ANNEXURE-1

 

List of Objectors

 

 

Objection No.

Name  & address of  the objector

1

Shri Shiv Goyal, Director, M/s Avani Textiles Ltd., Sibian Road, Sangrur (Punjab)

2

Shri Raghubir Singh Saini, H.No.4424, Ward No.2,  Narindra Colony, Ropar (Punjab).

3

Shri Avtar Singh, General Secretary, Chamber of Industrial & Commercial Undertakings, M.C.Block No.2, IInd Floor, Gill Road, Ludhiana-141003.

4

Director, M/s HANSO  Iron & Steels Pvt.Ltd., Jalalpur Chowk, Amloh Road, Mandi Gobindgarh-147301  .

5

Shri Kuldeep Singh Brar, Village & P.O. Sandhwan, Tehsil & Districrt Faridkot

6

Shri Joginder Kumar, President, The Ludhiana Electroplaters Association, Gambhir Market, Gill Road, Ludhiana-141003.

7

Shri Harinder Puri,  Secretary, Steel Furnace Association of India (Punjab Chapter), C/O.Upper India Steel Mfg. & Engg. Co. Ltd., Dhandari Industrial Focal Point,  Ludhiana-141010.

8

Shri Amar Singh, Consultant, Mandi Gobindgarh Induction Association, C/O.M/S. Gain Castings Ltd., New Grain Market, Mandi Gobindgarh.

9

Shri Bhupinder Dhiman, President, Small Scale Industries Association,, Udyog Bhawan, Industrial Estate, Rajpura-140401.

10

Director, M/s Hansco Iron & Steels Private Limited, Jalalpur Chowk, Amloh Road, Mandi Gobindgarh-147301.

11

Shri Manjatinder Singh Saini S/o Shri Raghbir Singh,  R/o 4424 B Narindra Colony, Ropar.

12

M/s Mawana Sugars Ltd., formerly known as Siel Limited, 5th Floor, Kirti Mahal, 19, Rajendra  Place, New Delhi-110125

13

Shri P.D.Sharma, President, APEX Chamber of Commerce & Industry (Punjab), Room No.204, 2nd Floor, Savitri  Complex-1, G.T.Road, Dholewal, Ludhiana-141003

14

Shri K.K.Garg, President, Induction Furnace Association of North India, Room No.204, 2nd Floor, Savitri Complex-1, G.T. Road, Dholewal, Ludhiana-141003.

15

Shri Vijay Talwar, General Secretary, National Electricity Consumers Association (Regd.), 1051, Dada Colony, Industrial Area, Jalandhar-144004.

16

Shri Rup Singh Dhumal, Laghu Udyog Bharti (Unit-Punjab State) C/o Sant Valves Private Limited, G.T.Road Bye Pass, Jalandhar

17

Shri B.P.Verma, Chief Electrical Distribution Engineer, Northern Railway, Headquarters Office, Baroda House, New Delhi.

18

Shri Sanjeev Bhatia C/o Rajeev Bhatia, Ranjeev Steels Private Limited, Amloh Road, Mandi Gobindgarh.

19

Shri Bhupinder Singh, General Secretary, PSEB Engineers’ Association,  45,  Ranjit Bagh, Near Modi Mandir, Passey Road, Patiala

Objection No.

Name  & address of  the objector

20

Director, Bansal Alloys & Metals Private Limited, G.T.Road, Sirhind Side, Mandi Gobindgarh-147301

21

Director, Vimal Alloys Private Limited, Shop No. 445, Sector 3-C, G.T.Road, Mandi Gobindgarh-147301.

22

Shri Balbir Singh Kharbanda, General Secretary, Cycle Trade Union (Regd.), Kharbanda Complex, Gill Road, Miller Ganj, Ludiana-141003.

23

Shri Sandeep Jain, Director, Antarctic Industries Limited, C-44/47, Focal Point, Ludhiana-141010.

24

Shri A.Puri, General Manager (Projects & Materials), Punjab Alkalies & Chemicals Limited, SCO 125-127, Sector 17-B, Post Box No.152, Chandigarh-160017.

25

Shri Gurnek Singh Brar, 1, Ranjit Bagh, Opp.Modi Mandir, Patiala-147001.

26

Shri Rajeev Jain, General Secretary, United Cycle & Parts MFRs Association,  Near Campa Cola Chowk, Gill Road, Ludhiana-141003.

27

Shri Pankaj Gupta, G.M.(Projects), Ansal Mittal Township Private  Ltd., Corporate Office:   703, Ansal Bhawan, 16 Kasturba Gandhi Marg, New Delhi-110001

28

G.M.Projects, Ganpati Townships Ltd., Regd. Office: Hazi Rattan Link Road, Bathinda.

29

PHD Chamber of Commerce and Industry, PHD House, Sector 31-A, Chandigarh.

30

Shri Angad Singh, Col (Retd.), General Secretary, Consumer Protection and Awareness Council (Regd.), K.No.831, Phase 3B-1, (Sector 60), S.A.S.Nagar (Mohali).

31

General Secretary, PSEB Engineers’ Association, 45, Ranjit Bagh, Near Modi Mandir, Passey Road, Patiala.

32

Shri S.K.Seth, Engg.-in-Chief PSEB(Retd.),  Consultant, Power Utilities, Power Sale Purchase, CDM, 41-H, B.R.S.Nagar, Ludhiana.

33

Shri R.L.Mahajan, President Technocrats Forum & Ex Er.-in-Chief/PSEB, 197-G, B.R.S.Nagar, Ludhiana.

34

Shri Avtar Singh, President, Northern Region, Sahveda (The Association for Entrepreneurs), # 1367, Sector 48-B, Chandigarh

35

Shri Gurnek Singh Brar, 1, Ranjit Bagh, Opp.: Modi Mandir, Patiala-147001.

36

Shri Sandeep Jain, Director, Antarctic Industries Limited, Focal Point, Ludhiana-141010

37

Shri H.R.Singla, Director General, Lovely International Trust, Jalandhar-Delhi G.T. Road (NH-1), Phagwara, Punjab(India)-144402.

38

Shri Parmod Chopra, Federation of Jalandhar Engineering Associations, H.O.B-IX-247, Santokhpura, Hoshiarpur Road, Jalandhar.

39

Additional Secretary/Irrigation & Power, Govt. of Punjab, Department of Power (Power Reforms Wing)

40

Shri Raghbir Singh, H.No.4424, Narindera Colony, Ward No.2, Ropar.

 

 

                                   

 

Annexure-II

 

Objections filed by various stake holders, response of PSEB and View of the Commission

 

The Commission would like to place on record, its appreciation to the participating consumers and organizations for the comprehensive inputs received both through the objections and in public hearings. In the following paras the objections filed, response of PSEB and view of the Commission on each have been briefly discussed.

 

Objection No. 1: Avani Textiles Ltd.

Issue No.1: HT rebate

HT rebate of 3% for LS consumers has been withdrawn w.e.f. 1.4.2010 but 7.5% rebate for MS consumers availing supply at 11 KV is still available even though the tariff for both the categories is same. PSEB shall save on account of transformation and HT/LT distribution losses. A rebate of atleast 10% or suitable reduction in tariff to account for huge expenditure required for creating infrastructure to receive supply at 66KV and above is requested.   

Response of PSEB

As per section 62 of Electricity Act 2003, Commission is required to determine the tariff rates for retail consumer categories. Accordingly, PSERC has determined the tariff rates for retail sale consumer categories of PSEB in the tariff order for FY 2009-10. PSEB has no right to charge or frame different tariff rates including the rebate to its various consumer categories from the one as determined by the Hon'ble Commission.

View of the Commission

HT rebate has been discontinued where supply is catered by the Board at the designated voltage. It, however, continues where supply is received at voltages higher than those specified. The justification therefor has been given in para 5.5 of the Tariff Order for 2009-10.

 

Objection No. 2&40: Sh. Raghbir Singh Saini

Issue No. 1: Tariff rationalisation    

The tariff revision for the year 2010-11 must be uniform for all the categories or on the basis of increase in various costs and not to compensate the Board against losses incurred due to negligence or wrong policies. The Conditions of Supply regulations and Electricity Regulatory Commission Act 1998 guidelines for revision of tariff should be followed which have not been complied with, even in the past.

Response of PSEB

In the year 2003, Parliament has enacted the Electricity Act 2003 which consolidates the laws relating to electricity business in India and supercedes all the previous electricity laws. All electricity utilities in India are required to follow this EA 2003 and accordingly Board also comes under its purview. The EA 2003 authorizes all the electricity Commissions to specify the terms & conditions and regulations for the determination of tariff, and in doing so, shall be guided by the principle of safeguarding consumer interest and also recover the cost of electricity in a reasonable manner. Accordingly, the Board has filed its tariff petition in line with ‘The Punjab State Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2005’ notified by PSERC on 21st November 2005.

Further, the EA 2003 provides that the tariff to be set by the Regulatory Commission should progressively reflect the cost of supply of electricity and also reduces the cross-subsidies. The tariff increase in various consumer categories on account of the revenue gap for FY 2010-11 would be determined by the Hon’ble Commission accordingly."

View of the Commission

Tariff is determined on the basis of the provisions of the Electricity Act 2003 and the Commission’s own Regulations framed thereunder. Costs permitted to the Board are usually normative and no compensation is allowed where such norms are exceeded. The Commission is also mandated to gradually reduce cross subsidy and for that reason tariff revision can not be uniform for all categories.

 

Issue No. 2: Discrimination to DS/NRS consumers

Discrimination done to DS/NRS consumers since 11/86 should be rectified during the tariff revision for the year 2010-11 because it is inconsistent and against the guidelines for determination of tariff contained in section 61of the Electricity Act 2003. Instead of three step tariff, only one rate should be prescribed.

Response of PSEB

The issue is a prerogative of the Hon’ble Commission.

View of the Commission                 

As per section 62(3) of the Act, the Commission is within its mandate to determine different tariffs for DS and NRS consumers. Tariff Policy requires that the consumers below poverty line and consumers below the specified level may receive special support through cross subsidy and the tariffs. The first slab of tariff covers such DS consumers.

 

Objection No. 3: Chamber of Industrial & Commercial Undertakings

Issue No. 1: Cost of Coal

The Commission, in TO 2004-05, had directed the Board to limit the transit loss of coal from 2% to 1% in next five years. However, the Board has made no efforts in this direction and the transit loss level for 2010-11 is still projected at 2%. The coal should be bought from cheapest sources to reduce expenditure but without compromising on calorific value.

Response of PSEB

The plants operated by the board are non-pit head stations and are located at a very large distance of about 1300 to 1625 kms from the coal mines. While the board is a regulated entity, whereas all other entities involved in the transportation of coal viz. coal production companies, railways, liaison agents, contractors etc. are not regulated. They are all bound by commercial contracts which cannot be bound by the regulatory norms. While every effort is maintained to bring down the losses through contractual obligations, however the same should be considered as an uncontrollable factor and the burden for the same should not be passed on the board. In order to control the transit losses, the board has appointed a liaison agent. Also, some of the coal is getting sourced from the captive coal mine (M/s Panem Coal Mines) at Pachhwara Block. The contractual obligations from the said coal mine prevent loading of impact of transit losses on the cost of coal.

View of the Commission

The Commission has carefully considered the issue of transit loss of coal. As several agencies are involved in the movement of coal, it is difficult to pin the entire responsibility for transit losses only on the Board. The Commission has decided that a normative 2% transit loss is reasonable and has been adopted accordingly. Receipt of coal from the Board’s captive coal mine is on an FOR basis and no transit loss is allowable in that case.

 

Issue No. 2: Power purchase

The total cost of power purchase (Rs.5876 crore) projected for FY 2010-11 is very high. With good snow this winter, dams are expected to be full thereby reducing power purchase requirement from other sources. Unscheduled purchase of power is being done at high cost during paddy season. The industrial sector should not be burdened with the additional power purchase expenditure.

Response of PSEB

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, board has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. The board has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. Board is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

After examining the ARR of the Board, it is seen that given the energy requirements and availability of power from different sources excluding traders, there may be very limited requirements of purchase of power from traders. Even so, the cost of such power that might be purchased through trading has been capped by the Commission.

 

Issue No. 3: Interest Charges

The Interest charges (Rs.1923 crore) projected are on account of money borrowed to compensate for the losses probably due to free supply provided to agriculture sector at the instance of GoP and to that extent the State Government should bear the losses. The Hon’ble Supreme Court in one of the cases has ruled discontinuation of cross-subsidy. Instead of free supply to agriculture, GoP should invest in installing new thermal plants.

Response of PSEB

The issue needs to be addressed by taking all relevant stakeholders in purview and sensitizing them towards the financial health of the Board together with the concerns of the consumers towards any increase in tariff. PSEB requests the Hon’ble Commission to take cognizance of the prevailing circumstances and issue appropriate directives for all stakeholders.

View of the Commission

Interest charges allowed by the Commission are only for approved borrowings of the Board. In so far as free supply of power to the agriculture sector is concerned, GoP, has been, by and large, paying the amount of subsidy worked out on that account.

 

Issue No. 4: Employee cost

The employee cost for FY 2010-11 has been projected to increase by about Rs.821 crore, though the Board was supposedly to reduce its expenditure on establishment. The Commission has accepted that PSEB has one of highest cost in the country and that Board has failed to initiate steps to right-size its manpower. The response by PSEB is not convincing and there is no time frame to rationalize the man power.

Response of PSEB

In the year 2010-11, PSEB has considered the impact to pay arrears (Rs. 525 crore i.e. 50% of the total arrears) which has resulted in the overall increase as observed by the consumers. The detailed rationale has been explained in the para 12.2.1 of the main text of the petition. The initiatives of employee reduction has already been discussed by PSEB in the paras 12.1.5, 12.1.6 and 12.1.7 of the main text of the petition.

View of the Commission

It is unrealistic to expect any drastic decrease in employee cost of the Board. The urgent and immediate need is to properly determine man power requirements over short and medium term and gradually right-size the staff strength of the Board accordingly. Presently, employee cost is allowable to the Board only on the basis of the Commission’s Regulations. There will, however, be additional implications on this account as the recommendations of the Pay Commission are partly to be given effect during the year 2010-11. The issue of employee cost is discussed in detail in para 4.9.

 

Issue No. 5: Energy Audit and T&D losses

The Board has deliberately omitted the latest information about number of 11KV feeders, accounted feeders and feeder wise T&D losses. 1% reduction in T&D loss translates to about Rs.100 crore decline in ARR and about 4 p/unit in tariff. The loss levels also greatly impact requirement of subsidy as they have direct link with AP consumption. T&D losses of the Board are assessed and not measured. The Board should compare its losses with all states rather than just three as per its convenience.

Response of PSEB

All the formats are specified in the tariff regulations. While the T & D loss levels of PSEB are one of the lowest in the country, however, should the Hon’ble Commission feel the need to have further break-up of loss levels, the same will be submitted subject to availability of data.

PSEB has only reiterated its submissions of previous ARR petition for 2009-10. The only submission that PSEB desired to bring to the notice of the Hon’ble Commission is that the T & D losses in the state are already quiet low and considering the inherent technical losses in the electrical networks, it is not possible to have a year on year substantial reduction in the losses. In this regard, reliance may also be placed on the Abraham Committee Report wherein it is suggested that T & D loss reduction should be considered at 1% per year in case the loss level of the utility is less than 20%. 

View of the Commission

The Commission obtains information as per the prescribed proformae.

For determination of T&D losses refer to para 4.2. For assessing AP consumption more accurately, the findings of an independent agency appointed for the purpose by the Commission, have been considered. 

 

Issue No. 6: Status of CFL

Details on number of CFL distributed/replaced and time for process completion should have been mentioned.

Response of PSEB

The first phase covering around 25 lac consumers would be implemented by Dec 31, 2010 and the second phase covering around 20 lac consumers will get implemented by Mar 31, 2011.

View of the Commission

Information required has been supplied by the Board. The Commission, however, observes that use of CFLs is only a part of a larger Demand Side Management (DSM) strategy. The Board has been asked to draw up a comprehensive DSM plan and bring out the manner in which it would be implemented.

 

Issue No. 7: Defaulters

The list of payment defaulters has not been included in the tariff petition for FY 2010-11. Efforts made to recover the amount and the progress made so far has also not been mentioned.

Response of PSEB

All the prescribed formats pertaining to the filing of ARR petition have been submitted by the Board. However, should there be a need to submit the desired information for the purpose of this ARR, the same may be suggested by the Commission. However, compilation of such information is a bit time consuming as details are to be integrated from all relevant field offices.

View of the Commission

It may not be necessary for the purpose of the ARR to seek detailed information on arrears due to the Board. However, the Commission does obtain data of outstanding arrears at the end of each financial year with a view to ascertaining whether the Board has been taking adequate steps in liquidating arrears to the extent possible.

 

Issue No. 8: Free power to employees

The Board has not indicated the cost of free supply to its employees. The loss in revenue works out to about Rs.37.5 crore per year which should ideally be added to main revenue of the Board as if it was being collected.

Response of PSEB

The free supply to the Board’s employees varies from 100 units to a maximum limit of 155 units per month. The free supply of electricity is a perk provided by Board to its employees and forms an inherent part of their salary structure. PSEB understands that similar perks are also allowed by other Government organizations like Railways, Roadways etc.

Besides, the free energy supply provided by the Board forms the taxable income of the employees of Board. The cost on account of employee’s concession allowed during the year 2008-09 and 2009-10 (Up to Nov 2009) is Rs. 23.08 crore and Rs. 16.20 crore respectively.

View of the Commission

Existing terms and conditions of service of the Board employees include free supply of electricity upto certain limits. As such, it may not be legally tenable to alter the terms and conditions of existing Board employees.

 

Issue No. 9: Maintenance schedule

Maintenance schedule of thermal and hydro plants should be so planned that all units are available during the months from June till September as there is maximum power shortage in that period.

Response of PSEB

The maintenance of the plants is done in such a way that no unit is under shut down during the maximum power shortage period. However, the same may be considered for deferment for a limited period subject to technical issues, if any, and practicability of the same.

View of the Commission

The Commission agrees with the response given by the Board.

 

Issue No. 10: Monthly Minimum Charges

Collection of Monthly Minimum Charges (MMC) is unjustified as the Board has not supplied uninterrupted and quality power to the Industrial sector. Moreover, some of the Industrial units do not consume electricity sufficient enough to cover even pre-revised MMC. Small industrial units are required to install certain machines that are important but used only once or twice in a month and therefore need to have a connected load 2-3 times of their running load since contract demand facility is not applicable to SP. Further, applicant of a new industrial connection also takes into account the anticipated load margin so as to avoid again undertaking the time consuming exercise for load extension. Most of the industrial units also get extra load sanctioned for future expansion to take advantage of the Voluntary Disclosure Scheme. To check the connected load, all the machines are taken into account while some of them are rarely used or used just for repair and maintenance when the unit is shut down.

The revised MMC will only force the industrial units to either close down or become defaulters of electricity bill.    

Response of PSEB

Monthly minimum charges are levied on account of inherent cost associated with installation of network which included O&M cost, interest cost, depreciation, interest of working capital, employees cost  etc. Even in the absence of any usage by the consumers, PSEB has to upkeep the network and the associated fixed costs are incurred. 

Further, PSEB understands that the minimum thresh hold consumption to cover MMC can be achieved by ‘switching on’ the full load for approximately 1 to 2.5 hours or more per day depending upon the various categories. Accordingly, it is not justifiable to remove the MMC.

View of the Commission

The Commission has in its Tariff Order for the year 2004-05 observed that a substantial portion of the Board’s costs are fixed in nature and do not undergo change with fluctuations in actual energy consumption. Ideally, therefore, all such fixed costs need to be recovered through fixed charges whereas the Board obtains only a small fraction of this cost through MMC. The Commission holds the same view at present. It is also relevant to mention that in deference to consumer sentiments in this respect, rates of MMC were reduced by 10% w.e.f. 1.4.2004.

 

Issue No. 11: Theft

Controlling theft of power is the most effective way in de-loading feeders and reduction of T&D losses. The Board has not provided details of FIRs registered, convictions obtained and revenue realized etc.

Response of PSEB

All prescribed formats pertaining to the filing of ARR petition have been submitted by the Board. Further, PSEB has already elaborated the MUs recovered under theft of electricity in para 3.2.2 of the petition. Should there be a need to submit the desired information for the purpose of this ARR, the same may be suggested by the Commission. However, compilation of such information is a bit time consuming as details are to be compiled from all relevant field offices.

View of the Commission

While it is necessary to take stringent action to control theft which includes legal action in accordance with the law, the Commission believes that it would be more effective if the issue of theft is systematically dealt with. This would include undertaking base line surveys, conducting energy audits at distribution level and segregation of technical and commercial losses. On this basis, the Board would be able to take more focused steps to control and minimize theft.

 

Objection No. 4&10: Hansco Iron and Steels (P) Ltd.

Issue No. 1: Load exemption during peak load hours

 A 66 KV consumer is entitled to draw a maximum of 50 KW or 5% of the sanctioned load during peak load hours as per ESR clause 168.1.1. The ‘no load losses’ of the main transformer, induction furnace transformer and the auxiliary transformer alone account for about 30 to 37 KW. This leaves the unit with just about 15KW load, which is not even sufficient for factory / office lighting or small repairs. It is requested to raise the load limit of 50KW to 100KW during peak load hours for 66KV consumers.

Response of PSEB

Maximum load limit of 50 KW to 66 kV LS consumers is to contain the excessive demand during peak load hours. PSEB has capped this maximum limit at 50 KW on account of the following reasons:

·          Increase in the maximum load drawal limit may provide a larger room for variation between demand and supply. The same may result in situations wherein PSEB has arranged for lower supply in comparison to the demand and vice versa. Severe mismatches between actual demand and supply of power may endanger the security and safety of the grid

·          During the peak load period, Board procures power from the short term sources to meet such extra demand, which often comes at large premiums. 

·          At the time of peak, the frequency of the system generally falls and power drawal under such conditions have a correspondingly higher UI charges. Procurement of power at lower frequencies may put extra financial burden on the board.

Considering the above, the Board believes that the current limit on the maximum load drawal during peak hours is sufficient and further enhancement in the same may not be considered.

View of the Commission                               

The manner in which peak load hour restrictions are enforced is being reviewed by the Commission. In case the issue raised is not resolved, the objector would be advised to approach the Commission in accordance with its Regulations.

 

Issue No. 2: HT rebate

LS consumer getting 66 KV supply is entitled to a 3% rebate However, the medium supply (MS) consumers get 7.5% rebate on receiving supply at 11 KV, despite tariff being same for both LS and MS consumers. As per the tariff order for FY 2009-10, the 3% rebate for LS consumers is also withdrawn while PSEB shall save an account of transformation and HT/LT distribution line losses. Therefore, enhancement in the rebate from 3% to 10% or suitable reduction in tariff to account for huge expenditure required for creating infrastructure to receive supply at 66KV has been requested.   

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However, actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, it is submitted that the supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest. Accordingly, Board requests the Hon’ble Commission that the issue of continuation of rebate to HT consumers need not be reconsidered.

View of the Commission

Refer to objection no.1, issue no.1.

 

Issue No. 3: Power factor incentive 

The LS consumers get incentive by maintaining power factor above 0.90 whereas induction furnace units are eligible for incentive beyond a power factor of 0.95. Such a provision is discriminatory in nature as all other charges / surcharges / tariff are levied equally to LS consumers as well as induction furnace units. Therefore, PIU should also be allowed incentive above 0.90.

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“………….The Commission had in its Tariff Order of 2004-05 observed that incentives should be available for actual improvement in system conditions and not just for maintaining the status quo. Accordingly, it had thought it necessary to fix suitable thresholds for different categories of industries keeping in view their basic inherent characteristics. It is observed that these findings remain equally valid at present and thus, consumers where the power factor is inherently higher need to be distinguished and allowed power factor incentive at improved benchmarks. For this reason, the Commission does not see sufficient justification for rebates to be allowed to RT and LS consumers having PIU’s at a power factor of less than 0.95.”

PSEB agrees with the observations of the Hon’ble Commission and believes that different consumers need to be benchmarked against their respective characteristics of industrial power factor. For example, Induction furnace load by its very nature is an instantaneous, concentrated and power intensive load which puts sudden jump in demand on the system. Therefore, we believe that the different PF specified for the purpose of allowing rebate for different consumer categories is reasonable and need not be reconsidered.

View of the Commission

The Commission had earlier taken the view that it is desirable to fix suitable thresholds for different categories of industries keeping in view their inherent characteristics. Thus, it is reasonable to distinguish industries where power factor is inherently higher and determine a higher benchmark to entitle them for power factor incentive. The Commission sees no reason to review its stand in the matter.

 

Objection No. 5: Sh. Kuldeep Singh Brar

Issue No. 1: Special tariff for agriculture pilot project

In reference to the meeting conducted by PSEB on 13-10-2009 in Mohali, a memorandum was issued regarding the supply of power at Agriculture tariff rate of Rs.2.85/kWh for the pilot project of producing International Standard vegetables and seedlings. Drawing a parallel from Himachal Pradesh State Electricity Board (HPSEB) which supplies electricity at a discounted rate of Rs 1.08/kWh for a similar project, the Government of Punjab has also recommended levying a tariff of Rs.1/kWh for the said project.

Response of PSEB

At present, Board does not have any such independent feeder existing in the system. However, an application has been received by the Board for an independent feeder for green house project on a pilot basis, which is under consideration of the Board.

View of the Commission              

The matter will be separately considered as the Board has since filed a petition in this regard. 

 

Objection No. 6: The Ludhiana Electroplaters Association

Issue No. 1: Unjustified tariff Increase

The tariff increase sought by PSEB is unjustified. Moreover, PSEB has not provided the balance sheet for FY 2008-09. The Board should contain T&D losses and minimize its staff. The Regulatory Commission is also manned by retired officers of the Board. The tariff should not be revised in the interest of the consumers.

Response of PSEB

The submissions made by PSEB contain the audited accounts for FY 2008-09 as Vol.III. The Consumers have raised the issue of increase in tariff and requested the Commission not to increase the same as the same is on account of inefficiency in operations. Cost of operations of a utility are not dependent entirely on its operational efficiency but also on other external factors like increase in input costs viz. fuel cost, raw material, cost of wires, transformers, third party services, inflation, price escalation and increase in establishment cost etc. The same are likely to increase the cost of operations of any utility and needs to be recovered through tariffs. PSEB in its submission has substantiated the rationale for increase in expenses and understands that the Hon’ble Commission will examine the prudence of the same before allowing the same to be recovered through increase in tariff.

 

View of the Commission

The Commission processes the ARR according to its notified Regulations, determines the cumulative revenue gap and accordingly revises the tariff for various categories of consumers, to recover the same.

 

Issue No. 2: T&D losses

T&D losses of the Board are higher than that of the national average

Response of PSEB

The T&D losses of the Board are one of the lowest in the country, we would appreciate in case the Consumers can share the basis of working out the national average T&D losses so that the Board can benchmark its performance and try to improve it further.

View of the Commission

It may be true that the T&D losses of the Board are not higher than national average but that does not imply that there is no further scope for improvement. The Commission has in this order re-determined a three year loss reduction strategy and expects that the Board would be able to achieve these levels. With a view to protecting interests of the consumers, costs allowed to the Board are on the basis of normative T&D levels determined by the Commission and not on the actual achievement of the Board.

 

Objection No. 7: Steel Furnace Association of India

Issue No. 1: Agriculture consumption

There is still no established and conclusive methodology for determination of agriculture consumption and estimates of PSEB and the Commission vary. Efforts should be made to ascertain actual agriculture consumption.

Response of PSEB

PSEB has already submitted its contentions and the approach for estimation of such sales for the kind consideration of the Hon’ble Commission.

View of the Commission

Accurate computation of agricultural consumption requires correct data on connected load and consumption as recorded by sample meters. On the basis of studies undertaken by the Commission from time to time, the Board has been asked to initiate specific measures which will assist the Commission in a more realistic estimation of AP consumption.

 

Issue No. 2: Consumption limit for subsidized tariff

In FY 2008-09 and FY 2009-10, the Board has claimed 1524 MU in excess of agriculture consumption than approved by the Commission. Beyond a reasonable level of consumption as approved by the Commission, the power supplied should be charged at a higher tariff which has no element of cross-subsidy. Therefore, 1524 MU of extra power supplied by the Board should be priced at the actual purchase cost.

