ARR and Tariff Petition

November 2008

ARR and Tariff Petition November 2008

Contents
1 Introduction to ARR and Tariff Petition............................................3
1.1 Filing based on Multi-Year Tariff (MYT) Principles for Second Control Period.........................................................................................................3

2 Resource Plan for Distribution business for Control Period..............7

2.1 Sales Forecast for the Control Period.................................................................7 2.2 Power Procurement Cost for Current Year Second Half and Ensuing Year....14 Capacity break-up of major generating sources ...................................................15 Power purchase tariffs ..........................................................................................24 ENERGY REQUIREMENT ................................................................................34 SUMMARY OF POWER PURCHASE FOR YEAR 2008-09 AND ENSUING YEAR 2009-10........................................................................................34 2.3 Capital Investment Plan...................................................................................35 2.3.1 Base Capital Expenditure.............................................................................35 2.4 Capex Financial Summary...............................................................................51

3 Analysis of Performance for Previous 3 Year and Corrections Required..................................................................................53

3.1 Introduction......................................................................................................53 3.2 Operating Performance....................................................................................53 3.3 Financial Performance.....................................................................................53 3.4 True-up required...............................................................................................54

4 ARR for Distribution business for the Control Period.....................57

4.1 Basis for O&M Cost Projections......................................................................57 4.2 Background .....................................................................................................57 4.3 Need for Review of the O & M Expenses Projection Methodology followed in the first control period..............................................................................58 4.4 Proposed Methodology for Projection of O & M Expenses............................59 4.5 Regulated Rate Base (RRB).............................................................................61 4.6 Depreciation and Advance Against Depreciation (AAD)................................62 4.7 Return on Capital Employed. ..........................................................................63 4.8 Other Expenditures...........................................................................................65 4.9 Tax on Income:................................................................................................65 4.10 Special Appropriations: .................................................................................65 4.11 Wheeling Revenue: .......................................................................................67 4.12 Non-Tariff Income: .......................................................................................67

5 Revenue Requirement for Retail Supply Business..........................68

5.1 Losses...............................................................................................................68

ARR and Tariff Petition November 2008

5.2 Expenditure Projections...................................................................................69 5.3 Revenue Projections.........................................................................................71 5.4 Revenue Gap....................................................................................................76

6 Filing of Proposed Tariffs (FPT) for Distribution business for Control Period.........................................................................77 7 Filing of Proposed Tariffs for Retail Supply business for Ensuing FY 2009-10.............................................................................83 Tariff Schedule...................................................................................85 8 Performance Parameters...................................................................92 1 Introduction .....................................................................................95 2 COST OF SERVICE MODEL FOR APNPDCL.............................96 3 Results............................................................................................104

ii

Introduction to ARR and Tariff Petition

1.1 Filing based on Multi-Year Tariff (MYT) Principles for Second Control Period

In pursuant to the relevant clauses of the Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Wheeling and Retail Sale of Electricity Regulation, Regulation 4 of 2005, the present filing envisage for Aggregate Revenue Requirement & Proposed Tariffs for Distribution Business for the Second Control Period FY 2009-10 to 2013-14 (Five Years) In the Regulation, the Commission has also laid down the procedures for filing under multi-year tariff principles. The multi-year period is defined as the Control Period and the first Control Period is defined as the three year period starting Financial Year 2006-07 and continuing till the end of Financial Year 2008-09. In the first control period the ARR of the Distribution Business ahs been determined for the entire control period and for the Retail Supply Business the same has been determined year by year as enunciated in the Regulation. As per the provisions of the Tariff Regulation (Reg 4/05) the filing in respect of the Retail Supply Business from the second control period (FY 2009-10 to 2013-14) is supposed to be for the entire control period. But the DISCOM has requested the Honble APERC to allow submitting the filings for the Retail Supply Business for FY 2009-10, instead of the entire control period on the following grounds. 1. 2. 3. dates. The Honble APERC is kind enough in granting permission to submit the ARR & Proposed Tariffs filings in respect of the Retail Supply Business for one Year i.e 2009-10 instead of total control period of 2009-14. . Filing details of a Resource Plan (to be adopted in the Multi-year and Annual filings for the Control Period) specifying the following: The Tariff Regulation in respect of the Central Generating Stations to be issued by CERC which is applicable from 1-4-2009 is due. APGENCO could not provide the Fixed & Variable Charges in pursuant to the recent Generation Tariff Regulation issued by APERC. Difficulty in making the power purchase cost estimation for the next control period because of uncertainties in Commissioning of the Projects in the anvil & their Commercial Operation

Sales Forecast for the Control Period Distribution Plan (Capital Investment Plan) for the Control Period Power Procurement Plan for the ensuing half year of FY 2008-09 and FY 2009-10

1.1.1

Segregation of Distribution and Retail Supply businesses

Clause 5 of the Regulation specifies that Till such time as there is a complete segregation of accounts between Distribution and Retail Supply businesses, the ARR for each business shall be supported by an Allocation Statement that contains the apportionment of costs and revenues to that business. The allocation statement shall also contain the methodology that has been used for the apportionment. As the Honble Commission has rightly assessed, the present accounts of licensee is at a consolidated level and the licensee does not have segregated accounts for each of the businesses. However, in line with the Regulation, the licensee has endeavored to analyze the expenses and incomes attributable to each business and has followed the following principles of allocating expenses and incomes to the retail supply business while the rest of the expenses and revenues are allocated to the distribution business: Before determining the segregation of costs and revenues for each of the businesses, it is important to first identify the functions under each of these businesses. These are as follows: Functions pertaining to Distribution (or Wires) Business The functions pertaining to Distribution business include: Management and maintenance of distribution network including substations, lines, transformers and other network equipment Capital expenditure on distribution network for network expansion as well as loss reduction Providing new connections to the distribution network Meter reading and billing Financial accounting and management functions pertaining to the distribution business

The functions pertaining to the Retail Supply business include: Procurement of power from generators Sale of power to Discoms own consumers Contracting for transmission and SLDC services

Based on the above definitions of functions pertaining to each business, the allocation of expenditures and revenues to the Retail Supply business is as explained in the table below: Allocation of expenses and income to Retail Supply Business Income: Expenditure: Revenue from Sale of Power (except wheeling revenue) Power Purchase Other Income Other Financial Charges Delayed Payment Charges HT-incentive ABT related UI Charges / Pool Trade Interest on security deposits Miscellaneous Charges from Consumers Recoveries for Theft of Power/Malpractice Revenue from Inter-State sales (D-trade) Securitization Scheme Benefits and Rebates

1.1.2

Filing Contents Filing Contents

The filing is structured in the following way: Section 2 provides the Resource Plan comprising Sales Forecast; Power Procurement Plan; and Distribution Plan (Capital Investment Plan) The sales forecast is used to determine the revenue from tariff from retail sale of electricity for the first year of the control period and the energy input required for meeting the demand. The power procurement plan is based on the availability of the generation sources during the ensuing year, the cost (fixed, variable and others) and the merit order dispatch of various sources to meet the demand expected during various months. The distribution/ investment plan is prepared keeping in view of the potential to meet the load growth, plans to improve quality of supply and the distribution loss trajectory that the utilities expect to be achieved during the Control Period. Section 3 provides a brief analysis of the financial and operational performance of the licensee during the 2005-06 to 2007-08. Section 3 also provides an analysis on the variations in uncontrollable items of ARR during the last 3 years followed by the true-up for the same period. Section 4 provides the ARR for distribution business for each of the year of the Control Period and the basis of projections of the expense and revenue items.

Section 5 provides the ARR for the retail supply business for the ensuing year and the combined ARR for the ensuing year (first year of the Control Period, 2009-10). Section 6 contains the tariff proposals for distribution business for the ensuing year 2009-10 and Section 7 contains tariff proposals for retail supply business for the ensuing year 2009-10. Section 8 provides the performance of the licensee on various technical and consumer service related issues during the previous year and plans for improving the same in the ensuing year.

Resource Plan for Distribution business for Control Period

2.1 Sales Forecast for the Control Period

The licensee has adopted the end-user method and trend methods for forecasting the sales of various categories. In respect of HT-I and HT-IV category services, end-user method has been adopted and for rest of the categories, trend method has been adopted.

2.1.1

Trend Method

This method is a non-causal model of demand forecasting which assumes to follow the same trend as in the past and hence the forecast for electricity is also based on the assumption that the past trend in consumption of electricity will continue in the future. Sales forecast for basic categories except agriculture was made for the years 2009-10 to 2013-14 by considering the following data: Base Sales Data: category-wise sales for FY 2005-06 to FY 2007-08 and First Half (H1) of FY 2008-09. Growth rates: Compounded Annual Growth Rate (CAGR) for 3 years (2005-06 to 2007-08)

HT-I Industrial: This category predominantly comprises two types of industries, Singareni Collieries and Cement Industry, drawing about 45% and 25% of total HT-I sales. In respect of Singareni Collieries, consequent on changing their strategies by closing some of its underground mines, new mines have been started based on opencast. As per historical data, there has been a downward trend in the consumption due to fewer loads required for opencast mining. In addition to the above, they have adopted adopting energy conservation measures, which resulted in reduction in energy consumption. In the last 3 years, sales recorded negative growth rates of -5%, -1% and -5% and 3 years CAGR -4%. Therefore -4% negative growth is expected for Singareni services for current year and 2nd control period from 2009-10 to 2013-14. A significant growth in production in the Cement industry has been witnessed due to increased consumption of cement by the various State Govt. programs such as Irrigation projects, providing houses under Indiramma program. The yearly growth rates of power consumption for the past three years in major cement industries were found to be of 5%, 7% and 11% and followed by 6% in the first half of the current year 2008-09. It is expected that similar trend will continue for second half of the current year. Hence growth in this industry is expected to be 8% in current year and 2nd control period 2009-10 to 2013-14.

Apart from Singareni and Cement industries, the growth in sales under HT-I category is recorded by 35% in year 2007-08. In this growth rate, 2 Nos HT consumers i.e. Sirpur Paper Mill and A.P RAYONS LTD contribute 24%. The Sirpur Paper Mill has contributed by increasing of their contracted load by 5 MVA in 2nd half of the year 2007-08. The A.P. Rayons Ltd. is having a third party supply, in this connection whatever additional consumption recorded in 2007-08 may not be expected in next control period. Considering all above factors and releasing of new services, growth rate is expected to be 25% in 2008-09 and 15% for 2 nd control period 2009-10 to 2013-14 for the services other than Singareni and Cement industries under HT-I Category. (In MU) 2012-13 2013-14 766.77 73.31 388.32 1,228.40 782.95 72.64 452.77 1,308.36

HT-I Voltage 132kV 33kV 11kV Total

2007-08 Actuals
653.07

2008-09 716.38 74.74 222.00 1,013.11

2009-10 734.29 73.60 255.03 1,062.92

74.95 177.05 905.07

2010-11 2011-12 Projections 743.54 755.07 75.15 74.23 292.71 337.14 1,111.40 1,166.43

HT-II Non-Industrial: In this category, there are 3 services in 33KV and above voltage level having captive generation as main source, which consume only about 3 MU per annum. Balance services existing in 11KV voltage have shown an average growth of 7% in the last three years as the new services released in HT-II were in 11 KV only. Due to the release of new services, the consumption in 11KV is expected to grow by 10.46% for the control period 2009-14. Accordingly, the growth rate 10.34% is expected on total sales for the ensuing control period 2009-14 after considering releasing of new services. (in MU) HT-II Voltage 132kV&above 33kV 11kV Total 2007-08 Actuals 1.89 0.81 55.70 58.40 2008-09 0.72 0.94 65.22 66.88 2009-10 0.72 1.02 71.61 73.36 2010-11 2011-12 2012-13 0.72 1.33 97.08 99.14 201314 0.72 1.46 107.26 109.45

Projections 0.72 0.72 1.11 1.22 79.30 87.74 81.14 89.69

HT-IV Irrigation: As a part of Jalayagnam program, the state government has proposed various lift irrigation schemes, which will be operational in the area of licensee as stated below.

During the fiscal year 2009-10, Devadula phase-II and Sripadasagar Yellampally LI schemes are expected to be operational. Also Devadula phase-III and Pranahitha Chevella LI schemes are expected to be operational during the fiscal years 2011-12 and 2012-13 respectively.

Load in MW Voltage 132 KV and above 33KV 11KV Total 2009-10 Devadula phase-II 101.30 Devadula phase-II 7.00 108.30 2010-11 2011-12 Devadula phase-III 226.13 Devadula phase-III 32.66 258.79 2012-13 Pranhitha Chevella 212.50 Pranhitha Chevella 1.95 214.45 2013-14

Accordingly, the estimated consumption for the next control period on account of existing LI schemes and ensuing LI schemes that are expected to be operational is as follows. (in MU) HT-IV 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Voltage Actuals Projections 132kV&above 42.01 373.52 720.72 720.72 1371.97 1983.97 1983.97 33kV 5.20 78.78 219.45 219.45 313.52 319.14 319.14 11kV 49.50 76.45 112.71 112.73 112.75 112.77 112.80 Total 96.71 528.75 1,052.88 1,052.90 1,798.25 2,415.88 2,415.90

HT-V Traction: Though Railway Traction has shown a growth rate in consumption by 8.28% during 2007-08 and it is expected that the consumption in this category increase by 8.34% during the current fiscal year 200809. The CAGR 2.5% of past 4 years is considered for the ensuing control period 2009-14 and the projected sales in this category are as follows. (in MU) HT-V 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Voltage Actuals Projections 132kV&above 333.01 360.77 370.51 380.14 389.27 398.61 408.25 33kV 11kV Total 333.01 360.77 370.51 380.14 389.27 398.61 408.25

HT-VI Colony Lighting: The consumption in this category has witnessed a negative growth rate of -11.5 % during the FY 2007-08 due to transfer of 3500 services from HT-VI to LT-I at Mandamarry. Hence no increase in consumption is expected in this category during the current fiscal year 2008-09. Previously this category was limited to link services i.e. the HT consumers under HT-I to HT-V can take service connection under HT-VI for colony and township purpose. From the FY 2008-09 onwards, this category is also applicable to Co-operative group housing societies or any person availing supply for supply to his employees for domestic purpose also. With this change, 5 new services are expected each year and a growth rate of 1.56% is expected for the ensuing control period 2009-14. (in MU) HT-VI Voltage 132kV&above 33kV 11kV Total HT-VII RESCO: The consumption in this category has increased by 18.64% and 9.6% during the FY2006-07 and FY2007-08 respectively. The consumption in this category is expected to increase by 7.87% during the current fiscal year 2008-09. For the next control period 2009-14, an average growth rate 8.36% is adopted for estimating consumption in this category as this category has a bulk consumer in turn supplying to various LT category loads. (in MU) Resco Voltage 132kV&above 33kV 11kV Total LT-I Domestic: The Domestic category sales growth is driven by the following factors. 1. Release of new service connections Increase in specific consumption due to addition of domestic appliances like air conditioners, water heaters etc. 10 2007-08 Actuals 428.07 428.07 2008-09 461.76 461.76 2009-10 500.55 500.55 2010-11 2011-12 Projections 544.60 588.71 544.60 588.71 2012-13 636.39 636.39 2013-14 689.85 689.85 2007-08 Actuals 70.40 42.62 9.86 122.88 2008-09 64.99 46.28 11.61 122.88 2009-10 64.99 48.09 12.18 125.26 2010-11 2011-12 Projections 64.99 64.99 49.58 51.17 12.43 12.67 126.99 128.83 2012-13 64.99 52.80 12.93 130.72 2013-14 64.99 54.60 13.19 132.77

2.

For the past 5 years the growth rate in this category has been increasing. Due to the aforesaid reasons, sales in this category have increased in the first half of FY2008-09 by 12.53%. Hence, the licensee estimates an overall growth rate of 11.87% during current FY 2008-09. In anticipation of sufficient availability of power, the growth rate is expected to be 10.36% during the ensuing control period of FY2009-14. (in MU)
Consumer Category Domestic supply Cat-I 2007-08 Acuals 1,346.4 6 2008-09 Estimate 1,506.34 2009-10 2010-11 2011-12 Projection 2014.05 2012-13 2013-14

1,661.49

1824.32

2223.51

2465.87

LT-II Non Domestic: In the previous FY 2007-08, the growth rate in sales of LT II category was 12.4% and expected to be 9.77% during the current FY 2008-09. However considering the 5 years CAGR in this category, the sales for ensuing control period is expected to increase by 10.32% as stated below. (in MU)
Consumer Category Non-Domestic supply Category-II 2007-08 Acuals 274.1 4 2008-09 Estimate 300.92 2009-10 2010-11 2011-12 Projection 402.70 2012-13 2013-14

329.21

364.43

444.98

491.70

LT-III Industrial: In the previous FY 2007-08 the growth rate in sales was confined to 6% compared to its preceding fiscal years i.e.FY2006-07 growth rate 18%. As the sales in this category has witnessed a negative growth rate of 10.89% during the first half of current FY2008-09 the sales of total FY2008-09 is expected to decrease by 0.72%. However considering CAGR of last 2 years, the sales in this category are expected to increase by 10.49 % during ensuing control period 2009-14 as shown below. (in MU)
Consumer Category Industrial supply Category - III 2007-08 Acuals 294.2 4 2008-09 Estimate 292.13 2009-10 2010-11 2011-12 2012-13 Projection 393.22 433.33 2013-14

323.68

356.82

480.99

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LT-IV Cottage Industries: In the last FY 2007-08 the growth rate in sales of this category was 7.16% and for FY 2008-09, it is expected to be 7.77 %. The licensee expects an average growth rate of 9.46% for the ensuing control period 2009-14.The details of estimated consumption are as follows. (in MU)
Consumer Category Cottage Industries - Category - IV 2007-08 Acuals 5.3 0 2008-09 Estimate 5.71 2009-10 2010-11 2011-12 2012-13 Projection 7.55 8.21 2013-14

6.36

6.94

8.98

LT-V Agriculture:

The livelihood of greater part of population in APNPDCLs jurisdiction is earned through agriculture. However, the farmers are largely dependent on lifting ground water for irrigation needs due to lack of sufficient water through other sources. As a result, agriculture category consumers contribute to the majority i.e., more than 45% of sales of NPDCL. Fixing the meters on LV side of selected DTRs does the computation of electrical energy consumption of these un-metered agricultural services. This methodology of computing the consumption is adopted in accordance with the directives of Honble Commission. The state is consistently experiencing a reasonably good rainfall during the last few years. Adequate rainfall over the past few years resulted in increase of ground water levels in the State including NPDCL area. The Honble Commission is continually adopting the consumption of 2909.06 MU in the Tariff Orders from the FY 2005-06 up to 2008-09. However, the actual consumption is increasing every year mainly due to release of additional services and increased specific consumption of agricultural services. Therefore there is a need for revision of the consumption allowed in the Tariff Orders during the previous years from the FY 2005-06 up to 2008-09 based on actual consumption. In concordance with the situation explained above there is a significant increase in agriculture consumption during the year 2007-08 at 3622.14 MU as against 2909.06 MU approved by the Honble commission in the Tariff Order 2007-08. The consumption for the first half of the FY 07-08 is 1542.50MU and the consumption for the second half of the FY 07-08 is 2079.64 MU. Similarly, the consumption during the first half of 2008-09 is 1561.9 MU. The increased consumption during the first half of 2008-09 compared to the H1 of 2007-08 is due to release of 29648 new agricultural services in APNPDCL. Conventionally, due to ensuing Khariff season the agricultural consumption during the second half of is much higher than the first half. Further, the annual target for release of agriculture services has increased to 43400 for CY 08-09. Based on the above it is estimated that the agricultural consumption during the
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second half of CY2008-09 at 2237.69 MU. Therefore, the total consumption for CY 2008-09 is estimated to be at 3799.59 MU. It is projected that a total of 43400 services are to be released during the EY2009-10. Keeping in view of the experience of current year and previous years and duly considering all the factors as explained above it is anticipated that the same trend will continue in the agricultural sector for the ensuing FY 2009-10. Accordingly, 3959.18 MU sales are projected for FY 2009-10. However considering CAGR of last 5 years, the sales in this category are expected to increase by 4.0 % during ensuing control period 2009-14 also as shown below.
2007-08 Actuals 2007-08 Tariff Order 2008-09 H1 Actuals 2008-09 H2 Estimation 2008-09 Revised Estimation 2009-10 Projections

LT-V Agriculture

Sales(MU)

3622.1 4

2,909.06

1561.9

2237.69

3799.59

3959.18

LT-V Agriculture

2010-11 4121.50

2011-12 4321.81

2012-13 4531.86

2013-14 4732.60

Sales (MU)

LT-VI Public Lighting & PWS Schemes: In the previous FY 2007-08 the growth rate in sales was 3.88%. Since the consumption in the first half of current fiscal year 2008-09 has increased by 16.24%, the overall growth rate for FY 2008-09 is expected to be 13.54%. Accordingly, the sales in this category are expected to increase by 8.64% for the ensuing control period 2009-14. (in MU)
Consumer Category Public Lighting Category - VI 2007-08 Acuals 241.2 0 2008-09 Estimate 273.87 2009-10 2010-11 2011-12 2012-13 Projection 355.79 383.54 2013-14

304.54

330.04

414.61

LT-VII General Purpose: In the previous FY 2007-08 the growth rate in sales was 20.37%, which is expected to be 18.09% for the current FY 2008-09.It is also expected that the sales in this category be expected to increase by 11.98% for the ensuing control period 2009-14. The details are as follows. (in MU)
Consumer Category General Purpose 2007-08 Acuals 20.2 2008-09 Estimate 23.95 2009-10 26.72 2010-11 2011-12 2012-13 Projection 29.87 33.47 37.49 2013-14 42.17

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Category - VII

Category wise Abstract of sales for current fiscal year and ensuing control period is given below:

Consumer Category LT Domestic supply - Cat-I Non-Domestic supply Category-II Industrial supply - Category - III Cottage Industries - Category - IV Irrigation & Agriculture Category - V Public Lighting - Category - VI General Purpose - Category - VII Temporary - Category - VIII Total L.T. HT Industrial segegrated - Category - I Industrial Non-segegrated - Category - II Irrigation & Agriculture - Category - IV Railway Traction Townships & Residential colones - Cat-VI Electricity Co-operative societies - Cat.VII Temporary - Category - VIII HT TOTAL : LT+HT TOTAL

2008-09 Estimate 1,506.34 300.92 292.13 5.71 3,799.59 273.87 23.95 0.20 6,202.71 1,013.11 66.88 528.75 360.77 122.88 461.76 2,554.16 8,756.87

2009-10

2010-11

2011-12 Projection

2012-13

2013-14

1,661.49 329.21 323.68 6.36 3,959.18 304.54 26.72 0.20 6,611.38 1,062.92 73.36 1,052.88 370.51 125.26 500.55 3,185.47 9,796.85

1824.32 364.43 356.82 6.94 4121.50 330.04 29.87 0.20 7,034.13 1111.40 81.14 1052.90 380.14 126.99 544.60 3,297.17 10,331.31

2014.05 402.70 393.22 7.55 4321.81 355.79 33.47 0.20 7,528.78 1166.43 89.69 1798.25 389.27 128.83 588.71 4,161.17 11,689.94

2223.51 444.98 433.33 8.21 4531.86 383.54 37.49 0.20 8,063.11 1228.40 99.14 2415.88 398.61 130.72 636.39 4,909.14 12,972.26

2465.87 491.70 480.99 8.98 4732.60 414.61 42.17 0.20 8,637.12 1308.36 109.45 2415.90 408.25 132.77 689.85 5,064.58 13,701.70

2.2

Power Procurement Cost for Current Year Second Half and Ensuing Year

Basis of estimating the quantity and cost of Power Purchased This section discusses the methodology and assumptions used for estimating the quantum and corresponding cost of power purchase of the Licensee for the second half of the financial year ending March 31, 2009 and for the financial year ending March 31, 2010. With the implementation of Multi-Buyer Model (MBM) in the state from June 9, 2005, each DISCOM has been allocated a certain share of the generating stations contracted by APTransco. Nonconventional Energy sources have been allocated to the DISCOMs based on their locations while the two mini-power plants LVS and Sri Vathsasa have been allocated to EPDCL. The allocation percentages for the different DISCOMs are as follows:

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S.No. 1 2 3 4

Name of the Distribution Company EPDCL SPDCL CPDCL NPDCL

Allocation Percentage 15.8 % 22.27 % 46.06 % 15.87 %

In the following paragraphs the capacities and availabilities of all the generating sources have been described. The actual energy availability in MU for each DISCOM is simply the total generation availability for each source (except NCEs and the mini-power plants) multiplied by the percentage allocation as per MBM. The energy availability of NCEs for each DISCOM has been shown separately.

