2% per month if cash payment is made after 30 days of the presentation of the bill by Gridco.

3.6 In a nut-shell, Gridco requests OERC to approve the following tariff and charges.
(a) The bulk supply tariff as proposed.
(b) Continuance of the existing transmission charge.
(c) Delayed payment surcharge as proposed.
(d) Fuel and power purchase price adjustment formula.

4.0 OBJECTIONS DURING HEARING

4.1 The representative of M/s. Utkal Chamber of Commerce & Industry (UCCI) highlighted the following :-
4.1.1 They raised the issue of T&D loss and observed that Gridco has no right to ask for 41% overall loss as against 35% target set by the Commission in the last tariff order. They have also pointed out that the Gridco's proposal for increase in the load factor for domestic and commercial categories would increase the actual power sale by more than 2000 million units in a year. This should reduce the loss level by 20%. Gridco should take account of this while asking for 41% system loss. They further argued that meters have not been fixed for about 85,000 consumers under Kutir Jyoti programme. If this is done, it would reduce the system loss further. The above three measures will reduce cost of procurement by about Rs. 500 crores in a year.

4.1.2 In their argument for reducing the power purchase they raised the following issues :-

a) Gridco should have optimized procurement of hydro power which was far cheaper. It is possible to purchase more hydro power than last year because of good rains in September'98.

b) The availability of comparatively cheaper power from Ib Valley and TTPS has been assumed on the lower side.

c) The EREB has no right to reduce the generation of lower cost power and increase generation of higher cost power.

d) Procurement from CPPs is lower as compared to what was assumed by OERC in 1997-98.

4.1.3 On the matter of transmission tariff and EHT loss they put forth their views as follows:

a) Transmission charges levied @ 40 paise per unit excluding transmission losses of 7.5% is very high.

b) PGCIL charges 11 paisa per unit as transmission charge.

c) Gridco itself charges only 17.5 paise per unit for both transmission charges and EHT losses for wheeling power to APSEB and to MPSEB.

d) The EHT transmission cost of Gridco on embedded cost basis comes to 19 paisa per unit.

e) Transmission losses have now been accurately evaluated at 5.3%. Thus 7.5% transmission loss is on the higher side.

f) Transmission charges should be calculated on embedded cost basis as in retail tariff.

4.1.4 In the matter of capital base and cost they argued:-

(a) Capital base of Gridco has been increased arbitrarily from Rs. 523 crores in 1997-98 to Rs. 1031 crores for 1998-99.

(b) Previous loss of Rs. 543 crores has been added to the revenue requirement of Gridco without considering the subsidy claims on Govt. amounting to Rs. 538 crores.

(c) The capital cost of assets transferred to Gridco and OHPC by the Govt. have been uplifted from 2 to 2.5 times of the book value. This has increased the revenue requirement of Gridco. Uplift of costs of depreciated equipment makes the consumers to pay depreciation continuously at a higher rate instead of zero depreciation after recovery of 90% of cost of equipment through depreciation.

4.1.5 They further pointed out that the fuel price adjustment formulae as proposed is complicated and incorporates excess power cost, other unadjusted costs etc. in it. These should not be included in the formula.

4.2.1 Mr. M.V. Rao, objector representing M/s. Ferro Alloys Corporation Ltd. (FACOR) had submitted the objections to the Commission and during the personal hearing brought to the notice that FACOR is a 100% export oriented company and is a capital-intensive company. He said that the present tariff is too high compared to those in foreign countries with whom the company has to compete. The price quoted for different countries was stated to be as follows :-

4.2.2 The next important issue pointed out by Mr. Rao was that the charge chrome plant situated in the North-Eastern distribution zone is availing NTPC power during off peak hours through the grid under supplementary agreement with Gridco. FACOR contends that Gridco has to be clearly directed in the tariff order so that Gridco and the four newly formed distribution companies would honour the above supplementary agreement for supply of NTPC power as it was approved at the instance of both the State and Central Governments for availing cheaper electricity required to compete in the international market.

4.3.1 Mr. T.C. Hota, representing M/s. Indian Charge Chrome Ltd. (ICCL), Bomikhal, Bhubaneswar in his written submission has dealt with two principal subjects. (1) Transmission tariff and (2) Emergency power for CPP. We would be dealing only with transmission tariff here as this order relates only to bulk supply and transmission tariff. Emergency power for CPP will be dealt with in the retail supply tariff order. Mr. Hota has brought to the notice of the Commission that in view of tabulation of monthwise loss shown as below in Appendix RT-4 of Gridco's proposal, estimated transmission loss in EHT line during the year 1997-98 at existing 7.5% is unreasonably high.