Response of PSEB

The proposed mechanism would be easier to implement for metered AP consumers. However, in the current circumstances, it may not be possible to ascertain the level of consumption by each of the agricultural consumer over and above the approved quantum. Moreover, the billing and collection infrastructure may require further enhancements as currently the entire collection against the agricultural consumption is recovered in the form of subsidy from the Government.

Further, the sale to a particular category of consumers for the ensuing year (2010-11 in this case) is based on assumptions and is likely to vary from the actual consumption. The same applies to all categories of consumers and not particularly the agricultural consumers only. Charging the consumers for such deviation based on the marginal pricing essentially means that only the agricultural consumers are contributing to the peak demand which may not be the case.

However, PSEB understands that the Hon’ble Commission may consider the suggestions keeping into account the aforementioned issues and other ground realities.

View of the Commission

Refer to para 3.2.3 and 4.1.3.

It may be difficult to evolve consumption norms for AP consumers given the fact that there are variations in the agro-climatic conditions and differing cropping patterns in the State. Even if such a norm were to be evolved, the proposed approach might be difficult to follow in practice given the inherent issues in exact estimation of AP consumption in the absence of complete metering of agricultural connections at present.

 

Issue No. 3: T&D losses

The Commission approved a T&D loss of 19.5% against 19.92% claimed by the Board for FY 2008-09. For FY 2009-10, the Commission approved T&D loss of 22% against 19.5% claimed by the Board. There should be T&D loss trajectory for next 5 years. Instead of energy audit study for improvement in thermal plants, efforts should be focused on distribution system where scope of improvement is much greater.

Response of PSEB

No response.

View of the Commission

The Commission has approved a higher T&D loss of 22% against 19.5% due to the downward revision in the figure of AP consumption based on the findings by its consultants M/s ABPS.

Also refer to objection no.6, issue no.2.

 

Issue No. 4: Interest and finance charges

The interest on short term borrowings made by the Board to meet revenue deficit due to disallowance of expenses by the Commission should not be allowed. As such, it shall not be in conformance with the decision of the Appellate Tribunal (page 152/199). The capital investment projections should be realistic assessments based on past experience. Due to over capitalization of RSD project, consumers should not be burdened with unwarranted cost in the form of excess interest cost, high ROE and depreciation charges. The interest due to non refund of excess interest paid should not be passed on to consumers. Also since interest cost on account of the diversion of funds done in the past is borne by the consumers, the issue needs detailed investigation. 

Response of PSEB

PSEB has already elaborated its rationale regarding increase in short term borrowings and diversion of funds in its Tariff petition. The suggestions made by the consumers are taken care by the Commission while issuing the tariff order. However, the Board desires to impress upon the issue that paucity of funds for meeting the daily operational expenses is at an alarmingly high level. The said scarcity of financial resources is primarily on the ground that the Board is not allowed to recover the actual expenses under the prudence check adopted by the Hon’ble Commission. Disallowance of such funds in the tariff order does not end the contractual obligations towards the lenders, fuel suppliers, power traders/generators etc. It is vital for any business entity to stick to its financial commitments and PSEB is no exception to that. PSEB therefore impresses upon the need to reach a consensus on the methodology of agricultural consumption and other such uncontrollable factors which lead to the aforementioned issues raised by the consumers.

View of the Commission                       

Interest allowable to the Board for short or long term borrowings is only in respect of costs that are allowed by the Commission as per norms.

Capital Investment projections of the Board are being assessed by the Commission after taking into account the actual expenditure incurred by the Board. Refer to para 3.14.2 and 4.13.2 of Tariff Order for 2009-10 and 2010-11.

The Commission has in its Order of 13.9.2007 addressed the issue of RSD cost. Appeal against this order is, however, pending before the ATE as discussed on page 175 of Tariff Order for 2009-10.

No increase in ROE has been allowed by the Commission. Refer to para 3.16 and 4.15. Regarding depreciation charges refer to para 3.13 and 4.12.

 No interest has been allowed on non - refunded interest paid in excess by the Board to GoP. Refer to paras 2.14.13 and 4.13.12 of Tariff Order 2009-10.

Interest of Rs.262.34 crore on account of diversion of capital funds is being disallowed based on audited accounts. Refer to paras 2.14.11, 3.14.11 and 4.13.11.

 

Issue No. 5: Employee cost

 As against employee cost of Rs.1.01/unit of energy sold projected by the Board for FY 2010-11, the Commission had approved Re.0.57/unit for FY 2008-09 and FY 2009-10. The increase in employee expenses should not be approved beyond the increase in Wholesale Price Index (WPI). Employee cost should be capped at existing level.

Response of PSEB

PSEB has submitted its rationale for increase in employee cost in the ARR petition and requests the Hon’ble Commission to consider the same.

View of the Commission

Refer to para 4.9.

 

Issue No. 6: Excess depreciation

The depreciation charges should be calculated based on the approved capital expenditure plan for FY 2010-11 as past experience shows mismatch between projected and actual investment by the Board.

Response of PSEB

PSEB has submitted its rationale for the said expenses in the ARR petition and requests the Hon’ble Commission to consider the same.

View of the Commission

Refer to para 4.12.

 

Issue No. 7: Cross subsidy and tariff rationalisation

As per tariff policy, the tariff should progressively reflect the cost of supply of electricity and should be within +20% of the average cost of supply. The tariff should be brought in the specified range by 2010-11. Despite repeated directions from the Commission, the Board has not provided category wise cost of supply. The Commission should calculate the cost of supply based on available information as done by HPERC where cost of supply for LS consumers was found to be 60% of average cost of supply. Tariff for LS consumers should be rationalized by reducing the cross-subsidy burden.

Response of PSEB

Determination of Tariff is the prerogative of the Commission and PSEB understands that the Hon’ble Commission may consider the issues raised by the Consumers

View of the Commission

The Commission has in its Regulations already specified the gradual reduction of cross subsidy though total elimination of the same is no longer envisaged in the Electricity Act 2003. A gradual reduction in cross subsidy in percentage terms has been effected in the previous years. An increase in average cost of supply will, however, result in increase in cross subsidy in real terms.

Adequate information is not available with the Commission to take an informed view on category-wise cost of supply. The Board has been directed to carry out a study and make its findings available in the shortest possible time frame.

 

Issue No.8: Disallowance of prior period expenses

Only approved expenditure should be passed on to the consumers. In case, actual expenditure exceeds the approved level, the same should be borne by the Board / Government. The prior period expenses of Rs. 107 crore should be disallowed. In ‘True up’ only expenditures approved by the Commission should be considered.

Response of PSEB

PSEB has submitted its rationale for such net expenses in the ARR petition and requests the Hon’ble Commission to consider the same.

View of the Commission

The Commission has disallowed the prior period expenses relating to employee cost which stands capped.

             

 Issue No.9: Rebate to HT consumers

The HT consumers have been allowed 3% rebate as they undertake large investments in creating infrastructure to receive power at high voltage which lowers the T&D losses and also benefits PSEB. The Commission however discontinued the rebate in the tariff order of FY 2009-10 which should be restored in considerations of the provision of EA, 2003 to link tariff with the cost of supply.

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, it is submitted that the supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest. Accordingly, Board requests the Hon’ble Commission that the issue of continuation of rebate to HT consumers need not be reconsidered.

View of the Commission

Refer to objection no.1, issue no. 1.

 

Objection No. 8: Mandi Gobindgarh Induction Furnace Association

Issue No. 1: Cross Subsidy

As per Regulations, cross-subsidy has to be eliminated within ten years from FY 2005-06 thereby meaning a reduction of 10% each year. Quantum of LS cross-subsidy per unit in FY 2005-06 was 71 paisa whereas it stands at 65 paisa for FY 2009-10. Therefore, a reduction of just 7 paisa against the target of 28 paisa has been achieved. Similarly, in percentage terms only 5.38% reduction has been achieved as against the target of 8%.The gap should be made good during FY 2010-11by reducing the cross subsidy by 50%.

Response of PSEB

The Electricity Act 2003 has been amended and it stipulates that the cross subsidization has to be progressively reduced rather than eliminated. Fixation of tariff is the prerogative of the Hon’ble Commission and the issues of the consumers may be considered appropriately keeping in view the financial health of the Board.

View of the Commission

Refer to objection no.7, issue no.7.

 

Issue No. 2: Power cuts

The power cut for LS and category II consumers has increased from a day in a week during previous years to 3 days in a week at present.  The consumers are forced to install diesel generators which cost about Rs.11/unit of generation. Provision be made in Tariff Order to compensate the Industrial units for power cut of more than one day/week at Rs.11/unit for average daily consumption.

Response of PSEB

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

In this regard, it is submitted that there is a huge disallowance on power purchase on account of non-consideration of AP sales by the Commission. Even though the financial position of the Board is getting more and more commercially unviable, however, only on account of its social responsibility, the Board has to purchase short term power to meet the demand of the consumers. PSEB requests the Hon’ble Commission to allow the AP sales as per the projections as the same will eventually lead to availability of more funds which can be used to procure more power for the state.

View of the Commission

There may not be any case for payment of compensation on account of loss of production etc. caused by imposition of power cuts. On the other hand, the Board needs to take every step possible to procure power at reasonable rates with a view to minimizing duration of power cuts should they be required to be imposed. In a situation of considerable mismatch between availability and demand of power, unlimited purchase of power is constrained by the high cost of power available during the periods of peak demand.

 

Issue No. 3: T&D Losses

Tariff should be determined by considering the projected figure of T&D loss of 18%.

Response of PSEB

The request may be considered by the Commission subject to approval of AP sales as requested by PSEB.

View of the Commission

Refer para 4.2.

 

Issue No. 4: Agriculture consumption

The assessment of agriculture consumption is going on since the issue of first Tariff Order FY 2002-03. The results of the study undertaken by PSEB and later by Punjab Agriculture University, Ludhiana were similar but were not accepted by the Commission as the number of meters installed was inadequate. The latest study conducted by M/s ABPS Infrastructure private ltd. is based on much less number of meters. However, the Commission has accepted the draft final report by M/s ABPS while final report is still under consideration. The study is not fair to subsidizing consumers, PSEB and in the interest of natural resources. The latest study does not reflect the exact hours of supply provided to the connected load of the AP set. The number of hours of supply is the only variable for AP set which needs to be declared by Board to establish annual consumption. Till such time the 100% installation of energy meters is completed, results obtained through hour’s record and matched with installed meters should be accepted.

Response of PSEB

PSEB has already given the detailed submission regarding the consideration of AP sales and the repercussions of disallowance of AP sales on the financial health of the Board which may kindly be considered by the Commission.

View of the Commission

Accurate computation of agricultural consumption requires correct data on connected load and consumption as recorded by sample meters. On the basis of studies undertaken by the Commission from time to time, the Board has been asked to initiate specific measures which will assist the Commission in a more realistic estimation of AP consumption.

 

Issue No. 5: Return on Equity

RoE gets burdened on account of disallowances in respect of T&D losses, power purchase cost and interest charges etc.

Response of PSEB

PSEB requests the Commission to consider the financial health of the Board and request for approval of expenses as submitted in the petition.

View of the Commission

Refer to paras 4.2, 4.8, 4.13 and 4.15.

 

Issue No. 6: LT surcharge/HT rebate

HT rebate of 3% should not be withdrawn and imposing the surcharge after 18 months will result in severe financial impact on the consumers.

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, it is submitted that the supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest. Accordingly, Board requests the Hon’ble Commission that the issue of continuation of rebate to HT consumers need not be reconsidered.

View of the Commission

Refer to objection no.1, issue no.1.

 

Issue No. 7: Energy meters

The argument of the Board that it is not feasible to manually read all meters and 100% metering be deferred till system to read all meters online is in place is not tenable.The Commission must ensure implementation of its existing directive to the Board to comply with Section 55 of the Electricity Act 2003 in respect of installation of meters by 31.3.2010 since acceptable level of AP consumption has not been achieved even after the lapse of a decade. 

Response of PSEB

PSEB has already given the status and implementation plan for increasing the sample size of AP consumers in the state as per the directives of the Commission in the ARR petition for 2010-11 which may be considered by the Commission.

View of the Commission

The Electricity Act 2003 provides for metering of all electric connections. In addition, the Commission has already directed the Board to ensure that the provisions of the Act are complied with. The Commission will separately take into account the fact that the Board has so far failed to comply with this directive.

 

Issue No. 8: Energy balance

Release of load may be allowed as per availability of power as energy balance is getting skewed towards costly power purchase and rural pattern of supply is getting replicated in urban areas rather than making it vice versa.

Response of PSEB

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission 

 It is not possible to restrict demand which is linked to economic growth and increase in population. Legally too, the obligation of universal service is cast upon the Board which cannot, thus, refuse release of new connections. On the other hand, the Board must take all possible steps to procure power at reasonable rates through long and short term contracts and add to generation capacity in the shortest possible time frame.

 

Issue No. 9: Power purchase

Power purchase should be done with the objective of providing uninterrupted supply with cost recovered from the category availing the benefit. Power purchase for Industrial consumers shall yield higher profit margin for the Board and will enhance industrial growth. Power purchase be allowed to PSEB with free hand to avoid power cuts.

Response of PSEB

The suggestion may be considered by the Hon’ble Commission. However, purchase of power should not be disallowed against non-consideration of AP sales as it severely impacts the financial health of the Board.

View of the Commission

It is true that the Board normally goes in for purchase of additional power during the paddy season as that is the period of maximum demand not only on account of increased agricultural consumption but also for other categories such as domestic and commercial. While the Board must make all efforts to procure additional power at that time, there are constraints on the quantum of power that can actually be purchased on account of high prices prevailing nationwide. Inordinate increase in the cost of power would inevitably result in additional burden on all categories of consumers including a very large number of such consumers who can ill-afford substantially enhanced tariff.

 

Issue No.10: Interest and finance charges

Reasons cited for increase in the interest cost is delay or non-payment of dues by State Govt., who is also withholding the refund of Rs.782.72 crore to PSEB. Similarly, delay in payment of subsidy is another reason for the increase in finance cost. The burden of such interest should not be passed on to the consumer.

Response of PSEB

The suggestion of the consumer is appreciated and the Hon’ble Commission is requested to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. The Government may be asked to pay the interest on non-payment of subsidy for the period of delay. However, the non-payment of such interest should not result in reduction of interest on actual working capital loans taken by the Board.

View of the Commission

Refer objection no.7, issue no.4.

 

Issue No.11: Aggregate Revenue Requirement

The revenue gap of Rs. 2890 crore projected for FY 2010-11 at existing tariff is without factoring revenues from AP consumption and other dues payable by the State Government. There will be no shortfall in revenue at the existing tariff if such payments are taken into consideration. Accordingly, tariff should be kept at existing level and dues from the State Government should be recovered on priority.

Response of PSEB

The gap during the year 2010-11 is projected as Rs 2890 crore and the cumulative gap over the years till 2010-11 is Rs. 6575 crore. The aforementioned gap for 2010-11 is after considering the revenue from sale of power to AP consumers at the applicable tariff. Under such circumstances, it is likely that the shortfall in recovery of ARR at the existing tariff may have to be made by suitable tariff revision; however PSEB believes that the prerogative of tariff fixation rests with the Hon’ble Commission which may deal with the issues appropriately.

View of the Commission

The revenue gap for 2010-11 has been arrived at after taking into account all estimated revenues including those for sale of power to the agriculture sector. The revenue gap in the year 2010-11 and the accumulated gap for the previous two years are taken into account to determine the total gap for the purposes of tariff revision.

 

Objection No. 9: Small Scale Industries Association

Issue No. 1: Monthly Minimum Charges (MMC)

The industry faces power cuts on a daily basis round the year and is not even able to consume energy enough to cover the monthly minimum charges. Therefore, the MMC being imposed should be withdrawn.

Response of PSEB

Total expenditure as calculated and given in the ARR Petition has two components viz., variable component and fixed component. Variable component accounts for the expenditure which varies as per the availability of power for example; power purchase expenses, Inter-state transmission charges etc. Whereas fixed component is one which is spent in spite of non-availability of power for example; R&M expenses, establishment cost, depreciation, interest, finance charges etc. In other words the variable charges depend on MUs purchased and fixed charges are independent of MUs purchased/handled.

                Since, if some of the fixed component of the total expenditure is not recovered by way of fixed tariff, it becomes a difficult proposition for PSEB to fulfill its day to day business requirement. Accordingly, MMC are levied to recover the fixed expenses in case of no consumption or less than a minimum thresh hold consumption.

                Further, it should be understood that the minimum thresh hold consumption to cover MMC can be covered by ‘switching on’ the full load for approximately 1 to 2.5 hours or more per day depending upon the various categories. Accordingly, it is not justifiable to say that because of the power cut the consumers are not able to consume even equal to the minimum thresh hold consumption to cover MMC and hence the MMC should not be removed.

                In addition to above, the real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

Refer to objection no.3, issue no.10.

 

Issue No. 2: Power cuts

The power cut for LS and category II consumers has increased from a day in a week during previous years to 3 days in a week at present.  The consumers are forced to install diesel generators which cost about Rs.11/unit of generation. Provision be made in Tariff Order to compensate the Industrial units for power cut of more than one day/week at Rs.11/unit for average daily consumption.

Response of PSEB

No response

View of the Commission

Refer to objection no.8, issue no.2.

 

Issue No. 3: Connected load/contract demand

With the installation of electronic energy meters having the capability to measure load condition at specific intervals, provision of connected load may be dispensed with for consumers having electronic meters, as in case of contract demand consumers.

Response of PSEB

Deployment of electronic meters is primarily to have better accounting of energy and enabling ease of recording data rather than to have a check on the connected load of the consumers. In case relaxation is provided to the consumers, there may be more case of meter burnouts and over drawl of energy by certain consumers which may have a detrimental impact on the overall system performance of PSEB under the UI regime. It is therefore desirable that a check on the connected load is established to ensure discipline in usage of energy by the consumers.

View of the Commission

The Commission had initially adopted the concept of contract demand in the case of LS consumers but has subsequently extended it to some other categories as well. The Commission intends to gradually increase the consumer categories for whom the concept of contract demand will in due course become applicable.

 

Issue No. 4: Annual Revenue Requirement

The revenue gap of Rs. 2890 crore projected for FY 2010-11 at existing tariff is without factoring revenues from AP consumption and other dues payable by the State Government. There will be no shortfall in revenue at the existing tariff if such payments are taken into consideration. Accordingly, tariff should be kept at existing level and dues from the State Government should be recovered on priority.

Response of PSEB

The gap during the year 2010-11 is projected as Rs 2890 crore and the cumulative gap over the years till 2010-11 is Rs. 6575 crore. The aforementioned gap for 2010-11 is after considering the revenue from sale of power to AP consumers at the applicable tariff. Under such circumstances, it is likely that the shortfall in recovery of ARR at the existing tariff may have to be made by suitable tariff revision; however, the prerogative of tariff fixation rests with the Hon’ble Commission which may deal with the circumstances prudently.

View of the Commission                      

Refer to objection no.8, issue no.11.

 

 

 

Issue No. 5: Tariff revision

The small and medium industry is already facing adverse financial conditions and any further tariff increase will only worsen the situation. Thus, tariff should be retained at the existing level.

Response of PSEB

No response.

View of the Commission

Refer to objection no.6, issue no.1.

 

Objection No. 11: Sh. Manjatinder Singh Saini

Issue No. 1:  Charging DS tariff

At premises of Congress Bhavan, Ropar where no commercial activity is carried, DS tariff should be charged instead of NRS tariff. Moreover, charging extra from NRS consumers is unjustified as no additional facilities are provided and infact long power cuts are imposed.

Response of PSEB

The categorization of consumers is done as per Regulations/norms. However, the objection does not relate to the ARR petition and may be taken up appropriately in the office of PSEB separately.

View of the Commission

Office and commercial premises have all along been charged NRS rates. No distinction is made even between private and government offices. The Commission does not see sufficient merit for any change in this dispensation.

 

Issue No. 2: Extra power purchase

The Board purchases power during election time under pressure of the ruling party and investigate the amount of power purchase allowed during 2009-10. Month wise quota should be fixed for power purchase and any over-drawl by Board should be investigated. 

Response of PSEB

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

Meanwhile, PSEB purchases short term power considering the demand supply gap and the availability of power at the prevailing rates in the market.

View of the Commission

It is imperative that the Board purchases power in a judicious manner. However, monthly monitoring of purchases or fixing of quotas may not be feasible in view of the fact that the prevailing situation both on the demand or supply side are susceptible to change at short notice. The Commission has in the Tariff Order of 2009-10 imposed a cap on the quantum of purchases after which the purchase price would be linked to the average realization cost of the Board.

 

Issue No. 3: Interest due to delay in subsidy

The Board should declare the source of finance and entity that pays the interest in case of delay in subsidy payment by GoP.

Response of PSEB

The Hon’ble Commission is requested to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. The Government may be asked to pay the interest on non-payment of subsidy for the period of delay. However, the non-payment of such interest should not result in reduction of interest on actual working capital loans taken by the Board.

View of the Commission

The Board would perhaps need to raise extra finances in the event of delay in receipt of subsidy from GoP which would involve payment of additional interest as well. This aspect is invariably dealt with in the relevant Tariff Order and seeking any further details from the Board in this respect may not be entirely relevant.

 

Issue No. 4: Tariff hike for DS consumers

Tariff for DS consumers should not be hiked as that it the only category that makes timely payment of bills while bearing the inefficiencies of power cuts, low voltage etc.

Response of PSEB

The Consumers have raised the issue of increase in tariff and had requested the Commission not to increase the same as the same is on account of inefficiency in operations. PSEB submits that cost of operations of a utility are not dependent entirely on its operational efficiency but also on other external factors like increase in input costs viz. fuel cost, raw material, cost of wires, transformers, third party services, inflation, price escalation and increase in establishment cost etc. The same are likely to increase the cost of operations of any utility and needs to be recovered through tariffs. PSEB in its submission has substantiated the rationale for increase in expenses and understands that the Hon’ble Commission will examine the prudence of the same before allowing the same to be recovered through increase in tariff.

View of the Commission

Refer to objection no.6, issue no.1.

 

Issue No. 5: Recovery of tariff from backdate

The consumers should not be made to pay for delays on part of the Board in submission of ARR petition and order by the Commission. The consumers price their products on current cost and cannot take the burden of additional cost.

Response of PSEB

No response

View of the Commission

The Commission wishes to avoid any increase in tariff with retrospective effect. However, in certain instances it is inevitable as not doing so would correspond to an abnormal increase in tariff which may have to remain applicable in ensuing years even if a high tariff is not required.

 

Objection No.12: Mawana Sugars Ltd.  (formerly, Siel Ltd.)

The issues pertaining to cost of supply, cross-subsidy, interest, RSD cost and submission of ARR in a mechanical manner brought out in the initial submissions  are the same verbatim as taken up by the objector in the ARR for 2009-10 and views of the Commission, after due examination afresh, are the same as expressed in the T.O. for 2009-10. The remaining issues are dealt with hereunder:

 

Issue No.1: Processing of ARR

The Commission should not process the ARR petition for 2010-11 since the tariff orders for the past three years are under appeal and till the same are finally disposed off by the ATE.

Response of PSEB

The filing of appeals on the previous year tariff order of the Commission do not refrain PSEB to file tariff petition for the ensuing period nor does the same hinders the Commission to determine the tariff for the future years. However, any impact of the final judgment of the ATE can be considered by the Commission in the subsequent tariff orders.

View of the Commission                      

Unless there is stay, pendency of appeals in respect of the tariff orders for the previous years is not a bar for proceeding with the ARR for the current year.

 

Issue No.2: Financial health of PSEB 

The tariff petition by Board based on year on year increasing expenditure and the subsequent order by the Commission with standard allowance/disallowance has become a formality. The Board has been diverting investible assets like depreciation reserve, consumer contribution and ROE funds to meet its revenue requirement which speaks of the poor financial health of the PSEB. Financial restructuring and cleaning of balance sheet of PSEB needs to be ensured as suggested by the Commission in its T.O. 2003-04 with a directives to Govt. of Punjab to return excess interest paid by the Board.  

Response of PSEB

Being the prerogative of the Hon’ble Commission, PSEB requests the Commission to kindly address the issue by providing appropriate directives to the stakeholders.

View of the Commission

GoP and the Board need to ponder over the rising debt and accumulated loans of the Board and decide upon measures necessary to contain the same so that financial health improves over time.

 

Issue No.3:  Capping of expenditure

a) The power purchase from costly resources (more than Rs 4 per unit) should not be allowed and the power purchase under UI should be minimized.

b)  Board should control fuel cost by reducing transit loss and Station Heat Rate.

Response of PSEB

a)       There are certain periods during the year, wherein on account of the peak load requirements, the demand for power is met through short term purchases, the prices of which are essentially determined by market forces. While some of the consumers request that PSEB may be given a free hand in procuring power whereas the others request to have a cap on the power purchase cost. PSEB understands the issues of the consumers and is therefore making efforts to maintain a balance and to purchase power from long term sources at competitive prices. Besides, efforts to have intrastate generation facilities are actively pursued to meet the shortfall.

b)       No response.

View of the Commission

a)               The Commission has already capped the total quantum of power that can be purchased by the Board, keeping the energy balance in mind. Should any additional power be purchased beyond that limit, the Board would only be allowed the average cost of realization per unit.

b)       The Commission allows only the normative rates and no extra burden is passed on to the consumers. Also refer to para 4.7.    

 

Issue No.4: Interest rate on Govt. loans

Interest rate on Government loans should be brought down from 14-18% to a lower percentage of around 8%.

Response of PSEB

The Govt. loans are in the range of 12-13.50%. PSEB would appreciate if the basis of the aforementioned interest rate of 8% be shared.

View of the Commission

GoP has been extending loans to the Board from time to time and the rate of interest on such loans being charged is the interest rate prevalent at the time of release of loans by GoP to the Board. The rate of interest on the totality of these loans, presently taken as 13.20%, is a matter which needs to be discussed and decided upon by the Board and GoP.

                                                             

Issue No.5:  Working capital loan

Working capital requirement should be determined on normative basis. The interest on loans taken on account of delay in subsidy should be borne by the Govt.

Response of PSEB

Increase in Working Capital requirements is primarily on account of disallowances in the expenses apart from the non-payment of timely dues by the Govt. In case of non-timely payment by the Govt., under such circumstances, PSEB should not be penalized by disallowing its actual cost of working capital loans.

View of the Commission

The Commission allows working capital on normative basis as per its own Tariff Regulations. For the delay in payment of subsidy, the Commission is levying interest which is also being paid by GoP. Also refer to paras 4.13 & 3.15. 

 

Issue No.6: Free units to AP and other consumers

Free units allowed to AP consumers and SC & weaker sections (30 units/ month) should be fixed in accordance with the decision of the ATE.

Response of PSEB

PSEB could not find reference to the said ATE judgment referred by the consumer. While the NTP says that “consumers below poverty line who consume below a specified level, say 30 units per month, may receive a special support through cross subsidy”, however, the said consumption of 30 units is just an indicative number, which in no way becomes a norm that  the units allowed free to such consumers be capped at this level.

View of the Commission

The observation of ATE in respect of supply of 30 units per month to SC and BPL consumers is possibly with regard to the concessional tariff that might be made applicable to such categories. It has no relevance to GoP’s decision to subsidize power to any category of consumers.

 

Issue No.7: Tubewell efficiency

PSEB is silent about the pilot project conducted for improving the efficiency of tubewell.

Response of PSEB

Technical consultant has been appointed to conduct the field data regarding the efficiency of tube well connections. The consultants have recently compiled the field data and are analyzing the same. It is envisaged that the draft report of the analysis will be submitted to PSEB within one month. The same will be shared with the Commission post finalization of the same

View of the Commission

The Board has reiterated that a field study is presently under way by the Bureau of Energy Efficiency aiming at ways and means to improving the efficiency of tubewells. This matter can be further considered once the findings of this study become available.

 

 

 

Issue No.8: Increase in AP tariff

The increase in tariff for LS consumers since FY 2002-03 has been of the order of 30%. This is ironic as the Electricity Act directs gradual reduction in tariff to bring them close to the cost of supply. The AP tariff needs to be increased to reflect more than 80% of the average cost of supply in line with NTP.

Response of PSEB

The issue raised by the consumer is a prerogative of the Commission and may be considered at the time of issuing the tariff order for 2010-11.

View of the Commission

The Commission appreciates the concern of appropriately fixing agricultural tariff. It would be relevant to mention, however, that there has been a 42.5% increase in agricultural tariff between 2002-03 and 2009-10. 

 

Issue No.9: Advantage of own generation

The average cost of power purchase in 2009-10 is projected as Rs 6.21/unit. Considering that own generation is cheaper, the Commission should issue directives to PSEB for early taking up of 2680 MW Gidderbaha Power Plant.

