JSERC (terms & conditions for distribution tariff) regulation 2004

' I I I I I I I r I I I I I I I I I I \j I 1. Published In Jha:khand Gazette .(ex.,ord.) dated 21.~.2004. penses. 25. 'Crose subsidy. 10. Provision for Bad and Doubtful Debts. 26. Rationalization of the Tariff structure. 11. Interest on loans. 27. Two part Tariff. 12. Interest on Working Capital. 28. Peak and Off-Peak Tariffs. 13. · Interest on Consumer security deposits. 29: Subsidised Tariffs. 14. Depreciation. 30. Seasonal Tariff. 15. Advance Against Depreciation. 31. Rebates. Jharkhand State Electricity Regulatory Commission (JSl:RC}, Ranchi, Notification, No. JSERC/FC/405, dated the 20th September, 2004.-JSERC (Terms and Conditions for distribution tariff) Regulation. PART-I In exercise of powers conferred under Section 181 of the Electricity Act, 2003 (hereinafter referred to as the Act) .. and all other powers enabling in this behalf, the Jharkhand State Electricity Regulatory Commission (hereinafter referred to as the JSERC. or the Commission} hereby makes the following regulations, namely:- 1. Short title and commencement.c-t.t These regulations may be called· the JSERC (Terms and Conditions for Distribution Tariff) Regulations, 2004. 1.2 These regulations extend to the entire State of Jharkhand. 1.3 These regulations shall come into force on the date of their publication in the Official Gazette. 1.4 Words and expressions used In these regulations and not defined herein but defined in the Act, shall have the meaning assigned to them under the Act. 2. Mete'red consumptlon.-2.1 The Commission shall estimate the consumption for metered categories based on billing data of the last 12 months, as provided by the Petitioner. . · · 3. Un-metered consumptlon.-3.1 The Commission.shall estimate unmetsrad consumption as a residue of total sales net of metered sales. · Terms and Conditions for Tariff dsterminstlon pens es. 7. Transmission and Wheeling Charge. 8~ Administration and General (A & G) Ex- 1. Shcrt title and Commencement. 2. Metered consurnptlon. 3. Un-metered consumption. 4. Sales Forecast. 5. Energy loss. 6. Power Purchase Cost. 16. Contingency Reserve. 17. Capital Expenditure. 18. Additional capltallsatlon. 19. Debt Equity Ratio. 20. Return on Equity. 21. Non-Tariff Income. 22. Net Revenue Requirement. 23. · Regulatory Asset. PART-II PART-I Jharkhanc State Eiectr;rdty Regulatory Commission {Terms arid Conditions for Distribution Tariff) Regulations, 2004]1 . Terms & Conditions for determining ARR I CONTENTS I ' • - -- •-· -· ··1 - ·--,------··,.--- • -L • -- I I , , I .. i i t ·1 I I i' I' I! I 3.'2 Unmetered domestic and commercial consumption shall be based on the proportion of consumption that is unmetered in these categories. The basis for this proportion shall be scrutinised by the Commission taking into account any sample study that had been undertaken by the Peiiticner. 3.3 Public Lamp consumption shall be calculated on the basis of actual hours use for urban areas and for rural areas. 3.4. The Commission shall take into account the results of joint verification of public lamps that has to be done by Petitioner in co-ordination with the Municipal Corporation. 3.5 Agriculture consumption shall be based on­ Number of pump sets, Percentage of the pump sets working on an average., Average rating of the pump sets in terms of BHP, Average usage of pump sets in terms of number of hours per year, Provided adequate ·bases is made available by the Petitioner for the aforementioned parameters, 3.6 Data fur the norms specified above sha!! be collected and ,..,er!fied through ' field studies directed to be conducted by the Petitioner from time to time. 4. Sales Forecast.-4.1 Sales for the ensuing year shall be based on the past trend. Suitable adjustments shall be undertaken to reflect the effect of known and measurable changes with respect to number of consumers, the connected load.· and the energy consumption. Such changes may include the Petitiioner's plan for1 expansion of capacity, change in operating conditions and consumers' price elasticity of demand. 4.2 The energy requirement for each consumer category for the ensuing year shall be determined taking into account the trend growth rates for average specific consumption and the forecasted number of consumers. 4.3 The petitioner may also use econometric modelling incorporating different economic factors affecting the demand for forecasting the sales estimated. 