Capacity break-up of major generating sources

APGENCO The table below shows the installed capacities of the Thermal and Hydel generating stations of APGENCO as on 30-9-2008 including share in the interstate projects. The DISCOMs purchase the entire generation of APGENCO under the terms of the PPA with the generator. Source THERMAL Kothagudem-A Kothagudem-B Kothagudem-C Kothagudem-D Ramagundam-B VTPS RTPP-I RTPP-II TOTAL THERMAL HYDEL Interstate projects: Machkund, Orissa (AP share 70%) T.B. Station, Karnataka (AP share 80%) State projects: Donkarayi Upper Sileru 25.0 240.0 84.0 57.6 Installed Capacity (MW) 240.0 240.0 240.0 500.0 62.5 1,260.0 420.0 420.0 3382.5

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Source Lower Sileru Srisailam right bank PH Srisailam left bank PH Nagarjunsagar Nagarjunsagar right canal PH Nagarjunsagar left canal PH Nizam Sagar Pochampadu Penna Ahobilam Mini hydro Singur Jurala TOTAL HYDEL TOTAL APGENCO

Installed Capacity (MW) 460.0 770.0 900.0 815.6 90.0 60.0 10.0 27.0 20.0 12.6 15.0 1x39 3625.8 7008.3

CENTRAL GENERATING STATIONS Southern region: The Licensee has Power Purchase Agreements with Central Generating Stations of Southern Region to purchase power from NTPC (SR), NTPC (SR) Stage-III, NTPC -Talcher-II, Neyveli Lignite Corporation Ltd (NLC), Madras Atomic Power Station (MAPS) and Kaiga Atomic Power Station (KAPS). The share of the DISCOMs in the total capacity of the stations is provided below: AP Share (including unName of the Station NTPC-(SR) NTPC-(SR) STAGE - III NTPC-TALCHER-II NLC TS II STAGE-I NLC TS II STAGE-II MAPS KAIGA 1 & 2 KAIGA 3 & 4 TOTAL NTPC-SIMHADRI GRAND-TOTAL (CGS) Capacity MW 2100 500 2000 630 840 440 440 440* 7390 1000 8390 allocated power) MW % 735.18 35.01 183.84 36.77 429.87 21.49 126.80 20.13 219.21 26.1 47.08 10.7 148.32 33.71 146 33.17 2036.3 27.56 1000.00 100.00 3036.3 36.19

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*Note. KAIGA unit-4 is expected to come under commercial operation in Dec08. IPPs The following IPPs are under commercial operations in the State: 216MW gas-based plant at Jegurupadu by GVK Industries (GVK); 208MW gas-based plant at Kakinada by Spectrum Power Generation Ltd., 351.49 MW gas-based plant at Vijayawada by Lanco Kondapalli Power Ltd (Lanco Kondapalli). . 220 MW gas based plant at Samalkota, East Godavari District by M/s. Reliance Power Ltd. (formerly M/s.BSES). AP Gas Power Corporation Ltd (APGPCL): Joint Sector APGPCL is a joint sector gas-based power project. The allocation of power from this project is in proportion to the equity share capital of participating industries. The total installed capacity of the project along with the DISCOMs share is as given below: Source Stage I Stage II Total Inter-State purchases PTC, NTPC V V N L, TPTCL The Licensee proposes to procure power from Power Trading Corporation, NTPC Vidyut Vyapara Nigam Ltd., Tata Power Trading Company Ltd, Reliance Energy Trading Ltd. Adani etc., on need basis. Non-Conventional Energy (NCE) Sources The installed capacities of NCE projects in the state for FY 2009 and FY 2010 are as follows: Installed Capacity (MW) 100 172 272 APDISCOMs Share (MW) 16 42.8 58.8 APDISCOMs Share (%) 16 24.88 21.62

17

Type of Project Bio Mass Power Projects Bagasse Cogeneration Projects. Wind Power Projects Mini Hydel Power Projects Industrial Waste Based TOTAL

FY 2009 (MW) 192.75 182.70 84.5 47.45 18 12.74 505.06

FY 2010 (MW) 192.75 190.70 284.5 51.05 33.66

765.40

Mini-Power Plants APTransco had entered into adhoc agreement with LVS (36.8 MW) for purchase of power as per the direction of Supreme Court and had a PPA with Srivathsa (17.202 MW) power plant. These have been allocated to EPDCL. Licensee proposes power purchase from CPPs of VSP, NBFAL, Sponge Iron India Ltd, Heavy Water Plant etc., during the year 2009-10 on need basis at the rates approved by the Commission. 2.2.1 Expected major capacity additions during FY 2010

S. No. 1 2 3 4 5 6 7 8

Station Name *GVK Extension Project *Vemagiri Power Generation *Konaseema EPS Oakwell Power Ltd *Gautami VTPS-IV Jurala RTPP-III KAKATIYA-I

Type IPP IPP IPP IPP

Fuel Gas Gas Gas Gas

Capacity (MW) 176 296 356 371.2 500 5x39 210 500

APGENCO Coal APGENCO Hydel APGENCO Coal APGENCO Coal

The licensee expects new capacity additions of about 1199 MW from new IPPs subject to the supply of gas by GAIL.

18

As an alternative, in absence of Gas in Jan-09, Generation of 200 to 230 MW is expected from Jan09 to May09 from Vemagiri Power Generation by utilization of diverted gas from LANCO, Kondaplli. Similarly,Generation of 150 MW is expected from Jan09 to March09 from GVK Extn. by utilization of diverted gas from GVK Phase-I.

BASIS OF ESTIMATION OF POWER AVAILABILITY FOR FY 2009 H2 AND FY 2010

APGENCO
Thermal: The power availability for the second half of FY 2009 has been estimated by the Licensee based on actual performance for the first half of FY 2009 and the expected plant performance and maintenance schedules of APGENCO for the remaining six months of FY 2009. APGENCO Thermal ( Energy Availability- MUs) Station Name FY 2009 H2 FY 2010 VTPS- I VTPS- II VTPS- III VTPS-IV RTPP-I RTPP-II RTPP-III KTPS-A KTPS-B KTPS-C KTPS-D RTS-B KAKATIYA-I Total 1543 1442 1503 250 1560 1493 0 800 737 782 1765 220 0 12095 2965 2907 2896 2998 2961 3005 554 1576 1549 1592 3438 417 1966 28824

Sl No 1 2 3 4 5 6 7 8 9 10 11 12 13

19

Hydel: The availability from Hydel plants of APGENCO for the second half of FY 2009 has been estimated taking into consideration the inflows in to the reservoirs of Srisailam and Nagarjuna Sagar owing to good rainfall in the Krishna catchment areas during the monsoon. The projection for ensuing year is based on the expected reservoir levels at end of current year and the assumption of a normal rainfall in the ensuing year. The following table shows the projected availability for FY 2009 H2 and FY 2010: APGENCO Hydel ( Energy Availability-MUs) Station Name FY 2009 H2 MACHKUND PH AP Share 248 TUNGBHADRA PH AP Share 92 USL 226 LSR 579 DONKARAYI 72 SSLM (Right Bank) 542 NSPH 980 NSRCPH 234 NSLCPH 108 POCHAMPAD PH 77 NIZAMSAGAR PH 19 PABM 0 MINI HYDRO&OTHERS 10 SINGUR 3 JURALA 0 SSLM LCPH 830 Total 4020

Sl No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

FY 2010 220 171 481 1156 122 2006 1953 192 88 59 7 2 13 2 146 2351 8969

20

CGS NTPC- Southern region: The estimate of availability from the CGS of the Southern Region for the second half of FY 2009 is based on the actual performance for the first half of FY 2009 and the expected performance for the second half of FY 2009. The total power availability estimate from CGS for FY 09 H2 and FY 10 is as stated below: Central Generating Stations ( Energy Availability-MUs ) Station Name FY 2009 H2 NTPC- (SR) 2761 NTPC-(SR) STAGE - III 745 NTPC TALCHER-II 1649 NTPC- SIMHADRI 3948 NLC TS II STAGE- I 370 NLC TS II STAGE- II 645 NPC-MAPS 135 NPC-KAIGA 1 & 2 406 NPC- KAIGA 3 & 4 378 TOTAL 11037

Sl No 1 2 3 4 5 6 7 8 9

FY 2010 5687 1389 3118 7406 648 1146 260 817 958 21429

APGPCL
The Licensee has not projected any power available from the unutilized capacity of other shareholders in APGPCL in the 2nd half of FY 2009 as it is in the nature of infirm power. As per the agreement with APGPCL, unutilized energy in stage-I has to be purchased by AP DISCOMs. APGPCL Allocated Capacity (Energy Availability- MUs ) Sl No Station Name FY 2009 H2 FY 2010 1 APGPCL I - Allocated capacity 36 65 2 APGPCL II - Allocated capacity 130 269 Total 166 334

IPPs
The availability of power from the generating stations of GVK, Spectrum, Lanco Kondapalli and Reliance (BSES) has been projected as declared by the IPPs. IPP's (Energy Availability-MUs ) Station Name FY 2009 H2 GVK 684 Spectrum 708 Lanco Kondapalli (Gas) 1502 Reliance 683 Total 3577

Sl No 1 2 3 4

FY 2010 1581 1608 3042 1683 7914

21

The projections for FY 2009 H2 and FY 2010 are based on existing gas supply position. The availability of power from generating stations of GVK Extension, Vemagiri, Gautami and Konaseema has been projected based on the availability of expected additional gas for 2009-10. New IPPs GVK Extension Project Vemagiri Power Generation Ltd Gautami Power Ltd Konaseema EPS Oakwell Power Ltd. Total FY 2010 (projected) All figures in MU 1196 2012 2523 2221 7952

Availability from stations with DISCOM Specific Allocations

The NCE projects and the two mini power plants are not allocated on pro-rata basis but allocated to specific DISCOMs based on their locations. The availability from these sources for each DISCOM is as shown below:

Mini Power Plants: Mini-Power Plants Allocated to EPDCL ( Energy Availability-MUs) Sl No Station Name FY 2009 H2 2009-10 1 Srivathsa 47 111 2 LVS 0 0 Total 47 111

Non-Conventional Energy (NCE) Sources

Energy availability in MU for FY 2009 H2

Total ( Typewise) 609.57 370.12 35.26 56.93 51.90 72.46 2210 1206.24

Sl No 1 2 3 4 5 6 7

Station Name NCE - Bio-Mass NCE - Bagasse NCE - Municipal Waste to Energy NCE - Industrial Waste based power project NCE - Wind Power NCE - Mini Hydel NCE - NCL Energy Ltd Total Availability ( DISCOM-wise)

SPDCL 319.41 115.11 17 0 1.94 23.47 2.2 479.13

NPDCL 75.9 128.71 0 0 0 7.07 1.6 213.28

EPDCL 84.6 93.69 0 45.86 0 11.29 1.6 237.04

CPDCL 129.66 32.61 18.26 11.07 49.96 30.63 4.6 276.79

Energy availability in MU for FY 2010

Sl No 1 2 3 4 5 6 7

Station Name NCE - Bio-Mass NCE - Bagasse NCE - Municipal Waste to Energy NCE - Industrial Waste based power project NCE - Wind Power NCE - Mini Hydel NCE - NCL Energy Ltd Total Availability ( DISCOM-wise)

SPDCL 682.37 290.73 34.28 0 94.57 47.25 4.5

1153.7

NPDCL 153.05 259.56 0 0 0 14.26 3.2

430.07

EPDCL 170.59 188.94 0 98.23 0 31.86 3.2

492.82

CPDCL 223.20 65.77 36.83 76.41 214.95 61.77 9.3

688.23

Total ( Typewise)
1229.21 805 71.11 174.64 309.52 155.14 20.2 2764.82

Losses external to APTransco system

The losses external to the APTransco system are estimated to be 4.17 %. This is applicable for procurement of power from Central Generating Stations.

Summary
A summary of the source wise current estimate of availability for FY 2009 H2 and FY 2010 is presented below. Summary Energy Availability Table- MUs Sector FY 2009 H2 APGENCO - Thermal 12095 APGENCO - Hydel 4020 CGS (SR) 11037 APGPCL 166 IPPs 4218 NCE 1206 Mini Power Plants 47 Bilateral Purchases 2132 Total 34921

Sl No 1 2 3 4 5 6 7 8

FY 2010 28824 8969 21429 334 15867

2765

111 378 78675

23

Power purchase tariffs

APGENCO
A fixed cost of Rs.3112.12 crores for the existing stations and including RTPP-II, III, VTPS-IV and Jurala for FY 2010 is considered in the ARR. The station-wise variable rates for APGENCO thermal plants that have been adopted for second half of FY 2009 and full FY 2010 are as follows Station VTPS (I, II, III) VTPS-IV RTPP-I RTPP-II RTPP-III KTPS (A, B, C) KTPS- D RTS-B KAKATIYA-I Variable rate (Rs./kWh) 1.57 1.4 1.74 1.74 1.74 1.28 1.16 1.36 1.16

VARIABLE COSTS FOR SLBPH APERC vide orders Dt 16-10-07 in IA No.11/07 in OP No.4/07 directed to pay the SLBPH energy Charges (Conventional Mode) monthly as per the methodology indicated in Para 475 & 476 of Tariff order 2004-05 subject to year ending adjustment. For Srisailam Laft Bank powerhouse (SSLBPH), variable cost of Rs. 0.86/unit is considered. However, the above rates are for estimation purpose only and the actual payments will be made as per the methodology specified in paragraphs 475 to 477 of Tariff Order 2004-05 and reiterated in paragraph 375 of Tariff order 2005-06.

24

NTPC-TALCHER -II (2000 MW)

The fixed costs are projected based on CERC order dt.31-01-2008 and revised allocation of 21.49 % w.e.f. 18-07-2008. Variable charges are projected based on Sep 2008 bill. Total capacity charges of 2000 MW TALCHER STAGE-II per annum = Rs. 863.5 Crs Capacity charges payable by APDISCOMS per annum for 429.87 MW entitlement = Rs.185.57 Crs. Variable rate = Rs.0.76/kwh

NTPC (SR) (2100 MW).

The fixed costs are projected based on CERC order dt.30-07-2008 and revised allocation of 35.01 % w.e.f. 18-07-2008. Variable charges are projected based on Sep 2008 bill. CERC vide order dt.30-072008 approved fixed charges of Rs.470.53 Crs. per annum Total capacity charges of 2100 MW TALCHER STAGE-II per annum = Rs. 470.53 Crs Capacity charges payable by APDISCOMS per annum for 735.18 MW entitlement = Rs.164.73 Crs. Variable rate = Rs.1.34/kwh

NTPC (SR) STAGE-III (500 MW) The fixed costs are projected based on CERC order dt.15-10-2007 and revised allocation of 36.77 % w.e.f. 18-07-2008. Variable charges are projected based on Sep 2008 bill . Total capacity charges of 500 MW NTPC (SR) STAGE-III per annum = Rs. 263.31 Crs. Capacity charges payable by APDISCOMS per annum for 183.84 MW entitlement = Rs.96.81 Crs. Variable rate = Rs.1.28/kwh.

NTPC- SIMHADRI

The fixed costs of NTPC (Simhadri) are projected based on CERC order dt.18-06-2008 and variable charges based on Sep 2008 bill. 25

Fixed cost per annum: Rs. 462.78 Crs Variable rate : Rs. 1.15/kwh

NLC TS II The fixed costs are projected based on CERC order dt.04-06-2008. Variable charges are projected based on Sep 2008 bill . Stage I Total capacity charges of 630 MW NLC STAGE-I per annum = Rs. 121.96 Crs Fixed cost payable by APDISCOMs per annum for 20.13 % entitlement = Rs. 24.55 Crs/year Variable rate Stage II Total capacity charges of 840 MW NLC STAGE-II per annum = Rs. 175.19Crs Fixed cost payable by APDISCOMs per annum for 26.09 %MW entitlement = Rs. 45.7 Crs/year Variable rate = Rs. 1.37/kwh = Rs 1.46/Kwh

MADRAS ATOMIC POWER STATION (MAPS) (440 MW): Government of India, Department of Atomic Energy (Power Section) notified the tariff for supply of power from MAPS vide Tariff Notification dated 22.09.2006. As per the notification the tariff effective from 1.4.2006 is fixed at 181.18 Ps/Kwh. The tariff is subject to fuel and Heavy water adjustment charges. Taking into account the revisions subsequent to 1.4.2006 in insurance and in the rates of fuel and Heavy water, the tariff applicable for September 2008 is Rs. 1.8922 /Kwh and the same has been adopted for arriving at projected costs for H2 of current year and ensuing year. The share of AP in MAPS was revised to 10.7 % w.e.f. 07.04.2007. Fixed cost is considered at Rs. 0.71/unit and variable cost at Rs. 1.18/unit.

KAIGA ATOMIC POWER STATION 1 &2 (KAPS) (440 MW): 26

Government of India, Department of Atomic Energy (Power Section) notified the tariff for supply of power from KAIGA 1 &2 vide Tariff Notification dated 21.09.2005. As per the notification, the tariff effective from 1.7.2005 is fixed at 279.5 Ps/Kwh. The tariff is subject to fuel and Heavy water adjustment charges. Taking into account the revisions subsequent to 1.7.2005 in insurance and in the rates of fuel and Heavy water, the tariff applicable for September 2008 is Rs. 2.8878/Kwh and the same has been adopted for arriving at projected costs for H2 of current year and ensuing year. Fixed cost is considered at Rs. 1.90/unit and variable cost at Rs. 0.99/unit.

KAIGA ATOMIC POWER STATION 3 & 4 (KAPS) (440 MW): Unit 3 (220 MW) of KAIGA Atomic Power Station was declared under commercial operation w.e.f 06.05.07. Unit 4 (220MW) is expected to come under commercial operation shortly. Pending finalization of Tariff for KAIGA 3 & 4 by Department of Atomic Energy, rates of KAIGA 1 & 2 are being adopted for making payments for supply of power from KAIGA 3 & 4. The KAIGA 1 & 2 tariff applicable for September 2008 has been adopted for arriving at projected costs for H2 of current year and ensuing year. The share of AP in KAIGA 3 & 4 is 33.17. Fixed cost is considered at Rs. 1.9/unit and variable cost at Rs. 0.99/unit. Other Costs for CGS (SR) The Other Costs for CGS (SR) have been calculated based on the previous years cost that the Licensees incurred. CGS (SR) incentive: Incentives for CGS (SR) for 2008-09 and 2009-10 are arrived at based on CERC notification dt.26-304. Total Incentive payable :-Incentive shall be payable at a flat rate of 25.0 Ps/kwh for ex-bus

scheduled energy corresponding to scheduled generation in excess of ex-bus energy corresponding to target PLF (Target PLF for NTPC Stations -80%, for NLC 75 % and for MAPS & KAIGA Stations there is no incentive). As per CERC orders, the incentive amount payable to NTPC & NLC is to be shared by the beneficiaries in the ratio of energy scheduled beyond target PLF.

APGPCL
The costs for purchase from APGPCL are as per projections given by APGPCL:

27

Cost component Demand Charges (Rs./KVA) Stage-I Stage-II Stage-I Fixed cost (Rs per kWh) Variable cost (Rs per kWh) Stage II Fixed cost (Rs per kWh) Variable cost (Rs per kWh) 75 0.28 1.18 0.12 0.88

There are no demand charges for Stage II of the generating station under the terms of the Memorandum of Understanding of April 1997.

IPPs
GVK: - JEGURUPADU POWER PROJECT The fixed cost is fully recoverable at 68.5% PLF. The variable charge of Rs 1.28 / KWh has been computed by assuming that 70% of the units will be generated on GAIL gas and 30% of the units will be generated on Reliance gas.. The capital cost of this plant is Rs.816 crores. The fixed cost is Rs. 114.63 Crores per annum for FY 2009 and Rs.96.0 Crores for FY 2010. The fixed cost includes foreign exchange variations payable by APDISCOMs to the company as per the provisions of Power Purchase Agreement. The actual fixed cost as settled by the Licensee may be different from the estimates as presented above on account of the monthly Foreign Exchange Rate Variation (FERV). to the DISCOMs. Deemed/Notional generation claims will be payable to the company up to 85% PLF as per the incentive formulae provided in the PPA. Computation of incentive has been carried out based on the formula provided in the PPAs. The PLF used for estimating incentives is based on the generators projections of plant performance for FY 2010. Incentive payment = Equity x (PLF - 68.5).x. 0.00525 Equity = Rs 244 .8 Crores The Licensee submits to the Honble Commission to allow the Licensee to subsequently claim the change in fixed cost on account of FERV

Projected incentive for FY 2010: Rs.21.21 Crs

28

SPECTRUM The fixed cost is fully recoverable at 68.5% PLF. The variable charge of Rs 1.24 / KWh has been computed by assuming that 70% of the units will be generated on GAIL gas and 30% of the units will be generated on Reliance gas.. The fixed cost of Rs 138.13 Crores has been adopted for FY 2009 and Rs 100.0 crores for FY 2010. The fixed cost is inclusive of foreign exchange variations payable by APDISCOMs to the company as per the provisions of Power Purchase Agreement. The actual fixed cost as settled by the Licensee may be different from the estimates as presented above on account of the monthly Foreign Exchange Rate Variation (FERV). The Licensee submits to the Honble Commission to allow the Licensee to subsequently claim the change in fixed cost on account of FERV from the DISCOMs. Deemed/Notional generation claims will be payable to the company up to 85% PLF as per the incentive formulae provided in the PPA. Computation of incentive has been carried out based on the formula provided in the PPAs. The PLF used for estimating incentives is based on the generators projections of plant performance for FY 2010. Incentive payment = Equity x (PLF-68.5)x0.004 (IF PLF > 68.5 < 80.5) Incentive payment = Equity x (PLF - 68.5).x. 0.005 (if PLF > 80.5 and < 85.5 ) Incentive payment = Equity x (PLF - 68.5).x. 0.006 (if PLF > 85.5 ) Equity = Rs 117.92 Crores

Projected incentive for FY 2010 : Rs.9.73 Crs. LANCO KONDAPALLI The fixed charges are fully recoverable at 80% PLF The variable charge of Rs 1.34 / KWh has been computed by assuming that 70% of the units will be generated on GAIL gas and 30% of the units will be generated on Reliance gas.. Estimated fixed cost for of FY 2009 Estimated fixed cost for FY 2010 : : Rs.310.39 Crs. Rs.312.0 Crs.