Response of PSEB

Landed cost of power purchase in 2009-10 is around Rs 3.63 per unit as per the ARR submission. Besides, PSEB is actively pursuing the implementation of intra-state generation projects so as to purchase power at lower rates.

View of the Commission

It is undoubtedly true that there is need to procure power at reasonable rates from every available source including intra-state generation.

 

Issue No.10: Depreciation Reserve Fund

PSEB should be directed for creation of depreciation reserve fund.

Response of PSEB

The financial position of PSEB is on the verge of collapse. It is unviable to fund the operations on a daily basis.  The net returns available with PSEB after meeting disallowances is already substantiated in the ARR petition. The same may be considered by the Commission while dealing with this aspect.

View of the Commission

Opening a Depreciation Reserve Fund is desirable. In view of the present precarious financial position, the Board may take a view on the appropriate time for operationalising this fund.

 

Issue No.11: AP subsidy

Additional subsidy needs to be recovered from the Government for the corresponding revision in AP consumption. As per ATE order dated 26.05.2006, AP subsidy has to be paid in full in cash and not to be adjusted against interest payable to the Government. The burden of interest on short term loans taken should not be put on the consumers.

Response of PSEB 

The Hon’ble Commission is requested to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. The Government may be asked to pay the interest on non-payment of subsidy for the period of delay. However, the non-payment of such interest should not result in reduction of interest on actual working capital loans taken by the Board.

View of the Commission

Refer paras 3.15 & 5.4. The Commission is of the considered view that the payment of loan is governed by the terms and conditions decided between the lender and the borrower.             

 

Issue No.12: Excess interest

Non refund of the excess interest paid to the Govt. for the year 2006-07 to 2008-09 to the tune of Rs.782.22 crore has further increased the short term loans of PSEB. 

Response of PSEB

No response.

View of the Commission

Refer to paras 2.14, 2.16, 3.15 & 5.4.        

                                                                                               

Issue No.13: Cost of supply

Since Commission’s observations in the T.O. 2003-04 to workout of category-wise cost of supply, Board on one pretext or the other has avoided the same. Now Board has intimated that it has invited bids from consultants for carrying out the said study. The Commission on its part has again in a routine manner asked the Board to put up findings as and when received.

 

 

Response of PSEB

The issue is prerogative of Hon’ble Commission. However, in this regard, Board has invited tenders from the consultancy firms for conducting the cost of service study for various categories of consumers. The input of this study can be considered (as and when finalized) for progressive reduction of cross subsidies in the spirit of the National Tariff Policy.

View of the Commission

Refer to para 5.11.                         

 

Issue No.14: T&D losses

Board be directed to bring down the T&D losses to 17% by 2011-12. T&D losses should not in any case be allowed higher than projected as was done during the last year to reduce AP consumption and thereby subsidy burden on the Government.

Response of PSEB

The issue is a prerogative of the Hon’ble Commission.

View of the Commission

Refer to para 4.2.

 

Issue No.15: Investment Plan

a) Provision of expenditure for release of tube well connections in the Investment plan leads to other consumers pay for it and should not be allowed.

b) 600 crore each provided for Gidderbaha & Doraha thermal plants is too early.

c) Investment plan projections are on a higher side against the previous performances.

d) The investment plan should be pruned after taking into account depreciation, ROE, consumer’s contribution (about Rs.1800 crore) as per decision of the ATE.

e) Expenditure on R&M plants should reflect corresponding benefit in form of additional generation and not reduction as shown in case of Thermal & Hydro plants.

f) Rs.2905 crore proposed to be spent on T&D be related to corresponding reduction in T&D losses (to be quantified) and improvement in quality of supply.

Response of PSEB

a) The levy of charges for release of tube well connections under the normal course (other than OYT) are very minimal and PSEB is not able to recover the expenses incurred for such release of connection from the consumers. Accordingly, funds need to be arranged as part of the capex plan to release such connections which is not the case with other consumer categories.

b to f) The Hon’ble Commission will undertake prudence check to approve the capex plan proposed by the Board.

View of the Commission                            

Refer para 4.13.2.

a) Any expenditure in excess of what a consumer has to pay per BHP as his contribution that is specified in the Supply Code, has to be borne by the Board. Allocation of resources for routine activity such as release of AP connections should not feature in the investment plan.

b) Projects intended to be executed on BOO/BOT basis are excluded from the investment plan.

c) The Commission takes into account the actual investment level of the Board in the previous years while determining the size of the Investment Plan.

d) There is no such specific direction in any of the orders of the ATE. Only consumers contribution and capital grants to the Board has to be off set and the Commission determines the size of actual Investment Plan accordingly. The depreciation is to be utilized for replacement of depreciated assets and can only be used for repayment of capital loans. ROE is not resulting in any actual profits for the Board which could be available for the purposes of the Investment Plan.

e, f) It may not be possible to correlate reduction in T&D losses or improvement in the performance of thermal / hydel plants to the quantum of investment made. 

       

Issue No.16: Return on Equity

There is no justification in the Board asking for ROE of 23.48% against 14%.

Response of PSEB

The issue is a prerogative of the Commission. PSEB has already highlighted its rationale in the ARR petition. However, PSEB understands that the CERC Regulations clearly specify that grossing up is to be done with the tax rate as applicable to the utility irrespective of the fact that whether the utility is paying the actual tax or not. PSEB is liable to pay a tax rate of 33.39% and not the MAT rate and therefore the claim of RoE at 23.48% is justified.

View of the Commission

Refer to para 3.16.

 

Issue No.17:  Power factor surcharge/incentive & KVAH tariff

KVAH based tariff is more scientific as it accounts for both the active (kWh) and reactive (kVarh) energy but introduction of the same has been pending for long. The incentive paid to consumers consuming reactive energy lower than the threshold level is less than the surcharge paid by consumers for consuming energy more than the level identified by power factor. LS consumers are primarily affected as a result of this and protest against the discriminatory treatment. In case of PIU specified power factor is 0.95 and for others it is 0.9. In case of mixed loads, as there is no policy for power factor. In such cases consumption should be segregated on pro-rata basis and provide incentive accordingly..

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of such tariff on the consumers. PSEB feels that prima facie the request for introduction of KVAH tariff has been received from small number of high end LS consumers and Induction furnace consumers, whereas, large number of other consumers have not expressed any inclination for opting the KVAH tariff. As this matter involves an in-depth study on the revenue stream, the Board is working on the finer modalities of the same. Besides, not many reference of implementation of such tariff elsewhere in the country could be found. It is one of the reasons for the timeframe of the said study to get prolonged.

View of the Commission

The Board has been asked to examine the issue and submit their report in a limited time frame after which the Commission will take a view in the matter.

For power factor incentive/surcharge, refer to objection no.4, issue no.3.

 

 Issue No.18: Peak Load Exemption Charges (PLEC)

PSEB’s justification of levy of PLEC charges because of higher cost of power purchase during peak times is unjustified as this cost is already included in power purchase budget and is accounted for. These charges are not levied on tube well consumers when power purchase is made to meet their requirement during peak summer at extra high rates. Such an approach is discriminatory.

Response of PSEB

It is submitted that:

·          Removing the PLEC may provide a larger room for variation between demand and supply. The same may result in situations wherein PSEB has arranged for lower supply in comparison to the demand and vice versa. Severe mismatches between actual demand and supply of power may endanger the security and safety of the grid

·          During the peak load period, Board procures power from the short term sources to meet such extra demand, which often comes at large premiums. 

·          At the time of peak, the frequency of the system generally falls and power drawal under such conditions have a correspondingly higher UI charges. Procurement of power at lower frequencies may put extra financial burden on the board.

Considering the above, the PLEC charges need not be removed. Rather, PSEB submits that the Hon’ble Commission may consider the submissions made by PSEB in the previous ARR regarding revision in the PLEC rates. PSEB believes that the PLEC rate needs to be aligned with the current short term power purchase cost which is around Rs.7 per unit. Moreover, the UI rates have also been increased. In the last submission PSEB had requested that PLEC may be levied at Rs 5 per unit over and above the normal tariff rate. It will necessarily be a correct signal towards the fact that actual cost of such power be charged through extra tariff which prompts the consumers to make judicious use of the scarce resources. PSEB requests the Commission to consider these aspects and revise the PLEC charges as deemed appropriate. 

View of the Commission

Levy of peak load exemption charges is one of the instruments to reduce load at peak hours and is widely used as almost every state in the country experiences power deficit during peak requirement hours. There is very little justification for imposing such restrictions on agricultural consumers who in any case are supplied power for 8 hours in a day.

 

Issue No.19: EHV rebate

The EHV rebate of 3% to 33/66 KV consumers has been unjustifiably withdrawn without opportunity to consumers to raise objections and without such proposal from the Board. As such this is not in order and cannot have precedence over the conditions/schedule of tariff issued by Commission during April 2006 under section 181(U) of EA, 2003. Further an appeal against the Tariff Order 2009-10, in which EHV rebate of 3% has been withdrawn, is pending before ATE.

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, it is submitted that the supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest. Accordingly, Board requests the Hon’ble Commission that the issue of continuation of rebate to HT consumers need not be reconsidered.

View of the Commission

Refer to objection no.1, issue no.1.

 

Objection No.13: APEX Chamber of Commerce and Industry (Punjab)

The Commission observes that the objector has raised issues which are fundamentally legal in nature. In the rejoinder he has further stated that issues not replied to by the Board tantamount to admission. The Commission does not deem it prudent to comment upon these issues for the moment. The objector is free to approach the Commission in a petition as per its Regulations.

 

Issue No.1: ARR without Tariff proposal

The ARR and retail tariff petition for FY 2010-11 filed by PSEB violates the provisions of the Electricity Act, 2003 as there is no tariff proposal and formats are not in conformance with Tariff Regulations, 2005.In the rejoinder, the Objector has stated that reply given by PSEB is wrong and the objection is reiterated.

Response of PSEB

PSEB has already submitted its response to the Hon’ble Commission regarding the aspect of submission of tariff proposal. It is submitted that the ARR as proposed by the Board is reduced and recomputed by the Commission and therefore it is desirable that the Hon’ble Commission may determine the tariff subject to approval of the final revenue determined by it. PSEB has submitted the information in the formats to the extent the information was available with the Board. PSEB is open to submit any further information if desired by the Commission.

View of the Commission

 It is indeed desirable that the ARR should include specific tariff proposals as well. However, increase in tariff is to be effected to cover the gap between projected revenue and expenditure of the Board. An estimation of the tariff increase is therefore, possible even if the ARR does not specify the proposed tariff increases.

 

Issue No.2: Status of PSEB

The Board can continue to function only as State Transmission Utility (STU) or a licensee for a period beyond one year from the appointed date i.e. 10.6.2003, as per proviso under section 172(a) of the EA, 2003. Section 39 specifically states that the STU shall not engage in trading of power. It is illegal for PSEB to conduct functions of generation, distribution and transmission after one year from the date of notification.

In the rejoinder, the objector has disagreed with the response given by PSEB and has reiterated the preliminary objection. It has also been stated that the copy of deficiencies raised by the Commission were not supplied to the objector.

Response of PSEB

As regards Board functioning as a State Transmission Utility (STU), PSEB has submitted the notification to Hon’ble Commission along with the replies to the deficiencies on the ARR raised by the Commission. The Board has received such notification from the State Government (in consent with the Central Government) which provides the required power to the Board to continue as STU and licensee. PSEB does not agree with the contentions raised by the objector. PSEB believes that there is no requirement to file three separate petitions while it is functioning as a Board.

View of the Commission

As per the provisions of Electricity Act 2003, an integrated entity such as the Board could continue to function for a period of one year from the appointed date. This is further extendable beyond the period of one year by notification of the State Govt. as may be mutually decided by the Central Govt.  and the State Govt. and on that basis, the Board had been continuing as an integrated entity.

 

Issue No.3: Audited accounts

The Board has not submitted audited accounts including balance sheet, profit & loss etc. As a result, the exercise of truing-up cannot be undertaken. Since PSERC regulations, 2005 provide for adjustment of revenue gap of the ensuing year based on review and true-up exercise, the revenue gap of Rs.1453.55 crore should not be allowed. In the rejoinder, the objector claims the response given by PSEB to be vague and has reiterated the preliminary objection.

Response of PSEB

PSEB has submitted the audited accounts (including audited report) and all relevant details along with the replies to the deficiencies on the ARR raised by Hon’ble Commission. Therefore PSEB requests the Hon’ble Commission to undertake the true-up.

View of the Commission

Board has furnished the audited accounts for 2008-09 in response to deficiency raised by the Commission. The Commission has accordingly undertaken true-up exercise for 2008-09.

 

Issue No.4: Multi-year tariff

Provisions in Tariff policy of Central Government mandate that multi-year tariff be framed after 1.4.2006 and also as per PSERC Tariff Regulations 2005 multi-year tariff is to be framed.

Response of PSEB

No response.

View of the Commission

The feasibility of introducing the multi-year tariff regime is under examination in the Commission.

 

Issue No.5: Cost of supply

In line with the decision of the ATE in 2006, the Commission in its tariff order of FY 2007-08 had directed the Board to determine category wise cost of supply which has not been followed by PSEB. Actual T&D loss of EHT consumers and power intensive units with 11KV supply are around 1% and 4% respectively against the approved loss level of 19.5%. Moreover, these consumers maintain a load factor of more than 70% and have borne the cost of sub-stations and the line. Tariff for EHT consumers and power intensive units deserves reduction by 25% and 20% respectively than average cost of supply.

In the rejoinder, the objector has disagreed with the response given by PSEB stating that the reply is in total violation of order passed by ATE in full bench judgment and has reiterated the preliminary objection. The objector referring to decision of the Commission on objection no.15, issue no.1 in the T.O. of 2009-10 wherein the Board was directed to submit the report on cost of supply within six months of the T.O., has further alleged that the Board is misleading the Commission and is liable to be punished as per section 142 and 146 of EA 2003.

Response of PSEB

PSEB has already initiated the exercise of inviting the bids from consulting firms for undertaking the detailed study on cost of supply to various consumer categories of consumers. PSEB envisages that the said exercise will start in the next couple of month pursuant to selection of the consultants.

View of the Commission

Refer to objection no.7, issue no.7.

 

Issue No.6: Monthly Minimum Charges (MMC)

Under Electricity Act 2003 or the Regulations there is no provision to charge MMC. Full cost is of the service line is borne by the consumer. In a power shortage scenario with around 40% power cuts charging MMC is all the more inappropriate. Various categories of consumers bear the power cut and don’t even consume electricity upto the value of MMC. A proportionate reduction in MMC should be allowed equal to the power cuts imposed on the consumers as ruled by Hon’ble Supreme Court and Rajasthan High Court. The bills should clearly show the amount earned by Board as the difference between the charges for units consumed and MMC charges which is estimated to be around Rs.1000 crore. Further, AP and domestic consumers should also be made to pay MMC charges as being charged from other LT consumers. Further, EA mandates for payment of charges for actual energy supplied and fixed charges. Fixed charges are already included in the costing and being paid by the consumers and cannot be charged twice.

In the rejoinder, the objector stated that the response given by PSEB is without any basis and has reiterated the preliminary objection. Against the contention of PSEB that MMC can be recovered if full load for 1-2.5 hours is utilized, the objector states that the response is crude attempt to mislead the Commission as the utilization factor of majority of consumers is just 10% of the full load. The objector has also submitted that the Board has shifted the onus of levying of MMC on AP consumers onto the Commission.

Response of PSEB

Monthly minimum charges are levied on account of inherent cost associated with installation of network which included O & M cost, interest cost, depreciation, interest of working capital, establishment cost etc. Even in the absence of any usage by the consumers, PSEB has to upkeep the network and the associated fixed costs.

The very nature of such costs in case of PSEB is similar to power purchase cost from central generating stations. Even in the absence of drawl of power, PSEB will still have to bear the fixed charges for such stations (from where PSEB has a capacity allocation) in the proportion of capacity allocated to the Board.

In the same spirit, it is legible that PSEB also recovers the MMC from the consumers for which PSEB has to install the network and also arrange for power which have an inherent fixed cost.

Further, the minimum thresh hold consumption to cover MMC can be achieved by operating  the full load for approximately 1 to 2.5 hours or more per day depending upon the various categories. Accordingly, it is not justifiable to remove the MMC.

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

Further, tariff determination is the prerogative of the Commission and therefore the request of the consumer may be considered by the Commission. However, Domestic consumers are already paying the MMC charges as per the tariff schedule given in the Tariff Order for FY 2009-10.

View of the Commission

Refer to objection no. 3, issue no. 10.

 

Issue No.7: Unmetered Consumption

 In TO 2002-03 Board was directed that new AP connections be released by providing meter. Thus all AP connections released from 2002 to 2010 are metered, which is about 30% of AP consumers. Board is duty bound to charge the metered AP connections on actual consumption basis and charged unmetered consumers on connected load basis. Under Section 55 of the EA, 2003 the Commission should take action for 100% metering of AP supply. To encourage AP consumers for metered connections, only metered AP consumers should be subsidized whereas tariff for unmetered consumers should be made equal to cost of supply.  In the rejoinder, the objector states that the reply of the Board is evasive and has reiterated the preliminary objection.

Response of PSEB

PSEB is already complying with the directives of the Commission with respect to the AP metering. A specific road map has already been chalked to increase the size of sample meters to 10%. However 100% metering of all tube well consumers and reading such meters in time for assessment of the AP consumption may be practically very difficult. This would also involve large resources. Hence this should not be considered by the Hon’ble Commission.

View of the Commission

It may not be appropriate to relate the question of metering of connections with differential tariff payable within the same category of consumers. As regards complete metering of agricultural connections, refer to objection no.8, issue no.7.

 

Issue No.8: Free electricity    

As per tariff policy, concept of free electricity is not desirable. Subsidized rates of electricity should be permitted only upto a pre-determined level beyond which the tariff should reflect the efficient cost of service. Moreover, since the Government bears the cost of electricity supplied to AP consumers, cross-subsidy should not be allowed. Use of pre paid meters can facilitate the transfer of subsidy to such consumers. In the rejoinder, the objector has reiterated the preliminary objection.

Response of PSEB

Free supply of electricity to the consumers is made on the behest of the Government. Further, the process of determination of tariff for various consumer categories including agricultural consumers is the prerogative of the Commission which may please be considered by the Commission.

View of the Commission               

It does not appear practicable to limit the quantum of free supply to agricultural power after which higher rates would become applicable. This aspect has been earlier discussed by the Commission in para 6.6 of the Tariff Order of 2007-08.

 

Issue No.9: Alternative to Cross-Subsidy

The tariff policy prescribes the option for the State Government to raise resources through mechanism such as electricity duty and giving direct subsidy to only needy consumers.  Since, the State Government levies electricity duty it cannot provide cross-subsidy by further burdening the subsidizing class. The industrial consumers in Punjab are paying electricity duty at 10% and Octroi at 4% over and above the tariff rates.

In the rejoinder, while reiterating, the objector has stated that the Board has not opposed the preliminary objection amounting to admission.

Response of PSEB

The aforementioned issue is a prerogative of the Hon’ble Commission.

View of the Commission

Levy of electricity duty and octroi is in the purview of GoP.

 

Issue No.10: Time of Day (ToD) tariff

TOD is an effective technique of load management with differential tariff structure for peak and off-peak supply.  Tariff policy also encourages ToD metering for large consumers with load of 1 MVA and above. PSEB’s Sales Regulations clause 13.3.8.2, also provide for rebate in tariff for night connections.

In the rejoinder, while reiterating the objector has stated that the Board has not given details of the feasibility analysis undertaken.

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of such tariff on the consumers.

View of the Commission                              

The matter is under consideration of the Commission and an early view in this respect will be taken.

 

Issue No.11: Peak Load Violation Charges

The Board charges peak load violation charges without being authorised by the Commission. Further, the income from such charges has not been shown in revenue receipts. In the rejoinder, while reiterating the objector has stated that the reply of the Board is wrong.

Response of PSEB

PSEB is authorized to collect PLEC as per the tariff orders of the Commission and submits that the said charges have been considered as part of revenue in the ARR.

View of the Commission                                   

There is mention of peak load violation charges in the Conditions of Supply framed by the Commission and as such any amount on this account is recoverable as a part of tariff.

 

Issue No.12: Debt Equity Ratio

State Government should maintain the Debt Equity ratio as 70:30 which is mandatory as per the rules & regulations framed under the EA, 2003 and a direction in this regard be issued by the Commission. This is essential to safeguard the interest of consumers as well as employees.

In the rejoinder, the objector has stated that the reply of Board is wrong and reiterated its objection.

Response of PSEB

The normative debt equity ratio is suggested to put a ceiling on the equity investment for the purpose of calculating the return on equity and not vice versa. A project can be funded through 100% equity as well. However, the impact of such enhanced equity infusion will only be towards an increase in tariff since RoE is a pass through in the tariff.

View of the Commission

The Commission ensures that interests of consumers and other stake holders are safeguarded and in order to strike a balance, allows costs on normative basis.

 

Issue No.13: Unaccounted electricity

a) Board supplies free electricity to its employees and establishment.  Despite the same being metered, it is not reflected in energy sales.

b) Electricity procured at high cost during elections should be investigated.

In the rejoinder, the objector has stated that the reply of Board is wrong and reiterated its objection.

Response of PSEB

a)       The free supply to the Board’s employees is limited to a maximum limit of 155 units per month which varies from 100 to 155 units per month to depending upon the hierarchy level of the Board. The free supply of electricity is a perk provided by Board to its employees and forms an inherent part of their salary structure which is duly accounted for in the Annual Accounts of PSEB. PSEB understands that similar perks are allowed by other Government organizations also. Besides, the free energy supply provided by the Board forms the taxable income of the employees of Board.

b)       No response.

View of the Commission

a)    Refer to objection no.3, issue no.8.

b) Refer to objection no.11, issue no.2.                                                 

 

 

Issue No.14: Discrimination against private organizations

Government organizations such as hospitals, schools etc are treated as domestic consumers while similar private originations are treated as commercial. This preferential treatment is unjustified and violates the EA, as supply voltage, load factor, consumption, time of operation and purpose of supply are the same in both the cases. This anomaly be removed.

In the rejoinder, the objector has stated that such discrimination is violation of section 62(3) and article 14 of the Constitution of India. The objection has referred to Appeal No. 147 of 2007 titled Govt. of Himachal Pradesh vs. HPSEB where ATE held the discrimination as violations of the provision of the EA 2003.

Response of PSEB

The tariff is charged as per the tariff schedule and the categorization approved by the Commission in the tariff orders. However, the suggestions may be considered by the Commission.

View of the Commission

Govt. Educational and Sports institutions and Govt. Hospitals/Primary Health Centres & dispensaries provide services to the society at as low a cost as possible. To that extent, there is some justification to supply cheaper power to these institutions. This aspect has been earlier discussed by the Commission in para 5.1 of the tariff order of 2009-10.

 

Issue No.15: Incorrect energy forecast

PSEB is imposing power cuts to the tune of 30% to 40%, which is the root cause of its losses. PSEB and State Govt. is losing revenue on this account. Energy forecast for the ensuing years should be done as per the growth rate in consumption after factoring the power cuts.  In the rejoinder, the objector has stated that the reply of Board is wrong and reiterated its objection.

Response of PSEB

The projection of energy demand is made on a CAGR basis which smoothens the increase/decrease in demand on a year to year basis. The energy balance submitted by PSEB shows that the demand projected on the CAGR basis is matched against the supply sources and any shortfall in the supply is envisaged to be met through short term purchases. PSEB is trying to tap the available competitive power sources to supply power on long term basis and envisages that power cuts be minimized to the extent possible.

View of the Commission

In a situation where there is a gap between demand and supply of power, it is perhaps more realistic to plan for growth of demand each year on the basis of restricted demand. However, as the power availability situation gradually improves there would be need to take unrestricted demand into account in computing additional requirement in any successive year.

 

Issue No.16: Free Supply to SC/BC consumers

Domestic SC/BC consumers are given free supply of 200 units per month while they can consume only 72 units at the restriction of 1 KW load. This encourages wastage at the cost of cross-subsidising categories. Moreover, cross-subsidising categories cannot be penalized twice, one by payment of electricity duty to the Government and then again through cross-subsidization.

In the rejoinder, while reiterating the objector has stated that the Board cannot escape its liability by considering the threshold level to be the prerogative of GoP.

Response of PSEB

Free supply of electricity to the consumers is made at the behest of the Government. Specifying the threshold level of consumption is the prerogative of the GoP which may be considered by the Commission.

View of the Commission

The subsidy in the cases of SC/BPL domestic consumers has recently been restricted to 100 units per month. All categories of consumers including subsidized categories pay electricity duty. Thus, cross subsidizing categories can not claim to be penalized twice.

 

Issue No.17: General Conditions of Tariff  

General Conditions of Tariff and schedule of tariff allegedly framed by the Commission (CC No.36/2006 dated 14.7.2006) is neither a Tariff Order nor Regulations. Charges levied under GCT are neither as per Act nor as per rules/ regulations.

Response of PSEB

No response.

View of the Commission                                                               

 ‘General Conditions of Tariff’ are prefixed to the Schedules of Tariff of the Board. These contain important operating conditions including definitions of various terms, operating conditions of agricultural tubewell consumers, billing procedures and practices, tariffs for special categories, applicability of Electricity Duty, taxes and fuel cost adjustment clause’. The Commission has approved ‘General Conditions of Tariff’ effective from 1.4.2006 after following the due process.

                                       

Issue No.18: Voltage surcharge

There is no provision in the Act, Rules & Regulations for charging voltage surcharge. Further, under section 39, 40, 42 of the EA, 2003 surcharge is only applicable to open access consumers. In the rejoinder, the objector has stated that the reply of the Board is wrong and illegal and that the Commission has not framed any regulation specifying supply voltage for various categories. The objector while reiterating has stated that there is no provision in the Act, rules or regulations for charging voltage surcharge and no tariff can be framed in violation of the provisions of the Act.

Response of PSEB

Levy of any penalty/rebate is done on the basis of tariff orders approved by the Commission. The supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest.

 Accordingly, the Hon’ble Commission has specified the supply voltage to various categories of consumers. Having given such directives, the Commission has even discontinued the applicable rebates for EHT consumers. In the same spirit, the levy of voltage surcharge is justified as it prompts the consumer to adhere to the specified voltage level for respective category of consumers.

View of the Commission

Voltage surcharge is imposed as per the General Conditions of Tariff and Schedule of Tariff framed by the Commission exercising powers under the Electricity Act 2003.

 

Issue No.19: Two part tariff

As per tariff policy, two part tariff was to be introduced with effect from 6.01.2007 but the same is still pending. Bulk consumers with load more than 1 MW have metering at both ends and differential tariff based on timing can be implemented. This will reduce peak load burden and improve financial health of PSEB through additional procurement and supply of electricity, and by optimal utilization of PSEB assets.

In the rejoinder, the objector has stated that the reply of the Board is evasive and has reiterated its objection.

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of such tariff on the consumers.

View of the Commission

The Commission is awaiting a proposal and has asked the Board to submit the same in a time bound manner.

 

Issue No.20: Schedule of General Charges

Schedules of general charges is invalid and has not been framed in accordance with the law without following the due process and not published in the official gazette. Hence these cannot be enforced till regulations required under the law are framed. In the rejoinder, the objector has stated the reply of the Board to be vague and reiterated its objection.

Response of PSEB

All the charges levied by the Board are in line with the tariff schedule and the directives given by the Hon’ble Commission from time to time. PSEB takes the approval from the Commission before levying any charge on the consumer. The same is evident from the following abstract mentioned in the TO for the FY 2009-10 and reproduced below:

“……v)  All other charges including rentals and deposits which are being collected by the Board as per schedule of general charges, supply code and general conditions of tariff & schedule of tariff approved by the Commission, will be continued at the existing rates till these are reviewed by the Commission…..”

View of the Commission

The Commission had approved Schedule of General Charges effective from January 1, 2008 after following the due process.

 

Issue No. 21: Electricity Supply Regulations 2005 and circulars of PSEB

PSERC is the only competent authority to frame regulation as per section 181 of EA, 2003. PSEB does not have the power to frame such regulations and should be restrained from using the Electricity Supply Regulations, 2005.

Similarly, the Board does not have the right to issue circulars, pass order, directions etc. affecting the right of the consumer without approval of the Commission and without serving notice to the affected person/persons.

In the rejoinder, the objector has stated that the reply for the Board is vague and has reiterated the preliminary objection.