4.4 Sales may also be forecasted on monthly basis to better reflect the • influence of seasonality. 5. Energy loss.-5.1 The level of energy losses of the Petitioner shall be· reduced in a phased manner. The Commission shall specify a multi year framework ;, wit!- respect to reduction· targets after consulting the Petitioner in this regard. The ! loss levels shall be brought. down gradually to-acceptable norms of efficiency. 5.2 The financial gains anticipated on account of reduction in energy losses : by the Petitioner shallbe accounted for in the determination of its expected revenue ! requirement. . ! 5.3 The Distribution system losses shall be estimated separately. The technical i' losses shall be estimated by System Simulation Study/Load Flow Analysis. The' Commercial losses shall be determined on the basis of a proper and regular energy, audit identifying geographical locations of the feeders on which losses are abnormally: high. In absence of such a study, the total Technical and Commercial (T&C) losses! shall be estirnated based on the energy input in the system and energy billed for the', • . I previous year. . . i [ Regs . .1 .. 5 Jhar!<hand Local Acts 110] ............ '" - --·-----· .... ·----------~·=·=---=--=--===,,,.,===-======-j I­ I I I I I I Own Generation· Fuel Cost Price Adjustllftent and relates-to-the adjustment on account o.~¥W.!ation_s in the landed price of fuel at Licencee's o'~r:i&thermal­ stations, upto the level of generation as qi 'le/mined. by JSERC from time to time. · Power Purchase Cost Adjustment fo( unit price of power purchase, for th quantity; from. that specified for pow .' tr9m other entities, including Cen 1. 'Item 6.7 of Regulation 6' added vide Notifin. No JSERC/Apptt. 6-275, dated 15.7..2®1- · lPublished ' in Jharkhand Gazette. (Ex-ord.j' dated 20.7.2006). . If m:: . • Determined levels/Permitted quantity have the connotation as approved by j5 e. in Tariff ' Order or any other an_nual 'revlews/Orders. ]r~' l · .. ~:~ti! Description ·-~: Code FOG Part-I Part 5A The Board may furnish information on circle-wise eneq::;y input and enrgy billed in system. 5.5 T&C losses for the ensuing year shall be fixed taking into account inter alia the plan submitted by the Petitioner for reduction of these losses, which shall include, information on energy auditing measures, improveent in Information · Technologies, theft reduction measures etc. 6. Power Purchase Cost.-6.1 The energy available from various sources of power that supply to the Petitioner shall be._determined. The fixed and the variable charge for these stations shall be determined. 6.2 The power purchase cost shall be estimated on the basis of-merit order despatch, which may be determined on the basis of variable cost. 6.3 Due consideration shall be given to the technical constraints and long term contractual obligations while determining power purchase costs on the.basis of · merit order principle. .. 6.4 The availability from the state owned generators shall be estimated taking, into account the generation figures approved by the Commission. 6.5 The Plant Load Factors pertaining to the previousfinancial year shall be ; taken into account for determining energy available with thermal Central G,ei:l,erating Stations (CGS). The energy from hydro CGS shaJI be estimated consid~rJhg the average avaiiabiiiiy in ihe previous years. · ·:i /; · 6.6 The Commissiion shall determine the implications of Availability ;Based Tariff (ABT) regime provided details on the energy drawn at system peak !~e~uency. from all sources of generation alontwith the quanturm of incentives/pen~IJJ,~s paid. should be made available to the Commission on monthly basis. .;, ~ 1l6.7. Additional power purchase cost on account of increase-~frtJ(Power Purchase Cost and in a case of own generation, increase in the fuel cesti,will ·be adju~ted·as per the Fuel and Power Purchase Cost Adjustment whichAfia~'been: 1.0 FPPCA sh!II be computed as per the-followinq formulate: .