RELIANCE INFRASTRUCTURE LTD (BSES) 29

The Fixed charge is fully recoverable at 85% PLF. The variable charge of Rs 1.21 / KWh has been computed by assuming that 70% of the units will be generated on GAIL gas and 30% of the units will be generated on Reliance gas.. Based on the formula provided in the PPA, the fixed cost works out to Rs. 152.10 Crs. for FY 2009. The fixed cost for FY2009-10 is calculated as Rs.159.72 Crs.

30

GVK EXTENSION POWER PROJECT

During diversion of GVK Phase-I gas to GVK Extn. ,the expected generation from GVK Extn. for the period from Jan09 to March09 is about 324MU.The energy availability for FY 2009 is based on expected additional gas availability. The fixed cost per unit is 96 Ps /Kwh considering USD rate at Rs. 48/$ . Based on GCV of Gas at 9600 Kcal/SCM, basic price of reliance gas at US $ 4.2/MMBTU, Station Heat Rate at 1850 Kcal/Kwh, Auxiliary consumption at 3 %, the variable rate works out to 178 Ps/Kwh.

VEMAGIRI POWER GENERATION LIMITED

Vemagiri Power generation Ltd amended PPA on 2-5-2007 with modification in fuel definition making fuel as natural gas only. The COD of the project was declared on 16-09-2006. The project is awaiting for natural gas supply. During diversion of Lanco gas to Vemagiri ,the expected generation from Vemagiri for the period from Dec08 to March09 is about 668MU. The energy availability for FY 2009 is based on expected additional gas availability. The fixed cost per unit is 99 Ps /Kwh considering USD rate at Rs. 48/$. Based on GCV of Gas at 9600 Kcal/SCM, basic price of reliance gas at US $ 4.2/MMBTU, Station Heat Rate at 1850 Kcal/Kwh, Auxiliary consumption at 3 %, the variable cost works out to 178 Ps/Kwh.

GAUTAMI POWER PROJECT

The energy availability for FY 2009 is based on expected additional gas availability. The fixed cost per unit is 99 Ps /Kwh considering USD rate at Rs. 48/$. Based on GCV of Gas at 9600 Kcal/SCM, basic price of reliance gas at US $ 4.2/MMBTU, Station Heat Rate at 1850 Kcal/Kwh, Auxiliary consumption at 3 %, the variable rate works out to 178 Ps/Kwh.

KONASEEMA EPS OAKWELL POWER LTD

The energy availability for FY 2009 is based on expected additional gas availability. The fixed cost per unit is 99 Ps /Kwh considering USD rate at Rs. 48/$. Based on GCV of Gas at 9600 Kcal/SCM, basic price of reliance gas at US $ 4.2/MMBTU, Station Heat Rate at 1850 Kcal/Kwh, Auxiliary consumption at 3 %, the variable rate works out to 178Ps/Kwh.

31

MINI POWER PLANTS

LVS POWER LTD (36.8 MW)

LVS is a Mini Power Plant originally contemplated for sale of power to third parties. Commission directed the developer to sell energy to APTRANSCO.

The

However the company was directed to back down the plant from 3.4.2003 onwards due to increase in variable cost. During the back down period fixed charges payable to the company for the FY 2009 is Rs.27.73 Crs. FY 2010 is 29.77 Crs.

SRIVATHSA POWER PROJECTS LTD (17.202 MW)

It is also a Mini power plant originally contemplated for sale of power to third parties. However, as directed by the Commission, the developer has agreed to sell the energy to APTRANSCO withdrawing the court case against APERC order passed in O.P.No.70-A/2001, Dt. 4.5.2001 and after series of negotiations developer furnished their proposals with a capital cost of Rs.56.88 crores. Fixed cost for 6th year (2008-09) is Rs.1.119 per unit and Variable cost during 6th year is Rs.1.2 per unit. The fixed cost for 2008-09 is Rs. 13.38 Crores. For the year 2009-10, fixed cost of Rs.1.057 unit and variable cost of Rs.1.2 unit has been adopted. The annual fixed charges work out to Rs.11.63 Crs for 2009-10.

NON CONVENTIONAL ENERGY (NCE) SOURCES:

The Commission as per its Order in R.P.84/2003 in O.P.-1075/2000 dated March 20, 2004 has announced the tariff applicable to NCE projects with effect from 1.4.2004. Subsequently, the Commission has revised the incentive in these projects for generation above threshold PLF and tariff for Mini Hydel projects in its orders on review petitions filed by NCE developers/associations against orders dt.20.3.2004. The NCE developers approached Honble High Court on the Commissions orders. Honble High Court issued interim directions allowing APTRANSCO to implement the revised tariff in addition to payment of 50% of the differential amount between the old rate and

32

revised tariff. Honble High Court in June 2005 disposed the cases filed by NCE developers, giving liberty to the Developers to file appeals before Appellate Tribunal for Electricity, New Delhi. The NCE developers filed appeals before Appellate Tribunal for Electricity .The Appellate Tribunal vide orders dt. 02.06.06 set aside APERC orders dt. 20.03.04 with a direction to APTRANSCO/DISCOMS to continue purchase of energy from NCE projects at a Tariff paid prior to the Commission orders. APTRANSCO/DISCOMS filed appeals before Honble Supreme Court against the Tribunal order dt.02.06.06. The Honble Supreme Court passed interim orders in the appeals and directed its office to issue notice to NCE developers. In the light of Honble Supreme Court orders, the DISCOMS are continuing payment of 50 % of differential amount in addition to revised Tariff to NCE developers. The GOAP filed an implead petition before Honble Supreme Court to clarify its stand in the case. The Honble Supreme Court has permitted the implead petition. The appeals are yet to be heard.

Bilateral Purchases

Month-wise shortfall has been estimated based on the availability and requirement. This deficit will be met from external sources such as UI, running existing IPPs on Naphtha, power traders and power exchange.

D-D Purchases
Month-wise availability of each Discom has been calculated based on PPA allocation and the requirement of each Discom has been calculated to arrive at Transco periphery, which has been calculated by grossing up the sales with losses. The D-D purchases /sales for each Discom have been estimated. The D-D pool price has been calculated based on the average fixed cost and the highest marginal cost station. The D-D price has been estimated to be Rs. 2.42/kwh.

33

ENERGY REQUIREMENT
Based on the availability shown above and the energy requirement from all the DISCOMs, the actual energy to be purchased has been projected as follows: DISCOMS EPDCL SPDCL CPDCL NPDCL Total Total Energy Requirement (after APTRANSCO and PGCIL Losses) FY 2008 H1 Purchase Annual Purchase (Net of Sales) FY 2009 H2 MU
5,167 7,308 16,289 6,146 34,909

FY 2010 MU
11,247 15,934 35,938 12,026 75145

33,160 31463.39

71,459

66,3 73.05

75,14 5.69

SUMMARY OF POWER PURCHASE FOR YEAR 2008-09 AND ENSUING YEAR 2009-10.
Based on the availability, requirement and costs for each source, the summary power purchase cost for the Sector is projected as follows: FY 08-09 Projection (Current Year) Power Purchase Station MUs APGENCO - Thermal 23175 APGENCO - Hydel 8202 CGS 13298 NTPC Simhadri 7732 NTPC - ER 0 IPPs 6839 APGPCL 342 Others (NCEs) 7177
Other Purchases ( Naphtha, UI, ISP)

Fixed Cost Rs. Crs. 2117 762 463 0.00 780 13 41

4,175

Variable Cost Rs. Crs. 3566 166 1558 859 0.00 752 36 4487
3,919 11,426

Other Costs Rs. Crs. 83 0 157 31 0 22 0 0

295

Total Costs Rs. Crs. 5766 166 2477 1353 0.00 1554 49 4528
3,919 15,895

Total

5,260 66,764

34

FY 09-10 Projection (Ensuing Year) Power Purchase Station MUs APGENCO - Thermal 25,294 APGENCO - Hydel 8,969 CGS 14,023 NTPC Simhadri 7,406 NTPC - ER IPPs APGPCL Others Total
15,867 334 2,875

Fixed Cost Rs. Crs. 3112 865 463 1473 5 41 5959

Variable Cost Rs. Crs. 3633 201 1637 852 2426 31 1168 9948

Other Costs Rs. Crs. 62 162 23 60

Total Costs Rs. Crs. 6807 201 2664 1338 4021 36 1209
16,215

307

75146

2.3

Capital Investment Plan

The licensee hereby submits to the Honble Commission the procedure adopted for Capital Expenditure (Capex) estimation for the control period. The total Capex estimated comprises of two components namely, Base Capex and Other Capex. The estimation of each of the components of total Capex is as mentioned below.

2.3.1 Base Capital Expenditure

The Base Capex is planned to cater the load growth and network strengthening. The following methodology has been adopted for the estimation of the Base Capex:

Methodology Sub-division Details

The following data has been gathered for all the sub-divisions in a DISCOM:

35

Sales Forecast Projection of sub-division wise sales for the control period has been carried out on the basis of the actuals of the last three years. The sales projections were done for LT, HT 11 kV, total HT sales and the total sales for the DISCOM for each year in the control period. The growth-rates were calculated for each sub-division for each year in the control period.

Sub-division Classification The classification of sub-divisions as Urban, Semi-urban and Rural was done on the basis of load factor at PTR level of the sub-division. The load factor of the sub-division is calculated using sum of the HT 11 kV and LT sales; and the total installed capacity of the sub-division (which is the sum of the installed capacities of all the PTRs in all sub-stations in a sub-division). All those sub-divisions having load factor 20% more than the average load factor of the DISCOM are classified as Urban subdivisions, and those having load factor 20% less than the average load factor of the DISCOM are classified as Rural sub-divisions. The remaining sub-divisions have been classified as Sub-Urban. All the sub-stations in a sub-division have been assumed to have the same classification as that of the subdivision.

2.3.1.1

Substation Details
Power Transformer Details The power transformer (PTR) capacities installed in a substation were gathered along with the peak loading details of PTRs. The data used for analysis is the year end values of 2007-08 and is as received from the field to ensure that the model captures and reflects the real situation as in the fields. The peak loading details as received from the field was validated to limit the peak loading on the PTRs based on certain criteria and also to ensure that the equivalent secondary current of the PTRs in a substation is less than the total feeder currents in a substation by a certain margin.

Feeder Details The details captured for analysis are the total number of feeders installed in a substation and the peak currents flowing through the same. This data too is as received from the field and correspond to the 2007-08 end year values. The peak current data in feeders of a sub-station have been validated to ensure that the total currents in the feeders in a substation is higher than the equivalent secondary current of the PTRs in a substation by a certain margin and also not exceeding certain limits which have been set depending upon the classification of the substation.

36

Distribution Transformer Details The total number of distribution transformers catered by a substation at the end of the year 2007-08 has been considered. The DTR wise peak loading hasnt been considered though the number has been categorized in various load bands.

2.3.1.2

Trigger Points for Network Additions (Substations; PTRs; Feeders; DTRs)

Substations The PTR and feeder loadings in a substation have been assumed to grow at the same rate as the yearon-year sales growth of sum of LT and HT 11 kV sales in that subdivision. The substation capacity limit has been fixed at 16 MVA for Urban substations, 10 MVA for sub-urban substations, and 5 MVA for rural substations. A new substation is proposed if all of the following happen: 1 If an additional PTR is required and the substation cannot accommodate any further PTRs based on the criteria mentioned above. 2 Average loading on PTRs in substation is greater than 80%. A certain loading of the PTRs in the present substation is transferred to the new substation. The PTR capacity to be installed in the new substation is a factor of the PTR utilization of the present substation, and can be either of 5 MVA; 8 MVA; 10 (5 + 5) MVA or 13 (8 + 5) MVA. The load transfer from a present substation to a new substation has been factored in such a way that in most situations the average loading on PTRs in the present substation after the load transfer doesnt exceed 80% in any of the years in the control period. The load transfer from a present substation to a new substation in the later years in the control period has been increased to ensure that total network is well balanced at the end of the control period. The number of feeders proposed for a new substation is a factor of the new capacity installed in that substation, the average new substation loading, and a maximum feeder current limit of 60 Amps. For year 2008-09, as the projects have already started for new substations installation, and a few of them proposed for this year are already operational, the difference in the additions as proposed by the model and the projections as per the projects wing for 2008-09 has been carried forward to the subsequent years in the control period. This has been done so to ensure that the network is strengthened to cater to the load growth expected during the control period.

37

Power Transformers A new PTR is proposed if all of the following happen: 1 If the peak loading of any of the PTRs installed exceeds 80% of its capacity and if the substation can accommodate a new PTR. The PTR capacity proposed is either 5 MVA or 8 MVA, depending on substation capacity. The final loading on the PTRs after a new PTR is proposed is such that the distribution of peak loads on all PTRs is the same. This shall ensure that all the PTRs are loaded equally unlike the scenario of peak loading on one of them being very high. A similar carry forward approach has been adopted for the PTR additions as done for substations.

Feeders The total number of feeders in a substation has been restricted to 16. New feeders are proposed if all of the following happen: 1 Peak feeder current exceeds more than 100 Amps; 2 If no new substation addition is being proposed; 3 If additional feeder can be accommodated in the substation. The peak currents in the feeders are distributed equally among the ones over loaded and the new feeders proposed. A similar carry forward approach has been adopted for the feeder additions as done above for substations and PTRs.

Distribution Transformers The number of DTRs has been categorized in various load bands as can be seen in the table below:
DTR Loading Information ( Beginning of the Year ) Name of Sub-Station No. of DTRs' SS - 1 SS - 2 SS - 3 SS - 4 192 225 365 153 <40% 0 0 0 0 40-60% 21 115 166 59 60%-80% 123 65 53 18 80%- 100% 48 45 146 76 >100% 0 0 0 0

38

The median value of the bands has been assumed to grow at the same rate as that of year-on-year grow rate of LT sales. For e.g., the median value of the band 40%-60% is 50%, and if a substation has LT sales growth of 10% for that year, the median loading value would shift to 55%. As there is a shift in the median value, some of DTRs in this band of 40%-60%, may have peak loads more than 60%. Certain of these DTRs which may be overloaded have been shifted to the next band level.
Shift in DTR loading during the year No. of DTRs' shifted 213 182 486 244

40% 140 112 310 158

40-60% 0 0 0 0

60%80% 3 14 21 7

80%100% 22 11 9 3

>100% 48 45 146 76

Of the 21 DTRs in the band of 40%-60%, 3 DTRs have moved to the next band of 60%-80% for the shift in median from 50% to 55%. The shift of DTRs to other bands also has been worked out on similar lines. We have assumed that, for LT sales growth of around 14% to 25% with respect to various load bands, about one-fourth of the DTRs would shift from one band to the next higher band. The shift is more than one-fourth for higher growth rates and less for lesser growth rates The addition of DTRs has been proposed incase the loading exceeds 80%. These overloaded DTRs are supported with equivalent number of additional DTRs in the same year. The overloaded and new DTRs would share the load and hence at the end of the year shall have a loading of approximately 40%. As for the e.g. mentioned above, the final scenario would look as captured in table below:
DTR Loading Information ( End of the Year ) DTRs added during the year

No. of DTRs' 262 281 520 232

40% 140 112 310 158

40%60% 18 101 145 52

60%80% 104 68 65 22

80%100%

>100%

70 56 155 79

A similar carry forward approach has been adopted for the DTR additions as done above for others.

39

2.3.1.3

Network Cost Details

The following approach has been considered to estimate the Network cost details which is important to convert the network additions to Base Capex: 1 Substation Unit Cost (Rs. / substation): For calculating the cost of a substation added we have considered the following to be a part of a substation unit: 33 kV line of 6 Kms; 132/33 kV tapping bay; 33 kV VCB; Substation unit cost excludes the PTRs, 11 kV bay and AB switches; It includes all the relevant material cost, construction cost and labor charges.

The substation unit cost arrived above is the value pertaining to 2008-09. Considering the possible increase in material and labor costs, the substation cost has been escalated by a certain percentage year-on-year. The number of substation additions each year has been multiplied by the substation unit cost for that year to arrive at the total cost of installing all new substations in that year. 2 PTR Unit Cost (Rs. / MVA): For calculating the cost of installing a PTR in a substation we have considered the following for the year 2008-09: PTR of 5 MVA capacity; HV Breaker; LV Breaker; Associated Equipment and labor cost.

The cost incurred for installing a 5 MVA PTR as above is divided with the PTR size to arrive at the PTR unit cost. The total MVA addition in a year, which includes the additions in existing and new substations, is multiplied with the PTR unit cost for that year to arrive at the total cost of installing all the PTRs. On similar lines as the substation unit cost, the PTR unit cost of 2008-09 has been escalated by a certain percentage year-on-year to get the PTR unit cost for subsequent years of the control

40

period. This has been done to account for the possible increase in the material and labor cost during the 2nd control period. 3 Feeder Unit Cost (Rs. / feeder): For calculating the cost of a installing a feeder in a substation we have considered the following for the year 2008-09: Feeder breaker and metering set (including CT/PT); Bay extension; 11 kV line; Poles; Associated Equipment and labor cost.

The total feeder addition in a year, which includes the additions in existing and new substations, is multiplied with the feeder unit cost for that year to arrive at the total cost of installing all the feeders. The feeder unit cost of 2008-09 has been escalated by a certain percentage year-on-year to get the feeder unit cost for subsequent years of the control period. 4 DTR Unit Cost (Rs. / kVA): For calculating the cost of a installing a DTR we have considered the following for the year 2008-09: 100 kVA DTR cost; AB switches; DTR structure; 0.3 km of LT line; 0.4 km of 11 kV line; Associated Equipment and labor cost.

The cost incurred for installing a 100 kVA DTR as above is divided with the DTR size to arrive at the DTR unit cost. The total kVA addition in a year is multiplied with the DTR unit cost for that year to arrive at the total cost of installing all the DTRs. The DTR unit cost of 2008-09 on similar lines as others above has been escalated by a certain percentage year-on-year to get the DTR unit cost for subsequent years of the control period.

41

5 Escalation Factor: The escalation parameter that has been considered on the unit costs of 2008-09 to arrive at the unit costs for 2nd control period is as mentioned below in the table:
2008-09 2009-10 3% 2010-11 3% 2011-12 7% 2012-13 7% 2013-14 7%

2.3.2

Network Additions Summary

In this section, the details of the network additions of all the DISCOMs are provided for the 2 nd control period. In the network additions, the substation additions, PTR capacity additions, Feeder additions, and DTR additions has been captured.

2.3.2.1

NPDCL

The network to be added in the 2nd control period in NPDCL is as mentioned below in the table:
NPDCL Substation Additions PTR Additions Feeder Additions DTR Additions Unit Nos. MVA Nos. kVA FY 0809 65 625 520 598,00 0 FY 09-10 78 697 721 1,155,72 2 FY 1011 64 636 399 895,93 2 FY 1112 86 721 454 885,67 4 FY 1213 64 437 229 161,32 2 FY 1314 62 385 232 163,30 0 Total (FY 09-10 to FY 13-14) 354 2,876 2,035 3,261,95 0

2.3.3

Other Capital Expenditure Apart from the base capital expenditure projected based on the load growth and existing load on the net work, it is proposed to invest and amount of Rs.2, 754.00 crores for loss trajectory, technology up gradation and system improvement of existing net work. The expenditure is basically divided into following heads:

1. 2. 3. 4. 5.

AT&C loss reduction Reliability Improvement & Contingency Schemes Renovation & Modernisation Technology Upgradation New Consumer Capex 6 Civil Infrastructure Development

Loss Reduction: The licensee proposes to invest in the following areas under loss reduction schemes 1 Meter replacement: In order to reduce commercial losses, the licensee proposes to replace 467960 nos existing electromechanical meters with high quality type during current fiscal year 42

and ensuing control period of 5 years which is expected to incur an expenditure of Rs 25 Crores 2 HVDS Conversion: The NPDCL has a predominant agricultural consumer base of an approximately 8 lakh consumers which contribute more than 45% of total sales. Hence, the licensee feels essential to reduce technical losses by converting existing LT distribution network to 11KV, laying LT cables and by erecting small capacity of DTRs 16/25 KVA in place of existing 100/63 KVA DTRs. Accordingly, the licensee proposes to take up HVDS works during the current fiscal year and ensuing control period which would incur about Rs. 741 Crores. 3 MRI instruments: The licensee intends to increase the accuracy in metering by taking all the electronic meter readings through Meter Reading Instruments only. These MRIs not only prevent disputes between consumers and the licensee over meter readings but also avoid erroneous readings when taken manually. The licensee estimates an expenditure of Rs0.81Crores during current fiscal year and ensuing control period. 4 Replacement of existing 34sqmm conductor with 55sqmm conductor: As a step to reduce the technical losses, the licensee proposes to replace existing worn out 35sqmm conductor of about 11500KM 11KV line with 55sqmm conductor and accordingly the licensee expects to incur an expenditure of Rs26Crores during current fiscal year and ensuing control period. Network Additions Sl. No.
1. 2.

Investment Area
AT & C Loss Reduction Meter Replacement ( Installation of High Quality meters) HVDS Conversion - Existing DTR capacity on the network proposed for conversion - Projected DTR capacity on the proposed HVDS network -Difference in DTR capacity ( Average DTR capacity assumed for HVDS network) - No of new DTRs required for HVDS network Laying of AB cables MRI instruments Replacement of existing 34 sqmm conductor with 55 sqmm conductor

Unit s Nos.

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

96860

95600

87500

73000

60000

55000

KVA KVA KVA KVA Nos. Kms. Nos. Kms.

192000 240000 240000 20 12000 2400 55 1921

192000 240000 240000 20 12000 2400 50 1673

192000 240000 240000 20 12000 2400 50 1323

128000 160000 160000 20 8000 1600 55 1222

120000 150000 150000 20 7500 1500 50 1120

120000 150000 150000 20 7500 1500 55 952

3. 4. 5.