4.3.2 It was argued that since EHT loss figure for Gridco for the period 4/97 to 3/98 has already been indicated as 3.823%, Gridco's claim of 5.3% towards the transmission loss was neither reasonable nor correct. He further observed that Gridco in clause 17 of its application has suggested to consider the transmission loss at 5.3% as a part of the system loss of 41% on the NGP basis. He further contended that the present EHT loss being 3.386% on an average for the year 1997-98, it was not known why Gridco was trying to project a higher transmission loss of 5.3% during the next year. He suggested that the transmission loss in EHT system should not be allowed to exceed 3%.

4.3.3 The total units received in the system is 10,815 MU for the ensuing financial year. Allowing a loss of 5.3%, the total energy transmitted through the system has been estimated at 10,242 MU. The cost of transmission, distribution and cost of lost units have been calculated at Rs.431 crores and has been divided by 10,242 MU to get a cost of 42.08 paise per unit. This according to Mr. Hota includes the inflated transmission loss as well as the inflated cost of the assets of the transmission network received from the Govt. at uplifted price.

4.3.4 The present transmission charge of 40 paise per unit has been considered by both the State Govt. and the CEA as abnormally high. In this connection reference was made to the summary records of the meeting taken by the Chairman, CEA on 16th December 1997 and annexed as an Annexure XIII(1/3) to the agenda of the 261st OCC meeting of the EREB held on 24.12.97, enclosed to as Annexure-I. The item 5.7 of the above proceedings of discussion states: "After detail study CEA has fixed a wheeling charge of 10 paise per KWH which comprises transmission charge and transmission loss of around 2.5 paise per unit and 7.5 paise per unit, respectively. This should be acceptable to Gridco."

4.3.5 Mr. Hota in his written submission has observed that the present rate of 17.5 paise per unit charged by Gridco for export of power to MPEB and APSEB includes both wheeling charges and loss, whereas Gridco are claiming 40 paise per unit towards transmission and 7.5% for loss in the present tariff proposal.

4.3.6 He has also referred to a letter No.P-II-TAR-1/98/467 dated 12.01.98 from the Chairman-cum-Managing Director of Gridco indicating Government's view that the present rate of 7.5% transmission loss and 40 paise wheeling charges, which has been levied from 01.4.97, are considered high and State Government has suggested a rate of 7.5% transmission loss with 20-25 paise per unit wheeling charges to be appropriate.

4.3.7 He has also mentioned that the Maharashtra State Electricity Board in their new policy for captive power plant has specified a wheeling charge at 2% of the energy wheeled and a transmission loss of 4% on EHT line between 100-500 Kms.

4.3.8 Based on the above information, he has proposed that the transmission charges should not be more than 4% towards wheeling loss and a maximum of 10 paise per unit towards wheeling charges. An amount of 10 paise per unit for wheeling charge will be an additional contribution to the fixed costs and higher than the recommendations of the CEA as well as the wheeling charge of MSEB.

4.4 Mr. K.N. Jena, objector representing M/s. OCA put forth the following objections :

i) Gridco has not submitted audited accounts for the year 1997-98. Hence tariff revision proposal should be rejected.

ii) Loss is due to mal-administration, in-efficiency, corruption and mismanagement.

iii) Revaluation of assets has increased the revenue requirement of the licensee in terms of depreciation, interest, operation and maintenance expenses, and reasonable return.

iv) Proposed tariff revision is arbitrary and does not conform to section 26 of Reform Act, 1995.

v) Regulatory authority is not a legally and properly constituted body after coming into force of Reform Act, 1995, as such, OERC has no competence and authority to increase the tariff.

vi) When no licence has been granted by the licensing authority for transmission and distribution separately, there should not be separate bulk supply tariff and retail supply tariff. Imposition of bulk supply tariff would neither ensure any benefit to consumers nor it would be conducive to improvement of efficiency.