~$.J.f- SE Where: . . . . · "' FPPCA is the Fuel and Power Purchase .Cost Adlustrr.snt in Rs.f'1~,;- I I I I I r I I follows: k n=1 Where: I 1.2 Power Purchase Cost Adjustment: · . The part for 'Power Purchase Costs Adjustment' shall be computed! as Is the actual variable cost per unit for the previous control period on the basis of actual landed price of fuel (determined as per the mode approved by JSERC) at Licensee's generation stations, expressed in Rs./Kwh calculated on the net output using permitted auxillary consumption and the actual fuel cost and actual Gross Calorific value and the SHR approved by JSERC. I Is the base variable cost per unit in Rs/kwh calculated .on the !net output using permitted auxiliary consumptions as approved by JSSRC in Tariff Order I is the approved base level of delivered energy as consldered by JSERC at the bus bar from thermal plants (million units) i' ·OGD8 1 to K, the thermal power station of the Licensee. I n FOG Adjustment on account of variation in 'landed price of Fuel at Tren1mal Power Statiions of the licensee in Rs. millions. I SE Total energy sold less energy consumption (sold) to the Agricu~ural and Rural Domestic category of consumers in the previous "Cohtrol Period" in Million Units (The Control Period shall mean a Quarter or the These components are explained in details in paragraphs below: i . I 1, 1. Own Generation Fuel Cost Adjustment: I' The part for 'Own Generation Fuel Cost Adjustment' shall be computed as follows: · I ( Where: l . B Independent Power Producers, Non-convsndonal Energy Producers, Captive Power Plants etk, as determined from time to time. A balancing term B to take care of under or over adjustment of revenue through previous f P, CA due to actual units sold in the present 11quarter being different from the forecast based Io~ the previous-quarter, I I j , I .Jharkhano Local Acts I[ ,eg. 6 112] l I , I I I I I Where, FPPCAn-1=Fuel and Power Purchase Cost Adjustment in Rs./Kwh in the previous control period (quarter) · OAn_ 1 =Actual units sold in quarter previous to the present one. 0An-2=Actual units· sold to quarter previous to the prsent one. Note.-Balancing Term "B" shall be calculated separately for each applicable category and added together to compute "B". 1.4. Total Energy. on which FPPCA is to be distributed: SE= Total of sold energy in the control period less (-) energy sold to agriculture and rural domestic category of consumers. 2.0. Implementation of FPPCA: (i) Only cost of fuel and power purchase as per the Tariff Order with respect to Methodology and Merit Order of Power Purchase from each entity shall be allowed. (ii) FPPCA shall be computed due to variation in cost of fuel and power purchased made on the basis of the levels of generation of power and those of purchase of power from other sources as determined by the Commission in the Tariff·Order ". (iii) The FPPCA will be recovered in the form of an incremental energy charge· (Rs./KWH) and shall be recovered from all consumers other than Agricultural and Rural Domestic Category of Consumers. (iv) The formulate for computation of FPPCA per Kwh for each category of consumer is given below: , A balancing term B shall be added in the formulate to take care of under or over adjustment of revenue through previous FPPCA due to actual units sold in the present quarter being different from the forecast based on the previous quarter and shall be computed as: Number of sources of power from 1 to k n Is the permitted level of power.purchases from each source in million units by th JSERC as per tariff order is the actual total cost per unit of delivered energy, inclusive of transmission change, computed based on the principles laid down in the respective arrangements approved by the Commission in Rs./KWh ior the previous control period. Is the base total cost per unit of the power purchased from a particular source, inclusive of transmission charge, computed based on 'the principles laid down in the respective arrangements in Rs./KWh for the previous control period. Adjustment on account of variation power purchase price trorn other entitles in Rs. Million I I I J· I (v) Licensee will submit the calculations of FPPCA and with all relevant informations and supporting documents to the Commission within 20 days of the start of the quarter for approval. The Commission after due , scrutiny and clarifications obtained if any from licensee shall approve the FPPCA to be charged within 30 days of the start of the quarter.] 7. Transmission. and Wheeling Charge.-The Inter State Transmission charges shall be estimated as per orders of the CERC. The Intra State Transmission and wheeling charge shall· be estimated as per regulations of the JSERC. 