43

Financial Summary (in Rs)

Sl. No. Investment Area 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

1 2

3 4 5

AT & C Loss Reduction Meter Replacement ( Installation of High Quality meters) in HVDS Conversion Cost of New DTR (additional capacity) Laying of AB cables MRI instruments Replacement of existing 35 sqmm conductor with 55 sqmm conductor SUB TOTAL ( In Rs Crores

48430000

49234000

46414375

41433449.5

36438732.3

35740323.26

1117800000 249360000 1265000 55901100 147.28

1151334000 256840800 1184500 50144829 150.87

1185874020 264546024 1220035 40843907.37 153.89

845923467.6 188709497.1 1435981.195 40366623.31 111.79

848566978.4 189299214.3 1396818.072 39587038.77 111.53

907966666.9 202550159.3 1644054.87 36004411.76 118.39

Reliability improvement and Contingency Schemes

The licensee intends to improve its reliability in power supply by reducing interruptions and improving the existing system by implementing the following schemes. 1 a) Reliability Improvement schemes Providing sectionalizers: The licensee proposes 3000nos AB switches as sectionalizers in 11KV lines to sectionalize the faulty line from the system in the event of break downs and line clears/ maintenance thereby restoring supply to the consumers as much as possible. This scheme is expected to commence in the current fiscal year and complete by the end of ensuing control period. Accordingly, an amount of Rs2.31crores approximately is estimated to be incurred during the above period. b) Reconductoring of lines: The licensee also proposes to replace the damaged conductor of existing lines with the similar size of conductor to prevent accidents and to avoid interruptions to the power supply to the consumers. Accordingly it is expected to carry out reconductoring work for 300KM of existing 11KV lines, which would incur an amount of Rs0.15Crores during the current fiscal year and ensuing control period. c) Replacing OH line with UG cables (at road crossings etc): The licensee aims at avoiding electrical accidents with power lines at road crossings and highly congested and densely populated locations due to low ground clearances as a result of escalation of road and other reasons. During the current fiscal year and for ensuing control

44

period, the licensee estimated to replace 40 KM of overhead line with XLPE UG cable at required locations which would incur an expenditure of Rs15.27Crores during the current fiscal year and ensuing control period.

Contingency schemes

- Provision of alternate supply at 33KV level: Under this scheme the licensee aims at providing alternate 33KV supply to 100Nos substations, which have a single source of 33KV supply. It is estimated that this scheme requires 500KM of new 33KV line and 200Nos new 33KV bays. To this end, the implementation of scheme would incur Rs25.38Crores during current fiscal year and ensuing control period.
Provision of alternate supply at 11KV level: The licensee intends to erect 300KM 11KV line to

provide alternate 11KV supply for improving reliability in power supply by providing supply to a part of feeder in the event of break downs, line clears etc. Accordingly, an amount of Rs 8.36Crores approximately is expected to be incurring during the present fiscal year and ensuing control period.
Provision of alternate supply for LT consumers: In the event of a distribution transformer failure, it

is necessary to have an alternate LT supply from adjacent DTRs to the existing LT lines. Hence 262KM of LT line is proposed for above purpose, which would incur an amount of Rs 4.62Crores during the current fiscal year and ensuing control period. Network Additions
Sl. No . Unit 200809 200910 201011 201112 201213 201314

Reliability Improvement & Contingency Schemes Reliability Improvement Auto-reclosers Sectionalisers Reconductoring of lines Replacing OH line with UG cables ( at road crossings etc) Others ( Pls Specify) Contingency Schemes - Provision of alternate supply at 33KV SS/ Consumers - Addition of 33KV lines - No. of Bays -Provision of alternate supply at 11KV Consumer - Addition of 11KV line - No. of Bays -Provision of alternate supply for LT consumers

Nos Nos Kms Kms

0 700 70 10

0 600 65 8

0 475 55 7

0 450 45 5

0 400 35 5

0 375 30 5

Kms Nos

90 36

85 34

85 34

85 34

85 34

70 28

Kms Nos

70 3.5

60 3

50 2.5

45 2.25

40 2

35 1.75

45

- Addition of LT line ( for ring fencing etc)

Kms

50

50

45

42

40

35

Financial Summary (in Rs)

Sl. No. 1 Investment Area Reliability Improvement Auto-reclosures Sectionalisers Reconductoring of lines Replacing OH line with UG cables Others ( Pls Specify) SUB TOTAL ( In Rs crores) Contingency Schemes - Provision of alternate supply at 33KV level - Addition of 33KV lines - Bays -33 kV SUB TOTAL ( In Rs crores) -Provision of alternate supply at 11KV level - Addition of 11KV line - Bays -11 kV SUB TOTAL ( In Rs crores) -Provision of alternate supply LT voltage - Addition of LT line 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

0 4900000 315000 34780000

0 4326000 301275 28658720

0 3527492.5 262572.75 25828671.4

0 3575763.45 229870.508 19740484.6

0 3400948.348 191303.3446 21122318.49

0 3411576.31 175452.496 22600880.8

3.9995

3.3285995

2.961873665

2.35461185

2.471457018

2.61879096

31338000 9561240 4.089924

30484910 9300961.8 3.97858718

31399457.3 9579990.654 4.097944795

33597419.3 10250590 4.38480093

35949238.66 10968131.3 4.691736996

31677623.2 9664859.23 4.13424825

17101000 600670 1.770167

15097740 530305.8 1.56280458

12958893.5 455179.145 1.341407265

12479414.4 438337.517 1.2917752

11869309.73 416907.6825 1.228621742

11112641.2 390329.818 1.15029711

7935000

8173050

7576417.35

7566315.46

7710435.755

7218895.48

Renovation and Modernization.

Under Renovation and Modernization scheme the licensee proposes to replace the following existing assets due to ageing of equipments. In order maintain the system in healthy condition and to provide uninterrupted power supply to the consumers, the licensee proposes to procure 300 Nos VCBs, 31292Nos Dtrs, and erection of 3210KM of lines during current fiscal year and ensuing control period of 5 years which is expected to incur an expenditure of Rs 73.09Crores. Network Additions

Sl. No. 1

Investment Area Proposed Retirement of existing assets - 33/11KV SS - VCBs in existing SS - 33KV line - 11KV line

Unit

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

Nos Nos Kms Kms

50 5 30

50 5 30

50 5 30

50 5 30

50 5 30

50 5 30

46

- DTR - LT line

KVA Kms

7792 500

7500 500

6000 500

5000 500

4000 500

1000 500

Financial Summary (in Rs)

Sl. No. 1

Investment Area Proposed Retirement of existing assets - 33/11KV SS - VCBs in existing SS - 33KV line - 11KV line - DTR - LT line

Unit

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

12375000 1741000 7329000 11904430 79350000

12746250 1793230 7548870 11802069 81730500

13128638 1847026.9 7775336.1 9724905.2 84182415

14047642 1976319 8319610 8671374 90075184

15030977 2114661 8901982 7422696 96380447

16083145 2262687 9525121 1985571 103127078

Technology up gradation

For proper identification of consumers and linking them with input source for the purpose of having complete database, e-procurement, billing, effective functioning of AMRs, the licensee proposes to implement the following projects during current fiscal year and ensuing
control period of 5 years which is expected to incur an expenditure of Rs 198.85Crores. GIS Mapping: The primary objective of this project is to enhance the efficiency of distribution system in terms of quality of power supply and increased revenue earning by reducing T&D losses (both Technical & Commercial) , outage and to merge the faction of independent offices into the main stream operational hierarchy with the help of organization wide network. WAN: The Discom offices are spread across five Northern districts of A.P. The company has established connectivity i.e. WAN, between various offices through BSNL Leased Lines. Presently the connectivity is provided to Circles, Divisions, EROs and District Stores mainly for SAP implementation. There are some more offices, which require connectivity to meet upcoming IT applications under APDRP XI Plan. AMR Solution: This is an Automated Meter Reading solution for remotely reading various energy meters installed in the field. This will facilitate to eliminate meter reading irregularities, online monitoring of the consumer meters, online analysis of the industries, load monitoring, feeder energy auditing etc. Under 47

this scheme, AMRs will be installed on HT services, LT High value services, Distribution Transformers, Sample AGL, DTR meters etc. Automation of Substations: Under this the company will be taking initiatives required at Substations to make them compatible to integrate with the upcoming IT applications. Basically this may require providing Intelligent Automatic Meter Reading devices (IAMR), WAN points, PCs, communication equipment etc. In addition the Town outdoor Substations will be planned to convert into Indoor Substations.

SCADA: The company is planning to take up Supervisory Control And Data Acquisition (SCADA) in the Towns of the Discom. Basically SCADA refers to a system that collects data from various sensors at substation or in other remote locations and then sends this data to a central computer, which then manages, and controls the data. This offers following advantages

Load Monitoring and Alarm Voltage Monitoring and Alarm Outage Monitoring Power Quality Monitoring and Alarm Reliability Assessment System Performance Analysis Loss Analysis Regulatory Reporting

ERP/IT Applications: To improve and automate the Finance & Accounts (F&A), the company has implemented SAP with the following modules. FI/CO MM AM IM

The main advantages envisaged by automation of F&A function are: Standardization of the methods and accounting throught the Discom. To done way with manual posting, writing of ledgers, cash book etc. Completion of Annual Accounts and book closures within the statutory due dates. To comply with the requirements of the Companies Act and Govt. of AP and APERC directives quickly as database would be readily available on line. Saving in expenditure in communication with its unit offices as all the information would be available in Corporate Office.

48

The company is presently using SAP R/3 4.7 Enterprise. Recently company has decided to upgrade the current version to higher version i.e. ECC 6.0. This version has lot of improvements and additional modules, which will enable the Discom to map some of the business process in to SAP. Network Additions
Sl. No. Investment Area Unit 2008-09 2009-10 2010-11 2011-12 2012-13 201314

1 2 3 4 5 6

Technology Upgradation Automation of Substations GIS mapping WAN AMR solutions SCADA ERP/IT applications

Nos Nos Nos Nos Nos Nos

50 10 100 6000 1

45 5 90 5000 10 AMC

45 4 80 3730 5 AMC

40 3 60 3000 4 AMC

10 2 40 1000 3 AMC

10 2 30 500 3 AMC

Financial Summary (in Rs)

Sl. No. Investment Area Unit 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Technology Upgradation Automation of Substations GIS mapping WAN AMR solutions SCADA ERP/IT applications

125000000 19230770 50000000 78000000

112500000 9903846.55 45000000 65000000 100000000 77000000

112500000 8160769.56 40000000 48490000 50000000 77000000

100000000 6549017.57 30000000 39000000 40000000 77000000

25000000 4671632.53 20000000 13000000 30000000 77000000

25000000 4998646.81 15000000 6500000 30000000 77000000

350000000

New consumer Capex

Presently in NPDCL for every new consumer, the service is released with a tamper proof energy meter and service wire (XLPE) at 33 KV level and for voltages from 11 KV and below, only meter will be supplied by the Discom. It is estimated that an average 65000 nos of LT meters and 12 nos of 33 KV services are released per annum. The projected expenditure for releasing these services for the current fiscal year and ensuing control period is Rs25 Crores. Network Additions
Sl. No. Investment Area Unit 200809 200910 201011 201112 201213 201314

Network additions for release of new service connections -33KV line for new consumer ( Including LI schemes) - Service Wire Consumer Meters - LT meters - HT metering set ( Meter cost including CT/PT) Other Schemes ( Pls Specify)

Kms Kms Nos Nos

15 0.09 80000 50

10 0.03 60000 50

10 0.03 66000 50

10 0.03 72600 50

10 0.03 79860 50

10 0.03 87846 50

49

Financial Summary (in Rs)

Sl. No. Investment Area Unit 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Network additions for release of new service connections -33KV line for new consumer ( Including LI schemes) - Service Wire Consumer Meters - LT meters - HT metering set (Meter cost including CT/PT) Other Schemes ( Pls Specify)

5223000 74340 40000000 2381000

3586460 25523.4 30900000 2452430

3694054 26289.1 35009700 2526003

3952638 28129.34 41206417 2702823

4229322 30098.39 48499953 2892021

4525375 32205.28 57084444 3094462

Civil Infrastructure Development The licensee plans to construct the corporate office at its Head Quarter in current fiscal year. It is also proposed to construct one circle office, 11 Nos Division Offices, 29 Nos Sub Division offices, 66 Nos Section Offices, 23 Nos ERO Offices and 5 Nos Sub ERO Offices during current fiscal year and ensuing control period of 5 years which is expected to incur an expenditure of Rs 21Crores and also an amount of Rs one crore provided for administrative support i.e. purchasing of furniture, vehicles/ACs etc for entire control period. Network Additions
Sl. No . Investment Area Unit s 200809 200910 2010112 201112 201213 201314

Civil Infrastructure Development - Construction of office buildings - Administrative support ( furniture/ Vehicles/Acs etc) ( No of offices)

Nos Nos

35 56

30 53

25 47

20 46

16 45

10 45

Financial Summary (in Rs)

Sl. No. Investment Area Unit 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Civil Infrastructure Development - Construction of office buildings - Administrative support ( furniture/ Vehicles/Acs etc) ( No of offices)

64338235 1680000

56801471 1637700

48754596 1495869

41733934 1566525

35724247 1639743

23890590 1754525

50

2.4
2.4.1.1 NPDCL

Capex Financial Summary

(In Rs Crores)
Total Control Period ( 2009-10 to 2013-14) 1818 323 292 339 864 646 45 62 137 25 21

Investment Area - NPDCL Load Growth & Network Strengthening ( Base Capex) SS Unit Additions PTR Additions Feeder Additions DTR Additions AT & C Loss Reduction Reliability Improvement & Contingency Schemes Renovation & Modernization Technology Up-gradation New Consumer Capex Civil Infrastructure Development Total Investment Requirement (includes contingency + duties + taxes)

200809 316 52 56 78 130 147 11 11 62 5 7

200910 557 64 65 111 317 151 10 12 41 4 6

201011 417 54 61 63 238 1 54 9 12 3 4 4 5

201112 504 78 74 77 275 112 9 12 29 5 4

201213 168 62 48 42 16 112 9 13 17 6 4

201314 173 64 45 45 18 1 18 9 13 16 6 3

559

780

6 34

675

328

3 38

2,754

As shown in the table above the total Capital expenditure of NPDCL for the 2nd control period is projected to be Rs 2754 Crs, which includes the contingency cost, duties and taxes.

51

52

Analysis of Performance for Previous 3 Year and Corrections Required

3.1 Introduction
This chapter presents the analysis of licensees performance during the last 3 years from 2005-06 to 2007-08. Key operating and financial parameters have been considered for this analysis.

3.2
3.2.1
Particulars Metered Sales LT Agricultural Sales Total Sales Add: Dist. Losses Discom Input (MU)

Operating Performance
Energy Balance:
2005-06 APERC Actuals MU % MU % 3,51 3,597 45.0 44.5 1 2,92 2,908 36.4 37.1 4 6,43 6,506 81.4 81.6 4 1,45 1,482 18.6 18.4 4 7,88 7,988 100.0 100.0 9 2006-07 APERC Actuals MU % MU % 3,99 3,75 47.8 43.1 2 3 2,90 3,39 34.8 39.1 9 9 6,90 7,15 82.6 82.2 1 2 1,45 1,55 17.4 17.8 3 0 8,35 8,70 100.0 100.0 4 3 2007-08 APERC Actuals MU % MU % 4,21 4,12 50.0 44.8 3 6 2,90 3,62 34.5 39.4 9 2 7,12 7,74 84.6 84.2 2 8 1,29 1,45 15.4 15.8 8 5 8,42 9,20 100.0 100.0 0 3

Loss Reduction - The Discom has achieved the stiff loss reduction target put forth by the Honble Commission from 2005-06 to 2007-08 the actual loss reduction (incl. EHT) from 2005-06 to 2007-08 was 18.43% to 15.81% against the APERC target of 18.56% to 15.42%. The Licensee has reduced losses by 2.62% from 2005-06 to 2007-08 against 3.14% of Honble Commission target. Metered Sales & Agriculture Sales For 2005-06, the metered sales are 44.50% of the total discom energy input. This level is slightly lower than the Tariff Order target of 45%. In the year of 2006-07 and 2007-08, the metered sales were accounted for 43.10% and 44.8%, which is lower than the APERC target of 47.8% and 50.0%. This variation is due to the Honble Commission has not allowed any increase in consumption of LT Agriculture Sales from 2005-06 to 2007-08. The Licensee consumption of Agriculture category was increased by 714 MU.

3.3

Financial Performance

Audited accounts for the year 2007-08 shows a financial Profit (Profit after Tax) of Rs 6.53 Crores, as compared to the financial profit of Rs. 5.58 and 5.33 Crores in 2006-07 and 2005-06 respectively. This benefit has come in from the effective O&M cost reduction and higher loss reduction achieved by the licensee despite the metered sales being lower than the target.

53

3.3.1

Financial Performance Summary Particulars

(Rs. Crores)
2005-06 1,205.55 639.31 75.13 1,920.00 1,542.69 175.79 93.66 87.17 14.31 1.05 1,914.66 5.33 2006-07 1,188.16 838.88 269.54 2,296.58 1,833.85 243.17 109.60 75.17 27.83 1.38 2,291.00 5.58 2007-08 1,420.35 1,078.95 203.34 2,702.64 2,162.36 229.06 120.48 93.98 88.77 1.46 2,696.11 6.53

Revenue
Revenue from sale of power Revenue Subsidies and grants Other Income Total Income

Expenditure
Purchase of Power O&M Cost Depreciation and Related Debits (Net) Interest and Finance charges Other Debits Provision for Income tax Total Expenditure SURPLUS/(DEFICIT)

3.4

True-up required
Details 2005-06 (in Rs. Crores) Tariff Order Actuals Variance 86.41 93.66 7.25 64.29 67.40 3.11 1.05 1.05 150.70 162.10 11.40 1.63 1.63 149.07 162.10 13.03

Depreciation Interest Taxes on Income Total Expenditure Wheeling revenue Total

Details O & M Charges Depreciation PGCIL & ULDC Cost Taxes on Income Total Expenditure Income on interest on CSD Total

2006-07 (in Rs. Crores) Tariff Order Actuals Variance 215.82 261.36 45.54 82.38 89.68 7.30 32.99 46.99 14.00 1.38 1.38 331.19 399.41 68.22 17.00 17.00 314.19 399.41 85.22

Details O & M Charges Depreciation PGCIL & ULDC Cost Taxes on Income Total Expenditure

2007-08 (in Rs. Crores) Tariff Order Actuals Variance 220.15 252.44 32.29 90.27 102.46 12.19 38.95 54.14 15.19 1.40 1.40 349.37 410.44 61.07

54

Income on interest on CSD Adjustment pertaining to 2004-05 and 2005-06 Audited Accounts Total

19.98 31.05 298.34

410.44

19.98 31.05 112.10

Loss of Wheeling Revenue: The Honble Commission has approved Rs. 1.63 Crores towards wheeling revenue for the FY 200506, the above revenue was not realized by the Licensee due to court case in Honble Supreme Court. Depreciation: NPDCL has incurred the expenditure towards depreciation after considering the depreciation on consumer contribution portion of Gross Fixed Assets that was more than approved in Tariff Orders 2005-06 to 2007-08. The licensee requests the Honble Commission to provide a true-up for APNPDCL of Rs. 26.74 Crores for the above years on account of depreciation. Provision for Tax: The Honble Commission is requested to provide a true-up Rs. 3.82 Crores for Tax on income for the three years i.e., 2005-06 to 2007-08. O&M Cost: During the year 2006-07, Pay Revision has taken place in the Discoms w.e.f. 01.04.2006 due to, which pays were increased by 25%. This was already mentioned by the Discoms during the process of MYT filing. Due to wage revision impact, the licensee requests the Honble Commission to provide a trueup to meet the increased O&M cost of APNPDCL.

Further this Discom has received Final Actuarial Valuation report from the Actuary for the year 200607, the contribution rate is 26.16% instead of 13%, which is adopted from FY 2006-07. This needs to be considered in the ensuing year with true ups.

True-up on Non-Tariff Income:In the MYT Order and Retail Supply Tariff Order for 2006-07 and 2007-08, the non-tariff income (NTI) target of NPDCL includes a large item amounting to Rs. 17 Cr. and Rs.20 Cr. respectively supposed interest income to be earned by the Discom on the funds received from consumers towards consumer security deposit calculated @9% p.a. against the cost incurred by the Discom @6% p.a. toward interest on Consumer Security Deposit to be passed on consumers every year. The funds available through consumer security deposit are never actually available as surplus cash for investment. The funds available from consumer security deposit are utilized towards supporting the 55

arrears accumulated over the years and therefore are not available for investments in fixed assets or financial instruments. Therefore, the licensee requests the Honble Commission not to consider interest income on consumer security deposit as NTI.

Adjustment pertaining to 2004-05 and 2005-06 Audited Accounts:The Licensee has earnestly requested Commission not to reopen audited accounts of 2004-05 and 2005-06 for true-up long after the statutory audits have been completed and made available to the Honble Commission.

PGCIL & ULDC Charges: APNPDCL has incurred Rs. 46.99 and Rs.54.14 Crores towards PGCIL & ULDC charges for FY 2006-07 & 2007-08 against Rs. 32.99 & Rs.38.95 Crores approved by the Honble Commission in respective Retail Supply Business Tariff Orders. The increase in PGCIL & ULDC charges by Rs. 29.19 Crores incurred was uncontrollable. The Honble Commission is requested to provide a true-up Rs. 29.19Crores for PGCIL & ULDCL cost.

Abstract of true up required for 3 years:

The abstract of true-up required to distribution cost and Retail Supply Business pertaining to FY 200506, 2006-07 and 2007-08 are as follows:
Details FY 2005-06 FY 2006-07 FY 2007-08 Total Amount Crores 13.03 85.22 112.10 210.34

56

ARR for Distribution business for the Control Period

Particulars Operation and Maintenance Charges Depreciation Advance Against Depreciation Taxes on Income Other Expenditure Special Appropriations Total Expenditure Less: IDC and expenses capitalized* Less: O&M expenses capitalized Net Expenditure Add Return on Capital Employed Total Distribution ARR Less: Wheeling Revenue from Third Party/ 25.30 Open Access/NTI (if any) ARR, (Net transferred to Retail Supply Business) 500.96 Base Year 294.34 150.17 1.70 1.35 20.00 467.55 55.86 411.69 114.57 526.26 Year 1 343.64 203.68 3.99 1.42 30.00 582.73 77.96 504.77 210.71 715.49 33.74 681.74 Year 2 392.01 260.08 9.53 1.49 30.00 693.10 63.44 629.67 278.41 908.08 38.99 869.09 Year 3 449.37 317.93 14.08 1.56 782.95 67.49 715.46 337.86 1,053.32 43.14 1,010.18 Year 4 Year 5 502.86 561.70 366.66 399.59 18.59 22.91 1.64 1.72 889.76 985.92 32.76 33.79 856.99 952.13 389.97 413.36 1,246.97 1,365.49 47.10 50.73

1,199.86 1,314.76

4.1 4.2

Basis for O&M Cost Projections Background

The O&M costs consist of the following: a. Salaries, wages and other employee costs; b. Administrative and General costs including legal charges, audit fees, rent, rates and taxes;

c. Repairs and maintenance costs. The licensees in the 1st control period have projected the O & M expenses based on predetermined norms based on number of substations, line length and number of consumers. The Honble commission had examined the approach adopted by the licenses and felt that there was a need for conducting a comprehensive benchmarking exercise to arrive at the O & M costs for each of the licensee during the control period. Subsequent to conducting the benchmarking study and given that only four discoms are under consideration, the Honble commission felt that an output based normative approach would lead to stringent performance requirements for some of the discoms while allowing relative laxity for others. Also employee expenses which constitute 60% - 75% of the overall O & M expenses are prone to variation due to impact of wage revisions etc. In light of the above constraints and also to ensure the adequacy the O & M expenses for the licensees , the Honble Commission has preferred to project the individual items O & M expenses based on the following

57

Increasing the employee and A & G expenses year on year based on the inflation rate of 5%

Providing R & M expenses corresponding to 2.5% of old assets (Gross Block as on 31 st March 2002) plus 1.5% to 2% of the new assets (Additions to the Gross Block during 2002-03 onwards upto the year under consideration).