Response of PSEB

All the charges levied by the Board are in line with the tariff schedule and the directives given by the Hon’ble Commission from time to time. PSEB takes the approval from the Commission before levying any charge on the consumer. The same is evident from the following abstract mentioned in the Tariff Order for FY 2009-10 and reproduced below:

“….. v. All other charges including rentals and deposits which are being collected by the Board as per Schedule of General Charges, Supply Code and General Conditions of Tariff & Schedules of Tariff approved by the Commission, will be continued at the existing rates till these are reviewed by the Commission;………”

View of the Commission                                   

The Commission had in 2005 informed the Board that all commercial circulars involving Tariff matters (including any other issue which brings about change in the liability of the consumers) should be issued only with the prior approval of the Commission. The Commission has since approved the Conditions of Supply effective from April 1, 2010. As per clause 50 of these Conditions of Supply, the Board is required within six months to prescribe procedure/guidelines consistent with the Conditions of Supply and the Supply Code in its Electricity Supply Instructions Manual. It has also been specified that existing Commercial Instructions/Electricity Supply Regulations that are not inconsistent with the Conditions of Supply will continue to be inforce in the intervening period.  

 

Issue No.22: KVAH Tariff

PSEB is not providing capacitors on AP consumers causing extra demand on the system. Introduction of KVAH tariff instead of KWH tariff is suggested thereby saving the Board from paying power factor incentive apart from improving system parameters.

In the rejoinder, the objector has stated the reply of the Board to be vague and reiterated its objection.

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of such tariff on the consumers. PSEB feels that prima facie the request for introduction of kVAH tariff has been received from small number of high end LS consumers and consumers having Induction furnaces, whereas, large number of other consumers have not expressed any inclination for opting the KVAH tariff. As this matter involves an in-depth study on the revenue stream, the Board is working on the finer modalities of the same. Besides, not many reference of implementation of such tariff elsewhere in the country could be found. It is one of the reasons for the timeframe of the said study to be prolonged.

View of the Commission

Refer to objection no. 12, issue no.17 in respect of KVAH tariff.

 

Issue No.23: Capacitor surcharge

The Board should levy capacitor surcharge on consumers who have not installed capacitors and reflect the same in the ARR. This would help save energy as well as yield revenues to the Board. Board should be directed to check all connections where two part meter is not installed.

In the rejoinder, the objector has stated that the reply of the Board is vague and reiterated its objection.

Response of PSEB

As per instruction of commercial circular 36/06 dated 14.7.06, Power factor surcharge is being levied on Large Supply consumers and capacitor surcharge is levied in other industrial consumers. 

View of the Commission

LS, MS, BS, RT and DS/NRS consumers with a connected load of 100 KW or more are expected to maintain stipulated power factor and are incentivized or penalized for their failure to achieve/not achieve the prescribed power factor. SP consumers have the choice either to maintain a prescribed power factor or install capacitors of the requisite capacity. In their case, the failure to either install or maintain capacitors of the required capacity is penalized by the imposition of capacitor surcharge.

 

Issue No.24: Impact of power cuts

More than 50 Lac consumers have installed inverters due to huge power cuts. Discharged batteries consume about three times the energy in banking. This leads to substantial wastage of electricity. Alternative use of diesel generators leads to air and noise pollution. The Board should be directed to make sufficient arrangements for generation. In the rejoinder, the objector has stated that the Board has failed to implement measures which can lead to reduction in power cuts.

Response of PSEB

Levy of power cuts is a forced measure taken to flatten the load curve during peak hours or in case of any shortfall in supply from the committed resources. It may be appreciated that electricity has become a necessity in the livelihoods and our tolerance for living without electricity has drastically reduced over the years. However, PSEB appreciates the contentions of the consumer and is seeking measures to ensure long term availability of power so that avoidable use of electricity is minimized.

View of the Commission

Refer to objection no.8, issue no.2.

 

 

Issue No.25: 100 KW during peak hours

PSEB should not impose the condition on the consumer to get minimum exemption for 100 KW when a consumer might actually need much lower load. This encourages wastage even as PSEB already faces acute power shortage. Board be directed that consumers should be made to pay on the basis of their energy requirement during peak load hours.

In the rejoinder, the objector has stated that the reply of the Board is wrong.

Response of PSEB

Levy of PLEC is based on the load profile of the consumers and is levied as per the tariff schedule approved by the Commission. It is in the hands of the consumers to minimize their load/peak requirements and avoid levy of such charges. The minimum permission limit of 100 KW during the peak load hours is kept to contain the number of consumers at the peak hours as this will increase the energy requirement at the peak hours and in turn will increase the power purchase cost of the Board.

View of the Commission

The manner in which peak load hour restrictions are enforced is being reviewed by the Commission. In case the issue raised is not resolved, the objector would be advised to approach the Commission in accordance with its Regulations.

 

Issue No.26: Technical and commercial losses

Board should take immediate steps to reduce the technical & commercial losses. T&D losses for power intensive units and induction furnaces running at 11KV cannot be more than 3% to 4%. Thus any penalty on such consumers is not justified.

Response of PSEB

No response.

View of the Commission

Refer to para 4.2.

 

Issue No.27: Surplus land

 Board has not disposed off the identified surplus land amounting to Rs.1400 crore (present price Rs.5000 crore). RoE should not be allowed on such amount. Also Board should provide detail of its encroached properties and intimate action taken against officers and officials responsible for releasing electric connections in encroached properties of the Board.

Response of PSEB

No response

View of the Commission                          

The Commission will separately take a view on the issue.

 

Issue No. 28: 15% surcharge on freight of coal

15% surcharge on freight of coal is leviable for not making timely payments and seems to have been added in under the head of ‘freight’. Recently Hon’ble Punjab and Haryana High Court has decided against the levy surcharge of 15% levied in favour of the Board. Thus surcharge if any loaded should be deducted from the expenditure for the period 2008-09, 2009-10 & 2010-11.

Response of PSEB

No response

View of the Commission                           

The Board has separately intimated to the Commission that no surcharge to the railways has been paid by the Board during the years 2008-09, 2009-10 and 2010-11. A case relating to payment of 15% surcharge on freight on coal for not making timely payments to railways pertains to the period 1998-2003. The case has been decided in favour of the Board and its effect will be separately examined.

 

Issue No.29: AP Sales

Board has not disclosed the number of metered AP consumers but an estimated over 30% AP consumers have metered supply. The Commission has fixed tariff for metered AP consumers at Rs.2.40 per unit while for unmetered consumers, a flat rate of Rs.283 per HP has been set. Board should charge accordingly. Estimation of AP consumption is futile exercise.

In the rejoinder, the objector has reiterated the issue.

Response of PSEB

The details of AP consumption based on the sample meters are submitted to the Commission. The overall consumption of AP consumers is calculated/determined on the basis of these sample meters only. Hence the AP consumption approved by the Commission is payable by the GoP in the form of subsidy at the tariff rate approved by the Commission.

 

 

View of the Commission                                

There are approximately 13264 no. AP connections which are being billed on the basis of meter readings. Estimation of AP consumption becomes necessary as the per BHP rate which is then applied to the remaining AP connections is actually worked out after estimating the total consumption of power by the agriculture sector.

 

Issue No.30: Domestic sales

The detail of domestic energy sale is not clear. There are three categories of domestic consumers with different tariffs. It has not been mentioned that out of total consumers having connected load of 8375.533 MW, how many consumers are falling in each categories.

Response of PSEB

No response.

View of the Commission                     

It is not possible to furnish this information as the number of consumers in each category would vary with the fluctuations in consumption.

 

Issue No.31: T&D losses

T&D losses approved at 19.5% for FY 2008-09 should not be revised. Projected T&D losses as 19.5% for FY 2009-10 and 18%for FY 2010-11 should be 15% and 13% respectively due to installation of 1 Lac CFL by AP consumers and other categories also. PSEB should install CFL in its offices. T&D losses should accordingly be approved as proposed.

In the rejoinder, the objector has stated that the reply of the Board is wrong and reiterated its objection.

Response of PSEB

Detailed rationale in the ARR petition for consideration of Commission has already been submitted. Installation of CFLs would reduce the energy consumption requirement in the system and not exactly the loss level in the system. The argument of the consumer cannot be considered in this aspect.

View of the Commission

Refer to objection no.6, issue no.2.

Increased installation of CFLs is not likely to have any significant effect on T&D losses.

 

Issue No.32: Power purchase

For FY 2008-09, Board has demanded Rs.414 crore for power purchase. Power purchase beyond the approved limit should not be allowed especially when the actual losses are in excess of the approved/projected losses. The licensee should seek approval of the Commission for additional requirement of power. The cost of additional power purchase should be met by the beneficiary category.  Board should be directed to increase generation for optimum utilization of fixed assets.

 Response of PSEB

Detailed rationale in the ARR petition for consideration of the Commission has already been submitted.

View of the Commission

Power purchases have to be made to cover the gap between demand and supply but these have to be effected prudently keeping its cost in view at all times.

Prior to the Tariff Order of 2009-10, the Commission had been allowing purchase of power actually effected by the Board in a particular year even though a lesser quantum of purchase had been projected in the relevant Tariff Order. In line with that policy, excess power purchase in 2008-09 has been allowed. The cost of such power would, however, form a part of the total power purchase costs of the Board and is borne by all categories of consumers.

 

Issue No.33: Employee cost

PSEB employee cost is highest in the country and has increased from 16% in 2008-09 to 21% in 2010-11. As per ATE order dated 26.05.2006, performance linked incentive is the requirement of the day to improve low productivity of employees. Increase in employee cost should be approved as per tariff regulations 2005.

Response of PSEB

PSEB has submitted the detailed rationale in the ARR petition for consideration of the Commission.

View of the Commission

Refer to objection no.3, issue no.4.

 

Issue No.34: Interest and finance charges

Interest and finance charges should not be allowed in deviation of rules regulations and approved amount of 767.48 crore should not be revised. Interest on GPF should also not be allowed since the interest given by the Banks and paid is almost equal.

Response of PSEB

PSEB has submitted the detailed rationale in the ARR petition for consideration of the Commission.

View of the Commission

Refer to para 4.13.                    

 

Issue No. 35: Value of scrap and damaged assets

Revenue from sale of scrap /damaged assets etc has not been shown.

Response of PSEB

The net receipts value of scrap after duly following the accounting principles is normally reflected as Non tariff income in the books of accounts.

View of the Commission                          

Receipts from the sale of scrap/damaged assets is reflected as non-tariff income in the books of account.

 

Issue No.36: Meter reading and bill distribution expenses

Meter reading and billing expenses should not be allowed as there is already overstaffing in the Board. Board should train and utilize the existing staff.

Response of PSEB

No response.

View of the Commission

Commission expects that the Board is optimally utilizing its man power resources.

 

Issue No.37: Advertising expenses

Advertising expenses for the FY 2008-09, should not be allowed as they are on the higher side and details for increase have not been supplied.

In the rejoinder, the objector has stated that there was no need for such expenses and should be added to the capital cost of the plant.

Response of PSEB

The advertisement expenses are increased mainly on account of the inaugural ceremony of the new plants viz., Talwandi Sabo Thermal Power Plant and Goindwal Sahib Thermal Plant.

View of the Commission                                

These expenses form a part of the A&G expenses of the Board which are determined on the basis of the Commission’s Regulations and are capped for each year.

 

Issue No.38: Hospitality expenses

These expenses for FY 2008-09 have been projected manyfold of the previous year expenses and should not be allowed. In the rejoinder, the objector has stated that these expenses cannot be allowed as revenue expenses.

Response of PSEB

No response

View of the Commission

Same as issue no.37 above.

 

Issue No.39: Subsidies, grants and incentives

Govt. is giving subsidies grants incentives to implement the different schemes known as Rural Electrification, kutir jyoti program, APDRP scheme which has not been shown in revenue receipts.

Response of PSEB

Detail of such amount is reflected in schedule-34 of the accounts.

View of the Commission 

The Commission agrees with the response of the Board.

 

 Issue No.40: Revenue of seasonal industries, temporary supply and Temples

Revenue from metered sales to seasonal industries, temporary supply, Golden temple and Durgiana temple has not been reflected in revenue receipt. Revenue receipts of all categories of consumers should be shown separately.

Response of PSEB

The consumption of the said categories of consumers is merged with that category of the DS consumers. The consumption at such places is accounted in the accounts.

View of the Commission

Sales to these categories are accounted for in the tariff income of the Board.

                                                                      

Issue No.41:  Income from deposit works, shifting of lines etc.

Income from deposit works, shifting of lines, recalibration of meters, peak load violation charges, load surcharge, late payment surcharge etc. have not been shown. Board should disclose correct figures of miscellaneous income for proper accounting.

Response of PSEB

The income from such activities is booked under the Account code 62.930 which represents the miscellaneous income (ultimately forming part of the non-tariff income of the Board).

View of the Commission

These incomes are a part of non-tariff income and booked as such.

 

Issue No.42: Energy availability

Thermal generation should be maximized and hydel generation estimates should be revised in view of good monsoon & heavy snowfall.

Response of PSEB

No response

View of the Commission

Thermal generation is estimated by the Commission on the basis of availability of the generating units after taking annual maintenance into account. In the case of hydel generation, estimates are based on the average of the last 3 years actual generation. These figures are firmed up in review on the basis of actual generation reported.

 

Issue No.43: R&M Expenses, A&G Expenses etc.

Demands of the Board on R&M expenses, A&G expenses, interest & finance charges, depreciation, RoE are unjustified and should be allowed on the basis of regulations of the Commission & methods already approved. Board’s debt equity ratio is 86:14 against the statutory requirement of 70:30. In line with ATE judgment, Board be directed to determine category-wise cost of supply.    

Response of PSEB

No response.

View of the Commission

R&M expenses, A&G costs and interest & finance charges are being allowed as per Regulations of the Commission taking an average increase in assets on the basis of last three years and not on projections submitted by the Board. ROE has been allowed as per past practice of the Commission.

 

Issue No.44: Formats

The formats 1, 1A, 1B and 1C attached with the petition are not in accordance with the tariff regulations. Further, details of no. of consumers, connected load, energy sales etc in respect of certain categories has not been provided. Month wise agriculture consumption data as per sample meters for different years has also not been given. Board be directed to file separate petition for Generation, Transmission, Wheeling charges and open access charges in compliance to the Act.

Response of PSEB

No response

View of the Commission

The Board has subsequently supplied information as per performae prescribed in the Tariff Regulations. If required, such information can, even at this stage, be shared with the objector. The Commission in its Tariff Orders is determining separate tariffs for generation and transmission in addition to fixing wheeling charges and open access charges.    

 

Issue 45: Retrospective Charges

No Tariff Order can be issued with retrospective effect. A copy of the Tariff Order is required to be served to the effected persons particularly to objectors.

In the rejoinder, the objector has reiterated its objection.

Response of PSEB

The matter is a prerogative of the Hon’ble Commission.

View of the Commission

Refer to objection no.11, issue no.5.

 

Objection No.14: Induction Furnace Association of North India

The objections filed by the objector and the rejoinder are same as filed by APEX Chamber of Commerce and Industry (Punjab), as detailed under objection no. 13 above. Accordingly, View of the Commission in the specific issues is the same. The same may be referred to.

 

Objection No.15: National Electricity Consumers Association

The objections filed by the objector are same as filed by APEX Chamber of Commerce and Industry (Punjab), as detailed under objection no. 13 above. Accordingly, View of the Commission in the specific issues is the same. The same may be referred to. In the concluding para, the following issues have been raised:

Issue No.1: Tariff

Tariff of any category may not be enhanced.

Response of PSEB

No response.

View of the Commission

Refer to objection no. 6, issue no.1.

 

Issue No.2: Subsidy to SP & MS category

In view of the provision in the Tariff Policy that the Government has the option to levy Electricity Duty as a substitute of cross subsidy for giving subsidy direct to consumers. SP & MS category be added in subsidized class because of negligible growth.

Response of PSEB

No response.

View of the Commission

Providing subsidy to any class of consumers is the prerogative of GoP.

                                                       

Objection No.16: Laghu Udyog Bharti

The objections filed by the objector are same as filed by APEX Chamber of Commerce and Industry (Punjab), as detailed under objection no. 13 above. Accordingly, View of the Commission in the specific issues is the same. The same may be referred to. Additionally, the following issue has been raised:

 

Issue No.1: SP Category

Load criterion for SP category be changed from 20KW to 100 KW and considered a subsidized class.

Response of PSEB

No Response

View of the Commission

This is not a tariff related issue. The consumer is free to approach the Commission separately.

 

Objection No.17: Northern Railway

The issues pertaining to  cost of supply, penalty for exceeding contract demand, higher tariff as compared to tariff of central generating stations, time bound revision of contract demand, power factor incentive/surcharge, simultaneous metering of maximum demand, incentive for timely payment, rebate for newly electrified routes/sections, change of tariff category for domestic consumers, rebate for maintenance and operation of distribution net work, minimum charges for supply on rural feeders, payment through  single bill, time for release of new connections/enhancement of load and meter testing charges are the same as taken up by the objector in the ARR for FY 2009-10 and the views of the Commission, after due examination afresh, are the same as expressed in that Tariff Order. Other issues are dealt with hereunder:

 

Issue No.1: Traction Tariff

Northern Railway has been making timely payment, drawing uninterrupted power supply round the clock, and is contributing negligible T&D losses into the system. So, existing tariff rates @Rs 5.12 per unit for traction is not justified as projected cost of power purchase for PSEB for FY 2010-11 s only Rs 3.17 per unit which has reduced by 25 paisa as compared to last year’s cost of Rs.3.42/unit.

Existing traction tariff @ Rs 5.12 per unit is much higher than HT tariff @ Rs 4.36 per unit. It is in violation of directives of Ministry of Energy not to charge railways at a rate higher than HT industry and quoted the Appellate Tribunal of Electricity (ATE) judgment dated 28.11.07 in case of Northern Railway v/s UERC in appeal No. 219 of 2006.

Response of PSEB

Fixation of Tariff is a prerogative of the Commission. However, the same should be considered in light of the financial health of the Board and its inability to meet its ARR with even the existing tariffs as is evident from the revenue gap projected by the Board.

View of the Commission                                   

The Commission had in the past observed that neither peak load restrictions nor weekly off days nor normal power cuts are applicable to Railway Traction. Thus, the quality of service rendered to the railways is far better as compared to other consumers of the Board. Moreover, the load of railways fluctuates considerably and also generates harmonics which adversely affect the system. In the circumstances, the Commission even now believes that there is sufficient merit in charging higher tariff to this category.

 

Issue No.2: T&D losses

T&D loss for FY 2010-11 should be less than 18% in line with recommendation of Abraham Committee as PSEB has already achieved a T&D loss level of 19.92% in FY 08-09. More than 10 Lac AP consumers are unmetered and forms major chunk contributing to T&D losses, so it should be brought into metering net to reduce T&D losses.

Response of PSEB

No response

View of the Commission       

The Commission has fixed a new T&D loss reduction trajectory for 2010-11 to 2012-13. Also refer to para 4.2. As regards metering of agricultural connections, refer to objection no.8, issue no.7.

 

Issue No.3: Employee cost

The employee cost of the Board is one of the highest in the country. As per ATE order dated 26.05.2006, performance linked incentive is the requirement of the day to improve low productivity of PSEB employees. Urgent steps need to be taken to reduce and right-size the Board’s staff strength and reasonable employee cost should be allowed.

Response of PSEB

No response

View of the Commission       

Refer to objection no.3, issue no. 4.

 

Issue No.4: Revenue gap

Revenue gap of Rs.6575 crore for FY 2010-11 should be supported by Government subsidy and tariff of genuine consumers like railways should not be hiked. Tariff should be based on cost of supply to railways & at a level lesser than the tariff for HT Consumers.

Response of PSEB

No response

View of the Commission

Funding of the revenue gap subsidy is prerogative of GoP. The Commission takes all relevant factors into account in determining tariff applicable to different categories of consumers.

 

Issue No.5: Implementation of MYT frame work

As per Tariff Policy, the multi-year tariff (MYT) regime is to be adopted from 1.4.06 and review after three years in 2009-10. The same has not been done.

Response of PSEB

No response.

View of the Commission

Refer to objection no.13, issue no.4.

 

Issue No.6: Metering for Railway Traction

Meter for railway traction should be provided at traction substations instead of line substation to minimize line losses.

Response of PSEB

In case of railway traction, a dedicated line is provided to railways, which is normally very short in length. Hence, the metering at the PSEB grid substation is justified. Moreover, if there is any theft/loss of energy in such a dedicated line meant for railways, the responsibility for the same lies with the railways.

View of the Commission

Despite considerable effort by the Commission, the Board has been unable to supply complete information in this respect. The Commission intends to suo-moto take up this issue as a petition and decide on its merit in a time bound manner.

 

Issue No.7: Alternate supply arrangement for traction and load violation charges

In case of supply failure from PSEB, the instances of maximum demand exceeding contract demand due to feed extension of adjacent TSS being fed by PSEB and vice versa should be ignored till such time the supply failure persists and load violation charges should not be levied for that period.

Response of PSEB

PSEB believes that the overdrawal of power on account of the aforementioned reasons is a business risk and needs to be borne by Railways. In case of overdrawal, it may be a case that PSEB has to procure power under UI mechanism or it has to curtail load of other consumers to supply the power to the traction substations which may have some commercial liability on PSEB. Imposing the penalty charges is a kind of indemnification of PSEB expenses to cover such risks which may arise on account of operations of Railways.

View of the Commission 

Same as issue no.6 above.

                 

Objection No.18: Ranjeev Steels Pvt. Ltd.

The objector has raised only two issues pertaining to HT rebate and power factor incentive which are similar to those already dealt with in objection no. 4 &10 at issue no.2&3 respectively. The same may be referred to.

 

Objection No.19 & 31: PSEB Engineers’ Association

Issue No.1: Recovery of Cost of Service

The financial parameters contained in the ARR reflect the progressively deteriorating financial health of the Board whereby leading to non achievement of the objectives of the Electricity Act 2003, NTP and NEP.  There is an urgent need for ensuring recovery of the cost of service to the consumers to make power sector sustainable.

Response of PSEB

The suggestions may be appropriately considered by the Hon’ble Commission.

View of the Commission

Undoubtedly, one of the objectives of the Electricity Act 2003 is to ensure that tariffs are reasonably set at such levels as to make electricity generation, transmission and distribution entities viable. However, the Act, National Tariff Policy and National Electricity Policy make it equally incumbent for such entities to perform efficiently in accordance with accepted norms and standards. In the interests of consumers, disallowances become inevitable when their performance remains sub-optimal. An important issue concerning the financial health of the Board relates to its mounting debt on which GoP needs to urgently address, possibly by financial restructuring.

 

Issue No.2: Capacity Addition

The Commission should formulate a road map/trajectory for capacity addition including setting up of a nuclear plant since power purchase from outside is one of the largest component in the ARR. The Board is not taking up generation projects in state sector as envisaged under clause 5.8.2 of NEP on the ground that sufficient funds are not available for equity investment. The Commission may direct the Board to execute the Gidderbaha project for departmentally.

Response of PSEB

PSEB appreciates the concerns of the Association and submits that the delay in implementation of the projects is on account of uncontrollable parameters viz. allocation of land, fuel linkages etc. The status update of the plants which are to be installed on BOO basis is given in the table below:

Name of Project

Awarded to

Year of Award

Capacity (MW)

Current status

Talwandi Sabo

M/s Sterlite

Sep 2008

1980

Work in progress

Rajpura Thermal Power Plant

M/s L & T

Jan 2010

1320

PPA signed

Gidderbaha

-

-

2640

Issues of coal linkages

Goindwal Sahib TPS

GVK

 

540

Work in Progress

View of the Commission

The Board is being asked to prepare a medium and long term strategy for capacity additions not only to overcome the current deficit but also to ensure that there is no mis-match between supply and demand in the future. The Commission will also suitably advise GoP in this regard.

 

Issue No. 3: Review petition to be made available to public

The Board be directed to place on its website and make public the review petition filed by the Board before the Commission against the Tariff Order of 2009-10.

Response of PSEB

A copy of the said review petition is already placed on the website of the Board.

View of the Commission

The Board has made the information available by placing the review petition on its website.

 

Issue No.4: AP Consumption for 2007-08 & 2008-09

The Commission on the basis of field study has reduced the AP consumption by 11.25% for 07-08 and 10.2% for 08-09. The methodology adopted by the agency to determine AP consumption has many short comings. The Commission is requested to finalise long and short term methodology for calculation of AP consumption in consultation with the Board.

Response of PSEB

The Board agrees with the views of the Association and requests the Hon’ble Commission to kindly consider the same.

View of the Commission                   

The objective of the Commission is to make a more accurate estimation of AP consumption and towards that end is working in consultation with the Board. Para 4.1.3 of the Tariff Order for 2009-10 has brought out a number of steps that need to be taken towards this end. The Commission trusts that the Board would implement these measures so as to enable better estimation of agriculture consumption. In the context of reducing T&D losses, the Commission has been repeatedly emphasizing the need of instituting regular energy audits at distribution level. Putting in place such a system in respect of AP feeders would be another step that will provide a useful cross check in AP consumption estimated through readings of sample meters.

 

Issue No.5: Fuel cost norms during trial run of unit III of Lehra Mohabbat

The procedure of working out fuel cost for 2008-09 for Lehra Mohabbat as Rs.2979 crore on the basis of applying SHR norms on infirm power is incorrect. Instead of taking the fuel cost as Rs.190 crore it should be Rs.268 crore as taken by the Board for infirm generation of 1168 MU (before CoD) for unit-III of Lehra Mohabbat.

Unit-IV scheduled to achieve COD on 12/09 has not been commissioned so far.  So the presumed energy generation of 575 MU by the unit need to be reviewed. 

Response of PSEB

The Board agrees with the views of the Association and requests the Hon’ble Commission to consider the same

View of the Commission                         

The Commission has calculated the fuel cost of GHTP in accordance with applicable CERC norms. Unit-4 of GHTP has been commissioned in January 2010 and any deviation in generation will be taken into account at the time of review. As infirm power generated by unit-4 of GHTP has been consumed within the state, there appears to be no rationale for that power to be priced at UI rates. On the other hand, fuel costs for the generation of that power have been allowed to the Board.

 

Issue No.6: Relaxation in operational parameters

As per the NTP, in case the operations have been much below the operating norms for many years, relaxed norms be fixed and a transition path over the time be drawn for achieving the prescribed norms. The same may be considered by the Commission for the Ropar Thermal Plant, which is not able to meet the SHR norm 2500.

Response of PSEB

The Commission is requested to kindly consider the request as the same is in line with the submission already made before the Commission in the ARR petition.

View of the Commission                                 

There does not seem to be sufficient justification for relaxing SHR norms of GGSTP as the same have been adopted by CERC on the basis of a detailed study undertaken of plants similar in most respects to those of the Board. Attention is also invited to the Commission’s Order dated 16.4.2010 in petition no.23/2009.

 

Issue No.7: Efficiency improvement of thermal plants

The principle adopted by the Appellate Tribunal for Electricity in appeal 86 and 87 of 2007 needs to be adopted for PSEB also. However, for efficiency improvement, services of NTPC, which has a full fledged R&D organization including a Cell for efficiency improvement instead of CPRI as suggested by the ATE, should be utilized.

Response of PSEB

PSEB has plans to undertake R&M of its old units. Post implementation of such R&M measures, the performance of the units is likely to improve. However, the suggestions may be considered by the Commission in near future, if required. 

View of the Commission                   

R&M of old plants is capital intensive and experience in the case of GNDTP has not been entirely positive. In case NTPC provides services for efficient improvement of thermal plants on a more economic basis, the Board will be well advised to consider this alternative.

                                                                               

Issue No.8: Quantify power cuts

The Board should specify power cuts in MUs during 2008-09 with details of consumer categories affected. Similarly for 2009-10, actual quantum of power cut for the period of April to December, 2009 and the projections for 2010-11 should be provided.

Response of PSEB

It may not be practically possible to provide category wise power cuts in MUs as the supply to consumers is at times from mixed feeders. Moreover, compilation of such data if required from the purpose of this ARR may take a longer time to be integrated since the same needs to be collected from all respective zones.