7.1 Employee costs.-7.1 The increase in Dearness Allowance (DA) shall be· price indexed. 7.2 The Commission shall follow a process of benchmarking, comparing performance of the Petitioner over a periodof time and with respect to its counterparts in other States. 7.3 The employee productivity (employee cost per unit of sale or any other indicator) shall be brought up to the all India average within a span of years that would be determined by the Commission separately. · 8. Administration and General (A&G) Expenses.-"-8.1 The A&G expenses shall be estimated keeping in view the rate of inflation. 8.2 The Oornrnissllon shall follow a process of benchmarking, comparing· performance of the Petitioner OVH a period of time and with res pct to its counterparts in other States. . · 8.3 The average A&G cost shcif be brought up to the all India average within a span of years that would be determined by the Commission separately. ER,-. R,9 , FS1 Fuel surcharge per unit (Rs/Kwh) to 1th category of consumer. Total fuel surcharge (Rupees). FPPCA consumer. i· Revenue contribution of 1th category of consumer in Rupees. Revenue contribution of rural domestic and agricultural category , I; of consumer in Rupees. ,., . .;. . No. of units sold to 1th category of consumer. ''1 I Fuel surcharge apportioned in Rupees to 1th category of i I i i ES1 FS1 -:-:1e total cost oi' fuel surcharge shall be distributed arnonqs: \he diife;ent categories oi consumers in proportion to the revenue contribution of the category of consumer as percent of the total revenue for the base years as per Tariff Order excluding revenue from rural domestic and agricultural category of consumers. v\l'thin each category, the apportioned fuel surcharge shall be spread equally over ea.~h unit (Kwh) of consumption/sale for that category. Let: •If .j I I I I I I I I I i I I. I I f I I I I I 3~ ~epair and Maintenance (R&Ni) =xi=enses.--3. I lhe Flc1;'vl expenses .11:111 be based on a certain percentage of opening balance of gross tixeo.assts tor ,li:-;tribution works, as may be specified by the Commission from iime to time. 9.2 The R&M expenses shall be adjusted for any extraordinary repair and ,naintenance work proposed to be undertaken by the Petitioner. 10. Provision for Bad and Doubtful De_bts.--10.1 No amount can be . .1llowed to be passed on the consumer on the ground ,of it being bad and doubtful debt as it wil lead to inefficiency in collectioin. 11. Interest on loans.-11.1 Interest on loan capital shall be computed loan­ wise on the actual outstanding loans duly taking into account the schedule of repayment and actual interest rate. 11.2 Normative Loan will be equal to the loan and amount of equity in excess of thirty percent (30%) invested into the project provided that the total of actual loans, equity and the normative loan shall not exceed the cost of the project. 11.3 In case of the existing distribution licensee, the normative loan shall be the opening normative loan after taking into account repayments worked out on normative basis. The weighted average rate of interest on loan shall be worked out on the actual 'outstandinq loan and applied to the normative loan for calculation of Interest on loan in the respective year. i 2. lnterest on Vvoril:ing Capiiai.-12.1 init~r1::sl on working capiiai that is roqulred to meet the shortfall in collection over and above the target approved by U1e Commission, shall be allowed. · 12.2. Rate of interest on working capital shall be the short-term Prime Lendina Rate of State Bank of India as on tst April of the year for which the tariff is determined. · · 13. Interest on Consumer security deposits.'-.13.1 Interest on Consumer nocurity deposits shall be equivalent to the bank rate or more, as may be specified lly the Commission from time to time. 14. Depreciation.-14.1 The capital base for the purpose of depreciation »hall be the historical cost of the asset: 14.2 Depreciation shall be calculated annually as per straight-line method at 1110 rate of depreciation as prescribed in the schedule attached to the regulations at Provided that the total depreciation during the life of the project shall not uxceed 90% of the approved original cost. 14.3 On repayment of entire loan, the remaining depreciable value shall be -pread over the balanceuseful life of the asset. 