4.3

Need for Review of the O & M Expenses Projection Methodology followed in the first control period

As in the first control period, the licensee has identified three major parameters which influence the O & M costs. These can be called the O & M cost drivers and are listed below.

4.3.1

Parameters for O&M Costs

Number of consumers Line length, which represents the Geographical Expanse of the system Substations, which represent the load handled as well as the geographical expanse.

The licensees have arrived at norms for O&M expenses based on each of the above variables. These norms represent both direct and indirect costs. So, for example, a norm of Rs.10, 00,000/ substation does not mean that Rs.10, 00,000 is incurred directly on O&M activities related to that substation. It reflects the sum total of both the direct costs such as manpower costs, consumables etc. and indirect costs such as overall O&M establishment costs that can be allocated to the substation. The licensees would like to humbly submit to the Honble commission that projecting the Employee Expenses and A & G expenses at a simple inflation rate and R & M expenses based on the GFA would understate the O & M expenses vis--vis the actual O & M expense requirement of the licensee due to the following reasons The licensees have to maintain manpower commensurate to existing and new network additions which are being planned to meet the ever increasing demand. Going by the past trend and projected future load growth of the licensees it is expected that the employee expenses will be much higher than the base year employee expenses, escalated with simple rate based on inflation. R & M expenses usually consist of the breakdown and preventive maintenance expenses incurred by the licensees to improve the quality of supply to the consumers. In addition to the above, the licensees will have to maintain requisite infrastructure to attend to the

58

supply related complaints of the consumers. The above expenses are closely correlated to the network length, consumers and substations in the licensee area. Hence projecting R & M expenses as a percentage of the Gross Fixed Assets is not truly reflective of the actual R & M expenses incurred by the licensees In view of the above mentioned points, the licensee hereby submits the methodology adopted and the resultant cost estimate for the Honble commissions perusal. The licensee has arrived at O & M norms based on the actual O & M expenses incurred during the year FY 2007-08. These norms have been escalated to arrive at norms for 2008-09 to 2013-14.

4.4

Proposed Methodology for Projection of O & M Expenses

The licensee has arrived at per unit cost (the norm) for the three parameters identified above based on the attribution of costs to these parameters. The attribution of costs has been done based on the following considerations: The main driver of cost is the number of connections on the network and hence the cost attributable to the number of consumers is significantly high; of the order of half the total cost approximately. Costs related to substations form the second major constituent of total O&M cost followed by the cost attributable to length of lines. The licensee submits that the existing cost levels are unalterable on account of historic reasons, for e.g., the number of employees is a major component of cost for the network business and the licensee has to incur the costs pertaining to the current number of employees. Hence, the licensee hereby proposes norms for computation of O&M costs as listed below: Norm for base cost in 2007-08 (Base Norm) This norm has been arrived at based on the actual audited accounts for the year 2007-08. This norm is different for each licensee due to the differing initial levels of cost. Escalation Rate: The norms arrived at for the year 2007-08 is escalated year on year using the weighted average rate of CPI and WPI indices (CPI- Industrial Workers: 55% and WPI Transmission/Distribution: 45%) calculated for the period April 06 to August 08. The escalation rate calculated as per the methodology mentioned above works out to 8.03%. The licensee has adopted the following methodology to determine the O&M norms for each year of the control period:

59

Development of the allocation ratios: The licensees have segregated the O & M expenses incurred by them and have allocated it to three categories viz, number of substations, line length in Km and number of consumers. The O & M norm were arrived at for the year 2006-07 by dividing the expense in each category with network numbers for that year. This norm was escalated with a rate of 8.03% for the year 2007-08. The norms for 2007-08 was used for estimating O & M expenses for the year 2007-08 by multiplying the O & M norm of 2007-08 with network additions during the year 2007-08. This estimate for the year 2007-08 was compared with actual O & M expenses incurred during the year 2007-08. The exact percentages of cost allocation to SS, Line Length and Consumers have been arrived by fine-tuning the proportions to align with actual O & M expenses incurred by the licensee in the year 2007-08. Table: Cost attribution to the parameters:
33/11KV SS Length of Line No of Consumers CPDCL 25% 25% 50% EPDCL 19% 17% 64% NPDCL 29% 28% 43% SPDCL 27% 25% 48%

Development of O & M norms for the base year (2007-08): The O & M expenses as per the latest audit accounts i.e. 2007-08 and the network/ consumer details at the end of the year 2007-08 were considered to arrive at the O & M norm for the base year 2007-08.The O & M norm based on the actual O & M expenses incurred in the year 2007-08 has been escalated year on year at a rate of 8.03%. The O & M expenses for each year have been arrived by multiplying the O & M norm of the respective year with network/ consumer details for the year under consideration.

The O & M norm, network/ consumer numbers and hence the projected O & M expenses for each licensee during the control period is shown in the table below-

4.4.1.1

NPDCL
O & M Norm The following are the norms for the year 2007-08 for NPDCL: 1 Substation (Rs./SS): 1, 105, 851; 2 Line Lenght (Rs./km): 3, 862; 3 Consumers (Rs./Consumer): 299. These norms for 2007-08 have been escalated at 8.03% year-on-year to arrive at the norms for 200809 to 2013-14.

60

Network/Consumer Details
Network Projections No of SS (Nos) Line Length (Kms) No of Consumers (Nos)

2007-08
662 183,021 3,629,967

2008-09
727 195,336 3,899,989

2009-10
805 217,200 4,065,367

2010-11
869 233,403 4,170,522

2011-12
955 249,848 4,275,677

2012-13
1,019 254,007 4,380,831

2013-14
1,081 258,174 4,485,986

Projected O & M Expenses

2008-09
Projected O & M Expenses ( Rs Crs) 294

2009-10
344

2010-11
392

2011-12
449

2012-13
503

2013-14
562

Total for the Control

2,250

As shown in the table above the total O & M expenses of NPDCL for the 2nd control period is projected to be Rs 2250 Crs. The O & M expenses have been projected by applying the above derived norms to the estimated network additions for each year of the control period based on the capex plan.

4.5

Regulated Rate Base (RRB)

The Honble Commission has outlined principles for computation of Regulated Rate Base (RRB) in regulation 4 of 2005. Calculation of RRB The honourable commission has proposed a computation methodology for the RRB for the year, RRB, which is as follows: RRB = (OCFA AD CC) + RAB+WC where, OCFA: Original Cost of Fixed Assets at the beginning of the Year available for use and necessary for the purpose of the licensed business. AD: Amounts written off or set aside on account of depreciation of fixed assets pertaining to the regulated business at the beginning of the Year. CC: Total contributions made by the users towards the cost of construction of distribution/service lines by the Licensee and also include the capital grants/subsidies received for this purpose at the beginning of the year. RAB: Change in the Rate Base in the year. This component would be the average of the value at the beginning and end of the year as the asset creation is spread across a year and is arrived at as follows:

61

RAB = (Inv D CC)/2

Inv: Investments projected to be capitalised during the year of the Control Period and approved. D: Amount set aside or written off on account of Depreciation of fixed assets for the year of the Control Period. CC: User Contributions pertaining to the RAB and capital grants/subsidies received during year of the Control Period for construction of service lines or creation of fixed assets. Based on the above computation methodology, RRB has been calculated as shown below. The Original Cost of Fixed Assets (OCFA), Accumulated Depreciation and Total Consumer Contribution have been calculated for Base Year and 2nd Control period are as follows i.e., 2008-09 to 2013-14. Regulated Rate Base for the year
Base Year Assets 2,626.09 OCFA Opening Balance (A) 1,916.01 Additions to OCFA (B) 710.08 Depreciation 1,068.35 Opening Balance (C ) 918.19 Depreciation during the Year (D) 150.17 Consumer Contributions 369.49 Cons Contributions Opening Balance (E) 273.13 Additions to Cons Contributions (F) 96.35 Working Capital (G) 51.97 Change in Rate Base H=(B-C-F)*1/2 231.78 Regulated Rate Base (A-C-E+G+H) 1008.44 Particulars Year 1 3,405.06 2,626.09 778.97 1,272.04 1,068.35 203.68 407.23 369.49 37.75 60.71 268.77 1517.74 Year 2 4,249.59 3,405.06 844.52 1,532.11 1,272.04 260.08 420.55 407.23 13.32 69.22 285.56 2080.57 (In Rs.Crores) Year 3 5,024.21 4,249.59 774.62 1,850.04 1,532.11 317.93 429.75 420.55 9.20 79.29 223.75 2599.96 Year 4 5,663.32 5,024.21 639.11 2,216.70 1,850.04 366.66 435.14 429.75 5.38 88.73 133.53 2966.68 Year 5 6,086.51 5,663.32 423.19 2,616.29 2,216.70 399.59 436.04 435.14 0.90 99.19 11.35 3122.02

4.6

Depreciation and Advance Against Depreciation (AAD)

Depreciation:
The Licensee has projected the depreciation based on the Depreciation rates as per the Electricity Supply Annual Accounts Rules. The table below shows the opening balance of gross fixed assets and additions during the year.

Details of Gross Fixed Assets

Particulars Base Year Year 1 Year 2 Year 3

(In Rs. Crores)

Year 4 Year 5

Opening Balance (A) Additions During the Year (B)

Closing Balance (C=A+B)

1,916.01 2,626.09 3,405.06 4,249.59 5,024.21 5,663.32 710.08 778.97 844.52 774.62 639.11 423.19 2626.09 3405.06 4249.59 5024.21 5663.32 6086.51

62

i.

The value of Gross Fixed Assets in the Balance Sheets as at March 31, 2008 reflects the balance as at April 1, 2008 duly adjusted for the additions estimated / projected for the Current year 2008-09 and for the 2nd control period. The capitalization is assumed for the base year and control period as the 90% of opening CWIP of the year and 40% of the works undertaken during the year. Based on these assumptions, additions of Gross Fixed Assets have been projected for the base year to year5. Removals of assets have been estimated as Nil for the base year and 2nd control period. Depreciation on Existing Assets: - The Depreciation has been projected based on respective depreciation rate for each existing class of assets as per Electricity Supply Annual Accounts Rules after considering the fully depreciated assets. The depreciation on existing Gross Fixed Assets created due to consumers contribution & grants (CC&G) has been projected by allocating the above depreciation in the ratio of CC&G assets to total assets.

ii.

iii. iv.

v.

Depreciation on New Assets:- Depreciation on new assets which is capitalized during the year has been calculated for an average of six months period only and full year depreciation on assets which were capitalized in previous year or years. Depreciation for new assets, which are created through funds from Consumers Contribution & Grants has been allocated in the ratio of funds from Consumers Contribution & Grants to total funds. Gross Depreciation on Total Assets for the year
Particulars

(In Rs. Crores)

Year 3 317.93 Year 4 366.66 Year 5 399.59

Gross Dep. on Total Assets

Base Year 150.17

Year 1 203.68

Year 2 260.08

Depreciation for the year on Assets that are created by charged Consumers Contribution & Grants (In Rs. Crores)
Particulars Dep. on CC&G Total Assets Base Year 25.30 Year 1 33.74 Year 2 38.99 Year 3 43.14 Year 4 47.10 Year 5 50.73

The Licensee has shown the depreciation on Consumers Contribution & Grants Assets as Non-Tariff Income for distribution business and deductions for Consumers Contribution & Grants.

Advance Against Depreciation (AAD)

The Licensee has not proposed any advance against depreciation for the base year and 2nd control year since the licensee has adopted the Depreciation rates as per the Electricity Supply Annual Accounts Rules.

4.7

Return on Capital Employed.

63

The Regulation prescribes that the licensees will be compensated for the financing costs through Return on Capital Employed (ROCE) principles. This principle is aimed to provide the licensee with the return on debt as well as return on equity at a normative level. The licensee has computed the ROCE as provided in the Clause 15 of the Regulation, which specifies that the ROCE be computed by multiplying the Regulated Rate Base (RRB) by the Weighted Average Cost of Capital (WACC). The Regulation specifies the following methodology for computation of ROCE: Return on Capital Employed (RoCE) for the RRB for the year i shall be computed in the following manner: RoCEi = WACC * RRBi

Where RRBi is the Regulated Rate Base for the year i and WACC is the Weighted Average Cost of Capital. The detailed computation of RRB is explained in Section 4.2 above. With respect to the WACC, the Regulation specifies the formula as follows:

D/ E 1 WACCRRB = rd + 1 + D / E re 1 + D / E
Where, D/E is the Debt to Equity Ratio Licensee is proposing a normative Debt: Equity ratio of 75:25 d is the Cost of Debt As the WACC is expected to remain unchanged during the Control Period, and as the interest rates are showing higher rates due to increasing of inflation rate, the licensee has proposed a rate of 13.5% for new loans as the cost of debt. e is the Return on Equity The licensee proposes a rate of 14% as the return on equity. Based on the RRB explained earlier and the WACC and the ROCE for 2008-09 and 2nd Control period is as follows:
Base Year 1 Year 2 Year 3 Year 4 Year 5 Year Regulated Rate Base (RRB) 1,008.44 1,517.74 2,080.57 2,599.96 2,966.68 3,122.02 Weighted Average Cost of Capital (WACC) 11.36% 13.88% 13.38% 12.99% 13.15% 13.24% Return on Capital Employed 114.57 210.71 278.41 337.86 389.97 413.36 Particulars

64

4.8

Other Expenditures

Other expenditure / other expenses allocated to distribution business include: lease rentals, contingency reserves, interest on General Provident Fund, Cost of raising finance (Guarantee charges), bank charges and interests on other sub-accounts. The other expenditure has been projected for CY and the control period as below. (In Rs. Crores)
Particulars Other Expenses Base Year 1.35 Year 1 1.42 Year 2 1.49 Year 3 1.56 Year 4 1.64 Year 5 1.72

4.9

Tax on Income:

The licensee projects 11.33% tax on Return on Equity during the current fiscal year 2008-09 and 33% during ensuing control period 2009-14. The details are as follows.
Particulars Taxes on Income Base Year Year 1 Year 2 Year 3 Year 4 1.70 3.99 9.53 14.08 18.59 Year 5 22.91

4.10

Special Appropriations:

In the Tariff Order dated 23rd March 2006, the Honble Commission has expressed its deep concern with the safety standards of electrical installations of distribution system and accordingly it has allowed a special appropriation of Rs 5Crores for each year totaling Rs15 Crores for the control period 2006-09. The licensee opines that the following reasons mainly attribute to the electrical accidents which have taken place during the past three years in the area of licensee. 1 2 3 Substandard wiring at consumer installations Low ground clearances from HT/LT lines Snapping of conductor falling on ground due to gale and wind

In compliance to the directions of the Honble Commission the licensee has initiated following steps to reduce number of electrical accidents a) Giving wide publicity by displaying slides at all annual fares and cinema theatres for obtaining standard wiring materials for house wiring and using MCBs (Miniature Circuit Breakers) and providing earthing for their electrical installation. b) Having concerned with the electrical accidents that have taken place due to low ground clearances, the licensee has initiated a major step by proposing erection of 50825 Nos 8.0 mtr PSCC poles and 6420Nos 9.0 mtr poles at intermediate spans of loose lines to increase ground clearances at hazardous locations like road crossings etc. To this end, the licensee as shown below has allocated Rs 1crore

65

each to all operation Divisions. An amount of Rs 21.22 Crores is expected to incur during the current fiscal year out of which, Rs 18 Crores have already been incurred as of 31st October 2008 and balance work is expected to be complete by December 2008.
Agt. Amount (Rs.Crores ) 1.187 0.988 1.188 1.199 1.191 0.992 1.195 0.987 1.193 0.989 1.187 0.989 0.995 0.997 0.997 0.997 0.987 0.988 0.990 0.991 21.225 No.of poles to be erected 8 Mts. 3018 2515 3018 3018 3018 2515 3018 2515 3018 2515 3018 2515 2515 2515 2515 2515 2515 2515 2515 2515 53821 9.1 Mts. 360 300 360 360 360 300 360 300 360 300 360 300 300 300 300 300 300 300 300 300 6420 Poles erected (Nos.) 8 Mts. 2985 1100 2815 4628 2556 2410 3052 2049 3812 858 3834 2966 1465 2217 2288 2880 2515 2100 2310 1985 50825 408 125 67 50 36 50 15 9.1 Mts. 65

Sl. No.

District

Division Warangal Warangal C&O

Warangal

Jangaon Mahabubabad Mulugu Karimnagar

Karimnagar

Huzurabad Jagityal Peddapally Khamman

Khammam

Sathupally Badrachalam Nizamabad

Nizamabad

Armoor Kamareddy Banswada Adilabad

Adilabad

Niramal Mancherial SirpurKagaznagar

Total :

In addition to the above, the licensee has further chalked out a program to erect 50000 Nos poles in the current fiscal year, which is expected to incur Rs 20 Crores. Similarly an amount of Rs 30 Crores each is proposed to be incurring in the next two fiscal years for erecting about 120000 poles. c) The licensee has also taken following steps to rectify the installations of its distribution system i)All the lines in APNPDCL are periodically inspected and rectifications such as replacing of leaning pole and double jumpering at cut point poles are being done to minimize the outages of 33KV and 11KV lines. ii)Replacement of damages poles iii)Rectification of stay sets 66

iv)Replacement of damaged insulators v)Replacement of damaged Conductor vi)Restringing of loose spans

The Licensee has proposed Special Appropriation as follows.

Particulars Special Appropriations Base Year 20 Year 1 30 Year 2 30

(In Rs. Crores)

Year 3 0 Year 4 0 Year 5 0

4.11

Wheeling Revenue:

The Licensee has not proposed wheeling revenue from Third party/Open Access sales for the base year and ensuing 2nd control period. (In Rs. Crores)
Particulars Wheeling Revenue Base Year 0 Year 1 0 Year 2 0 Year 3 0 Year 4 0 Year 5 0

4.12

Non-Tariff Income:

The APNPDCL has proposed depreciation on Consumers Contribution and Grants Assets as a NonTariff Income for Distribution Business. Non-Tariff Income for the base year and 2nd control period.
Particulars Non-Tariff Income Base Year 25.30 Year 1 33.74 Year 2 38.99 Year 3 43.14

(In Rs. Crores)

Year 4 47.10 Year 5 50.73

67

5Revenue Requirement for Retail Supply Business

5.1
5.1.1

Losses
Discom Losses

The losses for the year 2007-08 was 17.96% excluding EHT Sales and the licensee is proposing to achieve the loss target as set in the MYT order for 2008-09 and 2009-10 at 17.58% and 17.18% respectively.

Discom Losses:
Particulars Total Sales MU EHT Sales MU Distribution Losses MU Discom Input Excl EHT Sales MU Discom Input Incl EHT Sales MU Distribution Losses Excl EHT % Distribution Losses Incl EHT % 2007-08 Actuals 7748.17 1100.37 1455.13 8102.93 9203.30 17.96% 15.81% 2008-09 APERC Estimates 7,746.27 8756.87 1431.7 1516.38 1300.68 1544.18 7,615.25 8784.67 9046.95 10301.04 17.08% 17.58% 14.38% 14.99% 2009-10 Projections 9796.85 1891.23 1639.92 9545.55 11436.77 17.18% 14.34%

5.1.2

Transco Losses
As per information provided by APTransco, losses for current year and ensuing year are estimated at 4.23% and 4.16% respectively. Details Transmission Losses (MU) Transmission Loss % 2008-09 Tariff Revised Order Estimate 457.18 4.20% 4.23% 2009-10 Projection 496.44 4.16%

5.1.3

PGCIL Losses

PGCIL Losses have been taken 4.105% and 4.17% for current year and ensuing year respectively. This applies to purchases made from CGS. Details PGCIL Losses (MU) PGCIL Losses % 2008-09
86.63

2009-10
92.80

4.105%

4.17%

68

5.2
5.2.1

Expenditure Projections
Power Purchase Forecast

Details (Rs. Cr.)

2008-09 Estimate

2009-10 Projection

Power Purchase Cost (Rs. Cr.)

2681.73

2709.73

5.2.2

APTransco Charges

The licensee has projected the Transmission charges for 2008-09 and 2009-10 are Rs.137.22 Cr. and Rs.166.83 Cr. respectively.
2008-09 Estimate 2009-10 Projection

Details (Rs. Cr.)

Capacity contracted (MW)

Transmission Charges (Rs. Cr.)

2015.90 132.37

2158.82 161.30

5.2.3

Power Grid Charges

PGCIL charges for 2008-09 & 2009-10 are estimated as Rs.54.23 Cr. for CY & Rs. 48.69 Cr. for EY.
Details (Rs. Cr.) 2008-09 Estimate 2009-10 Projection

PGCL & ULDC Cost

54.23

48.69

5.2.4

SLDC Charges

The licensee has projected the SLDC charges for 2008-09 and 2009-10 are Rs.4.89 Cr. and Rs.6.23 Cr. respectively.
Details (Rs. Cr.) 2008-09 Estimate 2009-10 Projection

Capacity contracted (MW) SLDC Charges (Rs. Cr.)

2015.90 4.89

2158.82 6.23

5.2.5

Distribution Cost

As per the Regulation No. 4 of 2005 requires the Licensees to file the Aggregate Revenue Requirement for second control period ( 2009-10 to 20013-14 5years) for the Distribution Business, the same has shown in the Retail Supply Business as distribution cost for the FY 2008-09 and 200910. From the above total net distribution cost is estimated to be Rs. 484.26 Cr. and Rs. 652.76 Cr. for 2008-09 and 2009-10 respectively.