Regarding the payment of compensation to industries for their captive generation, PSEB submits as follows:

a.       It is the endeavor of PSEB to ensure round the clock power supply to its consumers. Normally, one day supply cut in a different weekly off day is imposed on Industry with a view to stagger the industrial load evenly on all week days.

b.       However, during the paddy season, due to sharp increase in demand, the otherwise normal one weekly off day need to be enhanced to bridge the gap between demand and supply. The paddy months of the year 2009 experienced continuous shortfall of rains and the paddy transplantation and subsequent watering remained totally dependent on tube well irrigation. There was a deficit rainfall of 36% in the State during the period from June 09 to September 09. In view of such conditions, staggered weekly off days were enhance to three days in a week in a certain period.

c.        It may however, be appreciated that whenever the demand was lower on account of good rainfall and/or favorable grid conditions, the additional weekly off days were relaxed.

d.       Further, while requisitioning the power connection and entering into agreement with PSEB, the consumers agree to restrict / regulate the supply as per directions of PSEB thus making itself fully aware of the implications of power cuts/power regulating measures. Therefore, no cause of compensating the consumers arises for such uncontrollable factors confronted by PSEB.

View of the Commission                   

Projections of power cuts proposed to be imposed in 2010-11 may not be very realistic as there are likely to be variations both on the demand and supply side which can affect the quantum of power cuts either way.

 

Issue No.9: Details of assets not commissioned and prior period expense

PSEB to provide summary of assets not commissioned in 2008-09 due to which the depreciation got reduced by Rs.28 crore. PSEB should also provide detailed break-up of Rs.107.6 crore of prior period expense.

Response of PSEB

The basic contention of difference in depreciation claims lies in the fact that capitalization estimates for 2008-09 were submitted envisaging investments that are likely to happen in several schemes (which have been shown in Form-21 prescribed by the Hon’ble Commission). In practical terms, it is likely that some of the schemes may not have actually fructified on accounts of several reasons within/out of the control of PSEB and therefore the depreciation amount is likely to differ and the same holds true for any other utility as well.

View of the Commission 

There is need for instituting procedures that will more accurately assess the value both of additional assets that get commissioned in a particular year and others where written down value has reached a level where it is no longer to be taken into account. The Commission intends to separately take up this matter with the Board. Details of the prior period expenses are available in the audit report for the relevant year.

                                                               

Issue No.10: Assessment of Energy Demand

For realistic assessment, the data for metered sales should include estimates of energy that would have been sold had there been no power cuts. The Board should give estimates of power cuts (in MUs) to be levied on various categories of consumers in the ensuing year.

Response of PSEB

The projection of energy demand is made on a CAGR basis which smoothens the increase/decrease in demand on a year to year basis. The energy balance submitted by PSEB shows that the demand projected on the CAGR basis is matched against the supply sources and any shortfall in the supply is envisaged to be met through short term purchases. PSEB envisages that levy of power cuts is decided on a real time basis, subject to actual rainfall during the year, capacity addition by CGS stations and availability of competitive power on short term basis. PSEB is trying to tap the available competitive power sources to supply power on long term basis and envisages that power cuts be minimized to the extent possible.

However, it is submitted that the incremental factor based on CAGR may be considered by the Commission.

View of the Commission                    

The Commission in its tariff orders approves the energy sales and matches the same with the energy available after factoring in the T&D loss. In case of any shortfall, the Commission also approves the power purchase through short term purchases. The unscheduled power cuts cannot be accurately projected for the ensuing year. The Commission takes care of increase/decrease in the energy sales at the time of review/true up.            

 

Issue No.11: AP consumption for 2009-10 & 2010-11

a) AP consumption for 2009-10 (RE) is almost the same as actuals of 2007-08 whereas the growth in the first six months of 2009-10 as compared to the same period 2008-09 has been 14.36% (not 12.72% as reported in the ARR). Similarly, the projected AP consumption for 2010-11 is on lower side.

b)  The criteria for reduce AP consumption in the previous years should not become a benchmark for the future and in case PSEB implements the directives of the Commission then there is no ground to impose any cut on the AP consumption.

Response of PSEB

a) PSEB has already explained the detailed rationale for projecting the AP sales for the ensuing periods. PSEB has not considered any abnormality in sales during the past years and has assumed a normal monsoon for the purpose of projections. However, any incremental factor may be considered by the Commission as deemed appropriate.

b) PSEB appreciates the argument of the Association and requests the Commission to consider the same. However, in this regard PSEB submits that even for the time in which PSEB is implementing the directives of the Commission, a considerate view be taken on the AP sales submitted by the Board.

View of the Commission                   

Refer to paras 3.2.3 & 4.1.3.

                                                                                 

Issue No.12:  Theft and T&D losses

Metered energy sales as a percentage of energy input has stagnated since 2003-04 whereas the AP consumption has increased by around 80.12%. Also the energy input has increase only by 38.51% only. This is an indicator of rampant theft of electricity. Monthly T&D loss reduction targets may be specified and carefully monitored by the Commission. T&D losses for 2010-11 should be fixed as 20% based on actual T&D losses and AP consumption for 2008-09.

Response of PSEB

PSEB interprets the aforementioned statistics in a different manner. It may be appreciated that the ratio of metered sales has remained constant whereas the AP sales have increased significantly despite the fact that there has not been a commensurate increase in the energy input. The same suggests that on account of the increase in sample meter database for AP consumers, regularization of connections under VDS the AP consumption is getting reflected on a more accurate basis. PSEB feels the importance of metering the AP consumers and is actively pursuing the directives of the Commission towards such metering. Regarding the theft of electricity, PSEB is taking adequate measures in this regard and details of units booked under such cases have already been provided in the tariff petition. Regarding the setting of monthly loss reduction targets, PSEB understands that implementation of IT interventions, capital expenditure, booking of thefts etc., is a time consuming process. Realization of potential benefits from such activities can be assimilated in a broader time frame and not on an immediate basis. Therefore, it may not be feasible to have monthly targets for loss reduction.

View of the Commission                   

Theft of electricity definitely needs to be tackled on a war footing. However, the Commission has been repeatedly observing that the enforcement activities of the Board would be more focused and effective if energy audits at distribution level are regularly undertaken. Monitoring of T&D loss reduction on monthly basis may not be feasible in so far as the Commission is concerned. However, the Board could consider and undertake an internal review on this basis if the same is practicable.

 

Issue No.13: CoD of Lehra Mohabbat unit IV

a)PSEB should provide correct date of COD for Lehra Mohabbat Unit-IV as against the earlier provided date of 12/ 2009.

b)  CERC norm for tariff period 2009-14 is 1 ml/kWh for specific oil consumption and 2500k.cal./unit for SHR. However, for units to be commissioned after 1.4.09, SHR would be 6.5% above the value of designed SHR. Since at present LM unit IV has not commissioned, SHR norm of 2500 could be applied after CoD.

c) The fuel cost per unit for Lehra Mohabbat Unit-IV for 2009-10 as shown by the PSEB is incorrect as the infirm energy rate has to be higher than the firm energy rate.

Response of PSEB

a)The COD of Lehra Mohabbat-Unit IV has been declared on 25.1. 2010.

b) Any specification of technical norms for the generating stations should focus on the inherent issues faced by stations. For example, even the new stations may not be able to provide the desired technical efficiency on account of design aspects, quality of coal (ash content, sulphur content), and quality of workmanship by the OEM etc. These issues must be examined on the basis of prudence and SHR for any station may then be considered based on such ground realities. It may not be advisable to follow such idealistic norms which may not comprehend to the ground conditions prevalent in the state.

c) PSEB has been operating its units efficiently which has lead to reduction in the overall variable cost of the station. The key difference is the difference between actual SHR and the normative SHR which has lead to the increase in variable cost calculated on the basis of normative SHR post the commissioning of the unit.

View of the Commission                         

a) The Commission notes that the GHTP Unit-4 achieved CoD on 25.1.2010.

b) The designed SHR of the unit is 2241 Kcal/KWH. The Commission has taken SHR of 2500 Kcal/Kwh for GHTP Unit-4.

c) Refer para 3.8.

 

Issue No.14: Assessment of energy availability

The Commissioning schedule of various projects is not envisaged in the time frame as considered by PSEB and needs to be revised. Similarly, the power purchase cost of central stations and gas based generating plants needs to be re-determined on a realistic basis.

Response of PSEB

PSEB has submitted the information to the best of its knowledge and has relied on the CEA’s monitoring data for implementation schedule of the project. We request the Commission to consider the commissioning schedules as deemed appropriate. PSEB has given the basis of estimating the variable charges for such upcoming stations which may be prudently examined by the Commission.

View of the Commission                   

Power purchase projections of the Board have, by and large, taken into account the commissioning schedule of various projects from which energy is to be received by the Board. The cost of power from central stations is adopted from the actual bills raised and is subsequently firmed up in review.

 

Issue No.15: CERC Tariff regulations 2009-14

CERC regulations 2009-14 would escalate annual fixed charges by about 5%. Thus the Board should work out annual fixed charges of the central generating stations based on these new regulations by escalating annual fixed charges of 2008-09 by 5%.

Response of PSEB

No response

View of the Commission                   

The Commission allows for variation, if any, in the fixed costs of Central Generating Stations at the time of review/true up.

 

Issue No.16: UI charges and power purchase for 2008-09

Additional UI  charges of Rs.1384.44 lac paid by the Board during 4/09 to 12/09 for purchase of power below 49.2 Hz, which is in violation of IEGC, transform to 470.9 LU Rs. 2.94/unit.

Details of cost and quantum of power purchased through all the traders be provided by the Board. Similar details for the period from April to Dec.2009 should be provided.

Response of PSEB

The board has submitted the average cost of power purchase from trading companies in the ARR submission. PSEB submits that power purchase from traders comprises of several transactions for different intervals and the price of the power varies for power purchased at different times in a day. Rather than providing such detailed submission, the Board has integrated all such transactions and has submitted the information in a more meaningful manner which may be considered for the purpose of the ARR.

View of the Commission 

The information submitted by the Board in respect of power purchases is sufficient for the purposes of examining the ARR. The payment of additional UI charges to the extent of Rs.1384.44 lac does not adversely affect the consumer as the average cost at which power is purchased from traders has been capped. To the extent that the Board has suffered avoidable loss through purchase of power at very high cost, the matter needs to be inquired into and responsibility fixed therefor.

 

Issue No.17: Employee cost

·       PSEB should give the detail of vacant posts of technical nature and for hydel and thermal categories.

·     Fill PSEB’s quota of posts vacant in BBMB.

·     Provide training to engineers and technical staff to fulfil the requirement under Electricity Rules, 1956.

·     Provide requisite technical staff for new grid substations.

Response of PSEB

·       All prescribed formats pertaining to the filing of ARR petition have been submitted by the Board. However, should there be a need to submit the desired information for the purpose of this ARR; the same may be suggested by the Commission. However, compilation of such information is a bit time consuming as details are to be integrated from all relevant field offices.

·       PSEB will consider the suggestions of the Association to fill vacant positions in BBMB.

·       No response.

·       Regarding the paucity of adequate manpower, PSEB submits that it is currently considering the report of M/s PWC and based on the final report it will undertake adequate steps to rationalize the manpower deployment in various departments of the Board. However, PSEB is concerned for the recovery of employee expenses which are already considered to be higher by the Commission.

View of the Commission 

The Commission presumes that the Board takes all steps necessary for efficient cadre management, mans its installations and provides in-service training to its personnel. In doing so, it is crucial that the Board applies current man power norms in working out its personnel requirements and take steps to right-size its staff strength in the short and medium terms.   

       

Issue No.18: Capitalization of assets

PSEB should provide details of capitalization of thermal assets worth Rs. 1298.75 crore (Lehra Mohabbat Unit III) added in 2008-09 and Rs.1226.28 crore (Lehra Mohabbat Unit IV) in 2009-10. Further PSEB should also provide details of transmission and distribution assets added during April-Dec 2009-10.

Response of PSEB

The amount of capitalization against Lehra Mohabbat Unit III is Rs 1105.62 crore and remaining amount pertains to other assets capitalized during the year.

The envisaged capitalization for Lehra Mohabbat Unit IV is Rs 1065.53 crore and remaining amount pertains to other assets capitalized during the year. 

As regards capitalization details of T&D assets, PSEB submits that it is difficult to provide the actual capitalization figure during the year as the same is reconciled only at the end of the financial year.

View of the Commission

The requisite information has been furnished by the Board.

   

Issue No.19: Unjustified adjustment of Subsidy against long-term loans

The Commission should advice State Government that outstanding subsidy should not be adjusted against loan and considering the critical financial position of PSEB, Government should not recall loans in 2009-10 and 2010-11.

In addition, the Commission should also direct GoP to clear arrears related to power subsidy for 2009-10, which is presently Rs.1038.57 crore.

Response of PSEB

PSEB appreciates the suggestions of the consumer and would request the Hon’ble Commission to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders.

View of the Commission

The Commission has already held that the question of adjusting loans against payment of subsidy is an issue that is to be mutually settled between GoP and the Board. The Commission sees no reason to change its position. As regards arrears of subsidy payable to the Board, GoP has since cleared the same even though it is by recalling its loans to the Board.

 

Issue No.20: Return on Equity

The RoE claim of PSEB (23.48%) is justified only when PSEB is making profit and is paying the tax on such profit at a rate of 33.99%. In a loss situation ROE of 15.5% is justified instead of 14%. 

Response of PSEB

PSEB understands that the CERC Regulations clearly specify that grossing up is to be done with the tax rate as applicable to the utility irrespective of the fact that whether the utility is paying the actual tax or not. PSEB submits that it is liable to pay a tax rate of 33.99% and not the MAT rate and therefore the claim of RoE at 23.48% is justified.

View of the Commission      

Refer to para 3.16.

 

Issue No.21: Capital expenditure

a) PSEB should explain the rationale for considering the proposed expenditure of Rs 600 crore on Gidderbaha project as part of the ARR. Also, it needs to be confirmed that whether the said project is being executed by a private party or by PSEB itself.

b) Expenses of Rs 600 crore have been projected for Ropar Gas based project. Details of Fuel/ Gas supply agreement and Gas Transmission Agreement should be provided.

c) The board should safe-guard against the potential delays in the R& M work of Bathinda Unit III & IV awarded to BHEL who has a track record of delaying the projects.

d) The Board should give status regarding Lehra Mohabbat stage III.

Response of PSEB

a) It is submitted that Gidderbaha Power Limited (GPL) is a company wholly owned by the Board created for developing the power project on BOO basis. The Board has been drawing loan for investing in GPL to meet its capital expenditure requirement for the acquisition of land and other related activities. The same is reflected in the Board’s account till the time the company is transferred to the selected bidder. However, the bid process for award of the GPL is getting delayed on account of delay in getting coal linkages.

b) The order to execute 1000 MW Ropar Gas power Plant at existing premises of GGSSTP Ropar on EPC basis is expected to be placed in the FY 2010-11. The funds (approx 15% of the total envisaged cost of Rs 4000 crore) are required to be given in advance to EPC contractor.

c) PSEB will consider the suggestion of the Association.

d) The development of LM stage III is under consideration by PSEB.

View of the Commission      

a) Refer to para 4.13.

b, d) The requisite information has been furnished by the Board.

c) The Board may ensure that there is no delay.

 

Issue No.22: Interest & finance charges

Reason for increase in expenses on the following accounts for 08-09 w.r.t. 07-08 should be explained as per specified table:

a.       Interest on borrowing for working capital

b.       Cost of raising finances

c.        Arranger Fee for non-SLR bonds

d.       Other Charges

Response of PSEB

Parameter

2008-09

(Rs.crore)

2007-08

(Rs.crore)

Response from PSEB

Interest on borrowing for working capital

569.54

365.80

The increase is on account of disallowances in expenses by the Commission, delay in refund of interest expenses by the Government, delay in release of subsidy by Govt. of Punjab and adjustment of Govt. loans against subsidy.

Cost of raising finances

6.80

0.10

PSEB had issued bonds to raise around Rs 315 crore in 2008-09. For the same, a guarantee fee of Rs 6.30 crore was payable @ 2% of the amount raised.

Arranger Fee for non-SLR bonds

1.57

0.00

PSEB had issued bonds in 2008-09 whereas in 2007-08, no such bonds were issued. 

Other Charges

13.87

7.10

There had been a stamp duty of around 2% which was booked under other charges.

View of the Commission      

The requisite information has been provided by the Board.

                                                        

Issue No.23: Charges for UI drawl to be borne by Government

No power cuts in the months of April 09 and May 09 were at the behest of the Govt should be confirmed. In case yes, the charges for UI drawl (Rs 5.93 crore) needs to be borne by the Govt.

Response of PSEB

During the months of April 09 and May 09 (Election Period), PSEB purchased 2241 MUs of power from all sources at an average rate of Rs.2.42 per unit. Out of the same, purchase of 170 MUs was exclusively made from traders during these two months at an average rate of Rs.4.20 per unit. Besides, bulk of power purchase (traded power) of 138 MUs was made through traders on the basis of long term agreement executed with them. The quantum of short term power purchase was only 32 MUs. Evidently, the power purchase through traders is meager, at a reasonable rate and need based only. In comparison, PSEB purchased 2045 MUs of power through traders during the paddy months of June-09 to September-09 at an average rate of Rs.5.73 per unit in order to meet the demand of agriculture sector. Therefore, the quantum of power purchase through traders during April -09 and May-09 was barely 8% of the purchases made during paddy months of June to September-09 and only 7% of total traded power purchased from April -09 to December-09 (2425 MUs).

The fixation of month wise quota for power purchase fall under the purview of the Hon’ble Commission. It would not be out of place to mention here that the Hon’ble Commission has already imposed a cap on excess power purchase (above approved quantum) from traders at the rate of 402.46 paise/unit for the year 2009-10 in the Tariff Order dated 08.09.09.

View of the Commission      

The Commission notes that purchase of power in the months of April and May 2009 have been effected at a rate well below the average cost of supply.

 

 

 

Issue No. 24: Issues relating to subsidy

The directive of State Government to provide subsidy does not remain operative in case of default in payment of subsidy. Considering the default in payment of subsidy by the Government in time, the Commission should frame specific Regulations regarding payment of subsidy. Moreover, the Commission should advise the State Government that loan is not to be recalled and subsidy is not to be adjusted against loan.

Response of PSEB

The aforementioned issue is to be considered by the Hon’ble Commission.

View of the Commission

The Commission in its Order dated 27.5.2008 passed in the matter of subsidy (to all categories of consumers) for neutralizing the increase in the tariffs for the year 2007-08 held that GoP is within its rights to call back overdue loans to the Board if it choses to do so and that the issue is to be mutually resolved by GoP and the Board.

 

Issue No. 25: Delay in implementation of new projects

There has been a severe delay in implementation of new projects in the state. While much reliance is given to projects awarded to private players, however the roadmap for implementation of the same needs to be defined and suitable measures taken to ensure that no further delay happens on their implementation.

Response of PSEB

The delay in the projects is largely on account of uncontrollable factors. Typically, in case of Gidderbaha, the RFQ was released to the bidders as back as Oct 2008. However in the absence of coal linkages, the bid process for award of project has not been completed. PSEB is making efforts to expedite the availability of basic inputs to award the project as early as possible

View of the Commission

Implementation of projects that have been awarded need to be closely monitored with a view to ensuring timely commissioning.

 

Issue No.26: Roadmap for capacity addition

The Commission may suggest roadmap for capacity addition by the Board in the State sector. Also, there needs to be some head start towards implementation of nuclear plants in the State.

Response of PSEB

The suggestions may be considered by the Commission considering the practical difficulties faced in implementation of other projects. However, PSEB is in the process of installing new generating stations on BOO basis. The detail of these plants with status update is given in the table below:

 

Name of Project

Awarded to

Year of Award

Capacity (MW)

Current status

Talwandi Sabo

M/s Sterlite

Sep 2008

1980

Work in progress

Rajpura Thermal Power Plant

M/s L & T

Jan 2010

1320

PPA signed

Gidderbaha

-

-

2640

Issues of coal linkages

Goindwal Sahib TPS

GVK

 

540

Work in Progress

View of the Commission

Refer to issue no. 2 above.

 

Issue No.27: R&M of GNDTP Units

Details of safeguards taken for timely completion of R&M of the units-III & IV should be given.

Response of PSEB

For timely completion of R&M works, PSEB while awarding the contract to the bidder ensures that the contract document should have penalty clauses related to the time over runs. Further, PSEB also takes PERT chart from the bidders for the proposed R&M works and monitors all the activities as per the activity wise schedule given by the bidder.

View of the Commission

In case R&M of Unit 3&4 of GNDTP is undertaken, the Board needs not only to ensure timely completion thereof but also to ensure that the contractual terms & conditions adequately take care of situations where performance parameters are not met subsequent to the completion of R&M works.

 

 

 

Issue No.28: CoD of Lehra Mohabbat Unit-IV

COD of Lehra Mohabbat Unit-IV has not been declared yet. CERC Regulations prescribe that infirm power should be charged at UI rate. Moreover the Regulations for determination of tariff should be applied only after the declaration of COD.

Response of PSEB

The infirm power supplied by the units is served to the consumers in the State. PSEB understands that the cost of generation had been much lower than the UI rate. In case the cost of infirm power is charged at the UI rate, the same will be required to be recovered through the tariff of consumers which may not be desirable. There would be no justification for loading the consumers with a higher tariff.

View of the Commission

The Commission agrees with Board’s response where the issue has been sufficiently clarified.

                                            

Issue No.29: CoD of GNDTP Unit-I & II & Lehra Unit-III

PSEB should provide the Unit Heat Rate as per contract/order/specification & as per Performance Guarantee Test and Design Heat Rate and Date of Commercial Operation in respect of GNDTP Unit-I & II and Lehra Unit-III.

Response of PSEB

All prescribed formats pertaining to the filing of ARR petition have already been submitted to the Commission. However, should there be a need to submit the desired information for the purpose of this ARR, the same may be suggested by the Commission.

View of the Commission

The Commission normally insists on receiving information as per the prescribed proformae.

                                                                               

Issue No.30: Station Heat Rate for GNDTP

The Commission may allow a margin of 10% on Station Heat Rate Target for GNDTP Unit-I & II units and considering the previous norms for un-renovated units III and IV.

Response of PSEB

For the 10% margin for Bhatinda units, considering the previous norms for un-renovated units III & IV, the Commission is requested to consider the suggestion.

View of the Commission                          

The Commission has taken the SHR norm of 2825 kcal/kWh for GNDTP Units 1&2 based on the CERC norms for Tanda TPS for the period 2009-14. In the past also, the Commission has adopted CERC norms for Tanda TPS in case of GNDTP units.

 

Issue No. 31: Energy Audit for SHR Improvement

 The Commission may direct PSEB to finalize an action plan with NTPC for improvement in SHR and other O & M parameters of the its generating stations.

Response of PSEB

PSEB will consider the suggestions of the Association.

View of the Commission

Refer to issue no.7 above.

 

Issue No.32: Long Term PPAs

There had been several instances wherein the PPA executed by the agencies did not fructify and also where even the open access was not allowed by the States. PSEB may be directed to secure the implementation of long term PPAs.

Response of PSEB

PSEB will consider the suggestions of the Association.

View of the Commission                                                                 

The issues are primarily management related and need to be taken note of by the Board.

 

Issue No.33: Manpower Shortage

There is an acute shortage of manpower in generation, transmission and distribution segments whereas there is over staffing at ancillary levels. Employee cost is a cost of historical nature as the number of employees cannot be reduced by way of VRS etc. those need to be allowed as per actual in 2010-11. Benchmarks may be suggested keeping the 2010-11 level as the base reference.

Response of PSEB

The suggestions may be considered by the Commission.

View of the Commission

Refer to issue no.17 above.

 

 

Issue No.34: Allocation of Power from NTPC Lara Project

PSEB to clarify a)position regarding allocation from Lara project b)detail of allocation from other NTPC projects which NTPC claims that the same has already been given to Punjab, along with the date of commissioning of the said projects. Further, PSEB may like to follow up the allocation of power from Lara since any proposal from NTPC is not over and above the decision taken by PMO.

Response of PSEB

All prescribed formats pertaining to the filing of ARR petition have been submitted to the Commission. However, should there be a need to submit the desired information for the purpose of this ARR, the same may be suggested by the Commission.

Further, PSEB submits that the Board has enumerated a list of plants along with the allocation details, from where the power is envisaged to be sourced in the ensuing years in the ARR petition.

View of the Commission

The Commission trusts that the Board would take adequate follow up measures to ensure that power is received from central generating stations as per its allocated share.

 

Issue No.35: Role of State Government

The entire sanctity of the tariff determination procedure is lost if the Govt. tries to intervene in implementation of the Commissions’ tariff order using administrative means. Any roll-back of tariff hike needs to be made public by the Govt. during the exercise of tariff determination by the Commission and comments/objections of all the stake holders invited and not after wards.

 Response of PSEB

The suggestions may be considered by the Commission.

View of the Commission

The Commissions follows the due regulatory process in the tariff determination exercise. Actions of any stakeholder in violation of the legal provisions are challengeable in the appropriate forum.

 

Issue No.36: Power factor incentive &Tariff matters

Norms for power factor incentive should be set near the operating level (about one percent lower) by using suitable benchmarks for different LS consumers. Further, the Board’s MDI meters integrate over 30 minutes for obtaining MDI reading; and the energy accounting of grid including UI is done on a 15 minutes interval.  Both need to be aligned. Also the ACD of 30 days is inadequate which needs to be revised.

Response of PSEB

The suggestions may be considered by the Commission.

View of the Commission                                

For power factor incentive, refer to objection no.4, issue no.3.

The Commission trusts that the Board will appropriately consider the suggestions regarding aligning the time intervals of MDI meters and Grid meters.

Review of Consumption Security (ACD) has been provided for in clause 16 of the ‘Electricity Supply Code and related matters’ issued on 29.6.07(applicable w.e.f 1.1.08) wherein the licensee will review the same after every three years preferably after revision of tariff for the relevant year as per the methodology provided therein.

 

Issue No.37: Estimation of AP Consumption

A detailed submission on the AP consumption has been made and suggested that the report of the Consultants cannot be relied upon on account of the inherent errors in the methodology of calculating the AP sales.

Response of PSEB

The suggestions may be considered by the Commission.

View of the Commission

Refer to objection no.8, issue no.4.

 

Suggestions by the objector

It has been suggested that the Commission may issue directives to the Board with regard  to (i) regulate power cuts on high/low loss feeders (ii) ban overdrawal of UI at frequency below 49.2 Hz except under critical conditions and also inform the Commission of such purchase on weekly basis (iii) in case GoP issues directions for additional power purchase, it should make payment for additional power purchase upfront (iv) provide feeder-wise losses suitably on its website (v) maintain minimum stock of key/critical items in its stores (vi) obtain approval of the Commission for augmenting/de-loading of the critically over loaded Grid sub-stations & lines and to provide new substations as per loading conditions (vii) display on website the list of industrial connections held up due to over loading of sub-stations and formulate regulations for technical feasibility of release of industrial connections (viii) provide the details of power purchase through traders in short term on weekly basis (ix) GoP be advised to develop a system of e-filing of FIRs of  theft of energy cases (x) display on website, a list of defaulters exceeding Rs.50000/- (xi) sign stringent agreement with BHEL for R&M of Bhatinda unit III & IV to avoid delay in commissioning  (xii)  to provide monthly information on the collection efficiency.

View of the Commission

Some of the suggestions pertain to providing data/information on the Board’s website. The Board should have no objection in doing so in the interests of greater transparency. Other suggestions concern issues that have a bearing on the day-to-day functioning of the Board and it is for the Board to take a suitable view. Some other issues that might necessitate the issue of directions to the Board will be separately considered by the Commission.

 

Objection No.20: Bansal Alloys & Metals Pvt. Ltd.

The objector has raised only two issues pertaining to HT rebate and power factor incentive which are similar to those already dealt with in objection no. 4 &10 at issue no.2&3 respectively. The same may be referred to.

 

Objection No.21: Vimal Alloys & Metals Pvt. Ltd.

The objector has raised only two issues pertaining to HT rebate and power factor incentive which are similar to those already dealt with in objection no. 4 &10 at issue no.2&3 respectively. The same may be referred to.

 

Objection No.22: Cycle Trade Union

Issue No. 1: Public notice

Advertisement method of public notice is a wrong process in the interest of consumers both from PSEB and PSERC side.

Response of PSEB

The objections is neither explicitly detailing the manner in which the current process is wrong and not in the interest of the consumers, nor does it reflect any other alternate manner in which the same could be made more effective. PSEB humbly submits that it is abiding by the process finalized and recommended by the Hon’ble Commission. While doing so, all technical and financial details are duly shared by the Board. However, in case the consumers can suggest any other manner so as to make the process more effective, the same may be considered by the Hon’ble Commission.

