Northern Power Distribution Company of AP Ltd
BEFORE THE HONOURABLE ANDHRA
PRADESH ELECTRICITY REGULATORY COMMISSION
AT ITS OFFICE AT 5th Floor, Singareni Bhavan, Red Hills,
FILING
NO.______/2010
CASE NO.
_______/2010
In the matter of:
Filing
of the ARR & Tariff applications for the Retail Supply Business for the
year 2010-11 under Multi-Year Tariff principles in accordance with the “Andhra
Pradesh Electricity Regulatory Commission (Terms and conditions for
determination of Tariff or Wheeling and Retail Sale of Electricity) Regulation,
2005” by the Northern Power Distribution Company of Andhra Pradesh Limited
(‘APNPDCL’ or ‘the Company’ or ‘the Licensee’) as the Distribution and Retail
Supply Licensee.
In the matter of:
NORTHERN POWER
DISTRIBUTION COMPANY OF ANDHRA PRADESH LIMITED
… Applicant
The Applicant
respectfully submits as under: -
1
This filing is made by the NORTHERN
POWER DISTRIBUTION COMPANY OF ANDHRA PRADESH LIMITED (NPDCL) under Section 61 of
the Electricity Act 2003 for determination of the ARR and Tariff for the Retail
Supply Business for the year 2010-11.
2
As per the requirements of Regulation 4 of 2005 of APERC,
the licensee had submitted its Aggregate Revenue Requirement (ARR) for
·
Operation &
Maintenance (O& M ) Costs: Key drivers of O & M cost such as number of Substations,
network line length and number of consumers were used to arrive at suitable
norms for projecting the O & M cost for the control period.
·
Capital Investment
Projections:
The existing level of network loading and projected level of sales growth was
used to estimate the optimal capacity additions to the network to deliver
quality power to the end consumer.
The licensee believes
that the above approach adopted best reflects the licensee’s requirement to
deliver good quality power to consumers at an optimal cost. However, the
Hon’ble Commission in its Tariff Order dated 20th March 2009, had
fixed the limits for O & M and capital investments, which are far lesser
than the licensee’s filing. Hence, the licensee had filed the revision of
petition with Hon’ble Commission for review of the costs approved for O & M
and Capital Investments. Pending decision from Hon’ble Commission on the
revision of petition filed by the licensee, the licensee has considered the
figures as per the filing estimate in the MYT petition for the period 2009-10
to 2013-14.
3
The licensee had projected a realistic level of distribution
loss taking into account the capital investment requirements and loss reduction
potential vis-à-vis loss reduction benchmarks achieved by other comparable
licensees in the country. The licensee strongly believes that loss reduction
targets, as mentioned in the Tariff Order dated 20th March 2009,
should be set at a level which is achievable in practice and which also
incentivizes it to take efficiency improvement measures. However, the stringent
loss reduction trajectory fixed by the Hon’ble Commission would adversely
impact the already precarious financial position of the licensee in case of
non-achievement of the loss targets. Accordingly, the licensee had filed a
review petition with the Hon’ble Commission for review of the loss reduction
trajectory for the 2nd control period. Pending a decision of the
Hon’ble Commission on the review petition filed by the licensee, the licensee
has considered the loss figures as per the MYT filing done for the period
2009-10 to 2013-14.
·
As per Regulation No. 4 of 2005, the licensee is required to
file the Aggregate Revenue Requirement (ARR) for Retail Supply Business for the
entire control period i.e., for the period 2009-10 to 2013-14. However, the licensee had requested the
Hon’ble Commission to allow it to submit the ARR for retail supply business for
FY 2010-11, instead for the entire control period due to the reasons, as mentioned
below.
-
Significant
uncertainty prevalent on the availability of energy as well as the cost of
power purchase for the 2nd Control Period:
·
Availability of
Energy:
Uncertainty in likely commissioning dates of AP Genco Stations, Central
Generating Stations, UMPPs and others. Timely commissioning of the new stations
is likely to have material impact on the power purchase costs of the licensee.
·
Power Purchase Costs: Pending passing of
the order from the Hon’ble Commission on the new generation regulation, the
licensee is of the opinion that the difference between the projected costs and
actual costs are likely to be magnified if the filing is done for an entire
control period rather than on annual basis.
-
Regulatory objectives
of a Multi-Year Tariff Regime not met:
·
Mechanism of
Incentivization: One of the essential elements in multi-year tariff regime is
the mechanism of incentivizing the performance of the licensee vis-à-vis the
targets set by the Hon’ble Commission. This approach is more suited in a
distribution business where the costs to a large extent are treated to be
controllable. However in retail supply business, power purchase costs’ being an
uncontrollable factor is not amenable to fixation of targets and hence does not
meet the intended objective of bringing in operational efficiencies in
licensee.
