Delhi Electricity Regulatory Commission (Business Plan) Regulations, 2017

5488 DG/2017 (1) GOVERNMENT OF INDIA EXTRAORDINARY PUBLISHED BY AUTHORITY No. 6] DELHI, SATURDAY, SEPTEMBER 2, 2017/BHADRA 11, 1939 [N.C.T.D. No. 239 GOVERNMENT OF THE NATIONAL CAPITAL TERRITORY OF DELHI [PART III DELHI GAZETTE : EXTRAORDINARY 3 [PART III DELHI GAZETTE : EXTRAORDINARY 5 [PART III DELHI GAZETTE : EXTRAORDINARY 7 [PART III DELHI GAZETTE : EXTRAORDINARY 9 [PART III DELHI GAZETTE : EXTRAORDINARY 11 [PART III DELHI GAZETTE : EXTRAORDINARY 13 [PART III DELHI GAZETTE : EXTRAORDINARY 15 [PART III DELHI GAZETTE : EXTRAORDINARY 17 [PART III DELHI GAZETTE : EXTRAORDINARY 19 [PART III DELHI GAZETTE : EXTRAORDINARY 21 [PART III DELHI GAZETTE : EXTRAORDINARY 23 DELHI ELECTRICITY REGULATORY COMMISSION NOTIFICATION Delhi, the 1 st September, 2017 Delhi Electricity Regulatory Commission (Business Plan) Regulations, 2017 F.3(512)/Tariff/DERC/2016-17/5750/1082.—In exercise of powers conferred under Section 181 read with Section 61 and Section 86(1)(b) of the Electricity Act, 2003 (Act 36 of 2003) and all other powers enabling it in this behalf, the Delhi Electricity Regulatory Commission hereby notifies the following Regulations namely: PART 1 PRELIMINARY 1. SHORT TITLE, COMMENCEMENT AND EXTENT (1) These Regulations shall be called the Delhi Electricity Regulatory Commission (Business Plan) Regulations, 2017. (2) These Regulations shall remain in force for a period of 3 (three) years i.e., for FY 2017-18, FY 2018-19 and FY 2019-20, unless reviewed earlier. (3) The period of validity of these Regulations may be extended by the Commission, as deemed fit and the operational norms may also be extended as per the principles laid down in these Regulations: Provided that the target for reduction in Distribution Loss for extended period shall be determined by the Commission based on the approved values by the Commission in the past, latest audited accounts, estimate of the actual for the relevant year, prudence check and other factors considered appropriate by the Commission. (4) These Regulations shall extend to the whole of National Capital Territory of Delhi. 2. DEFINITIONS AND INTERPRETATION In these Regulations, unless the context otherwise requires, words and expressions used in these Regulations shall have the same meaning as defined in Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2017; Words and expressions used but not defined in these Regulations shall have the same meaning as assigned to it in the Electricity Act 2003 or any other law framed under the Act. by the Commission. PART 2 BUSINESS PLAN FOR GENERATING ENTITY 3. RATE OF RETURN ON EQUITY (5) Return on Equity in terms of Regulation 4(1) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for Generating Entity shall be computed at the Base Rate of 14.00% on post tax basis: (6) Provided that the Equity for the purpose of Return on Equity shall be lower of the Normative Equity determined as per Regulation 63 of the Delhi Electricity Regulatory Commission (Terms And Conditions For Determination of Tariff) Regulations, 2017 or Equity available as per Audited Financial Statement of the relevant year. 4. TAX ON RETURN ON EQUITY (7) The base rate of Return on Equity as allowed by the Commission under Regulation 3, shall be grossed up with the Minimum Alternate Tax or Effective Tax Rate of the respective financial year in terms of Regulation 72 and 73 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017, as per the following formula: 24 DELHI GAZETTE : EXTRAORDINARY PART III] Rate of Return on Equity= 14/[(100-Tax Rate)/100] Where, Tax Rate is Minimum Alternate Tax (MAT) or Effective Tax Rate, as the case may be. Illustration- (i) In case of the Generating Entity paying Minimum Alternate Tax (MAT), say @ 20.96% including surcharge and cess, then, Rate of Return on Equity shall be = 14/[(100-20.96)/100] = 17.71% (ii) In case of Generating Entity paying normal Corporate Tax including surcharge and cess: (a) Estimated Gross Income from generation for FY 2017-18 is, say Rs. 1000 Cr. and (b) If estimated Advance Tax for the year on above is Rs. 240 Cr., then, Effective Tax Rate for the year 2017-18 = 240/1000 = 0.24 or 24%, and Rate of Return on Equity shall be = 14/[(100-24)/100] = 18.42% 5. MARGIN FOR RATE OF INTEREST ON LOAN Margin for rate of interest for the Control Period in terms of Regulation 4(2) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Generating Entity shall be allowed as the difference in weighted average rate of interest on actual loan as on 1 st April 2017 and 1 (one) year Marginal Cost of Fund based Lending Rate (MCLR) of SBI as on 1 st April 2017: Provided that the rate of interest on loan (MCLR plus Margin) shall not exceed approved base rate of return on equity i.e., 14.00%. 