View of the Commission

The public notice is issued to draw attention to the ARR which is otherwise available on the website and in the offices of the Board. The process is in line with the nationwide practice.

 Issue No. 2: Increase in tariff

 The ARR document of the Board is based on false and wrong figures and do not show the increase in tariff and Monthly Minimum Charges for 2010-11. The Commission is requested not to increase any kind of tariff alongwith MMC of all categories of consumers of Punjab.

Response of PSEB

PSEB  has projected the anticipated annual revenue requirement and has prayed to the Hon’ble Commission to approve the same. The final impact on tariff could be ascertained once the Hon’ble Commission, after applying the prudence check, approves the final Aggregate Revenue Requirement for the year 2010-11 and further decides the mechanism by which such Aggregate Revenue Requirement is to be recovered through tariff from the consumers.

View of the Commission

Refer to objection no. 6, issue no.1.

 

Objection No.23 & 36: Antarctic Industries Ltd.

The issues pertaining to deteriorating financial health of PSEB, capping of expenditure, free units to T/W and other consumers, efficiency of T/Ws, Depreciation Reserve Fund, interest rate on Govt. loans, working capital loan, increase in AP tariff, Advantage of own generation, AP subsidy, excess interest, Cost of supply, T&D losses, investment plan, Return on Equity, Power factor incentive/KVAH tariff and Peak load Exemption Charges (PLEC) have been dealt with in objection no. 12 at issue No.2 to 18 respectively. The remaining issues are dealt with hereunder. In the rejoinder it has been stated that the Board is issuing circulars with financial implications without the approval of the Commission.

 

Issue No.1: Definition of PIU

There is no explicit definition of Power Intensive Unit (PIU).

Response of PSEB

The Hon’ble Commission may kindly provide the same in the tariff order.

View of the Commission              

For the purposes of levy of surcharge, arc furnaces, chloro-alkali units and induction furnaces are deemed to be power intensive units.

 

Issue No. 2: HV Surcharge

The HV surcharge of 10% or 17.5% would widen the gap between the tariff and average cost of supply from an amount of 43 paisa to 75 paisa per unit which would be against the EA, 2003 that prescribes that tariff should gradually reflect cost of supply with reduction in cross-subsidy. Encouragement through a rebate is fine but the consumers unable to change over to higher voltage on account of technical unfeasibility or due to high cost of conversion and high O&M cost should not be penalized with surcharge. The Commission’s order on surcharge emanated from an inadvertent omission by the Board to mention about exemption of the objector from payment of HV surcharge in its ARR application for FY 2004-05. On the same 11 KV line, PSEB burdens the consumers with 2500 KVA or above load with surcharge while those up to 2499 KVA are not subject to a surcharge. Such an action is discriminatory. The matter needs to be looked into afresh atleast for future, if not for the past period. 

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Also, “The Commission observes that the reasons given by the Commission in Tariff Order 2004-05 for levying PLEC on commitment basis still hold good. The Commission also observes that it is not feasible to measure energy payable at PLEC rates separately because the same meter would record energy consumption payable at normal tariff as well as PLEC. Therefore the Commission decides to continue to charge PLEC on commitment basis……….”

Further, the supply of voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltages are taken by the consumers keeping in view of their own interest. Accordingly, Board requests the Hon’ble Commission that such cases should not be considered.

View of the Commission

Levy of surcharge by the Board in accordance with CC No.66/2007 dated 28.11.2007 issued on the basis of Tariff Orders for the years 2004-05, 2005-06 and 2006-07 and General Conditions of Tariff approved by the Commission was challenged in the High Court. The High Court upheld levy of surcharge as well as validity of CC No.66/2007. Thereafter review petition was filed in the High Court in which it was ordered that the review applicants could approach the Regulatory Commission in order to establish that Board’s Sale Circular dated 28.11.2007 runs contrary to the Tariff Order dated 30.11.2004 for the year 2004-05 and can not be given effect to. As a sequel to the Order of the High Court, a petition was filed before the Commission which was also dismissed.

In the light of the legal position as brought out above, there is no scope for any retrospective relief to consumers being subjected to HV surcharge. The Commission would, however, separately consider the issue and decide on the continuance or otherwise of the present dispensation.

 

 Issue No. 3: Pro-rata HV Surcharge

The Board had allowed payment of pro-rata HV surcharge having load above 2500 KVA vide notification CC No.52/2004 dated 17.10.2004 which benefited consumers and encouraged new connections. The sudden withdrawal of the notification and that too with retrospective effect has put heavy burden on the consumers for no fault.

Response of PSEB

No response

View of the Commission

The High Court has held that CC No. 52/2004 had become defunct and inoperative after the Tariff Order passed by the Commission for the year 2004-05.

 

Issue No. 4: Transformer Capacity

As per the new policy, LS Consumers should be allowed to install the transformer without any capacity restriction.

Response of PSEB

Board does not agree with the consumer’s view of removing the limit on the capacity of transformer installation because excessive size of transformer will result in unavoidable losses and also affects the fault level of the system. Therefore, commission may consider allowing the installation capacity of the transformer up to two times of the contracted demand in view of the future expansion, if any.

View of the Commission  

In para 5.2.4 of the Tariff Order for 2009-10 the Commission had observed that there is no limit on transformer capacity in case of LS consumers.  The Commission continues to hold the same view.

 

Issue No. 5: PLR timing

The two ways devised by the Board for PLR timings are not correct as the one through RTC in the meter is recordable while the other by Indian Standard Time (IST) is not recorded. Such an impractical approach is leading to heavy penalties levied as PLR violations for small difference in timing.

Response of PSEB

No response.

View of the Commission                          

The Commission has specified the procedure for working out violation of Peak Load Hours Restrictions in Annexure-20 appended to Conditions of Supply approved by the Commission.

 

Issue No. 6: Power factor for mixed load

Specified minimum power factor for general industry and PIU are 0.9 and 0.95 respectively. In case of mixed loads, there is specified power factor, which should be fixed at 0.9. 

Response of PSEB

No response.

View of the Commission

This matter will be separately considered by the Commission.

 

Objection No.24: Punjab Alkalies and Chemicals Limited

Issue No. 1: Tube well efficiency

PSEB is silent about the pilot project conducted for improving the efficiency of tube wells.

Response of PSEB

Technical consultant has been appointed to collect the field data regarding the efficiency of tube well connections. The consultants have recently compiled the field data and are analyzing the same. It is envisaged that the draft report of the analysis when submitted to PSEB will be shared with the Commission.

View of the Commission

Refer to objection no.12, issue no.7.

 

Issue No. 2: Cross Subsidy

As per the provisions of National Tariff Policy & the Electricity Act 2003, the Commission has fixed the time frame for elimination of cross subsidy by the year 2015. However, instead of gradual reduction, cross subsidy burden on objector has increased from 31 paise to 51 paise in 2009-10. A road map should be drawn for elimination of cross subsidy by the year 2015. A study of cost of supply of electricity for different categories be done by PSEB to ascertain average cost of supply for elimination of cross subsidy.

Response of PSEB

The aforementioned issue is to be considered by the Hon’ble Commission. However, in this regard, PSEB has invited tenders from consultancy firms for conducting the cost of supply study for various categories of consumers. The inputs of this study can be considered (as and when finalized) for progressive reduction of cross subsidies in the spirit of the National Tariff Policy.

View of the Commission

The Commission has in its Regulations already specified the gradual reduction of cross subsidy though total elimination of the same is no longer envisaged in the Electricity Act 2003. A gradual reduction in cross subsidy in percentage terms has been effected in the previous years. An increase in average cost of supply will, however, result in increase in cross subsidy in real terms.       

                                                       

Issue No.3: Limit on subsidized Consumption

There should be a limit of consumption by subsidized category beyond which normal tariff should be charged or the Government should make good of the increased consumption. Benefit of lowest slab in the domestic tariff should be limited to consumers who cannot afford to pay for electricity consumption and who restrict their consumption to 100 units.

Response of PSEB

The aforementioned issue is a prerogative of the Hon’ble Commission. However, PSEB feels that if the suggestion is implemented, it will impact on the consumers whose consumption is marginally above the 100 units as the consumer will have to pay the tariff at higher rates for the whole consumption. So this issue of classification of rich/poor domestic consumers is difficult to manage.

 

View of the Commission              

Regarding limit of consumption by subsidized category, refer to objection no. 13, issue no.8.

Regarding benefit of lowest slab in the domestic tariff, the Commission agrees with the response of the Board.                                                                                  

 

Issue No. 4: Cost of supply

Burden of high T&D losses should be passed on to contributing consumers and not on high voltage consumers as T&D loss in their case is minimal and also tariff to any category should be in line with its cost of supply.

Response of PSEB

The aforementioned issue is a prerogative of the Hon’ble Commission.

View of the Commission

This could be considered only after data on voltage-wise losses is made available by the Board who have been directed to ensure early submission of the same.

 

Issue No. 5: AP Consumption

More than 50% growth in the last 4 years is incomprehensible and 41% increase in AP consumption from 2006-07 to 2007-08 is unjustified. Also, an increase of 15% in AP consumption projected for FY 10-11 from actual consumption of FY 08-09 is not palatable. The consumption at cross-subsidized rates should be frozen as unrestricted consumption further burden the cross-subsidizing categories.

Response of PSEB

PSEB has already depicted the basis of projecting the AP sales in the ARR petition. Moreover, PSEB has submitted its detailed views on the methodology of AP sales in the petition. It may also be highlighted that the consumption of power by AP consumers needs to be correlated with decrease/increase in rainfall, depth of water table and pattern of crops in the state. Moreover in last four years more number of tube well connections have been released in the state and load to AP consumers have been increased under various VDS schemes which has also resulted in more AP consumption.

View of the Commission

Refer para 4.1.3.

 

Issue No. 6:  Subsidy

The amount of subsidy payable by the GoP should not be adjusted against the loan repayments. The interest on working capital loans on account of delay in subsidy payment should not be charged from the consumer.

Response of PSEB

PSEB appreciates the suggestions of the consumer and would request the Hon’ble Commission to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. The Government should be asked to pay the interest on non-payment of subsidy for the period of delay and should not adjust the loan against subsidy. However, the non-payment of such interest should not result in reduction of interest on actual working capital loans taken by the Board. 

View of the Commission

Regarding adjustment of loans against subsidy payable by GoP, refer to objection no.19&31, issue no.24. Interest on delayed/non-payment of subsidy is only to GoP account and not passed on to the consumers.

                                                                       

Issue No. 7: Re-allocation of Ranjit Sagar Dam cost

The Commission has dealt with the issue of allocation of RSD in a partisan manner. The issue therefore may be reopened and new committee may be reconstituted with consumers’ representative in it. The same is required because the amount still appropriated to PSEB is as high as 60%.

Response of PSEB

The issue under consideration falls under the prerogative of the Commission and the same may be addressed at the time of issuing the tariff order.

View of the Commission

The Commission does not believe that its findings on allocation of RSD cost is partisan in any manner. In any case, the Commission’s findings are open to scrutiny in the event of an appeal.

 

Issue No. 8: Power purchase cost

The cost of power purchased from outside the state has increased exponentially with no restrictions on quantum and price. The generation from PSEB owned plants has decreased. Such a trend needs to be checked.

 

 

 

Response of PSEB

PSEB has far exceeded its own projections during FY 2008-09 as submitted in the tariff petition for 2009-10. Further, PSEB has also been able to achieve the approved generation target set by the Commission for the said year.

It needs to be noted that despite of the age of Board’s own stations, PSEB has been able to sustain generation from the plants through pro-active, consistent and regular maintenance and by taking- up timely renovation & overhaul of its units.

However, because of the regular maintenance schedule of the plants, the projected energy availability from the plants viz., GNDTP, GGSSTP and GHTP (Unit I & II) has been estimated at lower levels. The details of the R&M work and maintenance schedule has already been provided in the ARR Petition.

PSEB submits that the increase in short term power purchase is essentially to meet the power requirements of the State. Keeping a check on the overall quantum of power may further aggravate the power crisis in the state, a concern which many of the consumers have already raised. PSEB understands that the real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

Refer to para 4.8.5.

 

Issue No. 9: Capacity addition

The average cost of power purchase in 2009-10 is projected as Rs 6.21/unit. Considering that own generation projects are cheaper, the Commission should issue directives to PSEB for taking up own projects on a fast track basis.

Response of PSEB

The landed cost of power purchase in 2009-10 is around Rs 3.63 per unit as per the ARR submission. Besides, PSEB is actively pursuing the implementation of intra-state generation projects.

View of the Commission

The Board has opted to add additional generation capacity in the State on BOO basis. In the case of 1800MW±10%Talwandi Sabo and 1200MW±10%Rajpura Thermal Power Projects, the sites have already been handed over to the respective lowest bidder. Further-more the Board intends to carry on with the bidding process for 2400MW±10% Gidderbaha Power Project afresh as Ministry of Coal, GOI did not provide fuel linkage and consequently the Board had to cancel the ongoing bidding process. Another project of 540 MW is being setup by M/s GVK Power (Goindwal Sahib) Ltd. in the State. 

 

Issue No. 10: T&D losses

Any increase in AP consumption (over & above approved consumption) should be quantified and charged to the consumers or borne by the Government and not charged to other consumers in the shape of T&D losses. Further, PSEB should control theft & pilferage and not charge to HT consumers as theft is not possible at high voltages. T&D losses, if pegged down to targets fixed by the Commission, shall substantially reduce tariff and average cost of supply.

Response of PSEB

PSEB appreciates the concerns of the consumers; however, it is believed that the issue needs to be addressed by taking all relevant stakeholders into the purview and sensitizing them towards the financial health of the Board. PSEB has already submitted the required information in the prescribed ARR formats in Petition for FY 2010-11. PSEB requests the Hon’ble Commission to take cognizance of the prevailing circumstances and issue appropriate directives for all stakeholders.

View of the Commission

Refer to para 4.2.

 

Issue No. 11: Employee Cost

Proposed 92% increase in employee cost is very high and unjustified. Any additional expenditure under this head should be met by way of internal efficiency improvement or by way of reducing costs over & above the performance level fixed by the Commission.  Increase during FY10-11should be as per WPI.

Response of PSEB

The items suggested by the consumers are not dependent on any indices, e.g. the impact of pay revision cannot be captured by means of escalating the base expenses using an average increase in indices. Such items need to be considered on actual basis as per the audited accounts. PSEB has already explained the rationale for increase in such expenses in detail in its ARR petition.

View of the Commission

Refer to para 4.9.

 

Issue No. 12: PLEC

PLEC should be recovered from consumers who are responsible for increase in demand during peak load hours and not on consumers who are receiving continuous power. The decision to continue with these extra charges is arbitrary and required to be removed. PLEC should be waived off for the continuous process industry who are not responsible for increase in the peak demand.

Response of PSEB

•Removing the PLEC may provide a larger room for variation between demand and supply. The same may result in situations wherein PSEB has arranged for lower supply in comparison to the demand and vice versa. Severe mismatches between actual demand and supply of power may endanger the security and safety of the grid

•During the peak load period, Board procures power from the short term sources to meet such extra demand, which often comes at large premiums. 

•At the time of peak, the frequency of the system generally falls and power drawl under such conditions have a correspondingly higher UI charges. Procurement of power at lower frequencies may put extra financial burden on the board.

Considering the above, the PLEC charges need not be removed. Rather, PSEB submits that the Hon’ble Commission may consider the submissions made by PSEB in the previous ARR regarding revision in the PLEC rates. PSEB believes that the PLEC rate needs to be aligned with the current short term power purchase cost which is around Rs. 7 per unit. Moreover, UI rates have also been increase. In the last submission PSEB had requested that PLEC may be levied at Rs. 5 per unit over and above normal tariff rate. It will necessarily be a correct signal towards the fact that actual cost of such power be charged through tariff which prompts the consumers to make judicious use of the scarce resources. PSEB requests the Commission to consider these aspects and revise the PLEC charges as deemed appropriate. 

View of the Commission

Refer to objection no. 4, issue no.1 and objection no. 12, issue no.18.

 

Issue No. 13: Transit Loss of Coal

Transit losses should be restricted to  0.8% as per CERC norms.

Response of PSEB

Though the Board is a regulated entity, all other entities involved in the transportation of coal viz. coal production companies, railways, contractors etc. are not regulated. They are all bound by commercial contracts which cannot be bound by the regulatory norms. While every effort is maintained to bring down the losses through contractual obligations, however the same should be considered as an uncontrollable factor and the burden for the same should not be passed on the PSEB.

View of the Commission

Refer to objection no.3, issue no.1.

 

Issue No.14: Power factor incentive

Power factor incentive is applicable over PF of 95% for Power Incentive units and general industry get an incentive over PF of 90%, the same need to be rationalized and made equal for all i.e. 0.25% rebate for every 1% increase in power factor beyond 90%.

Response of PSEB

The opinion and the objection raised by the objector has already discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“………….The Commission had in its Tariff Order of 2004-05 observed that incentives should be available for actual improvement in system conditions and not just for maintaining the status quo. Accordingly, it had thought it necessary to fix suitable thresholds for different categories of industries keeping in view their basic inherent characteristics. It is observed that these findings remain equally valid at present and thus, consumers where the power factor is inherently higher need to be distinguished and allowed power factor incentive at improved benchmarks. For this reason, the Commission does not see sufficient justification for rebates to be allowed to RT and LS consumers having PIU’s at a power factor of less than 0.95.”

Further, the Board understands that the differential power factor incentive is due to various consumers having different inherent power factor. For example, Induction furnace load by its very nature is an instantaneous, concentrated and power intensive load which puts sudden jump in demand on the system. Accordingly, the two differential values for giving the incentives are reasonable.

View of the Commission

Refer to objection no.4, issue no.3.

 

 

Issue No. 15: KVAH tariff

KVAH tariff should be implemented which will resolved lot of complications related with tariff.

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of such tariff on the consumers. PSEB feels that prima facie the request for introduction of kVAH tariff has been received from small number of high end LS consumers and consumers having Induction furnaces, whereas, large number of other consumers have not expressed any inclination for opting the KVAH tariff. As this matter involves an in-depth study on the revenue stream, the Board is working on the finer modalities of the same. Besides, not many reference of implementation of such tariff elsewhere in the country could be found. It is one of the reasons for the timeframe of the said study to be prolonged.

View of the Commission

The Board has been asked to examine the issue and submit their report in a limited time frame after which the Commission will take a view in the matter.

 

Issue No.16: HT Rebate

HT rebate of 3% for supply at 33/66 KV has been withdrawn in the tariff order for FY 2009-10, while PSEB saves on account of transformation and HT/LT distribution line losses. The Order of the Commission to eliminate HT rebate is unjustified and should be worked out on the basis of actual T&D losses.

Response of PSEB

The opinion and the objection raised by the objector has already been discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, the supply of voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltages are taken by the consumers keeping in view of their own interest. Accordingly, Board requests the Hon’ble Commission that such cases should not be considered.

View of the Commission

Refer to objection no.1, issue no.1.

 

Issue No.17: Open access charges

The open access charges may be defined on per MW per hour basis to promote consumers to procure power from outside the state through the exchange where the bidding is on hourly basis.

Response of PSEB

The issue is the prerogative of the Hon’ble Commission and this aspect may be dealt in the tariff order for 2010-11.

View of the Commission

The issue is under active consideration of the Commission and decision is likely to be taken shortly.

 

Issue No.18: Return on Equity

The RoE of 23.48% sought by the Board as against 14% allowed earlier has no justification and should not be accepted.

Response of PSEB

No response.

View of the Commission

Refer to paras 2.15 and 3.16.

 

Issue No. 19: Investment plan – Tube well connections

PSEB may explain the rationale for funding the T/W connections as part of its capex plan.

Response of PSEB

The levy of charges for release of tube well connections under the normal course (other than OYT) is very minimal and PSEB is not able to recover the expenses incurred for such release of connection from the consumers. Accordingly, funds need to be arranged as part of the capex plan to release such connections which is not the case with other consumer categories.

 

View of the Commission                                                                                        

Service connection charges are equally payable by AP consumers and any expense incurred in excess thereof for releasing a connection is borne by the Board. However, any expenditure incurred by the Board on this account need not be a part of the annual investment plan.

 

Issue No. 20: Investment Plan

The capex plan proposed by the Board needs to be prudently examined and cost benefit analysis of the same may be sought in terms of improvement in operational performance of T & D system, performance of thermal stations etc.

Response of PSEB

The Board requests the Hon’ble Commission to approve its Capex Plan without any disallowance as any disallowance would deteriorate the growth of the infrastructure needed to support the increasing power requirements of the state of Punjab.

View of the Commission

Refer to para 4.13.                                            

 

Issue No.21: Tariff

As the Board is not following most of the directives, the Commission may consider reducing the tariff for the year 2010-11.

Response of PSEB

No response.

View of the Commission

Refer to objection no. 6, issue no.1.

 

Objection No.25&35: Er. Gurnek Singh Brar

Issue No. 1: Timely payment of subsidy

More stringent safeguards may be considered by PSERC against non-payment of timely subsidy by GoP. The amount of subsidy payable by the GoP should not be adjusted against the loan repayment.

Response of PSEB

PSEB appreciates the suggestions of the consumer and would request the Hon’ble Commission to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. However, applicability of full/unsubsidized tariff from the 16th day of default in payment of subsidy by the Govt. (as suggested by the consumer) may have practical problems in billing and adjustments/reconciliations (with consumers) thereafter on receipt of subsidy payment. Alternatively, the Government may be asked to pay the interest on non-payment of subsidy for the period of delay. However, the payment of such interest on non-payment of subsidy should not result in reduction of interest on actual working capital loans taken by the Board.

View of the Commission    

The payment of subsidy by GoP is regularly monitored by the Commission. As regards adjustment of loans against subsidy payable, refer to objection no.19 & 31, issue no.24.

 

Issue No. 2: Charging AP Consumers

The subsidized rates of electricity should be permitted only to the small land holders. There should be no cross subsidy to the AP consumers since the Government is bearing the full cost of AP consumption. In case tariff is charged, AP consumers will include the same in food grain costing.

Response of PSEB

Free supply of electricity to the consumers is made at the behest of the Government. Specifying the consumers for getting subsidy is the prerogative of the GoP. Determination of the tariff for various consumer categories including agricultural consumers is the prerogative of the Commission.

View of the Commission                 

Regarding tariff for AP consumers, refer to objection no.12, issue no.8. It is for GoP to decide the quantum of subsidy to be provided to AP consumers.

 

Issue No. 3: Cost of supply to AP consumers

The cost of supply for agriculture consumers is more and accordingly the subsidy from the Government should be reimbursed at a higher cost of supply.

Response of PSEB

The issue is a prerogative of the Hon’ble Commission. However, in this regard, PSEB has invited tenders from consultancy firms for conducting the cost of service study for various categories of consumers. The inputs of this study can be considered (as and when finalized) for progressive reduction of cross subsidies in the spirit of the National Tariff Policy.

 

View of the Commission

GoP pays subsidy as determined by the Commission. As regards tariff for agricultural power, refer to objection no.12, issue no.8.

 

Objection No.26: United Cycle & Parts Mfrs. Association

Issue No.1: Tariff

There should be no increase in tariff including the monthly minimum charges.

Response of PSEB

The Consumers have raised the issue of increase in tariff and had requested the Commission not to increase the same. The cost of operations of a utility are dependent on other external factors like increase in input costs viz. fuel cost, raw material, establishment cost, cost of wires, transformers, third party services, inflation, price escalation, etc. The same are likely to increase the cost of operations of any utility and needs to be recovered through tariffs. PSEB in its submission has substantiated the rationale for increase in expenses and understands that the Hon’ble Commission guided by the ‘Consumers interest’ will necessarily examine the prudence of the same and allow the same to recover through the increase in tariff.

View of the Commission

Refer to objection no.6, issue no.1.

 

Objection No.27: Ansal Mittal Township Pvt. Ltd.

Issue No.1: Removal of single point metering equipment

It is requested to remove single point (11KV) metering equipment of the colony to avoid unchecked theft of electricity in the township/colony.

Response of PSEB

The objection does not relate to the ARR petition, however, PSEB has released the connection as per the scheme under single point supply to which the consumer has agreed. Now that the supply equipments pertaining to 11 kV have been installed, the consumer has requested to remove the same. PSEB believes that such removal of infrastructure will lead to duplication of efforts and consumption of resources for all such other consumers, who may like to avail the same. However, the Hon’ble Commission may consider the request and allow such relief to the consumers subject to the agreement that the consumers will bear all applicable cost for such removal of current infrastructure and other relevant costs for new resources for providing such connections as applicable to installation of a new connection. Such incremental cost should be allowed under the capex plan to the PSEB by the Hon’ble Commission.

However, we understand that the Hon’ble Commission is going to notify the Conditions of Supply and the issue of the consumer can be addressed separately under the said notification.

View of the Commission

The matter does not strictly pertain to the ARR. The objector is, however, free to separately approach the Commission in this regard.

 

Objection No.28: Ganpati Townships Ltd.

Issue No.1: Tariff Rebate

The proposed NRS tariff structure for FY 2010-11 does not mention the rebate of 7.5% being allowed on electricity consumption or MMC at 11 KV supply. The supply voltage for NRS connections is 240/400 volts. Similarly, under existing DS/NRS tariff, a 5% rebate is allowed where connected load in a private building complex/multiplexes and shopping complexes is more than 50 KW which is also not mentioned. In a rejoinder it is stated that in the response of PSEB the facts have not been brought out correctly.

Response of PSEB

The said matter is a prerogative of the Hon’ble Commission and may be appropriately suggested by the Commission at the time of issuing the tariff order.

However, we understand the issue of rebate was discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission  also  observes  that  there  is  a  need  for  the  existing  consumers

 getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

 

 

View of the Commission                     

NRS consumers having load upto 100 KW are required to be catered at 400 volts but consumers getting supply at 11 KV, will be entitled to 7 ½ % rebate as per provisions of relevant Schedule of Tariff. However, high voltage rebate for NRS consumers with load exceeding 100 KW stands withdrawn w.e.f 1.4.2010 as decided in para no. 5.5 of the Tariff Order for 2009-2010. Consumers/developers obtaining one point supply in commercial buildings/ complexes will be governed as per provisions of Clause 8 of the Conditions of Supply approved by the Commission.

 

Objection No.29: PHD Chamber of Commerce and Industry

Issue No.1: Capping of expenditure

In view of the rejection of Board’s appeal before ATE who observed that the expenditure in respect of purchase of power, interest charges and employee cost denied by the Commission and resulting in Revenue gap for 2007-08 and 2008-09 maybe kept capped as per the Commission’s order till improved performance of the Board.

Response of PSEB

No response

View of the Commission

Expenditure on account of purchase of power has since been capped in the Tariff Order for 2009-10. As regards interest charges and employee cost, these are determined only in accordance with the Commission’s Regulations.

                                                        

Issue No.2: T&D losses

T&D losses as projected by PSEB do not reflect the true position. If the variation in the AP consumption of 10.2% as per the report of the independent agency appointed by the Commission is accepted, the losses would be 31.1%.

Response of PSEB

It seems apparently that working of T & D losses by the consumer is not correct. The Hon’ble Commission had reworked the T & D losses for PSEB by considering the disallowance in AP sales as part of the T & D losses. However the Commission had worked out such losses to be around 22% in comparison to the loss level of 31%.

However, with regard to the disallowance in AP sales by the Commission, PSEB has already submitted its observations on the Agency report in the petition for the kind consideration of the Hon’ble Commission. PSEB understands that while the calculation of AP sales is on a fair side, however the same may still be lower than the actual consumption considering low pump efficiencies and lowering of water table in the state (the point was also substantiated by other consumers themselves by quoting excerpts from a study conducted by NASA). In light of the same, we believe that the consumption as projected by the Board may be considered by the Commission for working out the T & D losses. Further, the roadmap of metering for such consumers has already been submitted in the petition by PSEB.

View of the Commission

Refer to paras 3.2.3, 3.3 & 4.2.

 

Issue No.3: Cross subsidy

Practice to purchase excess power at high rates to meet shortfall of supply to Agriculture sector should not be allowed at the cost of cross-subsidizing by other consumer categories. Government should pay for such additional power purchase.

Response of PSEB

The real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

It is true that the Board has to effect power purchases during periods of high demand, quite often at high cost. However, power so purchased is not exclusively utilized by AP consumers.

 

Issue No.4: Power Cuts

Industry is facing long power cuts with increased peak load hour restrictions and also 50% restriction in peak load.

Response of PSEB

No response.

View of the Commission

Refer to objection no. 8, issue no.2.