·
Tariff Certainty: This is one of the
other objectives intended to be achieved through a multi-year tariff regime.
This is well addressed in the distribution business where the wheeling tariffs
are set based on the controllable costs. In retail supply business, apart from
the cost of service, the retail tariffs are also dependent on external factors
such as the subsidy support from the GoAP and cross subsidy levels across the
consumer categories. Hence the objective
of providing tariff certainty to consumers would be difficult to be achieved in
retail supply business till there is clarity on the above factors, most
importantly on cost of service (for which the major factor is power purchase
cost).
The Hon’ble Commission has been kind enough in granting permission to
submit the ARR & Proposed Tariffs filings in respect of the Retail Supply
Business for one Year i.e 2010-11 instead of total control period of 2009-10 to
2013-14 in its letter. (Letter No. APERC/SECY/S-361/2009-2, Dated 18/11/09).
4
In the following paragraphs, the licensee has provided a
brief summary of its performance during FY 2008-09 as against the Tariff Order
targets as well as the expected performance for the year i.e. FY 2009-10 and
the projections for FY 2010-11.
Performance Analysis
of the Previous Year FY 2008-09 and Current Year FY 2009-10
5
Performance Analysis: A brief analysis of
the key elements of licensee’s business is as follows:
·
Sale of Energy, Loss
reduction
The licensee is expected to show
an improvement in the metered sales in FY 2009-10 over FY 2008-09 though it
falls short from the APERC target primarily due to higher level of load
shedding undertaken in FY 2009-10.
The licensee would
like to humbly submit before the Hon’ble Commission that the loss reduction
trajectory fixed by it is very steep and requires the licensee to bring down
the losses by around 2.5% in a span of one year. The licensee submits to the
Hon’ble Commission that sincere efforts have been put to reduce losses and to
improve other operational parameters. The licensee requests the Hon’ble
Commission to consider the review petition filed by the licensee on loss
trajectory, Capital Expenditure and O & M levels and to fix reasonable
targets. The licensee requests the Hon’ble Commission to set realistic targets
on loss reduction and on other operational efficiency improvement measures.
Unrealistic loss targets can not be achieved by the licensee, even with their
best efforts, and such unrealistic targets shall only lead to loss of revenue
to the licensee, in the event of the licensee not achieving the set loss
target. This shall further deteriorate the already delicate financial health of
the utilities.
The licensee has
followed the agreed methodology of estimation of agricultural sales and has
been regular in submitting the required information to the Hon’ble Commission.
In view of this, the licensee requests the Hon’ble Commission to revisit the
level of agricultural sales approved for APNPDCL and treat it appropriately.
·
Revenue
The table below shows
a comparison of the revenue from various consumer categories as estimated and
approved in the Tariff Order and as billed (2008-09) and expected to be billed
(2009-10) by APNPDCL. It is observed that the actual revenue billed for the FY
2008-09 is less than the tariff order target by around 125 crores. This is
primarily due to higher level of load shedding in LT domestic, LT commercial,
HT industrial resulting in revenue loss. For the year FY 2009-10, the same situation
is expected to continue and revenue is expected to be lower than the tariff
order targets by around 106 crores. The revenue loss is mainly attributable to
the load shedding due to the deficit in energy availability.
Category
Wise Revenue: (Figures shown in Rs Crores)
·
Power Purchase Cost
Estimate for the state of AP for FY 2009-10
During the current year, the
state has witnessed a very large power deficit due to the following reasons:
§
As per Tariff Order for FY 2009-10, energy
from VTPS- IV and KTPPS-I (Bhoopalpally) was to be available from April’2009 and
August’2009 respectively. However, VTPS-IV was commissioned only on 28th January 2010 and COD of KTPPS-I is on 15th July 2010. This has
resulted in shortfall of 3,738 MU from both these plants.
§
RTPP III was to be available from
November’2009. However, its scheduled date of commencement of operation is now
set at 1st February 2011. This has resulted in a shortfall of 554
MU.
§
There is a shortfall of 3,435 MU in hydel
generation. The shortfall is 38% of the total estimate of 8,969 MU approved by
the Commission.
§
The shortfall in generation due to above
factors has been compensated by higher dispatch from VTPS (first 3 units), RTPP
(first 2 units) and IPPs.
However,
the power requirement is projected to be significantly higher than that allowed
in the Tariff Order and this will result in shortfall of 3,373 MU during the
current year. This power will have to be procured from external purchases at an
estimated average price of Rs. 6.19 / kWh. This is expected to cost an
additional Rs. 2,086 crores during FY 2009-10. The estimated energy deficit in
Million Units (MU) for the current year at the state level is as per the table
shown below –
Also, due to the
increase in coal price and use of imported coal, the weighted average power
purchase cost in FY 2009-10 is Rs 2.36 / kWh (excluding expensive power
purchase) as against the tariff order approved value Rs 2.16 / kWh.