5.0 GRIDCO'S RESPONSE TO THE OBJECTIONS

5.1 Cost of Power
Gridco submitted their response to the objections on bulk supply tariff application. With regard to the main component of revenue requirement, namely, power purchase cost, Gridco in their response have highlighted that the rates for the variable costs of all thermal stations have been projected as those prevailing at the end 1997-98. No provision for inflation during the year 1998-99 has been made. Clearly, some increase in fuel and other operating cost is inevitable. This will be recovered through the application of fuel and power purchase price adjustment formula proposed along with the tariff application. Secondly, they have stressed that the availability of cheaper hydro power to the optimal level has been taken into the power purchase plan. Orissa Hydro Power Corporation (OHPC) contributed about 32% of the total power purchased by Gridco during 1997-98. The power purchase plan anticipates an increase of around 10% in the availability of hydro power, that is from 3214 MU in 1997-98 to 3536 MU in 1998-99. They have also indicated that there has been a shortfall of total availability of hydro power for the first five months of 1998-99 to the tune of 9.4% compared to first five months of 1997-98. Because of the lower reservoir levels compared to previous year at Balimela power house and Machhkund power house, Gridco apprehends availability from OHPC for the year to be approximately 3,075 MU. Against this, Gridco's projection for the year in the tariff application is 3536 MU. Gridco has further indicated that under the prevailing arrangement with OHPC, a fixed amount is payable to OHPC without linkage to the quantum of power supplied. Hence, the per unit cost of power payable to OHPC will go up from Rs.0.51 to Rs.0.59 per unit. Further, the shortfall will have to be met by the purchase of more expensive thermal power. The estimated incremental cost will be at least Rs.83.95 crores. The average per unit pooled cost of power purchase will, as a result, go up to at least Rs.1.257 per unit, an increase of about 6.5%.

5.2 Procurement of power from OPGC
For 1997-98, OERC had approved a purchase of 2330.78 MU. However, actual availability was only 2058 MU. This represented a shortfall of about 11.7%. The reduction in generation was due to lower availability of machines, backing down due to system constraint and backing down due to lower demand as per the instructions of EREB. For 1998-99, Gridco has projected an availability of approx. 2115 MU, which is about 2.7% higher than the actual availability last year.

5.3 Procurement of power from TTPS
OERC had approved a power purchase of 1600 MU from TTPS for the year 1997-98. Gridco's present projection for 1998-99 is approx. 1771 MU, which is about 10.5% higher than the figure approved by OERC in 1997-98. The projection is as per the generation programme provided by the power station.

5.4 Procurement of power from CPP
For 1997-98 OERC had approved a purchase of 905 MU from the Captive Power Plants. Against this, the actual availability during 1997-98 was only 695 MU. The projection for the year 1998-99 has been assumed at 700 MU which is close to the actual availability for the last year. In this connection Gridco has indicated that with the adoption of availability tariff by EREB, Gridco would be required to pay fixed cost to central generating companies whether or not it draws power from them. With the introduction of availability tariff, the fixed cost liability in respect of Central Sector Power Plants will be much higher and the variable cost will be correspondingly much lower. It will be economical for Gridco to buy energy from Captive Power Plants only when the variable cost of the Central Power Stations is higher than the cost of power to be purchased from Captive Power Plants. In this regard, Gridco has given comparative figures of variable cost of different power stations along with cost of power from CPPs which are indicated below :

5.5 Justification for BST
In reply to objection made by M/s. Orissa Consumer Association (OCA), Gridco reiterated that being a holder of "The Orissa Transmission & Bulk Supply Licence, 1997 (No. 2/97)" granted by OERC under Section 15 of Reform Act, 1995, Gridco has already implemented an internal reorganisation, separating four distribution zones from the power procurement and transmission business. The four distribution companies have filed application for grant of distribution and retail supply licences, which are pending with OERC. Accordingly, a bulk supply tariff is needed to determine the rate at which power will be sold by Gridco, the holder of Transmission & Bulk Supply Licence, to the Distribution & Retail Supply Licensees. Gridco emphasised that unbundling of tariffs and functional separation results in economic efficiency in the allocation of resources and facilitates competitive market forces. A separate BST is expected to meet these objectives. Referring to the objection of M/s. OCA, Gridco stated that even when an application for revocation is pending with the Commission, the licensee is within its right to file a tariff application.

5.6 Return on loans and debentures
Gridco has stated that the Sixth Schedule of Electricity (Supply) Act, 1948 provides for inclusion of one half percentum on the outstanding loans and debentures in calculation of the reasonable return. As outstanding loan stands at Rs.761.88 crores, this works out to Rs.3.81 crores. This amount has not been included in the calculation of reasonable return and only the standard rate allowed on the capital base has been included for recovery through the bulk supply tariff for 1998-99.