 

Issue No. 5: Employee Cost

Technical staff deployed in unproductive areas should be shifted for maintenance and other related works. Information technology should be used for automation and online information and billing through e-mail etc.

Response of PSEB

Implementation of software applications can add into the operational efficiency of the Board. In this regard, PSEB is actively pursuing several IT initiatives. The detailed IT implementation plan has already been submitted to the Hon’ble Commission in Chapter-23 (PSEB’s Response to Commission’s Directives S.No. 1 of the table). The same is reproduced below for ease of reference:

The above IT implementation is scheduled to be completed in 18 months from the date of selection of ITIA (Under process). Salient IT modules for non-APDRP area/towns are also being covered so that a unified IT plan is implemented throughout in PSEB. Accordingly the same is likely to be taken up in 2009-10 and completed by 2011-12 as per the detailed scheduled given as follows:-

 

Year

Target Mile-stone (Months)

Activity/ Deliverable

2010-11

Data Centre Set -up (Patiala)

0-3 months

High level and low level Design and approval (infrastructure & application)

3-5 months

Installation, commissioning and configuration of hardware, network & operating system

5-8 months

Installation, configuration & customization of application software.

8-12 months

User acceptance testing

 

Pilot Project (Patiala Town)

3-5 month

Infrastructure design

4-8 months

DGPS field survey including consumer indexing & asset mapping

7-10 months

Installation Commissioning and configuration of H/W, N/W, O.S.

10-12 months

Installation, configuration & customization of application software.

 

10-12 months

Integration with legacy application and data centre

10-12 months

Data migration

11-12 months

User acceptance testing.

11-12 months

User training

 

 

 

 

 

 

2011-12

Roll Out (Remaining 46 No. Towns))

 

 

 

6 months (after successful completion of pilot project)

Infrastructure Design

DGPS field survey including consumer indexing & asset mapping.

Installation, commissioning & configuration of H/W. N/W and O.S.

Installation, configuration & customization of application software.

Integration with legacy application and data centre

Data migration

User acceptance testing.

User training

Regarding status of AMR, the same has been implemented at about 500 substations and all AP feeder meter points (about 2000) have been covered under AMR system. MIS is being generated at the Energy Center; Patiala with Web enabled facility provided to the end users for monitoring purpose. Further, roll out to cover remaining (approx. 6000) feeders is in progress.”

View of the Commission

It would be beneficial for the Board to ensure that its IT initiatives are implemented on schedule. Personnel of the Board need to be utilized as per their specialization. Deployment of technical staff on other duties or similar aberrations can be comprehensively addressed only once the man power requirements of the Board have been appropriately determined and the employee strength of the Board right-sized accordingly.

 

Issue No.6: Interest & finance charges

Increase in short term borrowing is due to late payment of subsidy by the Government. As such, interest on short term loan should not be included in ARR & the same be recovered from the Government.

Response of PSEB

Suggestion of consumer is appreciated and Hon’ble Commission  is requested to exercise its power under the Electricity Act to provide appropriate directives to the concerned stakeholders. The Government may be asked to pay the interest on non-payment of subsidy for the period of delay, however, the non-payment of such interest should not result in reduction of interest on actual working capital loans taken by the Board.

 

View of the Commission

Refer to objection no. 7, issue no.4.

 

Issue No. 7: Annualisation

Tariff order should be made applicable from the date of announcement and not with retrospective effect.

Response of PSEB

The issues raised by the consumers are a prerogative of the Hon’ble Commission and may be considered appropriately. However PSEB stresses upon the grave financial health of the Board and suggests that the increase in expenses (belonging to fuel cost, power purchase, interest expenses, employee cost etc) should be dealt on an yearly basis by revision of tariff so that the carrying cost of such deferred recovery of cost does not escalate the working capital requirements and the consumers do not suffer a tariff shock on such account.

View of the Commission

Refer to objection no.11, issue no. 5.

 

Issue No. 8: Period of annual tariff order

Tariff Order procedure is a long exercise and instead of annual tariff order, prorata provision for the next two/three years may be made on HPERC pattern.

Response of PSEB

No response.

View of the Commission

The Commission is in the process of finalizing Multi-year Tariff Regulations which can thereafter be the basis of determining tariff for the entire span of the control period.

 

Issue No.9: HV Rebate

Withdrawal of HV rebate is unjustified as the cost of infrastructure for receiving supply above 11KV is very high. Instead of rebate, voltage based differential tariff should be introduced on Himachal pattern.

Response of PSEB

Provision of rebate under the tariff is the prerogative of the Hon’ble Commission. The opinion and the objection raised by the objector have already been discussed by the Commission in detail in the Tariff Order for FY 2008-09. The relevant para has been reproduced below:

“……..Commission observes that voltages at which supply is to be given to different categories of consumers have been specified in the Conditions of  Supply since last more than ten years and the Board was required to release all new connections/additional loads/demands at the voltage specified in the Conditions of Supply. Therefore there is no logic in any rebate in tariffs to a consumer who is given supply at the specified voltage for that category. The Commission also observes that there is a need for the existing consumers getting supply at a lower voltage to convert to the specified voltage for benefit of the system and to reduce T&D losses. However actual conversion of supply voltage of the existing consumers will require some time. There could also be technical constraints in conversion of supply voltage or release of a new connection and or additional load/demand at the prescribed supply voltage which merits consideration…………………”

Further, it is submitted that the supply voltage for any connection depends upon the nature, quantum and type of load. New connections at higher voltage are taken by the consumers keeping in view their own interest. Accordingly, Board requests the Hon’ble Commission that the issue of continuation of rebate to HT consumers need not be reconsidered.

However, PSEB reiterates the grave financial position of the Board and requests the Commission to consider the two aspects appropriately while deciding the tariff for the consumers

View of the Commission

Refer to objection no.1, issue no.1.

 

Issue No. 10: Tariff

Industrial tariff is one of the highest in the state. Tariff should not be increased for next 2-3 years and should gradually be reduced to support the Industry.

Response of PSEB

The Consumers have raised the issue of increase in tariff and had requested the Commission not to increase the same. While fixation of tariff for a particular class of consumer is the prerogative of the Commission, however PSEB submits that cost of operations of a utility are dependent on other external factors like increase in input costs viz. fuel cost, raw material, cost of wires, transformers, third party services, inflation, price escalation, power purchase cost etc. The same are likely to increase the cost of operations of any utility and needs to be recovered through tariffs. PSEB in its submission has substantiated the rationale for increase in expenses and understands that the Hon’ble Commission guided by the ‘Consumers interest’ will necessarily examine the prudence of the same and will allow the same to be recovered through increase in tariffs.

View of the Commission

Refer to objection no.6, issue no.1.

 

Objection No.30: Consumer Protection and Awareness Council (Regd.)

Issue No. 1: T&D losses

There has been no reduction in T & D losses in the past. This is burdening the consumer as 1% reduction in losses would save crores of Rupees. Staff should be incentivize for reduction in losses.

Response of PSEB

PSEB has achieved a loss reduction of around 2.61% in 2008-09 from the loss level in 2007-08. Going forward, PSEB has set a target of 18% by 2010-11.

View of the Commission

Refer to objection no.6, issue no.2.

 

Issue No. 2: Theft

PSEB should increase enforcement activities.

Response of PSEB

No response.

View of the Commission

Refer to objection no.3, issue no.11.

 

Issue No.3&4: Overstaffing & accountability of staff

PSEB officials should be made more accountable. The ratio of employees of PSEB vis.a.vis consumer is very high. The man power must be brought down in this era of information Technology.

Response of PSEB

PSEB is actively pursuing the same. PSEB has awarded a consultancy services to M/s PwC to study the organization structure of the Board and come out with the recommendations on the employee strength required for various functions of the Board. The Board is currently finalizing the report of consultants and plans to implement organizational reforms depending upon the final recommendations.

View of the Commission

Refer to objection no.3, issue no.4.

 

Issue No. 5: Subsidy

Free supply being very limited is of little help to the farmers, rather this causes huge loss to PSEB. Subsidy amount be utilized for installing new plants.

Response of PSEB

The Government is paying subsidy for the entire AP consumption approved by the Commission.

View of the Commission

Providing subsidy to any category of consumers is the prerogative of GoP.

 

Issue No. 6: Commission paid to Banks

Services of experienced and talented staff of PSEB should be utilized instead of paying commission to Banks while taking the loans, thus saving money. 

Response of PSEB

Regarding the commission paid to the merchant bankers, it is submitted that raising of term loan through merchant bankers is normal market practice and a number of Public Sector Undertakings (both Central & State) are availing the services of merchant bankers for raising term loans.

The merchant bankers are registered with Security Exchange Board of India (SEBI) and are authorized to syndicate term loan to borrowers.

The services of merchant bankers (who are experts in syndicating the term loan for PSUs) were availed by the Board to raise term loan at the most competitive rates which resulted in saving of interest cost even after paying the commission to the merchant bankers.

View of the Commission

It may be necessary to obtain specialized services of merchant bankers. However, the Commission trusts that their remuneration is determined on a competitive basis.

 

Issue No. 7: Debt trap

Raising loans to repay the old loans is poor fiscal management resulting in additional liability of Rs.596 crore.

 

 

Response of PSEB

PSEB believes that the increase in Working Capital requirements is primarily on account of disallowances in the expenses apart from the non-payment of timely subsidy by the Govt. and adjustment of Govt. loans against subsidy, forcing the PSEB to take short term loans to manage its day to day operations.

View of the Commission

Only unjustified expenses of the Board are disallowed by the Commission. It is true that such disallowances add to the increasing overall debt burden of the Board. It is for the Board to take urgent steps to improve its functioning so that disallowances are minimized. GoP also needs to urgently consider financial restructuring plan of the Board so as to improve the overall financial health of the Board.

Also refer to paras 2.14, 2.16, 3.14, 3.15 & 4.13.

 

Issue No. 8: Energy accounting

The energy purchase and supplied should be audited to check theft and losses. Efforts should be made to improve the power factor of the system.

Response of PSEB

PSEB appreciates the concern raised by the objector and will consider the same at appropriate time.

View of the Commission                                 

The Commission has laid down a detailed policy to be followed by the Board in respect of different categories of consumers wherein they are incentivized or penalized depending on their ability/inability in achieving the prescribed power factor. Small power consumers who do not wish to be covered by the power factor regime prescribed would need to install capacitors and their failure to do so or maintain the same would make them liable to payment of capacitor surcharge. Board has also indicated that it intends to install  2100 MVAR to the existing capacity of 5600 MVAR (approximately) with a view to further improve the system power factor. The Commission has also been emphasizing for long the need for the Board to adopt systematic energy audit at distribution level with a view to containing its T&D losses.  Also refer to para 4.2.

 

Issue No.9: In-house management

In-house management of PSEB is required to reduce losses, extra expenditure and burden on consumers.

Response of PSEB

No response.

View of the Commission

The Commission, by and large, allows costs on a normative basis. The Board would always require reducing expenditure with a view to avoiding disallowances and possibly gain where its performance is better than the norms permitted.

 

Issue No. 10&11: Capacity addition

Capacity generation should be preferred over payment of subsidy. To avoid costly power purchase, the State must install additional generating plants.

Response of PSEB

No response

View of the Commission

This a matter on which GoP needs to take a view.

 

Issue No. 12: Energy conservation

Arrangements should be made by the Board to provide CFL’s at cheaper rates to the consumers to save electricity and obtain the benefit of carbon credits.

Response of PSEB

While PSEB is pursuing the aspects suggested by the Commission, however PSEB appreciate the concern of the council and surely consider the same.

View of the Commission

The Board has already been directed to draw up a Demand Side Management Plan which shall comprehensively address all energy conservation issues.

 

Issue No.13: Maintenance of HT lines  

a)Efforts should be made to replace the out dated system and upgrade the same.   b)There should be an incentive scheme for the staff for reduction of T&D losses.

Response of PSEB

PSEB appreciates the concern raised by the objector and will consider the same at appropriate time. Regarding incentive, the suggestion may be considered by the Commission.

 

 

 

View of the Commission

Effective improvements in the transmission and distribution system of the Board is an on-going process which is necessary to keep T&D losses in control. The Commission would be happy to consider any scheme framed by the Board with the objective of reducing T&D losses including an incentive scheme for the staff.

 

Issue No.14: Accelerated Power Development and Reforms Programme

PSEB must make full use of the incentives provided under APDRP Scheme to save on expenditure and earned extra revenue. 

Response of PSEB

PSEB appreciate the concern raised by the objector and will consider the same at appropriate time.

View of the Commission

The Commission expects the Board to ensure optimum utilization of available funds under the APDRP Schemes. 

 

Issue No.15: Bio-gas plants

There is an urgent need to establish environmental friendly Bio-gas plants which will provide additional employment and electricity at comparatively less price.

Response of PSEB

While PSEB is pursuing the aspects suggested by the Commission, however PSEB appreciate the concern of the council and surely consider the same.

View of the Commission

Incentivizing the installation of bio-gas plants concerns GoP. The NRSE policy stipulates the incentives currently available for such projects.

 

Objection No.32: Er. S.K.Seth

Issue No. 1: Subsidy

Mounting loans & servicing thereof and delayed payment of subsidy amount by the Govt. is affecting the financial health of the Board, resulting in higher tariff every year.

Response of PSEB

PSEB appreciates the concerns of the consumer. However, we believe that the issue needs to be addressed by taking all relevant stakeholders into the purview and sensitizing them towards the financial health of the Board together with the concerns of the consumers towards any increase in tariff. PSEB requests the Hon’ble Commission to take cognizance of the prevailing circumstances and issue appropriate directives to all stakeholders. 

View of the Commission

The Commission allows all costs on normative basis and interest on delayed payment of subsidy is also allowed so as not to burden the consumers on this account. Also refer to paras 2.14, 2.16, 3.14, 3.15 & 4.13.

 

Issue No. 2: Cost of supply and Cross subsidy

Under the Act, the Commission should safeguard the consumer interest by reducing the cross subsidies and prescribing that consumers pay the average cost of supply. In terms of lower MSP for agriculture produce all stake holders are losing and State is subsidizing the other States.

Response of PSEB

The Commission may consider the suggestions of the consumer.

View of the Commission

Cross subsidy is being gradually reduced. The Commission’s Regulations provide for phased reduction in cross subsidy by the year 2015.

 

Issue No. 3: Other sources of revenue

Board should avail benefit of sale of CERs from increasing the boiler efficiency, higher efficiency of hydro plants, cost reduction in purchase of DTs by improving the in-house workshops of PSEB and utilizing existing material for improving the system.

Response of PSEB

PSEB will consider the suggestions of the consumer.

View of the Commission

The Board must strive to increase efficiency and reduce costs wherever possible.

 

Issue No. 4: Impact of Electricity Duty

The existing electricity due of 10% is additional to the tariffs paid by the consumer which should also be kept in view while determining the new tariff.

Response of PSEB

The Commission may consider the suggestions of the Consumer.

View of the Commission

The total impact of bills payable by consumers is kept in mind by the Commission while determining tariff.

 

Objection No.33: Technocrats Forum

Issue No. 1: Revenue gap

The Board has not suggested any measure to bridge the reported cumulative deficit for three years of Rs. 6575 crore. Measures intended to be adopted to deal with the gap should be made known to the Consumers.

Response of PSEB

The suggestions may be considered by the Commission. However, PSEB feels that the entire claim of ARR needs to be prudently observed by the Commission before deciding the tariff hike.

View of the Commission

 It is desirable that the details furnished in the ARR by the Board should indicate not only the revenue requirement but also its proposals to meet the gap.

 

Issue No. 2: Tariff hike

In order to cover the entire deficit, a tariff hike of about 50% would be required. Tariff increase, if inevitable, for FY 2010-11 should be restricted to 5% and the balance be recovered from the Govt. as it did not allow the Board to function as a commercial organization. Increase in tariff should be linked with expected increase in WPI. It is the responsibility of the Government to undertake financial restructuring of the Board to retrieve it from the financial crisis and the Commission may advise the Govt. on this account.

Response of PSEB

The suggestions may be considered by the Commission. However, PSEB feels that the entire claim of ARR needs to be prudently observed by the Commission before deciding the tariff hike.

View of the Commission

The Commission takes note of the suggestion regarding the extent of tariff hike.

 

Issue No. 3: Additional subsidy

AP consumers were supplied power by arranging extra power at high cost because of scanty rainfall in FY 2009-10. Moreover, the Board has also lost revenue due to extra power cuts imposed on industrial consumers. Accordingly, additional subsidy from the Government should be claimed.

Response of PSEB

The Government is paying subsidy for the entire AP consumption as approved by the Commission. Further, PSEB understands that the real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

It is true that the Board has usually to effect costly purchases to meet high demand during the paddy season but not all power that is obtained in this manner is consumed exclusively by AP consumers.

 

Issue No. 4: Income from open access charges

Board has not shown any income received for allowing open access during FY 2009-10 which should be factored to reduce deficit.

Response of PSEB

The entire revenue generated from the operations of the Board are booked under revenue from sale of power and other income (with subheads) as per the books of accounts. The Board has not concealed any information from the Commission in this regard. A copy of the final accounts has already been served to all stakeholders.

View of the Commission

The Board accounts for income from open access charges under revenue from sale of power.

 

Issue No.5: Cross subsidy

As per Section 61 (g) of the Indian Electricity Act, 2003 the tariff should progressively reflect the cost of supply of electricity and further, as per tariff policy, the tariff should be within +20% of the average cost of supply by 2010-11.

Response of PSEB

The issue may be considered by the Hon’ble Commission. However, in this regard, PSEB has invited tenders from consultancy firms for conducting the cost of service study for various categories of consumers. The inputs of this study can be considered (as and when finalized) for progressive reduction of cross subsidies in the spirit of the National Tariff Policy.

View of the Commission

Refer to objection no.7, issue no.7.

                                                             

Issue No. 6: Employee cost

The share of employee cost in the overall unit cost of power is much higher as compared to some other progressive SEBs. Board should improve its efficiency in operations and improve revenue receipt per unit sold.  Board may present a comparative study of per unit employee cost with other SEBs. Board should also apprise the Commission and the consumers about the action taken to change its work culture. 

Response of PSEB

Regarding the paucity of adequate manpower, PSEB submits that it is currently considering the report of M/s PWC and based on the final report, the Board will undertake adequate steps to rationalize the manpower deployment in various departments of the Board.

View of the Commission

Refer to para 4.9.

 

Objection No.34: Sahveda (The Association for Entrepreneurs)

Issue No. 1: Peak Load Exemption Charges and penalties

As directed by the Commission, the Board has not submitted proposal to review the peak load exemption charges. These charges are not aligned with section 62 of the Electricity Act, 2003 and penalties being collected are not in line with section 126 of the Act. Also circulars annexed with ARR relate to Sales Regulations made under the Electricity Supply Act, 1948 which no more exists.

Response of PSEB

Regarding the levy of PLEC, the Board submits that:

·          Removing the PLEC may provide a larger room for variation between demand and supply. The same may result in situations wherein PSEB has arranged for lower supply in comparison to the demand and vice versa. Severe mismatches between actual demand and supply of power may endanger the security and safety of the grid

·          During the peak load period, Board procures power from the short term sources to meet such extra demand, which often comes at large premiums. 

·          At the time of peak, the frequency of the system generally falls and power drawl under such conditions have a correspondingly higher UI charges. Procurement of power at lower frequencies may put extra financial burden on the board.

Considering the above, the PLEC charges need not be removed. Rather, the Hon’ble Commission may consider the submissions made by PSEB in the previous ARR regarding revision in the PLEC rates. PSEB believes that the PLEC rate needs to be aligned with the current short term power purchase cost which is around Rs. 7 per unit. Moreover, UI rates have also been increase. In the last submission PLEC may be levied at Rs. 5 per unit over and above normal tariff rate. It will necessarily be a correct signal towards the fact that actual cost of such power be charged through tariff which prompts the consumers to make judicious use of the scarce resources. The Commission is requested to consider these aspects and revise the PLEC charges as deemed appropriate. Further PLEC is being charged as per Tariff Schedule.

View of the Commission                                                 

The Commission had in para 5.7 of the Tariff Order 2009-10 decided to continue the existing rates for levy of PLEC on commitment basis and the Commission continues to hold the same view. The issue has been dealt in detail in the Conditions of Supply approved by the Commission.

 

Objection No.37: Lovely International Trust

Issue No. 1: Revenue gap

Effect of projected revenue gap of Rs.6575 crore should not be passed on to the consumers as the same will upset the budget of private education institutes and universities. Board should reduce the gap by reviewing its own expenses under various heads.

Response of PSEB

The issue is a prerogative of the Hon’ble Commission. However, PSEB submits that the entire claim of ARR needs to be prudently observed by the Commission keeping in view of the deteriorated financial health of the Board for deciding the tariff hike.

View of the Commission

Refer to objection no.6, issue no.1.

 

Issue No.2: Cross subsidy

Subsidies given to various consumer categories should be withdrawn to avoid cross subsidization.

 

Response of PSEB

The issue is to be considered by the Commission. However, in this regard, PSEB has invited tenders from consultancy firms for conducting the cost of service study for various categories of consumers. The inputs of this study can be considered (as and when finalized) for progressive reduction of cross subsidies in the spirit of the National Tariff Policy.

View of the Commission

The law does not envisage total elimination of cross subsidy but only requires their reduction in a phased manner. The Commission already has a road map therefor which is brought out in its Regulations.

 

Objection No.38: Federation of Jalandhar Engineering Associations

Issue No. 1: Lower tariff and Incentives in Himachal Pradesh

Government of Himachal Pradesh provides incentive to industries and in addition lower rate of power and 100% assured supply has led companies setting industrial units in Himachal Pradesh. Thus it is important that while fixing tariff it is important to consider power tariff in Himachal Pradesh.

Response of PSEB

The issue is a prerogative of the Hon’ble Commission. However, PSEB submits that the entire claim of ARR needs to be prudently observed by the Commission, keeping in view the deteriorated financial health of PSEB, for deciding the tariff hike.

Further, PSEB understands that the real issue is the availability of cheaper power on long term basis. In order to arrange for the same, PSEB has been making efforts to increase its share of in-house generation and has also been tapping the other Central generating stations for providing power on long term basis. PSEB has enumerated a list of all such plants from where the power is envisaged to be sourced in the ensuing years in the ARR petition. PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers in its license area and believes that once the power supply from the aforementioned long term sources gets materialized, the suggested concerns of the consumers will get addressed automatically.

View of the Commission

The Commission takes note of the prevailing tariff in other states and specially the neighbouring states. However, with varying local conditions, it is not possible to bring about uniformity in tariff.

 

Issue No. 2: Efficiency improvements and reduction in cost

The Board should use information technology and ERP to increase efficiency and save costs. The inefficiencies of the Board should not be passed on to the consumers.

Response of PSEB

PSEB has noted the suggestion given by the consumer and will act on the same if found suitable and financially viable.

View of the Commission

Refer to objection no.29, issue no.5.

 

 Issue No. 3: Night tariff

The rates for utilization of power from 10 p.m to 8 a.m are lower in many states. The night tariff needs to be fixed in line with other states.

Response of PSEB

PSEB is currently analyzing the feasibility and repercussion of implementation of Time of day tariff on the consumers.

View of the Commission                                                 

Refer to objection no.13, issue no.10.

 

Issue No. 4: Load checking for MS consumers

Since MS units have electronic meters installed now, the benefits as applicable to LS consumers (liberty to install additional load so long as it remains within sanctioned demand) should also be extended to MS units.

Response of PSEB

The board has noted the concern of the consumer and will consider the same.

View of the Commission

Refer to objection no.9, issue no.3.

 

Issue No. 5: Subsidy to AP consumers

Government gives subsidy to PSEB on AP sales @ Rs.2.40 per unit against the cost of Rs.4-5 per unit.  Why should Govt. compensate only half the cost.

 

 

 

Response of PSEB

Free supply of electricity to the consumers is made at the behest of the GoP. The current tariff rate for AP consumers is Rs. 2.85/ unit. Further, the process of determination of tariff for various consumer categories including agricultural consumers is the prerogative of the Commission.

View of the Commission

The Commission determines the tariff payable for AP supply and subsidy is payable by GoP on that basis.

 

Issue No. 6: Open access for power intensive units

Power purchase forms a major part of PSEB expenses. By allowing a liberal open access policy to all power intensive units, the Board can reduce its losses on power purchase significantly.

Response of PSEB

As per the Open Access Regulations notified by the Commission, the Commission has determined the Open Access charges for the year 2009-10 in the Tariff Order for FY 2009-10 which the Board has already implemented. Further, PSEB understands that the issue of liberal ‘open access’ is a prerogative of the Hon’ble Commission.

The entire revenue generated from the operations of the Board is booked under revenue from Sale of power and other income as per the books of accounts.

View of the Commission

The Commission’s Open Access Regulations are in place. It is also encouraging that an increasing number of consumers are availing open access under these Regulations.

 

Issue No. 7: Power from UMPPs

Board should aggressively book power from UMPPs which are under commissioning/ bidding.

Response of PSEB

PSEB is concerned about its responsibility of ensuring adequate power supply for the consumers from the UMPPs and accordingly pursuing the same to get allocation from the UMPPs.

View of the Commission

The Commission trusts that the Board’s efforts will bear fruit.

 

39. Government of Punjab

Department of Power, GoP in its letter dated 15.2.2010 has briefly brought out certain issues, raised by various consumers during public hearings for the ARR and concerning tariff setting by the Commission. These issues relate to HV surcharge, power factor incentive/rebate, IST and RTC of meters, transformer capacity restrictions, MMC, cost of supply, metering of AP consumers, disparity in tariff between Govt. and private Institutions within the same category, subsidy to DS consumers above 100 units and hike in tariff. View of the Commission in respect of these issues has been adequately expressed while dealing individual issues for the respective objectors. However, the observations of GoP on the ARR conveyed in its letter dated 10.3.2010 are summarized hereunder, alongwith the view of the Commission:

 

1: Financial health of PSEB

Continued disallowance by the Commission on Employee Cost, Interest & Financing charges, fuel cost and Power purchase cost (due to under-achievement in T&D losses) has led to decline in financial health of the Board. Disallowance of about Rs. 4600 crore by the Commission upto 2007-08 has led to accumulated commercial losses and short-term loans of the Board.

The Board has consistently not been able to achieve norms, performance parameters and targets set by the Commission, which has led to disallowances and subsequently erosion in Board’s capacity to purchase power. This has resulted in long duration of power cuts. Thus though the tariff rates have been contained the availability of power to the consumers has been constrained.

Till now the Commission has adopted the strategy of penalizing the Board for non-achievement of norms and targets set by it, but instead of achievement of targets, the financial condition of the Board has deteriorated. Thus, the Government has requested the Commission to alter its strategy of bringing about improvement in functioning of the Board without adversely hitting the financial health of the Board.

View of the Commission

Interests of consumers have also to be kept in mind by the Commission and for that reason, disallowances have to be effected when the Board’s performance is sub-optimal. The Commission aims to set reasonable performance targets for the Board and monitoring of its functioning would reveal the correctives that need to be applied to ensure that these are achieved.

 

2: AP consumption

The Board has the tendency of projecting AP consumption on the higher side to keep T&D losses low. The report given by M/s ABPS have shown several discrepancies/inconsistencies in the estimation of AP consumption by the Board. The correction in AP consumption (8902 MU) made by the Commission for 2007-08 may still be on higher side if suitable correction in AP consumption for 2006-07 is considered.

With no increase in area of cultivation, declaration of additional load in VDS and more than one tube well in the same land holding, the AP factor i.e consumption per KW of connected load should be less. Thus AP consumption for 2006-07 and 2007-08 approved by the Commission is on the higher side. Further, AP consumption of 8374 MU approved by the Commission 2008-09 in T.O 2009-10 needs to be retained and also corrected for 2009-10. Similarly, AP consumption for 2010-11 be allowed with a normative 5% increase over approved AP consumption for 2009-10.

Estimation of correct AP consumption is a serious concern for the State Government as it is paying subsidy for the free supply. The directives given by the Commission based on the findings of M/S ABPS should be strictly implemented.

View of the Commission

AP consumption is primarily to be estimated on sample meter readings and AP factor worked out on the basis of connected load. To the extent that there are aberrations in the reporting of data by the Board, consumption has to be suitably curtailed as was done in the years 2007-08 and 2008-09 in accordance with findings of an independent study which was undertaken at the behest of the Commission. It would be difficult to retain AP consumption in 2009-10 at the same level as 2008-09 specially when it is otherwise contended that failure of monsoon in 2009-10 led to higher consumption and higher quantum of power purchased by the Board. Refer also to paras 3.2.3 and 4.1.3.