The impact of the
power purchase cost for NPDCL will mirror the changes in cost for the state
since most of the generation sources are allocated on a pro-rata basis to all
the licensees.
Net profit or loss during the year
6
The estimated revenue gap for the licensee for the current
year is shown in the table below-
Estimates for the Ensuing Year (FY 2010-11)
7.
The licensee has adopted a modified trend approach for projecting the
category-wise sales for the ensuing year. As the name suggests, the licensee
has considered the historical growth trend observed in the sales of categories
and the same has been moderated based on the other relevant inputs such as
underlying economic growth drivers, number of pending applications etc. The
licensee has also factored in the load-relief provided to various categories of
consumers from February 2009 to January 2010, to project unrestricted sales for
months of February and March 2010 and for all months in FY 2010-11. The total
sales forecast (unrestricted) for key categories is as follows:
Number of hours of Supply to LT Agricultural Consumers in FY
2010-11:
The licensee presently considered
7 hours of power supply to agricultural consumers in FY 2010-11, keeping in
view the power supply situation in the state. The deficit situation is expected
to continue in FY 2010-11 as per current estimates. However, the licensee shall
carry-out a supplementary filing for increase in number of hours of supply to
agricultural consumers to 9 hours during the course of the year, in FY 2010-11,
as and when the power situation in the state improves and adequate power is
available for extending agricultural supply by 2 hours.
Power Purchase Requirement for FY 2010-11: Following are key
points considered by the licensee with regard to power purchase requirement by
the licensee –
The licensee would
like to submit that the power supply position for the ensuing year would be
critically dependent on the timely commissioning of the above stations. Any
delays in commissioning of the above plants would lead to additional financial
burden on the licensee due to increased level of expensive power
procurement.
Additional power
purchase cost for the next year for NPDCL is estimated to be Rs 300.81 crs.
8. Tariff Proposals –
·
The licensee proposes to change
tariffs for the following categories are as follows:
·
LT Domestic: No change in tariff is proposed for this category of consumers.
·
LT Non-Domestic /
Commercial: The energy charge for consumers having consumption
above 100 units / month is proposed to be increased from Rs. 6.20 / kWh to Rs.
6.70 / kWh. This shall be done by creating a new slab at 100 units’
consumption. Hence, the proposed energy charges for this category is:
·
0 to 50 Units: Rs. 3.85 / kWh
·
51 to 100 Units: Rs. 6.20 / kWh
·
Above 100 Units: Rs. 6.70 / kWh
·
LT Industrial: The energy charge for all industrial consumers in category 3 (A) and 3
(B), which are presently being charged Rs. 3.75 / kWh is proposed to be
increased to Rs. 4.25 / kWh. No change in tariff is proposed for sugar-cane
crushing units and pisciculture & prawn units (with contracted load below
10 HP).
·
LT Cottage
Industries: No change in tariff is proposed for this category
of consumers.
·
LT V (A) and V (B): No change in tariff is proposed for this category of consumers.
·
LT VI, VII (A), VII
(B) and VIII: No change in tariff is proposed for these categories
of consumers.
·
HT I (A) Industry
General: The energy charge for consumers in this category is
proposed to be increased by 50 paise / kWh. No change in energy charge is
proposed for energy of lights & fans, colony lighting and seasonal
industries. Additionally, time-of-day tariff is proposed for all HT – I (A)
Industrial consumers during the time-blocks 10 AM to 2 PM and 6 PM to 10 PM.
The time-of-day tariff for the time-block 10 AM to 2 PM shall be 75 paise / kWh
and for the time-block 6 PM to 10 PM shall be Rs. 1.00 / kWh. This time-of-day
tariff shall be in addition to the energy charges to be levied on the total
consumption. The time-of-day tariff shall be applicable only on the consumption
during the time-blocks mentioned.
·
HT I (B)
Ferro-Alloys: The energy charge for these consumers is proposed
to be increased by 50 paise / kWh, from Rs. 2.40 / kWh to Rs. 2.90 / kWh.
·
HT II
(Non-Industrial): The energy charge for these
consumers, across voltages, is proposed to be increased by Rs. 1.00 / kWh.
·
HT IV (A) Government
Lift Irrigation Schemes: The energy charge for these
consumers is proposed to be increased by 50 paise / kWh, from Rs. 2.36 / kWh to
Rs. 2.86 / kWh.
·
HT V Traction: The energy charge for these consumers is proposed to be increased by 80
paise / kWh, from Rs. 3.95 / kWh to Rs. 4.75 / kWh.