5.7 Transmission Loss
Gridco in their reply to the objection made by M/s. ICCL on 17.10.98 at page 7/29 in Issue No. 4 "Gridco is misrepresenting the transmission loss by giving misleading data. Appendix RT-4 mentions a level of 3.823% while the cost of supply is being calculated at 5.3%" have clarified that in Appendix RTCC-3 submitted in response to the queries from OERC the loss of 3.82% has been calculated on the basis of gross input. For the purpose of determination of revenue requirement, transmission loss needs to be calculated on the net input basis since only the net energy input is available in the system for sale. Secondly, RT-4 provides information on metered gross input or gross output. Gridco has further stated that there is no case for restricting the transmission loss to 3% as stated by the objector as this would be totally unreasonable and not in consonance with the existing system conditions.

6.0 COMMISSION'S ANALYSIS AND DECISION ON GRIDCO'S PROPOSAL

6.1 In order to determine the revenue requirement of the licensee on the basis of which the Bulk Supply Tariff is to be approved, the Commission has analysed the components of the licensee's costs. These are discussed below.

6.1.1 Volume of Power Purchase

(i) The Orissa Electricity Regulatory Commission in its order on tariff for the year 1997-98 had approved a net sale volume of 6091 million units corresponding to power purchase of 9371 million units on the basis of T&D loss of 35%. This purchase did not include sale of 194 million units of power for supply to the 100% export oriented units (EOU) from NTPC and 95 MU for back up supply to ICCL. Taken together, the total sale for the year 1997-98 accepted by the Commission was 6380 MU (6091+194+95) corresponding to 9815 MU of purchase.
(ii) Gridco have estimated that the energy sale during year 1998-99 will be 940 million units more than the actual sale of 5440 MU during 1997-98. This increase has been attributed to an increase of 339 MU or about 6% in demand on account of load growth over the previous year and about 601 million unit on account of expected reduction in losses. Thus Gridco's estimated sale for the year 1998-99 is projected as (5440+940) 6380 million units.
(iii) The Commission, after taking into consideration the proposed increased sale of 339 million units on account of load growth over the approved sale figure of 6091 million units for the year 1997-98, estimates the sale for the current financial year (98-99) as (6091+339) 6430 million units. This sale figure includes increase in billing on account of reduction in commercial losses. In other words, it includes the conversion of lost units to billing units due to improvement in billing and revenue collection.
(iv) Power sale by the Transmission and Bulk Supply licensee to Distribution and Retail Supply Licensee has been estimated by the Commission as 9891.39 MU based on 35% overall T&D loss.
(v) Gridco, in its tariff proposal for the year 1997-98, had estimated a purchase of 11000 million units from the various sources, but as per the actuals for the year 1997-98, the total purchase was 10357 million units. This was 643 million unit less than what was projected by Gridco. The current year's projection by Gridco is 10814 million units at a loss level of 41%. Taking into account the estimates and the actuals for the year 1997-98, the Commission considers the estimate of purchase for the current year as an over estimation. The purchase of power may, therefore, be limited to 10093.47 million units, inclusive of the power requirement of 202.08 MU for the 100% export oriented units. The quantity of power available for sale to distribution and retail supply licensees would be 9495.73 MU taking into consideration transmission loss of 4%. This is summarized as follows :-

Quantum of Power Purchase

* Note :
1. 202.08 MU of NTPC power is deducted for wheeling to EOUs.
2. 4% transmission loss will be deducted to arrive at the sale quantity to Distribution and Retail Supply Licensees.
3. Net quantity of power available for sale is 9495.73 MU.

6.1.2 Sources of Power for Gridco System
Purchase of power is the single largest component in the total expenditure budget of Gridco. For the year 1998-99, Gridco has estimated that out of total expenditure of Rs.2071 crores, about Rs.1276 crores alone will be for purchase of power. Since Gridco has no generating capacity of its own, it has to meet its entire requirement by purchase of power from various generating stations. The installed capacity of the hydro stations in the State (owned and operated by the Orissa Hydro Power Corporation) is 1272 MW including Orissa share from Machhkund power house. The installed capacity of the thermal power station at Ib owned by OPGC is 420MW. Talcher Thermal Power Station (TTPS) with installed capacity of 460MW and owned by National Thermal Power Corporation (NTPC) but is fully dedicated to meet the demand of Gridco system. Apart from these hydro and thermal stations, some small amount of power is supplied by the Captive Power Stations i.e. NALCO (Angul) and ICCL (Choudwar) to the grid system. The balance of requirement of Gridco is purchased from various Central Sector Generating Stations owned by NTPC, DVC, Chukha power station in Bhutan, and sometimes from various SEBs. The quantum of power purchased by OSEB/Gridco during the last five years is indicated below power station wise.

PURCHASE OF POWER
(Units in MU)