14.4 Depreciation shall be chargeable from the first year of operation .. In case , ir operation of the asset for part of the year, depreciation shall be charged on pro-· rr1t11 basis. 15. Advance Against Depreciation.-15.1 Advance Against Depreciation (/\/\0) shall be permitted wherever loan repayment considered tor working out 1111,mist on loan exceeds the depreciation allowable as per schedule and shall be n, imputed as follows:- · AAD=Loan repayment as referred above amount subject to a ceiling of 1/1 Oth nr ,irlolnal loan amount minus Depreciation as per schedule. t· i." I (ii) Works deferred for execution, !iii) Liabilities to meet award of arbitration or in satisfaction of the order or · · decree of a court'. and (iv) On account of change in law: Provided that original scope of works alongwith estimates of expenditure shall be submitted alongwith the application for provisional tariff. I 18.2 The capital expenditure of the following nature actually incurred after th,e cut-off date may be admitted by the Commission subject to prudence check: 1 (i) Deferred liabiliti~s relatinig to work;/services within the original scope of (ii) Liabilities to·meet award of arbitration or in satisfaction of the order or decree of a court, (iii) On account of change in law: (iv) Any additional work/service which has become necessary for efficient and successful operation of plant but not included in the original capital cost. Impact of additional capitalisation in tariff revision within the approved project I cost may be considererfby the Commission once in a tariff period. Note 1.-Any expenditure admitted on account of committed liabilities within the- original scope of work and the expenditure deferred on techno-economic grounds but falling within the original scope of work shall be serviced in the normative debt-equity ratio arrived at in the manner indicated in regulation 18. Note 2.-Any expenditure on replacement of old assets shall be considered atter writing-off the entire value of the original assets from the original capital cost. Note 3. -Any expendiiure admitted on account of new works not in the original scope of work shall be serviced ln the normative debt equity ratio of 70: 30. Note 4.-Any expenditure admitted on account of new works not in the original scope of work shall be serviced in the normative debt-equity ratio of 70:3'.0 after writing-off the original amount of the replaced assets from the original capital cost. · 15.2 ."-.C'J2:'.C2 .'.\gc.inst Dep~2cia1ion in a year shall be c::alculated by considering l actual o; normative ioan arrived at in ihe manner indicated in regulation 24. I ·1 :i3_ Goniirigency Rese,v•=.-16.1 A provision towards Contingericy Reserve ! shall be created subject 10 incidence oi uncertainties with respect to such items bt I revenue requiremeni, as may be specified by the Commission. · 16.2 Liabilities in this reqard shall be allowed subject to a scrutiny by the Commission. , 6.3 The amounis available in these reserves shall be invested in approved I: Government securities and shall be drawn upon with prior approval of the Commissi~r· I 17 _ Capital E:q::,enditure_-17 .1 The petitioner shall· provide projectwise j' . details of the expenditure incurred in the previous year and expenditure proposerfto ; be incurred in the ensuing year. · 1. 18- Additional capitalisatim1--18.1· The capital expenditure within the oriqinal scope of work relating to following nature actually incurred after the date of commercial operation up to the cut-oft date may be admitted by the Commission subject to prudence check. (i) Deferred liabilities, [ Regs. 16-18 :' .~i!ar'.<:-:ar:d Local Acts 113] .. ,t: 21.3 The meter rent shall be based on the amount being charged on this account and the number of metered consumers. 22. Net Revenue Requirement.-'-22.1 Ne, Revenue Requirement is the Annual Revenue Requirement less Non-tariff income. 23. Regulatory" Asset.-23.1 The Commission shall specify the terms and conditions for provision of Regulatory Asset and its related · administrative mechanisms through appropriate regulations. ' Terms and Conditions for Tariff determination 24. Cost standard.-24. l The tariffs for various categories shall be bench marked with the average cost of supply based on historical or embedded costs that nre prudently incurred· by the Petitioner in its operations pending any such study that reasonably establishes the category wise cost to supply. The category wise cost to supply factors in such characteristics of- a category as the load factor, yoltage, extent of technical and commercial losses etc. 25. Cross subsidy.