The
total increase in revenue due to the above tariff proposals is Rs.139.15 crores
for NPDCL for the 8-month period (August 2010 to March 2011) in FY 2010-11. The
licensee has calculated revenue from proposed tariffs only for the 8-month
period – August 2010 to March 2011, as the licensee has assumed that the tariff
order for FY 2010-11, to be issued by the Hon’ble Commission, shall be in
effect from 1st August 2010. As a result, NPDCL will still have a
deficit of Rs. 2524 crores after this tariff increase.
Based
on the information available, the Applicant has made sincere efforts to comply
with the Regulation of the Hon’ble Commission and discharge its obligations to
the best of its abilities. However, should any further material information
become available in the near future, the Applicant reserves the right to file
such additional information and consequently amend/ revise the application.
This
filing has been discussed and approved by the Board of Directors of APNPDCL and
Ch. Narasimha Reddy, Chairman and Managing Director of APNPDCL has been
authorised to execute and file the said document on behalf of APNPDCL. Accordingly, the current filing documents are
signed and verified by, and backed by the affidavit of Ch. Narasimha Reddy, the
Chairman and Managing Director APNPDCL.
a.
Take the accompanying
ARR and Tariff application of APNPDCL on record and treat it as complete;
b.
Grant suitable
opportunity to APNPDCL within a reasonable time frame to file additional
material information that may be subsequently available;
c.
Consider and approve
APNPDCL’s ARR and Tariff application including all requested regulatory
treatments in the filing;
d.
Pass such order as
the Hon’ble Commission may deem fit and proper in the facts and circumstances
of the case.
NORTHERN POWER DISTRIBUTION COMPANY OF ANDHRA PRADESH
LIMITED.
(APPLICANT)
Through
CHAIRMAN AND MANAGING DIRECTOR
Place:
Dated:
April , 2010
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BEFORE THE HONOURABLE ANDHRA PRADESH
ELECTRICITY REGULATORY COMMISSION
AT ITS OFFICE
AT 5 th FLOOR, SINGARENI BHAVAN, RED
HILLS,
FILING
NO.______/2010
CASE NO.
_______/2010
In the matter of:
Filing of the
ARR & Tariff applications for the year 2010-11 in accordance with the
“Andhra Pradesh Electricity Regulatory Commission (Terms And Conditions For
Determination Of Tariff For Wheeling And Retail Sale Of Electricity)
Regulation, 2005” by the NORTHERN Power Distribution Company of Andhra Pradesh
Limited (‘APNPDCL’ or ‘the Company’ or ‘the Licensee’) as the Distribution and
Retail Supply Licensee.
In the matter of:
NORTHERN POWER
DISTRIBUTION COMPANY OF ANDHRA PRADESH LIMITED
… Applicant
AFFIDAVIT OF
APPLICANT VERIFYING THE APPLICATION ACCOMPANYING FILING AS PER TERMS AND
CONDITIONS OF TARIFF FOR
I, Ch. Narasimha
Reddy, son of Papi Reddy working for gain at the Northern Power Distribution
Company of Andhra Pradesh Limited do solemnly affirm and say as follows:
1
I am the Chairman & Managing Director of APNPDCL, the
Licensee that has, vide the Hon’ble Commission’s approval in proceedings No.
APERC/Secy/Engg/No.6 dt.31.3.2000, been granted the distribution and retail
supply functions that APTransco was authorised to conduct or carry out under
the Act and the license, with respect to the business of distribution and
retail supply of electricity in the Northern distribution zone in Andhra Pradesh. On December 27, 2000, the Hon'ble Commission has awarded a Distribution
and Retail Supply License to APNPDCL, to be effective from April 1, 2001. I am competent and duly authorised by APNPDCL
to affirm, swear, execute and file this affidavit in the present proceedings.
2
As such, I submit that I have been duly authorised by the
Board of Directors of APNPDCL to submit the application, as per the Terms and
Conditions of Tariff for
3
I submit that I have read and understood the contents of the
appended application of APNPDCL. The facts stated in the application are true
to the best of my knowledge, which are derived from the official records made
available and certain facts stated are based on information and advice which, I
believe to be true and correct.
4
I submit that for the reasons, and facts stated in the
appended application this Applicant pray that the Hon’ble Commission may be
pleased to
(a)
Take the accompanying
ARR and Tariff application of APNPDCL on record and treat it as complete;
(b)
Grant suitable
opportunity to APNPDCL within a reasonable time frame to file additional
material information that may be subsequently available;
(c)
Consider and approve
APNPDCL’s ARR and Tariff application including all requested regulatory
treatments in the filing;
(d)
Pass such order as
the Hon’ble Commission may deem fit and proper in the facts and circumstances
of the case.
DEPONENT
VERIFICATION:
I, the above named
Deponent solemnly affirm at
DEPONENT
Solemnly affirmed and signed before me. |