6. OPERATION AND MAINTENANCE EXPENSES (1) Normative Operation and Maintenance expenses in terms of Regulation 4(3) and Regulation 92 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Generating Entity shall be as follows : (a) Normative Operation and Maintenance expenses for existing generating stations shall be as follows : Station 2017-18 2018-19 2019-20 PPS I 17.69 18.68 19.73 (b) Additional R&M Expenses for generating stations shall be as follows : Table 2: Additional R&M Expenses (in Rs. Cr.) Station 2017-18 2018-19 2019-20 PPS I 16.12 16.12 0.00 (3) Impact of any statutory Pay revision on employee’s cost as may be applicable on case to case basis shall be considered separately, based on actual payment made by the Generation Entity and shall be allowed by the Commission after prudence check at the time of true up of ARR for the relevant financial year. 7. CAPITAL INVESTMENT PLAN (1) The tentative Capital Investment plan for Gas Turbine Power Station for FY 2017-18 to FY 2019-20 is as follows: [PART III DELHI GAZETTE : EXTRAORDINARY 25 Table 3:Capital Investment plan (in Rs. Cr.) Sr. No. Description 2017-18 2018-19 2019-20 Efficiency Improvement 1 Procurement and commissioning of exhaust plenum for GT # 1 Reduction in Gross Station Heat Rate 2 Replacement of Steam Ejector with Increase in output power 3 Installation of VFD in Condensate Extraction Pump (CEP) Mod-I,2,3 Reduction in Auxiliary Consumption 4 Procurement of steam turbine glands, for steam turbine (34MW)- Mod-2 Increase in output power 5 Total 1.88 17.43 0.35 (2) The Capital investment plan and the respective scheduled date of commissioning, submitted by the Generating Entity in the Annual Tariff Petition, shall form the basis for computation of Annual Fixed Cost in terms of Regulation 99 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (3) Provided that, any improvement in operational parameters resulting from commissioning of the scheme due to any Additional Capital Investment in existing generating stations shall form the basis for computing the Energy Charge Rate, from the scheduled date of commissioning of the respective schemes, in terms of Regulation 103 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (4) Capital cost shall be trued up annually and financial impact on account of variation in projected capital cost in the tariff order vis-a-vis actual capital cost and scheduled date of commissioning vis-a-vis actual date of commissioning shall be dealt as per the provisions of Regulations 61, 62 and 150 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. 8. NORMS OF OPERATION FOR GENERATING STATIONS: (1) Normative Annual Plant Availability Factor and Normative Annual Plant Load Factor for existing generating stations of Delhi shall be as follows : I. Normative Annual Plant Availability Factor (NAPAF) : 85% II. Normative Annual Plant Load Factor (NAPLF) : 85% (2) GROSS STATION HEAT RATE (GHR) Gross Station Heat Rate for existing generating stations of Delhi shall be as follows: (3) AUXILIARY ENERGY CONSUMPTION Auxiliary Energy Consumption shall be computed in two parts: a) Fixed: 0.5% of the generation at normative PLF of the plant capacity which shall form part of other expenses under Fixed Cost, at energy charge rate approved by the Commission in respective Tariff Order. b) Variable: 2.0% in Combined Cycle mode and 0.5% in Open Cycle mode of the actual generation which shall form part of computation of energy charge rate of the respective month. Sr. No Generating Station Combined Cycle Open Cycle 1 Gas Turbine Power Station (GTPS) 2450 3125 2 Pragati Power Station I (PPS I) 2000 2900 26 DELHI GAZETTE : EXTRAORDINARY PART III] 9. INCENTIVE Incentive to a Generating Entity or unit thereof shall be payable at a flat rate of 25 Paisa/kWh for ex-bus scheduled energy corresponding to scheduled generation in excess of ex-bus energy corresponding to Normative Annual Plant Load Factor (NAPLF) as specified in Regulation 8(1) of these Regulations. 10. INCENTIVE SHARING MECHANISM FOR RE-FINANCING OF LOAN (1) The incentive due to lower rate of interest on account of re-financing of loan in terms of Regulation 71 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Generation Entity shall be computed as the product of total quantum of loan availed and difference of weighted average rate of interest on actual loans versus margin of 2.00%plus (+) SBI (2) The incentive on account of re-financing of loan computed as per sub clause (1) above shall be shared equally between the Consumers and the Generation Entity. 