 

3: T&D losses

The Commission has in its tariff order of 2004-05 set T&D loss reduction trajectory, which the Board has not been able to achieve. The Commission has been disallowing the power purchase cost which stood at Rs. 2050 crore by the end of 2007-08. The measure adopted by the Commission has not yielded any results in the past. Thus the Commission should reset the T&D loss reduction target based on the actual T&D losses of 2007-08 worked out with approved AP consumption and to achieve ultimate target of 15% by 2012.

Moreover the Commission in 2009-10 had set T&D loss target considering the losses in 2008-09 of 24.07% but since the actual T&D losses for 2008-09 have worked out to 22.54%, the Commission should now suitably revise the prescribed T&D loss target for 2009-10. The Commission may consider prescribing the T&D loss reduction trajectory as 20.50% (2009-10), 19% (2010-11) and 17.5% (2011-12). Also, while approving revised estimates of energy requirement/ power purchase for 2008-09 the Commission should take T&D loss target for 2008-09 at least 20.5%.

View of the Commission

The Commission has now reset the loss reduction trajectory for the years 2010-11, 2011-12 and 2012-13. It would be unfair to the consumers to allow higher level of power purchases at high cost on account of the Board’s inability to achieve targeted levels of loss reduction. Refer also to para 4.2.

 

4: Disallowance of fuel cost

The Disallowance of fuel cost by the Commission in the ARR for 2009-10 is not justified, keeping in view the fact that the performance of thermal plants owned by the Board is comparable with the best in the country. The Commission should appoint expert group to carry out a study and recommend performance norms/parameters for the thermal stations.  The disallowance is unjustified in the view of the fact that per unit cost of generation from GGSSTP and GNDTP where station heat rate is higher than norms is much less than average cost per unit of power purchased.

View of the Commission

Fuel cost is being allowed largely as per CERC norms which in turn have been determined on the basis of CEA’s recommendations made after extensive studies of a large number of thermal stations. Refer also to paras 3.8 & 4.7.

 

5: Power purchase cost

The monsoon failed in most of the parts of the state in 2009-10 and hence the Hydel generation from Board’s own plants as well as BBMB had gone down. In order to provide power to all categories including AP consumers with reasonable power cuts and to save the paddy crops, the Board had no option but to increase power purchase. Thus the State   Government feels that the Commission should not make any cuts on the cost of traded power procured by the Board in 2009.

Moreover as power purchase cost is one of the major components of the ARR, there is a need to develop a mechanism to regulate power purchase and bring transparency in high cost short term power purchase. Accordingly, the Commission may issue appropriate guidelines/procedure in this regard.

View of the Commission

The Commission has in the past allowed the entire power purchase cost upto 2008-09. However, taking into account the injudicious purchase of power by the Board in the past, the Commission has now allowed purchase upto the extent required as per projections of the Board but the cost of purchases beyond that level have been capped to the average cost of supply from 2009-10 onwards. Refer also to paras 3.9 & 4.8.

 

6: Employee cost

The Commission should allow full employee cost to the Board as it is legitimate historical component of the cost of supply. The Commission had allowed full employee cost in for the year 2002-03, since then the number of employees in the board have reduced from 91624 to 64309 ending 3/09, thus the total employee cost including the terminal benefits should be approved instead of notional employee cost. 

The impact of revised pay scale including the arrears should be allowed in full to the Board even if the employee cost is approved on notional basis.

View of the Commission

Refer to para 4.9.

 

7: Adjustment of excess subsidy against interest on diverted funds

As the matter pertaining to the disallowance of interest on GoP loans due to diversion of capital funds is under adjudication by the Appellate Tribunal, it is reiterated that the Commission should allow payment of interest on GoP loans as was done prior to 2007-08.

Further, the following points are also brought out:

·          The Government cannot be held responsible for any diversion of funds during the regulatory regime as it has been paying subsidy as determined by the Commission.

·          Even when it is difficult to pin point particular loans or capital borrowing diverted by the Board as held by the Commission in its order dated 13.09.2007, the Commission has worked out interest liability at the average rate of interest of 12.22% on the GoP loans, instead of taking average rate of interest of total outstanding capital loans(inclusive of GoP loans).

Furthermore, the Commission cannot adjust subsidy against interest in diverted funds as the payment of subsidy is a statutory payment under section 65 of the Electricity act and the Commission is not empowered to direct the Government to make any other payment, especially since the matter is under the adjudication of the Appellate Tribunal, instead the excess subsidy paid during 2008-09 should be adjusted against the subsidy payable in 2010-11.

View of the Commission

Disallowance of interest owing to diversion of capital funds is being effected in compliance of the Orders of the Appellate Tribunal. As the Commission’s decision regarding disallowance of interest has been challenged, there is little option but to await a verdict before any changes are effected in the present dispensation. The Commission does not propose to adjust subsidy against interest on diverted funds.

 

8. Tariff hike in AP category

The Commission should not increase AP tariff any further and in case hike is unavoidable it should not be more than the average hike, considering the importance of agriculture production for the country as a whole and state of Punjab.

View of the Commission

In line with the recommendations in the Tariff Policy, the tariff hike approved by the Commission in the past has been with the view to reduce cross-subsidy and to bring the tariffs of various categories including AP closer to the average cost of supply.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ANNEXURE-III

 

Minutes of the Meeting of State Advisory Committee of the Punjab State Electricity Regulatory Commission held on February 10, 2010.

 

            The meeting of the State Advisory Committee was held in the office of the Commission at Chandigarh on February 10, 2010. The following were present:

1.                  Sh. Jai Singh Gill,                                                                   Ex-officio Chairperson

Chairman, PSERC,

Chandigarh

 

2.         Sh. Satpal Singh Pall,                                                             Ex-officio Member

Member, PSERC,

Chandigarh

3.         Sh. Virinder Singh,                                                                  Ex-officio Member

Member, PSERC,

Chandigarh

 

4.                  Shri Prithi Chand,                                                                    Member

Addl.Secretary/Power,Govt. of Punjab                                  

     (on behalf of Secy/Power,Punjab),

5.         Shri Jacob Pratap,                                                                  Member

Asst.Labour Commissioner, Punjab,                                                

     (on behalf of Labour Commissioner, Pb),

6.         Sri Amarjit Goyal                                                                     Member

 on behalf of Chairman, PHDCCI,                                                                 

            Punjab Committee, Chandigarh,

7.         Shri B.P.Verma,                                                                      Member

Chief  Elec. Distribution Engineer,                                         

            Northern Railway, New Delhi, 

 

8.         Shri K.D.Chaudhary,                                                               Member

Member/Distribution,                                                              

            PSEB,Patiala

9.         Sh.Y.P.Mehra,                                                                         Member

            Ex-Tech. Member, PSEB,

            # 12 Ram Bagh Colony, Patiala

 

10.       Prof. R. S. Ghuman,                                                               Member

Deptt. of Economics,Punjabi University, Patiala

 

11.       Shri J.S. Mann,Dy.Manager, NTPC                                        Member

            (on behalf of  Executive Director, NCR-HQ, NTPC),

            R&D Building, Sector-24, Noida.       

 

 

12.       Sh. Bhagwan Bansal,                                                             Member

            Punjab Cotton Factory, Ginners Association (Regd.),

            Shop No. 109, New Grain Market, Muuktsar

 

13.       Sh.Sarbagh Singh,                                                                  Member

            Passi Nagar, Pakhowal Road,

            Ludhiana

 

14.       Sh. Jagtar Singh,                                                                    Member

            Director,Social Work &Rural Development Centre

            Vill Nurpur Bedi, Distt. Ropar

 

15.       Shri Gurmit Singh Palahi,                                                       Member

            Secretary, National Rural Development Society,

V & P.O Palahi, Teh. Phagwara (Kapurthala)

 16.      Smt. Namita Sekhon, IAAS,                                                    Secretary

            Secretary, PSERC

       

1.   The Chairman welcomed the Members of the State Advisory Committee and thanked everyone present for having spared time to attend the meeting. The Chairman thereafter requested the Members for their valuable suggestions.

2.   Shri Amarjit Goyal appreciated the efforts of the Commission in bringing transparency into the working of the Board which was lacking before the constitution of the Commission. Shri Goyal offered the following suggestions/views:

  • Board should be advised not to include cost of those items in their ARR which have earlier been disallowed for true up and review by the Commission.
  • Board’s present debt needs to be replaced with loans carrying lower interest rates so as to reduce the interest expenses.
  • Theft of electricity in the Board is high and is invariably being resorted to in connivance with the employees of the Board. This needs to be checked.
  • The total energy sold to all categories/consumers in the State should be metered as per provisions of the Electricity Act, 2003 so that T&D losses are accurately measured and theft is reduced.
  • There should not be any increase in tariff for industrial consumers, as any such increase would force the industry to shift to other States.
  • Staff of the Board needs to be screened and reduced to control the salary bill.
  • The burden of excess power purchase at higher cost being effected for AP consumers should not be passed on to industrial consumers. Presently, the industrial consumers are not only subjected to huge power cuts but also charged additional expenses on account of additional power purchase cost. The extra expenditure on this account should be borne either by the State Govt. or the Central Govt or the AP consumers.
  • The AP consumption is increasing every year. Tariff should be determined at 80% of average cost of supply as per Tariff Policy and the higher subsidy charged to GoP.
  • Road map for reduction of cross subsidy should be indicated in the Tariff Order.
  • Release of AP connections under OYT should be limited. Govt. may be advised in this regard.
  • The proposed abolition of high voltage rebate of 3% / 5% with effect from April 1, 2010 is unfair to the Industry and needs reconsideration by the Commission.
  • Discrimination in power factor rebate between the PIUs and General Industry needs to be done away with.
  • Due to shortage of power in the State, Open Access should be made more liberal and on perpetual basis.
  • The time block for scheduling under Open Access Regulations should be of 1 hour rather than 15 minutes.
  • ToD tariffs should be introduced in the State.
  • Due to provision of peak load charges, night tariff should be on the lower side.
  • Open Access charges should be on the actual quantum and duration cleared and not on the basis of application for NOC/concurrence etc.

3.   Shri Gurmit Singh Palahi pointed out that:

·         Many applicants under general category have been awaiting release of connections since 1990 but cannot opt for OYT/discretionary quota schemes which are being launched by the Board from time to time. Board should, therefore, consider releasing large number of AP connections under the General Category.

·         The officers of concerned area should be held accountable/responsible for power theft.

·         Supply of electricity to all consumers should be metered so that T&D losses are properly quantified.

·         Introduction of various schemes such as VDS for various categories do not reach grass root level. A foolproof method for building awareness in this regard needs to be devised.

·         Punjabi should be introduced in the functioning of the Board.

·         Bills should be allowed to be paid through Co-operative Societies.

4.   Shri Jagtar Singh suggested that land holding limit of say 5 acres may be fixed for supply of power at Rs. 50 per BHP per month whereas for consumers with more land holdings, the AP tariff should be higher. He suggested that the AP connections of small farmers should be released on priority.

5.   Shri Bhagwan Dass Bansal drew attention of the SAC to the fact that:

·         Industry is shifting out of state due to shortage of power. Power shortage in the State has resulted in delay in paddy milling.

·         The focus of the Govt. is agriculture rather than industry.

·         Seasonal industry needs an assured supply of 18 hours per day during working season for its survival and financial viability.

·         Electricity complaints in newly set up residential colonies are not being promptly attended. Complaint staff of the Board needs to be properly equipped to handle complaints.

Shri Bansal suggested that:

·         Payment of Electricity bills should be made online to avoid long queues.

·         Open Access for purchase of power from outside the State should be made simpler.

·         Commission should direct the Board to introduce one time settlement scheme for the large number of defaulting consumers in the State.

6.   Shri Sarbagh Singh was of the view that

·         Transit loss of coal should be reduced to 1%

·         The Board should add to its generation capacity rather than purchasing power at high cost.

·         The employee cost should be reduced.

·         Free supply of power to PSEB employees should be stopped.

·         Maintenance of the transmission/distribution system should be improved.

·         There is large scale power theft in connivance with the Board employees. Action against erring employees should be taken and any political interference to save such employees should be resisted.

·         Interest cost is very high and needs to be reduced.

·         Board should carry out energy audit and also reduce T&D losses.

·         There is no mention of defaulting bill amounts in the ARR. This should be rectified.

7.   Sh. B.P.Verma, Chief Elect. Distribution Engineer, Northern Railway expressed his views:

  • Railways are being penalized on account of increased Tariff even though payments are made well in time.
  • Railway Traction getting supply at 132/220 KV should be allowed rebate as admissible to industrial/other categories.
  • Tariff hike should be avoided by reducing T&D losses, employee cost and increase in efficiency in operations of the Board.
  • Metering should be at the premises of RT Substation and not at the grid Substation of PSEB.
  • Failure of supply by Board at a supply point results in excess drawal of power from neighbouring supply point. Hence, CD should be sanctioned for RT cumulatively for one section.
  • RT should be allowed power factor incentive above 0.90 as being allowed to other industries.
  • Cross subsidy in case of RT should be reduced.
  • The RT tariff should not be more than industrial Tariff.
  • Extension of railway electrification should be encouraged by offering concessional Tariff as in States like Tamil Nadu.

8. Shri Y.P. Mehra, Ex.Tech Member,PSEB offered the following suggestions/views:

  • The orders of the Commission are not being implemented. This needs to be reviewed by the Commission.
  • The power purchase cost is increasing every year. For this the Board should be directed to add its own generation.
  • There should be proper mix of generation through power plants both in public sector and private sector.
  • Board should not finance the Capital Cost for release of tubewell connections. Rather this amount should be used for creating additional capacity in the State.
  • The Commission may advise the Govt. to undertake financial restructuring of Board which is long overdue.
  • Commission should ensure that Depreciation Reserve Fund is not utilized for Working Capital.
  • All the orders of APTEL need to be implemented.
  • Govt. should be advised to pay subsidy in time and Govt. loan/debt should not be allowed to be adjusted against subsidy.
  • Voltage wise cost of supply needs to be accounted.
  • Pilot Project study for improving the efficiency of AP pump sets needs to be expedited.
  • The PF surcharge and rebate discrimination should be removed.
  • The proposed withdrawal of high voltage rebate would result in higher tariff for HT industries. This needs to be reconsidered.
  • Regularization of temporary tubewells should not be allowed due to shortage of power and also due to a long queue of pending connections.
  • Carbon Credit study should be carried out as Carbon Credit would be a source of added revenue for the Board.
  • Open Access should be encouraged by the Commission by amending OA Regulations and simplifying procedures.
  • Introduction of KVAH Tariff would result in reduced losses and increased stability of the system.
  • AP Tariff should be at least 80% of the average cost of supply.

9.   Prof. R.S. Ghuman, Pbi. University raised the following issues:

  • The methodology of projections using CAGR needs to be reviewed and made more in line with ground realities.
  • The AP consumption should be metered to give real estimation of AP consumption as well as T&D losses.
  • Govt. should subsidize AP consumption fully and not in part.
  • Open Access should be encouraged to increase production and employment.
  • Generation Projects should be taken up in the Public Sector also rather than depending entirely on the private sector. With the present approach there would be monopoly of the private sector.
  • Subsidy should be given only to the deserving consumers, not to everybody. AP consumers with land holding upto 7.5 acres (max 10 acres) only should be eligible for free/subsidized supply.
  • The huge revenue gap is a matter of concern and needs to be considered by the Commission.
  • Members should be impressed upon to attend the SAC meetings.
  • Board should not limit the comparative study of T&D losses to only 3-4 states.

10. Sh. Jacob Pratap, Asstt. Labour Commissioner pointed out that cess on building and other construction works is required to be recovered by the Board from contractors. Such payments can be affected by recovery from the bills of the contractor. He was of the view that the Board representatives should attend Lok Adalats. Non attendance of Board representatives often leads to cases being decided in favour of the employees. Therefore, the Board ends up paying huge sums as compensation to employees. The Court cases regarding labour disputes also need to be handled properly in order to save huge sums of money of the Board.

11. Lt. Gen. (Retd.) Kamaljit Singh was unable to attend the meeting. He however, sent his suggestions which are annexed as Annexure.

12. Shri Prithi Chand, Addl. Secy. /Power stated that the comments of the Govt. on the ARR of the Board would be sent separately. He admitted that the financial health of the Board was very poor and with a debt of Rs. 16000 crore its very survival was in jeopardy.  He requested the Commission to consider the financial viability of the Board while determining the tariff. He pointed out that Power theft, T&D losses & purchase of power at higher cost were responsible for the huge revenue gap.

He further pointed out that the AP consumption is not determined accurately and undue burden on this account was being passed on to the Govt. He suggested that all the AP connections should be metered to ascertain the actual consumption and the amount of subsidy payable by the GoP. He informed the house that work on three Power Plants was already in progress and the work on the fourth power plant would start soon. With this, he expressed the hope that by the end of 2013, the State would be self sufficient in power.

13. Er. K.D. Chaudhary, Member/Distribution stated that various measures were being undertaken to improve the efficiency of the Board. He further informed that the Board was envisaging various DSM measures like Bachat Lamp Yojna and Installation of additional capacitors for purposes of power factor management. He also informed that a pilot study for improving the efficiency of about 2000 tube well connections on 4 feeders has been commenced by BEE free of cost.

He drew the attention of the house to various measures that were in the offing like establishment of Consumer Call Centre at Ludhiana which would be extended to Amritsar, Jalandhar, Bathinda, Mohali and Patiala. He pointed out other steps such as release of connections through telephone, material to be delivered at site of release of connection, outsourcing of vehicles, re-organisation of staff on functional basis, de-centralisation of powers, providing mobiles to Linemen for better communication and strengthening of Transmission and Distribution system.

He also assured that grant of Open Access procedure would be simplified and suitable amendment effected in the Grid Code to provide for installation of several makes of meters for OA purposes. Accountability would also be fixed in case of power theft.  He further informed the members that three new Thermal Plants will be established over the next couple of years. He, however, felt that it may not be possible to introduce ToD tariffs as adequate surplus power was not available in the State.

Addressing some of the other issues raised by members of the SAC, he informed that information system for consumers upto village level was already in place, instructions in Punjabi were being issued, supply to Rice Millers was regular, online payment of bills for industrial consumers was in place and one time Settlement scheme of electricity dues for defaulting consumers was already in existence.

He further pointed out that temporary tube well connections were not given last year and would not be given in future, registration for Carbon Credits had been formalized, sample size for correct estimation of AP consumption has been increased from 4% to 8% and would further be increased to 10%. AMR system was being introduced to supplement the Sample Meter Reading system. Also, AP load has been separated on all 11 KV feeders except 300-400 feeders with mixed load. The work of separating AP load on these 300/400 feeders would also be completed by 30th April, 2010.

14. Reacting to some of the issues raised, Chairman, PSERC informed the members that cross-subsidy is being reduced in percentage terms as per Tariff Regulations notified by the Commission. Provision for online banking exists in the Supply Code and Open Access Regulations are constantly being reviewed for easy facilitation of Open Access in the State. He referred to a presentation made by Indian Energy Exchange which indicated that nearly half of the total number of Exchange customers were from Punjab. He assured the members that the Commission would further examine the feasibility of introducing ToD/Seasonal Tariff in the State. He clarified that one of the reasons for increase in employee cost of the Board in the ARR is the provision for payment of increased emoluments/arrears owing to implementation of 5th Pay Commission report.

The Chairman expressed concern about the poor financial health of the Board and observed that there is urgent need to consider its FRP without linking it to the unbundling of the Board. He also observed that,

(a) a suitable mix of public/private participation requires to be considered while adding generation capacity in the State. He also clarified that rates for all IPPs except for GVK (for which rates are to be determined by the Commission), are attractive and have been competitively determined.

(b) As applications are pending for release of AP connections for the last 18-19 years, a fair scheme has to be urgently put in place to determine the manner in which AP connections are to be released. This would also fulfill one of the requirements of the Supply Code.

(c) The Board must expedite information with regard to very old issues, like KVAH tariff, Voltage-wise Cost of Supply etc. so as to enable the Commission to take a final view on these matters. He also requested the Board to draw up and implement a comprehensive DSM plan.

(d) Appreciating the introduction of Consumer Call Centres/Electricity Call Centres in 6 cities of the State, the Chairman also emphasized the need to consider upgradation of consumer complaint facilities in other and specially the rural areas of the State.

Chairman, in his concluding remarks thanked the members of the SAC for their valuable suggestions. He also thanked the Member/Distribution for his informative comments on several issues raised in the meeting.


Annexure

 

Suggestions by Lt. Gen. (Retd) Kamalajit Singh

 

Lt. Gen. (Retd.) Kamaljit Singh has suggested the following steps for reducing the T& D losses:

(1)      Installation of LT capacitors on tube well connections. The cost of each is about Rs.500/-. The farmer should bear this, if he wants free power. Alternatively, the PSEB should recover the cost of installation of these capacitors in the billing which should be done in two installments. This measure will reduce consumption of electricity of tubewells by 50 percent.

(2)      Conversion of LT distribution system to HVDS system, to prevent tampering with the high voltage wires. Since this conversion is cost intensive, the PSEB should be permitted to bill the cost of Capital expenditure and larger amount under capital expenditure be permitted for early implementation, by obtaining a loan from the Central Govt.

(3)      Replicate the Andhra Pradsh Demand Side Management (DSM) plan which involves the user having an ISI marked pumpset, LT capacitor, friction less foot valve and plastic suction and delivery pipes to maximize delivery of water. The farmer gets free power, only if he implements the above measures, otherwise he has to pay for the electricity consumers. This will require political will to implement for which the commission could use the provision of Sec. 65 of the Electricity Act to enforce / cajole the Punjab Government, if possible.

(4)     Replacement of electro-mechanical meters with electronic meters.

  (5)     The shifting of meters outside residential premises.

He has also suggested that the Commission should direct the Punjab Government and the PSEB to expedite the construction of Shahpur Kandi Barrage.  The Board should carry out a study for optimizing the use of Ravi Water by way of creating additional hydel stations on the UBDC to the Beas River.

 

 

 

 

 

 

 

 

Annexure-IV                                                                                                                                                                                                                                         

COMPLIANCE WITH DIRECTIVES ISSUED IN CHAPTERS 4 & 5 AND ANNEXURE-IV

OF TARIFF ORDER  FY 2009-10

An overview of the Directives issued to the Board in the Tariff Order FY 2009-10 and status of their implementation is summarized below:

Sr.

No.

Issues

 

Directive in Tariff Order

FY  2009-10

PSEB’s reply

PSERC’s comments

1.

Energy Audit and T&D Loss Reduction.

Background

The Commission observed that in the absence of yearly targets and the Board’s achievements against them, the Commission is unable to comment on the steps being taken by the Board for carrying out the energy audit and T & D loss reduction. Attention was also invited to para 4.2 of the Tariff Order.

 

The Board was also advised to furnish a comprehensive IT implementation plan with yearly targets and achievements.

 

Directive

The Board was directed to issue within one month of the issue of tariff order, its final projections of financial and physical targets that are to be achieved for the current and next two years in respect of:

 i) Conversion of LT distribution system to HVDS.

ii) Replacement of electro-mechanical meters by electronic meters.

iii) Installation of capacitors at all 11 KV feeders in urban and rural areas.

iv) Shifting of meters outside residential premises.

and also the targets for completion of assessment of base line data, segregation of technical and commercial losses and energy audit upto distribution level.

At the time of Tariff Order the Commission would assess the performance of the Board in respect of these specific measures and then take a view on the fixation of loss reduction trajectory for the next phase.

 

PSEB had placed two work orders for carrying out energy audit at GGSSTP Roop Nagar by the following firms:

·          M/s Electrical Research & Development Association Vadodara for balance of plant area.

·          M/s Energy & Resources Institute, New Delhi for Main Plant Unit No.3,4, 5& 6.

The firm at Sr. No.1 has submitted the final report and the follow up action is in process.

The firm at Sr. No. 2 has submitted the draft energy audit report and the final report is being awaited.

Work of Energy Audit for GHTP was also required to be done by above firms and final energy reports are being awaited from the firms.

Work of Energy Audit for GNDTP Bhatinda of Unit-II was conducted by firm at S. No.(ii) above and detailed energy audit of balance of plant area was audited by firms at S.No.(i). The reports of energy audit of Unit-II are attached as per Annexure-VI of Volume-II.

Following measures were planned to be taken for achieving the target of reduction of losses up to 17% by the year 2011-12 from the present losses of 19.92% for the year 2008-09:-

·          Conversion of LT DS system to HVDS

·          Installation of LT capacitor on AP tube well connections

·          100% replacement of electromechanical meters with electronic meters

·          Providing effective earthling at substations and DS transformers

·          Refurbishing/Strengthening the DS system R-APDRP

·          Installation of capacitors on 11KV Feeders in urban as well as rural areas.

·          IT initiatives like spot billing, GIS mapping, Centralized Call Centres, Remote metering etc.

·          Augmentation of over loaded and de-loading of DS transformers and 11 KV feeders.

·          Installation of meters outside the consumers’ premises.

·          More theft detection by Enforcement Agencies.

The financial and physical targets for the current year and next two years in respect of items (i) to (iv) under para 4.2 of Tariff Order 2009-10 is as under:-

As regards Item No.(i) i.e. conversion of LVDS System in to HVDS is quite capital intensive. 6 such schemes stand already completed and 34 schemes (for 5,24856 connections of AP Tube Wells) stand sanctioned by REC and work of tendering is in progress to issue work orders.

The Board has also prepared its low cost Demand side Management plans which are quite effective and will result in controlling growing demand. These are as under:-

The Board has started the process of replacement of incandescent lamps with CFL under Bachat Lamp Yojna. Under this scheme CFLs will be provided to 48.00 lakh domestic consumers @Rs.15/- per CFL. The developer shall provide maximum of 4 CFL Lamps to each consumer and recover the balance cost of CFL by utilizing CDM (clean development mechanism) thus costing nil to PSEB.

By adding 2100 MVAR capacity at a cost of Rs.20 Cr., the Board aims to reduce the demand significantly and the same will also help in reducing the losses.

The tender process for BLY stands completed after pre-bid conference. Now, the offers of firms are being evaluated.

The work will be completed in 12-15 months from the inception of the scheme.

The work of replacement of electro-mechanical with electronic meters will be undertaken parallel to the shifting of meters outside the consumers’ premises in respect of 32 Lac consumers to be covered in Non-APDRP areas up to 10/2010 and further 17 Lac under APDRP schemes up to June 2011. The balance electro-mechanical meters will be replaced under R-APDRP scheme for 47 Towns. Part-A of APDRP for IT initiative stands sanctioned for Rs.272.83 Cr. from steering committee of IT set up by Ministry of power, GOI. The schemes for part-B of APDRP are under preparation by Field Offices as per guidelines issued by MOP/GOI.

Month wise physical and financial details are attached as per Annexure-VII in Volume-II.

Regarding IT Implementation Plan, PSEB is in the process of implementing IT under R-APDRP (Part-A) 11th Plan covering 47 towns of Punjab. The IT implementation shall include the following modules:-

1. GIS based consumer indexing and asset mapping.

2. GIS based net work analysis modules.

3. Metering, Billing and collection.

4. Centralized Customer Care Service

5. Energy Audit.

6. Metering Data acquisition.

7. New Connection.

8. Disconnection and dismantling (CRM)

9. Management Information System (MIS)

10. Web self service.

11. Identity and asset management.

12. System Security requirement.

The above IT implementation is scheduled to be completed in 18 months from the date of selection of ITIA (under process). Salient IT modules for non-APDRP area/towns are also being covered so that a unified IT is implemented throughout in PSEB. Accordingly the same is likely to be taken up in 2009-10 and completed by 2011-12 as per the detailed schedule given as follows:-

 

Year

Target Mile-stone

Activity/Deliverable

2010-11

Data Centre Set-up (Patiala)

0-3 months

High level and low level design and approval (infrastructure & application)

3-5 months

Installation, commissioning and configuration of hardware, network & operating system

5-8 months

Installation, configuration & customization of application software.

8-12 months

User acceptance testing.

 

 

 

 

 

 

 

Pilot (Patiala Town)

3-5 months

Infrastructure design

4-8 months

DGPS field survey including consumer indexing & asset mapping

7-10 months

Installation, commissioning and configuration of H/W, N/W and O.S.

10-12 months

Installation, configuration & customization of application software.

 

10-12 months

Integration with legacy application and data centre

10-12 months

Data migration

11-12 months