-25.1 The cross subsidy shall be reduced gradually and 111 a phased manner. 25.2 The Commission shall be issuing a drait regulation, in accordance with ::;,H:tion 61 (g) of the Act, and as per powers defined under Section 181 of the Act. 1'11u Commission shall also set out the methodology for computation of surcharge fllr cross-subsidy compensation in terms of Section 42(2) of the Electricity Act.. 26. Rationalization of the Tariff structure.-26.1 the slab structure shall 11.i determined in a way that similarly placed consumers in any tariff category p,;y uimilar tariffs and the tariff structure ensures an efficient consumption of Note 5.-The scrutinv 0, the project cost estimates by ,he Corumission shall . IJ•·: limited to the rsasonab.eness oi the capital cost, financing plan, interest durir.Q. construction, use of etficient technology and such·other matters for the purposes of determination of tariff. . 19- Debt Equity Ratio.-19.1 Debt Equity ratio as on the daie of commercial operation for the purpose of determinaton of tariff sh1:II be 70:30. Where equity employed is more than 30%, the amount of equity for the purpose of tariif shall be limited to 30%. Where actual equity employed is less ihan 30%, the actual equity shall be considered. 20. Return on Equity.-20.1 The return shall be computed @ 14% on the equity base calculated, as aforementioned. 21. Non-Tariff lncome.-21. 1 Non tariff income shall be the revenue in excess of the revenue collected on account of tariffs, as approved by the Commission; and shall include such items as Delayed Payment Surcharge (DPS) and Meter rent. Delayed Payment Surcharge 21 .2. DPS shall be estimated taking into account the uncollected amount and the prevailing bank rate. I I I I I I , . I 26.2 The Commission shall undertake suitable mergers of categories and/oi sub-categories in _light_ of _a simple, easy to comprehend and logical tariff struft~I e. 26.3. The Commission shall not show any undue preference to any consu er · but may differentiate according to the consumer's load factor, power factor, vojta. e, total consumption of electricity during any specified period or the time at which the supply is required or the geographical position of any area, the nature of supply ahd the purpose for which the supply is required. I 27. Two PartTariff.-27.1 In accordance with Section 45(3) the charg~sl'or electricity supplied may include- I a. A fixed charge in addition to the charge for the actual electricity suppli d. b. A rent or other charges in respect of any electric meter or electrical pl!nt provided by the Petitioner. · I j 27.2 The Commission, shall, follow a two-part tariff structure enabli~g the Petitioner to recover its fixed costs through fixed charge and variable cost throygh energy charges. - · · 1 i' 28. Peak and Off-Peak Tariffs.-2s:1 The Commission may determinT a differential tariff·for peak and off-peak hours to promote demand side manage'mlnt. This may be done in a phased ;;,a:1:12r. speci!ylng these tariffs for ind~st! ial consumers in the beginning gradually covering other consumer categories. . : 29. Subsidised Tariffs.-29.1 The Commission shall allocate the s~b~idy provided the State Government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the Commission under Section' 62 . of the Act. · · · , · J 29.2 The State Government shall, notwithstanding any direction which rria',{ be given under Section 108 of the Act, pay in advance on a quarterly basis this amo'µnt of subsidy to the Petitioner. This amount shall be deposited in the account lot J1the Petitioner at the beginning of each quarter. , I · 30. SeasonalTariff.-3.1 The terms and conditions for categorising seasonal industries may be specified by Commission from time to time. · I 30.2 The seasonal industries identified by the Petitioner shall be approved by the Commission. · ' 30.3 The Commission shall determine the season/off-season tariff from time to time. 31. Rebates,_:31.1 The Oommisslon may specify rebates on the tariff for purchasing electricity at higher voltages from tinie to time, I The Fornis mentioned in the Regulation are available in the office. of fthe .Jharkhand State Electricity Regulatory'Commissi9n, 2nd Floor, Hajendra Jawan :i r !i. I