69

Rs In Crores
Particulars Net O&M Charges Depreciation Taxes on Income Other Expenditure Special Appropriations Add Return on Capital Employed Total Distribution ARR Less: Wheeling Revenue from Third Party/ Open Access/NTI (if any) Net Distribution Cost 2007-08 Actuals 229.06 120.48 1.40 1.29 0.00 80.57 432.79 18.02 414.77 2008-09 APERC Estimates 210.78 238.47 98.10 150.17 1.70 1.35 5.00 20.00 93.66 114.57 407.54 526.26 407.54 25.30 500.96 2009-10 Projections 265.68 203.68 3.99 1.42 30.00 210.71 715.49 33.74 681.74

5.2.6

Interest on Consumer Security Deposits

As per the Regulation No.6 of 2004, the licensee is collecting initial security deposit and additional security deposit from consumers and paying interest on the deposits at the rates as specified in the Regulation. The interest on consumer security deposit is estimated at Rs. 14.15 Cr. and Rs.15.14 Cr for the FY 2008-09 and FY 2009-10 respectively .
Particulars Opening Balance Additions during the Year Closing Balance Average Balance Interest @ % p.a. Interest Cost 2007-08 Actuals 204.56 24.22 228.78 216.67 6.00 12.52 2008-09 Estimates 228.78 14.03 242.82 235.80 6.00 14.15 2009-10 Projections 242.82 19.01 261.82 252.32 6.00 15.14

5.2.7

Supply Margin

The Commission has allowed the supply margin of Rs.5 Cr. for 2008-09. However, in view of cost saving and taking measures to transfer the benefits to consumers the licensee has decided to forego the supply margin for current year as well as for ensuing year. Details (Rs. Cr.) Supply Margin Amount 2008-09 2009-10 -

5.2.8

Other Costs

The licensee is not claiming any expenses under the head other costs. Details (Rs. Cr.) Other Costs 2008-09 2009-10 -

70

5.2.9

Aggregate Revenue Requirement for Retail Supply Business

The Aggregate Revenue Requirement for the Retail Supply Business is provided below for previous year, current year and ensuing year.
SI.No. 1 2 3 4 5 6 7 8 9 10 11 12 Particulars Transmission Cost SLDC Cost Distribution Cost PGCIL Expenses ULDC Charges Network and SLDC Cost (1+2+3+4+5) Power Purchase / Procurement Cost Interest on Consumer Security Deposits Supply Margin in Retail Supply Business Other Costs, if any Supply Cost (7+8+9+10) Aggregate Revenue Requirement (6+11) 2008-09 APERC Estimates 121.00 132.37 4.00 4.89 407.54 500.96 52.00 584.54 1,626.50 12.00 5.00 1.00 1,644.50 2,229.04 54.23 692.44 2,681.73 14.15 2,695.87 3,388.32 2009-10 Projections 161.30 6.23 681.74 48.69 897.96 2,709.73 15.14 2,724.87 3,622.83

5.3

Revenue Projections

Category-wise Sales Forecast: The Licensee has projected the Sales for FY 2008-09 and 2nd Control period from 2009-10 to 2013-14 in Distribution Business. The same sales are considered for Retail Supply Business also for the FY 2008-09 and 2009-10. The Category wise sales forecast abstract as follows. Category wise Sales Forecast in MU
Consumer Category LT Domestic supply - Cat-I Non-Domestic supply Category-II Industrial supply - Category - III Cottage Industries - Category - IV Irrigation & Agriculture Category - V Public Lighting - Category - VI General Purpose - Category - VII Temporary - Category - VIII Total L.T. HT Industrial segregated - Category - I Industrial Non-segregated - Category - II Irrigation & Agriculture - Category - IV Railway Traction Townships & Residential colonies - Cat-VI Electricity Co-operative societies - Cat.VII Temporary - Category - VIII HT TOTAL : LT+HT TOTAL 2007-08 Actuals 1,346.46 274.14 294.24 5.30 3,622.14 241.20 20.28 0.28 5,804.03 905.07 58.40 96.71 333.01 122.88 428.07 1,944.14 7,748.17 2008-09 APERC Estimates 1,562.86 313.73 345.93 6.29 2,909.06 279.45 22.64 5,439.96 907.22 60.62 476.83 314.72 133.40 413.52 2,306.31 7,746.27 1,506.34 300.92 292.13 5.71 3,799.59 273.87 23.95 0.20 6,202.71 1,013.11 66.88 528.75 360.77 122.88 461.76 2,554.16 8,756.87 2009-10 Projections 1,661.49 329.21 323.68 6.36 3,959.18 304.54 26.72 0.20 6,611.38 1,062.92 73.36 1,052.88 370.51 125.26 500.55 3,185.47 9,796.85

71

Category wise Sales Growth Rate

Consumer Category LT Domestic supply - Cat-I Non-Domestic supply Category-II Industrial supply - Category - III Cottage Industries - Category - IV Irrigation & Agriculture Category - V Public Lighting - Category - VI General Purpose - Category - VII Temporary - Category - VIII Total L.T. HT Industrial segegrated - Category - I Industrial Non-segegrated - Category - II Irrigation & Agriculture - Category - IV Railway Traction Townships & Residential colones - Cat-VI Electricity Co-operative societies - Cat.VII Temporary - Category - VIII HT TOTAL : LT+HT TOTAL 2007-08 Actuals 7.87% 12.42% 5.81% 7.16% 6.56% 3.88% 20.37% 25.26% 7.01% 10.60% 12.86% 352.35% 8.28% -11.51% 9.61% 0.00% 12.48% 8.34% 2008-09 Estimates 11.87% 9.77% -0.72% 7.77% 4.90% 13.54% 18.09% -28.57% 6.87% 11.94% 14.52% 446.74% 8.34% 0.00% 7.87% 0.00% 31.38% 13.02% 2009-10 Projections 10.30% 9.40% 10.80% 11.40% 4.20% 11.20% 11.57% 0.00% 6.59% 4.92% 9.69% 99.13% 2.70% 1.93% 8.40% 0.00% 24.72% 11.88%

5.3.1

Revenue from Current Tariffs

The computation of revenue at current tariff for the ensuing year for each customer category have been carried out as per the Guidelines for Tariff Filling Retail Supply of Electricity issued by the Honble Commission. It is carried out as follows: Revenue from Tariffs = Energy Estimate * Approved Energy Charges .... (a) + Demand Estimate * Approved Demand Charges .... .(b) + Incremental Revenue on account of Monthly Minimum Charges (MMC) (c) + No. of Consumers Estimated * Approved Customer Charges (d) + Other Charges ----- (e) - Incentive ------------(f)

72

Energy charges: For customer categories having telescopic energy tariffs, the energy estimates have been apportioned into the slabs and then have been multiplied with the corresponding slab tariff. The apportionment has been based on the historical break up of telescopic consumption into the various slabs as captured in the billing information database. Demand/Fixed Charges: The estimate of demand has been made in HP or in MVA as the case maybe. Specifically, in the case of the HT Industrial (Segregated) and HT Industrial (Non-Segregated) categories, billing demand has been assumed to grow in proportion to the growth of sales in ensuing year. Monthly Minimum charges (MMC): The incremental revenue due to MMC for each category is the difference between Cost of units recorded and computed units billed at the relevant tariff in respect of HT categories. In respect of LT categories, it is the difference between the cost of unit and monthly minimum charges notified in the tariff order. Customer Charges: Customer charges approved in tariff Order for each of the category of consumers. As per the revised regulatory formats income from customer charges is considered as part of revenue from tariffs. Other Charges: These are the charges other than the above charges. There are no other charges proposed for ensuing year. Load Factor Incentive: It is an incentive approved in Tariff Order for consumption at different levels of load factor (for HT-Cat 1). It is deducted from gross revenue from tariffs to arrive net revenue from tariffs. Based on the sales forecast made in the earlier paragraphs, the Revenue from Sale of Power is computed as per the current year tariffs and actual proportions of sales in each slab under different categories in LT and voltage-wise sales in HT.

Revenue from sale of power is arrived at Rs. 1,426.26 Cr. and 1,648.46 Cr. for 2008-09 and 2009-10. The Category-wise Energy charges, fixed charges / Demand charges and customer charges for previous year, current year and ensuing year are provided in the table below.

73

Revenue from Sale of Power for CY 2008-09:

Revenue from Current Tariffs Consumer Category
Energy Energy Charges Demand / Fixed Charges MMC Customer Charges Incentive Total Charges

MU
LT Domestic supply Non-Domestic supply Industrial supply Cottage Industries Irrigation & Agriculture Supply Public Lighting & PWS General Purpose Temporary Total L.T. HT Industrial segregated Industrial Non-segregated Irrigation & Agriculture Railway Traction Townships & Residential colonies Electricity Co-operative societies Temporary HT TOTAL : LT+HT TOTAL 1,506.34 300.92 292.13 5.71 3,799.59 273.87 23.95 0.20 6,202.71 1,013.11 66.88 528.75 360.77 122.88 461.76 2,554.16 8,756.87

Crores
296.88 166.31 109.55 1.03 1.87 37.59 9.58 0.12 622.93 291.62 28.66 124.70 144.31 49.15 18.47 656.91 1,279.85

Crores
25.09 0.18 25.27 62.53 6.78 69.32 94.59

Crores
11.40 0.07 0.01 11.48 11.48

Crores
53.20 5.63 0.65 0.08 19.31 0.77 0.29 79.94 0.44 0.14 0.12 0.02 0.02 0.75 80.69

Crores
16.95 16.95 16.95

Crores
361.48 172.01 135.30 1.29 21.18 38.36 9.87 0.12 739.62 337.65 35.59 124.82 144.32 49.18 18.47 710.03 1,449.65

74

Revenue from Sale of Power for EY 2009-10:

Revenue from Current Tariffs Consumer Category
Energy Energy Charges Demand / Fixed Charges MMC Customer Charges Incentive Total Charges

MU
LT Domestic supply Non-Domestic supply Industrial supply Cottage Industries Irrigation & Agriculture Supply Public Lighting & PWS General Purpose Temporary Total L.T. HT Industrial segregated Industrial Non-segregated Irrigation & Agriculture Railway Traction Townships & Residential colonies Electricity Co-operative societies Temporary HT TOTAL : LT+HT TOTAL 1,661.49 329.21 323.68 6.36 3,959.18 304.54 26.72 0.20 6,611.38 1,062.92 73.36 1,052.88 370.51 125.26 500.55 3,185.47 9,796.85

Crores
330.62 181.75 121.38 1.15 2.06 41.89 10.69 0.12 689.66 306.94 31.44 248.39 148.20 50.10 20.02 805.10 1,494.76

Crores
25.99 0.18 26.17 63.88 7.10 70.98 97.15

Crores
11.40 0.07 0.01 11.48 11.48

Crores
56.51 5.87 0.67 0.08 20.35 0.79 0.29 84.57 0.50 0.16 0.14 0.02 0.02 0.84 85.41

Crores
16.95 16.95 16.95

Crores
398.53 187.69 148.04 1.41 22.41 42.68 10.99 0.12 811.88 354.38 38.70 248.53 148.22 50.13 20.02 859.98 1,671.86

5.3.2

Non-tariff Income at Current Charges

Non-Tariff income includes income on power purchase rebates, securitization benefits, UI Charges,& Other Receipts etc.
Particulars ( In Crores) Non-Tariff Income Recoveries from theft of power or malpractices Interest on staff loans and advances Income from Investments Income from Trading UI Charges Rebate Rebate (Subsidy) from REC Miscellaneous receipts NTPC Incentive Total Non-Tariff Income 2007-08 Actuals 1.89 0.16 2.50 1.71 3.94 25.33 16.13 20.65 72.31 2008-09 Estimates 1.93 0.17 2.62 1.80 16.93 23.45 2009-10 Projections 1.97 0.18 2.75 1.88 17.78 24.57

The non-tariff income is estimated as Rs.23.45 Cr. in 2008-09 and Rs.24.57 Cr. in 2009-10.

5.3.3

Revenue at Current Tariffs and Charges

From the foregoing paragraphs the total revenue of the Discoms comes to Rs.1,449.71 Cr. for 2008-09 and Rs.1,673.03 Cr. for 2009-10.

75

Particulars ( In Crores)

Revenue from Tariff Revenue from Non-Tariff Total Revenue

2008-09 Estimates 1,450.33 23.45 1,473.78

2009-10 Projections 1,671.86 24.57 1,696.42

5.4
5.4.1

Revenue Gap
Revenue Deficit / Surplus at Current Tariff and Charges
Particulars ( In Crores) 2008-09 APERC Estimates 2,229.04 3,388.32 1,445.49 1,450.33 34.42 23.45 103.91 749.13 1,810.62 2009-10 Projections 3,622.83 1,671.86 24.57 123.85 1,802.56

Aggregate Revenue Requirement Revenue from Current Tariffs Non - Tariff Income Revenue from Trading Revenue (Deficit) / Surplus at Current Tariffs

76

Filing of Proposed Tariffs (FPT) for Distribution business for Control Period

Wheeling Tariffs The licensee has determined the voltage-wise wheeling charges for compensation of network losses and the network maintenance expenses. As required under the regulations, the licensee has determined the ARR for the distribution business and that forms the basis of the wheeling charges. Distribution charges by voltage level Network charge has the following four major components which need to be allocated voltage-wise 1) Operation and Maintenance (O&M) related dependent on the number of substations, line length and the number of customers 2) Depreciation related driven by assets 3) Interest / ROCE related driven by assets 4) Other expenses Cost Allocation Process The O&M expenses have been segregated into three major components related to substations, lines and customer expenses. Segregation of the total O&M expenses amongst the three major components has been done based on the O & M norms developed by the licensee. As part of our study on O&M expense allocation methodology, we have carried out an analysis of the actual O&M expenses incurred amongst the three major components, in few urban and rural circles. Based on the analysis of the data and the actual O&M expenses for 2006-07 and 2007-08 the norms have been developed. O&M substation related expense has been allocated to the 11 KV voltage levels only as the substation network caters to the 11 KV and below system. O&M lines related expense has been allocated based on the voltage-wise line lengths. Customer related O&M expenses have been allocated based on the voltage-wise total number of customers. Depreciation and interest/ ROCE related costs are primarily driven by the assets in each of the voltage system. The licensee has used the Gross Fixed Asset available for each voltage class as the basis for allocation of these costs. The other expenses are also allocated based on the asset base at each voltage level. Wheeling charges computation Voltage-wise contract demand has been used to determine the wheeling tariff at each voltage on a Rs./KVA basis. For the LT category, the demand has been obtained by taking the difference between the non coincident peak demand of the licensee and the total contracted demand at 33 KV & 11 KV voltage levels. For LT category, the wheeling tariff is calculated on a Rs./kwh basis. The contract demand at each voltage level has been grossed up by the losses at that level and subsequent levels to arrive at the demand at the higher voltage levels. This has been used for purposes of sharing the costs at the next level to arrive at the wheeling tariff at that level.
Voltage-wise Losses Sl. No. 1 2 3 Particulars 33 kV 11 kV LT Base Year 4.88% 4.83% 7.87% 2009-10 4.83% 4.71% 7.63% 2010-11 4.70% 4.60% 7.43% 2011-12 4.58% 4.46% 7.19% 2012-13 4.40% 4.31% 6.94% 2013-14 4.23% 4.15% 6.67%

77

Energy (or demand) handled at each voltage level needs to be considered while determining the wheeling tariff for consumers. For example, at 33 KV level, the energy that will be handled by the 11 KV system, needs to be taken into account to determine the per unit charge. Similarly at 11 KV system, the energy handled by the LT level also needs to be considered. A consumer has to pay the charges for each of the voltage system being used. For example the 11 KV system needs to pay wheeling charges for the usage of 33 KV network and LT systems need to pay the wheeling charges for the 33 KV and 11 KV network. Given below is the table which summarizes the approach: Voltage-wise wheeling charges Output/Supply Voltage System 33kV 11kV LT ARR33 / (CD33 + CGD11+ CGDLT ) (ARR11 + (CGD11+ CGDLT ) *Charges33 )/ (CD11+ CGDLT ) (ARRLT + (Charges11 * CGDLT)) /LT Sales in MUs

CD - Voltage-wise contracted demand by consumers CGD - Voltage-wise contracted demand grossed-up with losses Charges Voltage-wise wheeling charges as per above formula for respective voltage Based on the methodology explained above, the licensee is proposing the following distribution wheeling charges for each of the control period.
Wheeling Tariff Calculation Sl. No. 1 2 3 Particulars 33 kV (Rs./kVA/Month) 11 kV (Rs./kVA/Month) LT (Rs./kWh) 2009-10 15.48 147.63 0.98 2010-11 17.84 171.89 1.17 2011-12 17.93 181.10 1.28 2012-13 18.37 190.63 1.42 2013-14 17.64 184.50 1.46

Methodology is as follows

78

Network Details - 33 kV Sl. No. 1 2 3 4 No of Substations Line Length No of Consumers GFA Units Nos Kms Nos Rs Crs Base Year 727 8,420 31 214 2009-10 805 8,982 33 267 2010-11 869 9,461 33 325 2011-12 955 10,072 33 368 2012-13 1,019 10,551 33 405 2013-14 1,081 11,003 33 434

Network Details - 11 kV Sl. No. 1 2 3 4 No of Substations Line Length No of Consumers GFA Units Nos Kms Nos Rs Crs Base Year 59,410 838 1,045 2009-10 73,125 892 1,347 2010-11 82,961 946 1,677 2011-12 92,977 1,001 1,952 2012-13 95,565 1,055 2,166 2013-14 98,180 1,108 2,304

Network Details - LT Sl. No. 1 2 3 4 No of Substations Line Length No of Consumers GFA Units Nos Kms Nos Rs Crs Base Year 127,505 3,959,309 1,367 2009-10 135,093 4,064,408 1,791 2010-11 140,981 4,169,509 2,247 2011-12 146,799 4,274,609 2,704 2012-13 147,891 4,379,709 3,092 2013-14 148,991 4,484,811 3,349

Network Details - Total Sl. No. 1 2 3 4 No of Substations Line Length No of Consumers GFA Units Nos Kms Nos Rs Crs Base Year 727 195,336 3,960,178 2,626 2009-10 805 217,200 4,065,333 3,405 2010-11 869 233,403 4,170,488 4,250 2011-12 955 249,848 4,275,643 5,024 2012-13 1,019 254,007 4,380,797 5,663 2013-14 1,081 258,174 4,485,952 6,087

Distribution Expense Projections for the Control Period Sl. No. 1 Particulars O & M Cost Projections - SS Related - Line Related - Consumer Related Depreciation Taxes on Income Other Expenditure Special Appropriations ROCE Base Year 294 87 81 126 150 2 1 20 115 2009-10 344 104 98 142 204 4 1 30 211 2010-11 392 121 114 157 260 10 1 30 278 2011-12 449 144 131 174 318 14 2 338 2012-13 503 166 144 193 367 19 2 390 2013-14 562 190 158 213 400 23 2 413

2 3 4 5 6

79

7 8

Less O & M expenses Capitalized Total Gross ARR NTI Net Distribution ARR

56 526 25 501

78 715 34 682

63 908 39 869

67 1,053 43 1,010

33 1,247 47 1,200

34 1,365 51 1,315

Sl. No. Sl. 1 No. 1 2 3 42 53 64 75 6 87 8

Particulars O & M Cost Projections Particulars - SS Related O & Line Related - M Cost Projections - SS Related - Consumer Related - Line Related Depreciation - Consumer Related Taxes on Income Depreciation Other Expenditure Taxes on Income Special Appropriations Other Expenditure ROCE Special M expenses Less O & Appropriations Capitalized ROCE Total Gross ARR Less O & M expenses Capitalized NTI Net Total Gross ARR Distribution ARR NTI Net Distribution ARR

Distribution Expense - 33 kV Base Year 2009-10 2010-11 Distribution Expense - 11 kV 4 4 5 Base Year 2009-10 2010-11 112 137 162 4 4 5 104 121 087 0 0 25 33 40 12 16 20 00 00 10 103 060 081 0 21 22 24 91 171 211 18 112 112 46 83 110 26 38 48 21 31 26 2 3 3 205 284 364 24 36 45 10 13 15 195 270 349 Distribution Expense - LT

2011-12 5 2011-12 193 5 144 0 49 23 10 124 0 -5 251 1131 54 29 3 425 51 17 408

2012-13 6 2012-13 220 6 166 0 54 26 10 140 0 -7 281 0149 61 14 3 503 58 18 485

2013-14 7 2013-14 250 7 190 0 60 28 20 151 0 -9 291 0156 66 15 4 552 62 19 533

Sl. No. 1

Particulars O & M Cost Projections - SS Related - Line Related - Consumer Related Depreciation Taxes on Income Other Expenditure Special Appropriations ROCE Less O & M expenses Capitalized Total Gross ARR NTI Net Distribution ARR

Base Year 179 53 126 78 1 1 10 60 34 295 13 282

2009-10 203 61 142 107 2 1 16 111 46 393 18 376

2010-11 226 69 157 138 5 1 16 147 37 496 21 475

2011-12 251 77 174 171 8 1 182 38 575 23 552

2012-13 277 84 193 200 10 1 213 18 683 26 657

2013-14 305 91 213 220 13 1 227 18 747 28 719

2 3 4 5 6 7 8

80

Voltage-wise Losses Sl. No. 1 2 3 Particulars 33 kV 11 kV LT Base Year 4.88% 4.83% 7.87% 2009-10 4.83% 4.71% 7.63% 2010-11 4.70% 4.60% 7.43% 2011-12 4.58% 4.46% 7.19% 2012-13 4.40% 4.31% 6.94% 2013-14 4.23% 4.15% 6.67%

Contracted Capacities at Consumer end Sl. No. 1 2 3 Particulars 33 kV 11 kV LT Total Base Year 2009-10 124.58 195.70 1,403.25 2,168.47 2010-11 124.58 202.45 1,568.57 2,340.54 2011-12 157.25 209.20 1,749.39 2,786.90 2012-13 159.20 215.95 1,992.50 3,251.21 2013-14 159.20 222.70 2,288.32 3,553.78

Voltage-wise Contracted Demand Grossed up with Losses - 33 kV Sl. No. 1 Particulars 33 kV Base Year 2009-10 131 2010-11 131 2011-12 165 2012-13 167 2013-14 166

Voltage-wise Contracted Demand Grossed up with Losses - 11 kV Sl. No. 1 2 Particulars 33 kV 11 kV Base Year 2009-10 216 205 2010-11 223 212 2011-12 229 219 2012-13 236 226 2013-14 243 232

Voltage-wise Contracted Demand Grossed up with Losses - LT Sl. No. 1 2 3 Particulars 33 kV 11 kV LT Base Year 2009-10 1,675 1,594 1,519 2010-11 1,864 1,776 1,695 2011-12 2,068 1,973 1,885 2012-13 2,341 2,237 2,141 2013-14 2,671 2,558 2,452

Wheeling Tariff Calculation (Rs. Cr./MW) Sl. No. 1 2 3 Particulars 33 kV 11 kV LT Base Year 2009-10 0.02 0.18 0.46 LT Sales Sl. No. 1 Particulars LT Sales Base Year 6,202.7 2 2009-10 6,611.3 8 2010-11 7,034.1 4 2011-12 7,528.7 9 2012-13 8,063.1 2 2013-14 8,637.1 3 2010-11 0.02 0.21 0.53 2011-12 0.02 0.22 0.55 2012-13 0.02 0.23 0.58 2013-14 0.02 0.22 0.55

Wheeling Tariff Calculation Sl. No. 1 2 Particulars 33 kV (Rs./kVA/Month) 11 kV (Rs./kVA/Month) Base Year 2009-10 15.48 147.6 3 2010-11 17.84 171.8 9 2011-12 17.93 181.1 0 2012-13 18.37 190.6 3 2013-14 17.64 184.5 0

81

LT (Rs./kWh) Contracted Capacities of 132KV consumers 132KV details (MW)

0.98

1.17

1.28

1.42

1.46

2009-10 445

2010-11 445

2011-12 671

2012-13 884

2013-14 884

82

Filing of Proposed Tariffs for Retail Supply business for Ensuing FY 2009-10
The licensee does not propose any change in tariffs for the ensuing year. The licensee however would like to make the following submissions:

Proposals for Change in Tariff/ Amendments H.T. CATEGORY IV(B)- AGRICULTURAL This tariff is applicable for consumers availing H.T. Supply for Irrigation and Agricultural purposes which are not covered under HT Category IV (A). For the Lift Irrigation schemes managed by Government of A.P. the energy charges are 236 paise/unit and covered under H.T. Cat-IV (A). Now societies are being formed for maintenance of Lift Irrigation schemes of Government and asking for change of name in favour of the society and the Government is handing over entire responsibility to the societies through an internal agreement between the Government and societies. There should be a uniform Tariff for all the Lift Irrigation Schemes either maintained by societies or Government. Hence the Licensee requests the Honble Commission for deletion of HT Cat-IV (B), and keep the Tariff as H.T. Cat-IV (A). HT CATEGORY VII- TEMPORARY SUPPLY AT HT The temporary supply is normally released to only works which are temporary in nature i.e. for construction works etc., where the wiring/ installations are done on temporary basis. The Licensee is finding difficult where the applicants are asking to release temporary supply for major construction works at a time extending to more than 2 years. Hence the Licensee may be permitted to release under temporary category even the period exceeds beyond 2 years. THE PROPOSED ADDITIONS TO THE EXISTING DEFINITION ARE AS FOLLOWS. LT CATEGORY VII GENERAL PURPOSE * The tariff is applicable for supply of energy to Rythu Bazars maintained by Government of A.P. (* Sir, for kind perusal During the year 2001 CPDCL has issued instructions to cover Rythu Bazars under Cat-VII. The word Rythu Bazar is not included the Tariff. The DPE staff has booked mal-practice cases. Hence an amendment is proposed.)

