CESCO has submitted calculation of expected revenue from
charges and its revenue requirement for the year 2000-01 along with a
proposal for new tariff stating that the existing tariff and charges in
force since 01.02.2000 was inadequate to meet revenue requirement of FY
CESCO estimated that it would draw around 3940.164 MU of
power from GRIDCO. It estimated sale of 2259.32 MU, an increase of
13.52% over the billed units for the year 1999-00. The Licensee’s
estimate of power purchase for the year 2000-01 was Rs.527.98 crores and
the average cost per unit was estimated at 134 paise/unit.
The cost of distribution and sale of energy for the year
2000-01 was estimated at Rs.231.49 crores which comprised employees
cost, cost of materials, administrative and general expenses, interest
on loans borrowed from organisations, bad debts and depreciation (less
capitalization on account of interest) and legal expenses. There was a
proposal for special appropriation of Rs.15.18 crores. CESCO estimated
to earn a reasonable return of Rs.18.17 crores on its capital base of
The revenue requirement for FY 2000-01 estimated by CESCO
is in Table : 1.
Table : 1
Revenue Requirement for 2000-01
(Rs. in Crores)
Purchase of energy
Distribution & sale of energy
To summarise CESCO has stated that the estimated
revenue requirement for the year 2000-01 is Rs.792.82 crores and it
would face a deficit of Rs.242.82 crores during the year if the existing
tariff is allowed to continue . It has further stated that any
postponement of tariff, given CESCO’s poor consumer mix and the
expenses incurred due to the super-cyclone, would perforce require the
licensee to be referred to the BIFR and possible liquidation. The
revenue projection made by CESCO for 2000-01 is in Table : 2.
Table : 2
Estimated Revenue from charges for 2000-01
(Rs. in Crores)
For FY 2001 based on existing tariff
For FY 2001 based on tariff proposed in the
application for full year
CESCO has stated that the system suffered from an adverse
sales mix skewed towards LT consumers. The LT sale was projected at
67.64%, HT 16.0% and EHT 16.36% of the total sale in 2000-01. The losses
projected for each category of consumption were LT 42.84%, HT 15%, and
EHT 0%. CESCO has further stated that its massive distribution losses
were due to the above skewed consumption pattern. The licensee therefore
requested the Commission to consider voltage-wise loss level for tariff
calculation. CESCO has pleaded that international experience had shown
that regulators elsewhere followed non-homogeneous performance benchmark
for loss stipulation. Even after privatization the licensees’ loss
reduction drive had been slow in the initial years of reform.
CESCO proposed a loss figure of 42.65% for 2000-01. The
licensee has claimed to have embarked upon a massive loss reduction
programme and proposed to achieve the same by implementing several
measures. The devastation and the consequent expenses incurred due to
super cyclone had proved to be a major setback to the licensee.
Main Features of CESCO’s Proposal
CESCO has proposed a tariff to reduce the gap between
revenue requirement and expected revenue from existing tariff and
charges for the FY 2000-01. Based on the concept of rationalisation of
tariff structure of the previous years, it proposed changes in the
tariff structure which would yield additional revenue. The licensee has
proposed increase in demand charges for some HT and EHT consumers and
energy charges for all categories of consumers keeping in mind the OERC’s
objective of reduction of cross-subsidization. CESCO wished to carry out
the rationale of a uniform rate for all categories of consumers using
electricity from the same voltage of supply. The licensee proposed to
recover 14% of the total fixed cost from fixed charges which was far
below the stipulation of the Commission at 33%. CESCO has pleaded that
its calculation of revenue requirement for 2000-01 included Rs.12.1
crores on account of differential in the power purchase cost as
calculated by the Commission due to 10 months of deferment of new Bulk
Supply Tariff. Further an amount of Rs.1.48 crores which was not allowed
in the last tariff order was included in the revenue requirement for
2000-01. CESCO has further stated that it needed to enhance tariff by
39.61% to reduce its own deficit and cross-subsidization and to make
substantial investments in the areas of system improvement and metering.
Main features of tariff proposal of CESCO were as
Demand charge is proposed at Rs.250/KVA for all
consumers except for the following categories :-
Domestic, Commercial, Small Industry, Medium
Industry, Irrigation, Street Lighting, Public Institution, PWW
Demand charge for Street Lighting, Small
Industry, PWW<100 KW, Public Institution, Commercial and Medium
Industry was proposed at Rs.100 per KVA.
No change proposed in the existing customer
Energy charge in respect of EHT consumers except
Power Intensive Industry, Colony Consumption and Emergency Supply to
CPPs was proposed at 320 paise per unit.
Energy charge for all HT categories except
Irrigation, Bulk Supply-Domestic, Commercial and Colony consumption
was proposed at 350 paise/unit.
Energy charge for all LT categories except
Domestic, Irrigation and Commercial has been proposed at uniform
rate of 400 paise/unit.
Commercial Tariff for consumption less than 100
units was proposed at 400 paise/unit.
The proposal in respect of domestic tariff for
consumption less than 100 < units was 220 paise/unit, for
100 to 200 units of consumption the rate proposed was 325 paise/unit.
In respect of EOUs CESCO proposed energy charge
at 205 paise/unit for consumption till 50% of the load factor and
180 paise/unit above that load factor primarily with the objective
of retaining industrial consumers under the grid and help other
A 300% rise was proposed in the Rebate subject to
the approval of the proposed Retail Tariff by the Commission.
Reconnection charges were proposed at Rs.60 for
single-phase domestic consumer, Rs.100 for single-phase other
consumers, Rs.200 for three phase line and Rs.1000 for HT and EHT
Power Factor Penalty was proposed to be reintroduced for Medium
Institution of Purchased Power Price Adjustment Clause
CESCO has stated that its power purchase costs were directly
affected by GRIDCO’s proposed bulk supply tariff as approved by OERC.
Since these costs were beyond the control of CESCO, the proposal was to
insulate CESCO from such risk through institution of a Purchased Power
Price Adjustment Clause (PPPAC). The proposed formula does not provide
an automatic pass through of cost. The change in retail tariff would
need the Commission’s approval. Therefore a simple interest at the
rate of 16% per annum would be made applicable to the delay between the
new BST coming into effect and the adjustment coming into force.
CESCO has made the following prayers to the Commission :-
Approve the Retail Supply Tariff and Charges as
Confirm revenue requirements, calculation of
capital base and calculation of clear profits for the year 2000-01
Approve previous year’s deficit of Rs.1.48
crores to be recovered through special appropriation in 2000-01.
Allow a voltage-wise loss stipulation for
computing revenue requirement and for special category of capital.
Institute PPPAC to cover all changes in the cost
of power purchase.
Approve the proposed tariff to be effective from 1st January,