83

LT CATEGORY I DOMESTIC Domestic establishment / Premise is the one which is used for dwelling/ residential purpose only. for domestic category, the households having a separate kitchen will be treated as a separate establishment.

LT CATEGORY II NON-DOMESTIC AND COMMERCIAL The word Non-Domestic and commercial purposes should be replaced with Non-Domestic (includes commercial) purposes This tariff is applicable for supply of energy to all establishments that are not classified in any other tariff categories of Tariff Order.

This tariff will applicable for supply of energy to all premises/ establishments that are used for all Non-Domestic (including commercial) purposes and also not covered for the establishments/ Premises in the Tariff orders.

84

Tariff Schedule
The licensee does not propose any change in tariffs for the ensuing year.
Electricity Tariffs Proposal for the FY 2009-10

Category

Purpose

Rates for FY 2008-09 Energy Fixed/Demand Charges Charges Ps/Unit --------------Rs.37/HP/Month of connected load Rs.100/KVA/Month of RMD or 80% of Contracted Demand whichever is higher 145 280 305 475 550 385 620

Proposed Rates for FY 2009-10 Energy Fixed/Demand Charges Charges Ps/Unit --------------145 280 305 475 550 385 620

Low Tension Category I Domestic 0 50 Units/Month 51 - 100 Units/Month 101 - 200 Units/Month 201 -300 Units/Month Above 300 Units/Month Non-Domestic / II Commercial 0 -50 Units/Month Above 50 Units/Month (I) Industrial Normal Upto 75 HP III (A) Connected Load (ii) Industrial Optional Demand Tariff (50 to 75 HP) (iii) Pisiculture and Prawn culture below 10 HP contracted load (iv) Sugarcane Crushing Off-Seasonal tariff for Seasonal loads for item -(i) Off-Seasonal tariff for Seasonal loads for item -(ii) Industrial (Above 75 HP upto 150 HP) Above 75 HP upto 150 HP

Rs.37/HP/Month of 375 connected load Rs.100/KVA/Month of RMD or 80% of Contracted Demand 375 whichever is higher

375

375

90 50 Rs.37/HP/Month on 30% of Contracted Load Rs.100/kVA/Month on 30% of CMD or RMD whichever is higher Rs.100/KVA/Month of RMD or 80% of Contracted Demand whichever is higher Rs.37/HP/Month on 30% of Contracted 440 Load Rs.100/kVA/Month on 30% of CMD or RMD whichever is higher 440 375 Rs.100/KVA/Month of RMD or 80% of Contracted Demand whichever is higher 85

90 50

440

440 375

III (B)

Category

Purpose

Rates for FY 2008-09 Energy Fixed/Demand Charges Charges Ps/Unit Rs.100/KVA/Month of recorded demand or 30% of contracted demand whichever is higher Rs.10/HP/Month of Contracted Load subj. to min of Rs. 30 per month With DSM measures Dry Land Farmers (Connection<=3 Nos) Fixed - 0 Dry Land Farmers (Connection > 3 Nos) Fixed - *210/HP/Yr Wet Land Farmers (Holding<=2.5 Acres) Fixed - 0 Wet Land Farmers (Holding > 2.5 Acres) Fixed - *210/HP/Yr Corporate & IT Assesses Fixed - 0 Without DSM measures Dry Land Farmers (Connection<=3 Nos) Fixed - 0 Dry Land Farmers (Connection > 3 Nos) Fixed - *525/HP/Yr Wet Land Farmers (Holding<=2.5 Acres) Fixed - 0 Wet Land Farmers (Holding > 2.5 Acres) Fixed - *525/HP/Yr Corporate & IT Assesses Fixed - 0 20 50

Proposed Rates for FY 2009-10 Energy Fixed/Demand Charges Charges Ps/Unit 440

Off-Seasonal tariff for Seasonal loads

IV V(A)

Cottage Industry and Dhobhi Ghats Agriculture @

440 Rs.100/KVA/Month of recorded demand or 30% of contracted demand whichever is higher Rs.10/HP/Month of Contracted Load 180 subj. to min of Rs. 30 per month With DSM measures Dry Land Farmers (Connection<=3 Nos) Fixed - 0 Dry Land Farmers (Connection > 3 Nos) Fixed - *210/HP/Yr Wet Land Farmers (Holding<=2.5 Acres) Fixed - 0 Wet Land Farmers (Holding > 2.5 Acres) Fixed - *210/HP/Yr Corporate & IT Assesses Fixed - 0 Without DSM measures Dry Land Farmers (Connection<=3 Nos) Fixed - *210/HP/Yr Dry Land Farmers (Connection > 3 Nos) Fixed - *525/HP/Yr Wet Land Farmers (Holding<=2.5 Acres) Fixed - *210/HP/Yr Wet Land Farmers (Holding > 2.5 Acres) Fixed - *525/HP/Yr Corporate & IT Assesses Fixed - 0 86
@

180

0 20

0 20

20 100

20 100

20 50

20

20

50 200

50 200

Category

Purpose

Rates for FY 2008-09 Energy Fixed/Demand Charges Charges Ps/Unit

Proposed Rates for FY 2009-10 Energy Fixed/Demand Charges Charges Ps/Unit

* Equivalent Flat rate Tariff in the absence of Metering V(B) Out of turn allotment Metered tariff (Mandatory) Local Bodies/ Street Lighting Minor Panchayats Major Panchayats Nagarapalikas and Muncipalities - Gr.3 Muncipalities - Gr.1 &2 Muncipalities, Selection & Special Grade Corporations Local Bodies/ PWS Schemes Minor/ Major Panchayats Upto 2500 units/Year Above 2500 units/ Year Nagarapalikas and Muncipalities Gr 1,2,3 and Spl./ Selection Grade Up to 1000 units/month Balance units Corporations Upto 1000 units/month Balance units VII VIII General Purpose Temporary Supply - Agriculture Purpose - Other than Agriculture

Tatkal (with DSM)

20

Tatkal (with DSM)

20

VI (A)

-------------

156 208 274 326 353 379

-------------

156 208 274 326 353 379

VI(B)

-----

20 50

-----

20 50

Rs.20/HP/Month of Contracted Load subj. to Min of Rs.100. Rs.20/HP/Month of Contracted Load subj. to Min of Rs.100. -------

Rs.20/HP/Month of Contracted Load subj. to Min of 405 Rs.100. 375 Rs.20/HP/Month of Contracted Load subj. to Min of 460 Rs.100. 400 --405 230 620 -----

375 405 405 460 400 230 620

High Tension Categories (A) Industrial I General ** 87

Category

Purpose 132 kV and above 33kV 11kV and below Fans & Lighting Colony Consumption

Rates for FY 2008-09 Proposed Rates for FY 2009-10 Energy Energy Fixed/Demand Fixed/Demand Charges Charges Charges Charges Ps/Unit Ps/Unit 250/KVA/Month 275 250/KVA/Month 275 230/KVA/Month 300 230/KVA/Month 300 195/KVA/Month 325 195/KVA/Month 325 440 440 400 400 360 250/KVA/Month 380 230/KVA/Month 430 195/KVA/Month 245 --360 250/KVA/Month 380 230/KVA/Month 430 195/KVA/Month 360 380 430 245 360 380 430

II

Seasonal Industries (Off-Seasonal tariff)# 132 kV and above 250/KVA/Month 33kV 230/KVA/Month 11kV and below 195/KVA/Month (B) Ferro Alloys --Others 132 kV and above 250/KVA/Month 33kV 230/KVA/Month 11kV and below 195/KVA/Month

Irrigation & Agriculture Govt. Lift Irrigation IV(a) Schemes IV(b) Others: (i) Flat rate tariff (ii) Metered Tariff (Optional) V Railway Traction VI Townships/Colonies Temporary supply IV

--0 ---$

236 0 0 400 400

--0 ---$

236 0 0 400 400

@ Farmers eligible for free supply under Dry land as well as Wetlands have to comply with DSM measures as applicable to his pumping system (Viz. Submersible and surface pumpsets) failing which they shall not be eligible for free supply. To be complied by March 2008 HDPE or RPVC piping suction and/or delivery ISI-marked monobloc or submersible pumpset. Free supply shall not be allowed for Paddy in second crop. New connections shall be given only with DSM measures and with meters only. # Based on the Recorded maximum Demand or 30% of CMD whichever is higher ## The demand charge will be levied at each metering point based on the individual billing demand at that point. However in the event of supply failure by the licensee at a supply point and power is drawn from an alternate traction supply point, the period of such supply failure shall not be taken into account for the purpose of working out the maximum demand as far as the alternate traction supply point is concerned. **Category HT I (A): The following incentives are applicable for consumers for the energy consumed from the distribution companies: 88

INCENTIVE STRUCTURE Load Factor Band >50% and upto 70% >70% Incentive Rate Energy Eligibility

For incremental consumption over 50% Load Factor (LF) 25% 25% For incremental consumption over 40% LF

The incentive scheme is applicable for the consumption with above mentioned load factors. $ Temporary supply or temporary increase in supply to existing consumers ordinarily limited to a period not exceeding 6 months at rates 50% in excess of HT tariffs. HV Metering for LT services: For LT consumers having HV side metering as per Tariff conditions, no concession need to be provided. Minimum charges Schedule:

LT categories
Category No. Purpose I Domestic Single Phase upto 250 W above 250W Three Phase II Non-domestic/ Single Phase Commercial Three Phase

Rs.25/Month
Rs.50/Month Rs.150/Month Rs.65/Month

Rs.200/Month

III (A) III (B)

Industrial Optional 75150HP Recorded demand during the month or 80% of contracted demand whichever is higher and 50 Units/KVA of Billing Demand per month Rs.2/Point/Month
Rs.6/Point/Month

VI (A)

VII VIII

Street Lighting Panchayats Municipalities and Corpns. General PurposeSingle Phase Three Phase Temporary Supply

Rs.50/Month Rs.150/Service/Month

89

Other than agriculture

Rs. 125 per kW or part thereof of contracted load for first 30 days or part thereof and Rs. 75 per kW or part thereof of contracted load for every subsequent period of 15 days or part thereof Minimum charge Rs. 100 per HP of contracted load for the first 30 days or part thereof and Rs. 50 per HP of contracted load for every subsequent period of 15 days or part thereof.

Agriculture

HT Categories Min. Billing Demand Min.Energy Charges IndustrialI (A) General I (B) Ferro alloy II V VI Non-Industrial Recorded demand during the month or 80% of contracted demand, whichever is higher

50 Units/KVA of billing demand per month Guaranteed energy off-take at annual 85% load factor on contracted demand or actual demand whichever is higher during the year. 25 Units/KVA of billing demand per month

Railway Traction
Townships/Colo nies

32 Units/KVA of Contracted demand per month

25 Units/KVA of contracted demand per month

VOLTAGE SURCHARGE (A) H.T consumers who are now getting supply at voltage different from the declared voltages and who want to continue taking supply at the same voltage will be charged as per the rates indicated below: Contracted Demand with Licensee and other sources (in kVA) 1 70 to 1500 2 1501 to 5000 Voltage at which Supply should be availed (in kV) Voltage at which Consumer is availing Supply (in KV) Rates % extra over the normal rates Demand Charges 12% 12% 12% 12% 12% 12% Energy Charges 10% 10% 10% 10% 10% 10%

Sl. No.

11 6.6 or below 33 11 or below

3 Above 5000 132 or 220 66 or below (B). For H.T. Consumers availing supply through independent feeders. 1 70 -2500 2 2501-10000 3 Above 10000 132 or 220 11 6.6 or below 33 11 or below 66 or below

90

Customer Charges: The customer charges are as given below: For All LT Categories inclusive of Agricultural Services* *Domestic consumers in the first slab and connected load less than 250 watts HT Categories (a) 66kV and below (b) 132/220kV Rs. 750/- month Rs. 1500/- per month Rs. 20/- per month Rs. 15/- per month

All other conditions as per in the Annexure D of the Tariff Order will be applicable for the respective categories under LT and HT supply.

91

8 Performance Parameters
Since its formation, APNPDCL has been putting continuous efforts for reduction of distribution losses at all voltage levels. The efforts include both structural and efficiency improvement related measures with well-directed plans for improvement of performance by reduction of distribution losses. The distribution loss trajectory shows that the investment made on this improvement related works is fruitful and achieved the objective. Distribution Losses Excl. EHT Sales Incl. EHT Sales 2001-02
26.73% 23.30%

2002-03
24.25% 21.24%

2003-04
23.13% 20.24%

2004-05
21.90% 19.20%

2005-06
20.88% 18.43%

2006-07
20.09% 17.82%

2007-08
17.96% 15.81%

It may be observed that the distribution loss has reduced substantially from a level of 26.73% during 2001-02 to 17.96% during 2007-08, which is a result of the companys consistent endeavor to improve levels of efficiency. It is estimated that the loss level during 2008-2009 would be at 17.58 % that is slightly higher than 17.08 % for the FY-2008-2009 as envisaged in the Tariff Order due to increased sales percentage compared to the Tariff Order in the LT voltage level, particularly, in the agriculture sector. As a part of efficiency improvement measure a comprehensive Energy Audit is being conducted to ascertain energy losses and reduce both technical and commercial losses. The loss reduction potential in each of the 26 Towns and 188 nos. mandal head quarters is estimated. Energy Audit of all the feeders of respective towns and mandals head quarters is being taken up to bring down the losses by taking various measures. However, it is a fact that the reduction of loss is dependent to a great extent on the investments made in the structural improvement made in the sector. It is experienced that in the last few years that HVDS introduced on various feeders has not only helped in improvising the quality of supply on these feeders but also in achieving the objective of reduction of losses. Therefore, in continuation to the above efforts, new HVDS scheme is planned to implement in current control period also. The licensee would like to bring to notice of the Honble Commission that majority of the investment during the next control period is towards expansion and strengthening of the network. It may be considered that out of a total investment of Rs 2754 Cr, only Rs 751 cr i.e., 23% of the investment actually intended for reduction of losses by implementing plans such as HVDS conversion, replacement of lower size conductor, meter replacement etc., Nevertheless, APNPDCL projected a sizeable reduction in loss level as shown in the table below with implementation of above investment plan and other efficiency improvement measures.

92

Distribution Losses Excl. EHT Sales Incl. EHT Sales

2008-09
17.58 14.99

2009-10
17.18 14.34

2010-11
16.73 14.07

2011-12
16.23 13.12

2012-13
15.65 12.25

2013-14
15.05 11.91

93

Cost of Service

94

1 Introduction
This report presents the estimated cost of service for various consumer categories of the Northern Power Distribution Company Limited (APNPDCL), for the year starting on April 1, 2008 and ending on March 31, 2009. The objective of this report is to classify the costs into demand; energy and customer related components and then apportion the same to various customer categories. The steps involved in the analysis are:

Forecasting the energy and peak demand requirements for the power system in the year under consideration; Forecasting the energy and peak demand requirements at the transmission-distribution interface in that year; Estimating the energy and peak demand requirements for each customer category for that year; Estimating the costs of providing the energy and peak demand required for each customer category; and Classifying and allocating the above costs to various consumer categories of APNPDCL at the retail level.

95

2 COST OF SERVICE MODEL FOR APNPDCL

The cost of service calculations are based on the cost of service model developed for NPDCL. The model, as currently used, calculates the cost of serving all customers categories of APNPDCL. All financial input into the model is as per the ARR for the year 2008-09, including revenue, and expenditure data. The following section gives a brief overview of the Cost of Service model developed for AP NPDCL

96

Financial Input Cost Elements as per the ARR 1. Power Purchase Cost 2.

Expenditure Classification Classification of the cost elements Demand Related Energy Related

Technical Input Energy Sales ( MU) Coincident Demand (MW) Non- Coincident Demand (MW)/ Contracted Demand (MW)

Customer Related

Expenditure Allocation Allocation of classified costs to Consumer Categories

Model Outputs Category-wise PP Cost allocation Category-wise Transmission Cost allocation Category-wise Distribution Cost allocation Category-wise Consolidated Cost Summary

Financial Input Sheet

This forms the base for the income and expenses data for the APNPDCL. The values are as per the ARR for the year 2008-09.

97

Technical Input Sheet

This part includes the system data required for the cost of service calculation. The energy and losses in the system are included along with the data regarding the customers responsible for the corresponding sales and losses. The percentage loss quoted is the loss in the distribution system and hence accounts for the energy that is unavailable for sale to the retail customers. APNPDCL customers are segregated into LT and HT customers which includes EHT (220 kV and 132 kV), Sub-transmission (33kV) and distribution (11kV and LV). The EHT customers are included as APNPDCL customers, even though they may be connected at 220 kV or 132 kV. In this study, technical losses experienced in EHT system are covered by EHT, 33kV, 11kV and L.T loads. Hence they need to be apportioned to all loads in the system. The HT customer categories in the APNPDCL system are;

HT Customers Industrial Cat- I (11KV, 33KV and 220/132 KV) HT Others Cat- II (11KV, 33KV and 220/132 KV) Irrigation and Agriculture Cat-IV (11KV, 33KV and 220/132KV) Railway Traction Cat V (132KV) RESCOs Cat VI (11KV & 33 KV) Temporary Colony Consumption ( 11KV, 33KV)

The LT (400 Volts) customer categories in the APNPDCL system are;

LT Customers Domestic category I Non-domestic category II Industrial category III Cottage industries category IV Irrigation and Agriculture category V Public lighting category VI General purpose category VII Temporary category VIII

Energy Sales in MU, Non- coincident demand and coincident demand data is entered for the above customer categories The coincident demand is the estimated contribution of each category to the system peak demand and the non-coincident demand has been estimated from system load shapes derived and represents the peak demand of each customer category, irrespective of the time of day. Values used in this analysis are shown in Table 2-1. 98

Table 2-1 Coincidence Factor

78% 81% 96% 96% 100% 75% 75% 75%

Coincident Factors and Load Factors used L.T Customers Domestic Category Category I Non-Domestic Category II Industrial Category III Cottage Industries Category IV Irrigation and Agriculture Category V Public Lighting Category VI General Purpose Category VII Temporary Category VIII H.T Consumers Industrial Category I 11KV 33KV 220/132 KV 11KV 33KV 220/132 KV Irrigation and Agriculture Category IV 11KV 33KV

Class Load Factor

56.92% 60.00% 65.09% 65.09% 54.07% 46.97% 46.97% 46.97%

Average Peak

71% 100% 100% 100% 100% 80% 100% 100% 80%

71.96% 68.16% 73.92% 70.86% 70.86% 50.62% 70.86% 70.86% 50.62% 52.60% 68.19% 70.86% 70.86% 70.86%

HT Others Category II

220/132 KV Railway Traction Category V (132KV) RESCOs Cat VI 11KV 33KV Temporary Colony Consumption 11KV Colony Consumption 33KV
95%

100% 100%
100% 100%

The DISCOM peak demands, both coincident and non-coincident are estimated using basic load shape synthesis model. Load shapes of different categories of consumers are constructed based on the Load Shapes data collected from the field. The following tabulation provides a derivation of the coincident peak demand, along with the assumptions for APNPDCL used in that derivation:

99

NORTHERN Sales Loss as % of input Losses Sub Total

Energy (MU) 9796.85 14.34% 1639.92 11,436.77

Average Coincident Demand (MW) 1573 16.21% 304 1877

The load factor and coincidence factor included in the Model for each category are assumed based on a review of the characteristics of the loads and load mix in APNPDCL. One of the key assumptions is on the assessment of the timing of the system peak in the test year and this has a significant bearing on the coincidence factor for each of the customers. Recent data indicate that:

The system peak demand of APNPDCL is occurring during Morning hours due to Agricultural loads. During the morning peak occurrence , the coincidence factor of agriculture is 100% and the same is reduced to zero at the time of evening peak Based on above considerations, it is felt that average demand method would be suitable for allocation of costs to consumer categories since it allocates the cost equitably on all consumer categories based on morning and evening peak loads. In the average demand method, as the name suggests, average of coincident morning peak and coincident evening peak is taken. In the model there is provision to calculate the cost based on the coincident morning peak, evening peak and average. The current option selected in the model is the average method. Expenditure Functionalization
The new model is developed keeping in view the unbundled nature of the power sector in A.P, hence the expenditure pertaining to NPDCL is taken as per the ARR in the financial input sheet.

Power Purchase Cost Transmission & SLDC Charges Repairs and maintenance Employee costs Administration and general expenses Depreciation Interest and financial charges

100

 Other expenses

101

Expenditure Classification
This section classifies the expenditure into demand, energy and customer related items. The options with respect to classification are;

Demand Energy 80% Demand , 20% Customer Customer Manual entry

The fixed costs in the power purchase are treated as demand related expense and the variable cost of power purchase is treated as energy related expense. Entire transmission cost is considered to be a demand related expense. The O & M expenditure in distribution is classified into demand and customer related in the ratio of 80:20. The same has been arrived at based on subjective judgment, as it is felt that some portion of the assets and employee expenses are used for catering to the needs of the customer such as customer service/call centers. The other cost elements in distribution viz., ROCE, depreciation and other costs have been fully considered under demand related costs. There is an option given in the expenditure classification sheet to arrive at the Power purchase cost with costly power (units purchased from short term sources at Rs.8/unit) and power purchase cost without the costly power the ( additional units purchased at Rs.2.16//unit). This option has been introduced in the model to assess the impact of purchase of costly power on the cost to serve for the different customer categories.

Expenditure Allocation
The expenditures which have been classified into demand, energy and consumer related are apportioned to the individual customer categories. Power Purchase Cost Allocation: Demand related costs of Power Purchase are primarily driven by the system peak. Hence they are allocated to customer categories based on the Coincident Demand. Energy costs in Power Purchase are allocated based on the loss-adjusted category energy consumption.

102

Transmission Cost Allocation: The transmission costs (including PGCIL and ULDC) are considered as demand related cost and the same is allocated to LT categories based on Non-coincident demand and contracted demand (CMD) for HT categories Distribution Cost Allocation: a) Operation and Maintenance Expenditure The demand related portion of O & M expenses are allocated to LT consumer categories based on non -coincident demand and contracted demand (CMD) for the HT consumer categories. The customer related costs are allocated to customer categories based on the number of customers in each category. b) ROCE Return on capital employed is driven by assets and it is fully considered as demand related expense. ROCE is allocated to LT consumer categories based on non -coincident demand and contracted capacity for the HT consumer categories. c) Depreciation Depreciation expense is driven by the level of fixed assets in the utility and is entirely considered under demand related expenses. Depreciation is allocated to LT consumer categories based on non -coincident demand and contracted capacity for the HT consumer categories. d) Interest on Consumer Security Deposit This is allocated to consumer categories based on the energy consumption grossed up for losses. A summary of the results of the model are the outputs and these are discussed in the next section and a comparison of revenues and costs by customers is made in this part of the computation.

103

3 Results
The following tabulation summarizes the results of the process:

APNPDCL needs to handle 11436.6 MU, which consist of sale of 9796.6 MU to its customers and losses of 1639.92 MU. Average Peak demand required by APNPDCL is 1877MW, which consist of 1573 MW to serve the customers, and 304 MW of losses in the system. The average unit cost of supplying the customers of APNPDCL is estimated at 3.57Rs/kWh. The expected unit revenue from APNPDCL customers at current tariff is 2.85 Rs/kWh.

Table-3.1 compares the cost of service and revenue expected from current tariffs for the major categories and Table 11 provides detailed results for each category:

Revenue and unit revenue at current tariffs. Allocated cost and unit allocated cost
Revenue to cost ratio Weightage of each category

Subsidies have not been considered.

104

Revenue CONSUMER CATEGORIES from Sale Non-Tariff CONSUMER CATEGORIES of Power Income Cr. Cr. Domestic - Category I Non-domestic Supply - Category II Domestic - Category I Industrial Supply - Category III 398.53 10.75 Cottage Industries - Category IV Non-domestic Supply - Category II 187.69 1.17 Irrigation and Agriculture - Category V Industrial Supply - Category III Lighting - Category VI 148.04 0.49 Public General Cottage Industries - Category IV Purpose - Category VII 1.41 0.02 Temporary - Category VIII Irrigation and AgricultureTotal Low Tension Supply - Category V 22.41 7.59 Public Lighting - Category VI 42.68 0.48 Industrial - Cat- I General Purpose - Category VII 10.99 0.07 Industrial Segregated - Cat- I (33KV) Temporary - Category VIII Indusl. Segregated - Cat-I (220/132KV) 0.12 0.00 HT Others - Cat-II Total Low Tension Supply 811.88 20.57 Indusl. Non-Segregated - Cat- II (33KV) Indusl. Non-Segre - Cat-II (220/132KV) Irrigation and Agriculture - Cat-IV Industrial - Cat- I 104.13 0.32 Irrigation and Agriculture - Cat-IV (33KV) Industrial Segregated - Cat- I 0.09 HT Cat IV - Irrigation & 26.91 Agriculture (132 kV) (33KV) Railway Traction - Cat V Indusl. Segregated - Cat-I 223.34 0.92 HT Cat VI - Colony Consumption (11KV) (220/132KV) Colony Consumption (33KV) HT Others - Cat-II 36.06 0.09 Colony Consumption ( 132 KV) Indusl. Non-Segregated - Cat- II Cat - VI RESCOs 0.45 0.00 (33KV) Temporary Indusl. Non-Segre - Cat-II Total High Tension Supply 0.00 2.18 (220/132KV) Irrigation and Agriculture - Cat-IV Irrigation and Agriculture - Cat-IV (33KV) HT Cat IV - Irrigation & Agriculture (132 kV) Railway Traction - Cat V HT Cat VI - Colony Consumption (11KV) Colony Consumption (33KV) Colony Consumption ( 132 KV) RESCOs Cat - VI Temporary Total High Tension Supply 859.20 4.00 26.62 Total 51.80 170.11 148.22 4.88 19.24 26.00 19.24 0.14 0.28 0.90 0.46 0.02 0.06 0.08 0.63

Cost of Allocated Service Expenditure Rs./Kwh Cr. 3.87 4.14 643.57 3.76 3.83 136.24 3.82 121.85 3.80 3.85 2.43 3.79 1,513.69 3.85 115.82 3.69 10.28 3.22 2.70 0.08 3.79 2,543.98 2.99 2.99 3.72 94.00 3.43 23.68 2.96 3.25 198.42 3.48 3.03 27.13 3.18 2.38 0.31 3.00 2.24 41.90 3.57 75.17 213.09 120.34 4.24 14.58 20.66 119.24

Revenue / Cost Comparison

Weightages

64% 139% 122% 59% 2% 37% 108% 164% 33%

18% 4% 3% 0% 43% 3% 0% 0% 73%

111% 114% 113% 133% 148% 97% 64% 69% 80% 124% 116% 132% 126% 17%

3% 1% 6% 1% 0% 0% 1% 2% 6% 3% 0% 0% 1% 3%

955.01

90%

27%

Total
127457749.doc

1,671.08
November 2008

24.57

3,498.98

48%

100%

127457749.doc

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STATUS ON IMPLEMENTATION OF TARIFF DIRECTIVES

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DIRECTIVES BROUGHT FORWARD FOR CONTINUED COMPLIANCE

Energy Audit The DISCOMs shall conduct regular and thorough energy audit to ensure accountability. The energy audit is being conducted regularly i.e. A copy of the Energy Audit Reports of each every month in Towns & Mandal Head Quarters. 1st. DISCOM to be filed with the Commission on a & 2nd Quarter reports of Energy audit for the year quarterly basis. 2008-09 and statement of energy reconciliation for the year 2007-08 have been submitted to the Honble Commission. Hence the Directive is being complied The Licensee shall henceforth reconcile with. the energy accounting figures annually and file reconciliation statements along with the audited Annual Accounts every year. Management of Industrial Feeders The DISCOMs shall submit data log sheets for supply conditions pertaining to the previous 30 days through RS.232 communications port, along with an abstract summary statement The monthly report on industrial feeder interruptions pertaining to their company regarding is submitted to APERC up to September 2008 based interruptions to industrial feeders once in a on the information collected manually. month to the Commission. The Commission intends to observe the time being taken to restore power and the quality of power supplied to industries to ensure supply of uninterrupted quality power. Availability of copies of ARR / Tariff filings The Licensees shall invariably make available copies of their ARR / Tariff filings available at all the district headquarters. Agricultural Consumption Estimates The DISCOMs shall file the monthly agricultural consumption estimate in two parts, (a) consumption estimate for un-metered services based on LV side DTR meters and (b) consumption on account of services released under Tatkal scheme and metered services. The estimate shall be filed with the Commission by 25th of every month. Metering & Billing The Commission reiterates its previous directive (Tariff Order for 2002-03) that (a) for Yes. ARR / Tariff filing copies were made available at all district head quarters every year. Hence the Directive is being complied.

The estimation of Agl. Consumption of APNPDCL has been submitted to Honble Commission up to the month of September 2008. Hence the Directive is being complied with.

For loads of 20HP-50 HP, LT Demand meters were provided for 95% services. For above 50 and up to 75 HP, new services are released with tri-vector meters.

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loads of 20 HP and above but below 50 HP, LT demand meters should be fixed; and (b) for loads of 50 HP and above up to 75 HP, trivector meters be fixed and the metering should be on the HT side. (a) The DISCOMs should make full-scale efforts to fill the gaps in sales database and achieve the stipulated 2 to 3 percent sales ratio of accessed sales of total metered sales by 30th September, 2008.

A) The Licensee has been taking steps to reduce the assessed sales by replacing all the defective meters in time.

B) The Licensee is submitting the sales database and MBC reports regularly. Up to August 2008. Hence the Directive is being complied with

(b) The DISCOMs shall file a Metering, Billing and Collection (MBC) report based on sales database, by 25th of every month without fail. Multiple Connections The Licensee is conducting regular inspections in all the circles every month and identified multiple The DISCOMs to conduct a door-toservices are converted in to single services. door checking of all services and to remove all multiple connections and on a continuous basis. Subsidy Administration
The Licensee is submitting the actual subsidized category sales regularly. Monthly actual subsidized sales The DISCOMs shall file before the have been submitted to APERC up to the month of SepCommission the actual sales to subsidize 2008. categories of consumers for whom the GoAP agreed to pay the subsidy every month and the Commission will monitor the units actually sold by the DISCOMs vis--vis the subsidy provided. At the end of the year, subsidy adjustments will be made based on the consumption of units in respect of various subsidized categories. For measuring the sales to the subsidized categories, the agricultural consumption estimate based on LV side meter readings on DTRs shall be the basis. For measuring the sales to metered categories of consumers, the sales database shall be the basis.

The Commission reiterates that in case the subsidy is not paid regularly on monthly basis, in advance, by GoAP, the DISCOMs shall avert to the full cost tariff fixed by the Commission. The GoAP obligation towards subsidy payments to DISCOMs is limited to the

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10

quantities mentioned in this order. If the DISCOMs exceed tariff order quantities and thus the subsidy requirement, the Commission will not entertain any request for additional quantities of energy to subsidized categories unless the permission of the GoAP is taken for additional subsidy if the excess consumption relates to agriculture. In other categories, if there is excess consumption, no additional subsidy will be recommended by the Commission to GoAP. Defaulters List The Licensee shall post on their website, the list of all those defaulters whose dues exceed Rs.50.000/- along with the reasons for non-collection and details of litigation involved, if any. This data shall be updated every six months and will be displayed on the first of the second month following the end of the previous half-year. Thus, the data pertaining to the dues as on 31st March shall be posted by 1st May and that as on 30th September by 1st of the following November on the respective websites of the DISCOMs. Market Survey The Licensee shall carry out a census of all HT consumers covering aspects like type of activity, connected load, contracted load, captive capacity, types of loads, sources of power purchase including third parties, and other technical and commercial parameters and file a report thereon with the Commission every year by 30th September. Generation of Power from Hydel Stations of APGENCO The DISCOMs should closely coordinate with APGENCO to ensure that no unit of Srisailam Complex (Left Bank Power House and Right Bank Power House) is backed down or shut down during the surplussing season. In case of generation of surplus energy by them over and above the requirements of DISCOMs and other users of energy, they should shut down some unit(s) of Thermal Power Stations with marginal variable cost in the merit order if

The directive is being complied with. The Defaulters List till end of March 2008 has been updated in website www.apnpdcl.in and the data as on September 2008 will be posted in the month of November 2008 as per the Directive.

The directive is complied with.

The directive is complied with

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reduction of generation up to backing down limit does not help bring down the frequency to a safe level. Consumers Pass Books The Licensees shall take up the implementation of the Commissions directive to issue pass books to all consumers in right earnest and submit a progress report thereon every 30th July and 31st January. However, it will be the consumers responsibility to get the pass book updated at the time of meter reading / issue of the bill. Break-up of voltage-wise losses in Distribution Network The DISCOMs shall invariably submit the break-up of losses at each voltage level such as LT, 11 KV and 33 KV for grossing-up of month-wise sales to arrive at the power purchase requirement consistent with MYT losses. Merit Order Dispatch Deviation The DISCOMs to furnish a monthly report on deviations along with reasons for such deviations in actual dispatch of Generating Stations in Merit Order compared to the monthly dispatch schedule adopted in the Tariff Order showing the quantum of energy in MU for each generating station. This monthly report must be placed on the DISCOMs website. They are also directed to follow the directive of the Commission vide paragraph 479 of Tariff Order 2005-06 on maintenance schedule based on demand and supply position in different months. Fixing meters on poles The Central Power Distribution Company (CPDCL) to furnish the data of lossreduction on 11 KV feeders and also improvement in revenues from services in the areas where pole-mounted metering was implemented. This information may be filed with the Commission by 30th September and may also be kept on the DISCOMs website.

The Spot billing system is being implemented for all LT Category Consumers except LT Agriculturall Consumers. Under the spot billing system, the bill is served at consumer premises. However, the pass books are issued to the consumers on their request. The licensee has also represented to the Honble Commission to consider dispensing of issuing pass books to the individual consumers as the spot billing system is satisfying the consumers.

12

Based on the voltage wise losses, the Licensee is arriving at the power purchase requirement while filing of ARR of NPDCL.

13

The directive is complied with

14

The directive pertains to APCPDCL. The polemounted metering is not felt essential for NPDCL as the meters are being shifted to make them accessible to inspect periodically and to take the readings monthly/ bi-monthly.

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16

17

Compensation for default in Standards of Performance The DISCOMs shall duly submit the presented monthly and annual reports to the Commission furnishing inter-alia the details of compensation paid to the affected consumers pursuant to the default in complying with the Guaranteed Standards of Performance specified in the Regulation No.7 of 2004, as required under Clause 5 thereof. Copies of Test Reports on Testing of Meters The SPDCL in particular and all other DISCOMs in general will ensure that copies of the Test Reports on the tests conducted on the consumer meters are invariably made available to consumers to afford an opportunity to them to record their comments. Un-authorized Agricultural Connections The Licensees to conduct a census of the un-authorized agricultural connections and submit the same by 31-05-2008. The DISCOMs shall be at liberty to take up the matter with the State Government for regularization; if any regularization is contemplated under Government Policy. The DISCOMs shall file their action plans in this regard by 31-07-2008.

Being complied with.

The meters are tested in the presence of consumers only and a copy of the meter test report is issued to the consumers immediately after inspection. A separate register is maintained at each MRT Lab of the Licensee. Regularization of un-authorized agricultural is being done regularly as and when the farmers are paying the necessary amounts.
Programmed to be regularized during 08-09 Normal + Tatkal

04-05 NPDCL

05-06

06-07

07-08

1434 4

2253 7

2652 1

2102 5

36855

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Telugu version of important documents The Licensees shall bring out the Telugu version of the GTCS at the earliest, and make available copies of the same to the needy The Directive will be complied with. persons at a reasonable cost. Similarly, the Licensees shall take action to bring out Telugu versions of all important documents like Annual reports, etc.

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FRESH DIRECIVES Deficiency in filings The licensees in their ARR filings for the years 2009-10 onwards shall provide data (along with similar data pertaining to the preceding year) on the following items as an addendum to their filings, in case Guidelines already issued by the Commission for filing of ARRs do not already provide for the depiction of these data in the ARR filings; they shall also place these data on their website: Recovery of compensation for non-compliance with Standards of Performance (SoPs) The compensation payable/paid by a licensee for non-compliances with the Standards of Performance as laid down by the Commission from time to time shall not be a charge on the consumer tariffs and should be recovered by the licensees concerned from the person(s) held responsible for such noncompliance. Disconnection charges No licensee shall levy and collect any disconnection charges from a consumer in case the consumers connection was not actually disconnected. In case, however, such a collection is effected, the Commission re-iterates that the Licensee shall adjust all such unauthorized collections in the future CC bills along with interest @ 24% p.a. with a minimum of Rs.75. Further, the affected consumers are entitled to approach the respective Forums for Redressal of Consumer Grievances. Energy conservation Each of the DISCOMs shall ascertain and intimate to the Commission by 31.12.2008 the likely adverse effects of adoption of CFL lamps of low Power Factor, as also the environmental concerns regarding the disposal of such lamps and the steps taken / proposed to be taken by them to minimize / eliminate such adverse effects and their own evaluation whether or not support from the Commission in this endeavour should be continued. Treatment of Income from Trading DISCOMS shall submit to the Commission by 30.09.2008 a detailed note on its trading activities during the last three years detailing therein the various steps taken to locate and / or procure

While filing the ARR 2009-10, the data will be incorporated.

The compensation is paid to the concerned consumers and the same will be recovered by the Licensee from the employees held responsible for non-compliance with the Standards of Performance.

The Directive is being complied with.

The licensee plans to replace existing incandescent lamps with CFLs through various agencies under CDM. The licensee will insist on power factor of CFL not less than 0.9 in this scheme while entering an MoU with any party. The report on adverse effects will be studied submitted to at later.

DISCOMs are jointly undertaking the activity of procurement of surplus power and putting it for trade to other entities through trader or exchange. Similarly DISCOMs are also procuring additional power during shortages through trading. The dispatch of generating

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surplus power from different sources for trading, the methodology adopted for price discovery for sale, as well as for 174 purchase, if any resorted to for this activity, the volumes, and the financial results for each year, estimated and the actuals. Safety issues and Compensation The distribution licensees will chalk out by 30.09.2008, a cogent and viable plan of action to adhere to appropriate safety standards, in particular to periodically inspect their electrical installations to take prompt action to rectify any shortcomings noticed or brought to their notice and to lay down a time schedule therefor. They will also work out and display on their website a transparent procedure for determination and payment of compensation in respect of electrical accidents involving humans as well as animals.

stations and procurement of surplus/additional. Power is being done in view of the states requirement. All the lines in APNPDCL are periodically inspected and rectifications such as replacing of leaning pole, damaged conductors, replacement of damaged insulators and double jumpering at cut point poles are being done to minimize the outages of 33KV and 11KV lines. Safety measures such as The following are being carried out regularly. i)insertion of middle poles in loose spans ii) Replacement of damages poles iii)Rectification of stay sets iv)Replacement of damaged insulators v) Replacement of damaged Conductor vi)Restringing of loose spans vii)Non-Departmental electrical fatal accident compensation paid by the NPDCL is Rs.1.0 lakh per Adult and Rs.50,000 per child (if the accident has occurred due to conductor snapping or pole damage or transformer blasting or calamities due to departmental fault). For Electrical fatal accident to animals, compensation is Rs.3000 each. In case of Dept. electrical fatal accidents compensation is paid as per the Work Men Compensation Act.

HT Incentive Scheme Each DISCOM shall prepare a consultative paper on the incentive scheme applicable to HTindustrial consumers, duly indicating the number of consumers who have availed the incentive and their consumption pattern over a period of time in Preparation of consultative paper is being done and the terms of load factor, power factor, contracted and same will be submitted by 31.12.2008. recorded loads. The DISCOMs shall submit this consultative paper to the Commission by endAugust 2008, to enable the Commission to take a view on the continuity or otherwise of the scheme for future years in its present form or in some modified form. Short-term Power Purchases A website is going to be created shortly for this purpose Each DISCOM shall immediately design and create a web-based platform with facilities for online trading to be operationalised by 31st August 2008. For this purpose, a prototype model that has in-built features for settlement as well as a balancing mechanism on a half-hourly basis has

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to be developed and put on the website. The Discoms have to show to the Commissions satisfaction by 30th June,2008, the modus operandi they intend to adopt for attracting a large 175 number of players as also the methodology they plan to adopt for arriving atthe acceptable bid prices. Tariff for shopping malls and hoardings As the hoardings have all the attributes to be covered under LT Category Non- Domestic and Commercial, and consume electricity mainly during evening peak hours, the Discoms shall confirm to the Commission by 30.09.2008 that the tariff actually charged from them is LT-II- NonDomestic & Commercial, irrespective of their location, atop the residential apartment complexes, etc. They shall also come up with appropriate proposals, if considered desirable, for any revision of tariff for hoardings and the shopping malls while filing their ARRs, etc. for the next Control Period commencing from FY 2009-10. Passbooks All DISCOMs shall ensure that passbooks are issued to all consumers desiring the issue thereof. The specific reservations of the DISCOMs, if any, on this issue must be brought to the notice of the Commission by 31.08.2008. Certification for LT Category IV Cottage industries In respect of LTCategory IV - Cottage Industries and Dhobighats, the DISCOMs shall first enquire of the District Officer of the concerned Department of GoAP whether or not that Department is issuing the certificates that a particular unit is indeed a Cottage Industry, etc. In case such certificates are issued by the Department concerned, the certification will be insisted upon for extending the benefit of tariff under this category. The certificate shall not be insisted upon and it will be the Officers of the DISCOM concerned, not below rank of the Divisional Engineer who will decide whether or not a particular unit falls under this category, when however, the department concerned is not issuing such certificates. Agreements in Telugu

The shopping malls and hoardings are actually charged from hoardings is LT-II non-domestic & Commercial only. The above services are consuming power during peak load hours. Appropriate proposal for revision of tariff on higher side for hoardings, if any will be included in the ARR filing for FY 2009-10.

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The licensee has represented to the Honble Commission to consider dispensing of issuing pass books to the individual consumers as the spot billing system is satisfying the consumers with required information on the bills.

The Directive is being complied with.

11

12

The Directive is being complied with. The agreement

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The DISCOMs shall ensure by 31.08.2008 that the agreement formats for fresh connections are also available in Telugu also and confirm by 31.10.2008 that the consumers have indeed been provided with the option of executing the agreements in Telugu, if so desired by them. 24-hour supply to rural areas The DISCOMS shall submit half-yearly reports to the Commission by 31st October and 30th April indicating therein the status on separation of feeders as on 30th September and 31st March, respectively. A gist of these reports may also be displayed by the DISCOMs on their website. They may also report by 31.10.2008 as to why not the minimum charges payable by the consumers in rural areas where the supply is provided only for a limited number of hours a day on a continuous basis throughout the year should not be suitably reduced. Non-compliance with Commissions directives by DISCOMs The Commission expresses its displeasure on the DISCOMs not complying with a number of its directives issued in the Tariff Order for 2007-08 and some even in earlier orders, which are listed in Part-I of Annexure-B to this Tariff Order. The Commission expects the DISCOMs to fully comply with these directives by the revised dates indicated therein. Any failure to do so will be taken a serious note of. Commission Determined Tariffs The Discoms shall submit quarterly reports of the load curve analysis of major consumer categories based on the studies done by their Load Research Cells. They shall also arrange to make every quarter, before the submission of the report for that quarter, a presentation to the Commission, with the first presentation being made in midAugust, 2008.

formats are available in Telugu and the consumers have an option of executing the agreements in Telugu.

The report will be submitted by 31.12.2008.

The NPDCL will fully comply with the directives

The directive will be complied with.

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ANNEXURE B PART-I
LIST OF DIRECTIVES NOT COMPLIED BY DISCOMS AND TO BE COMPLIED WITH BY THE DATES STIPULATED IN No. Directive Fixing meters on poles The Central Power Distribution Company (CPDCL) to furnish the data of loss reduction on 11 kV feeders and also improvement in revenues from services in the areas where polemounted metering was implemented. This information may be filed with the Commission every year by 30th September and may also be kept on the DISCOMs website. Implementation of Energy Conservation Act 2005 The DISCOMs shall submit a report on the action taken to implement the provisions of the Energy Conservation Act, 2005. They shall also submit proposals for offering suitable incentives to the Industrial consumers who comply with the provisions of the Energy Conservation Act, 2005. The report along with proposals on incentives may be submitted to the Commission by 30.09.2008 Safety Measures The Licensees shall file the action plan to adhere to appropriate safety standards, to periodically inspect their electrical installations, to take prompt action to rectify any shortcomings noticed or brought to their notice and to lay down a time schedule therefore as required to be filed by them in terms of Para 186 of the Tariff Order 2006-07, by 30-092008. Compensation to the victims of accidents The DISCOMs to work out, and display on their website, a transparent procedure for determination and payment of compensation in accident cases, by 30-09-2008. Status of Implementation

Not pertains to APNPDCL

No such incentive proposed by the licensee.

Periodical inspections and rectification of all installations are carried out regularly by the Licensee. Special drive has been initiated to erect intermediate poles at loose spans and to maintain the ground clearances. 50604nos poles were erected so far. The work is still under progress.

A transparent procedure for determination and payment of compensation in accident cases is adopted and displayed on website of the Licensee

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No.

Directive Merit Order Dispatch / Centralized Dispatch The Commission directs DISCOMs to furnish a monthly report on deviations along with reasons for such deviations in actual dispatch of Generating Stations in Merit Order compared to the monthly dispatch schedule adopted in this Tariff Order showing the quantum of energy in MU for each generating station. They are also directed to follow the directive of the Commission issued vide paragraph 479 in Tariff Order for 2005-06 on maintenance schedule based on demand and supply position in different months.

Status of Implementation

The directive will be complied with

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