11. Operational Norms for Rithala Combined Cycle Power Plant shall be the norms specified in Regulation 7.3 of the Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Generation Tariff) Regulations, 2007 for E/EA/EC/E2 Class Machine. Part 3 BUSINESS PLAN FOR TRANSMISSION LICENSEE 12. RATE OF RETURN ON EQUITY (5) Return on Equity in terms of Regulation 4(1) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for Transmission Licensee shall be computed at the Base Rate of 14.00% on post tax basis: (6) Provided that the Equity for the purpose of Return on Equity shall be lower of the Normative Equity determined as per Regulation 63 of the Delhi Electricity Regulatory Commission (Terms And Conditions For Determination of Tariff) Regulations, 2017 or Equity available as per Audited Financial Statement of the relevant year. 13. TAX ON RETURN ON EQUITY The base rate of Return on Equity as allowed by the Commission under Regulation 10 of these Regulations shall be grossed up with the Minimum Alternate Tax or Effective Tax Rate of the respective financial year in terms of Regulation 72 and 73 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017, as per the following formula: Rate of Return on Equity= 14/[(100-Tax Rate)/100] where, Tax Rate is Minimum Alternate Tax (MAT) or Effective Tax Rate, as the case may be. Illustration- (i) In case of the Transmission Licensee paying Minimum Alternate Tax (MAT), say @ 20.96% including surcharge and cess, then, Rate of Return on Equity shall be = 14/[(100-20.96)/100] = 17.71% (ii) In case of Transmission Licensee paying normal Corporate Tax including surcharge and cess: (a) Estimated Gross Income from Transmission Business for FY 2017-18 is, say Rs. 1000 Cr. and, (b) If estimated Advance Tax for the year on above is Rs. 240 Cr., then, Effective Tax Rate for the year 2017-18 = 240/1000 = 0.24 or 24% and Rate of Return on Equity shall be = 14/[(100-24)/100] = 18.42% 14. MARGIN FOR RATE OF INTEREST ON LOAN : Margin for rate of interest for the Control Period in terms of Regulation 4(2) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Transmission Licensee shall be allowed as the difference in weighted average rate of interest on actual loan as on 1 st April, 2017 and 1 (one) year Marginal Cost of Fund based Lending Rate (MCLR) of SBI as on 1 st April, 2017: Provided that the rate of interest on loan (MCLR plus Margin) shall not exceed approved base rate of return on equity i.e., 14.00%. [PART III DELHI GAZETTE : EXTRAORDINARY 27 15. OPERATION AND MAINTENANCE EXPENSES (1) The Normative, Bay wise and Circuit kilometres wise, Operation and Maintenance Expenses of a Transmission Licensee, including own consumption of energy for Transmission Licensee’s installations and offices, shall be as follows: Table 5: Bay wise Norms for HVAC (Rs. Lakh/bay) Voltage Levels 2017-18 2018-19 2019-20 400kV 45.23 47.76 50.44 220kV & below 15.30 16.16 17.06 Table 6: Circuit km wise Norms for HVAC lines (Rs. Lakh/ckm.) Voltage Levels 2017-18 2018-19 2019-20 400kV 8.13 8.59 9.07 220kV 2.03 2.15 2.27 (2) Impact of any statutory Pay revision on employee’s cost as may be applicable on case to case basis shall be considered separately, based on actual payment made by the Transmission Licensees and shall be allowed by the Commission after prudence check at the time of true up of ARR for the relevant financial year. 16. CAPITAL INVESTMENT PLAN (1) The tentative Capital Investment Plan for the Transmission Licensee for FY 2017-18 to FY 2019-20 is as follows: Table 7:Capital Investment plan (in Rs. Cr.) Sr. No. Details of scheme 2017-18 2018-19 2019-20 1 New Works 400 kV a Substations - - - b Lines - - - 220 kV c Substations 132 267 618 d Lines 8 238 435 2 Automation Works a 400 kV - - 20 b 220 kV - - 106 3 Augmentation Works a 400 kV - 7 25 b 220 kV 37 298 71 c 66kV and below - 69 38 28 DELHI GAZETTE : EXTRAORDINARY PART III] Sr. No. Details of scheme 2017-18 2018-19 2019-20 4 Land Cost including Civil 27 27 27 5=1+2+3+4 Grand Total 204 906 1340 (2) The Capital investment and the respective scheduled date of commissioning, submitted by the Transmission Licensee in the Annual Tariff Petition, shall form the basis for computation of Annual Fixed Cost in terms of Regulation 111 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (3) Capital cost shall be trued up annually and financial impact on account of variation in projected capital cost in the tariff order vis-a-vis actual capital cost and scheduled date of commissioning vis-a-vis actual date of commissioning shall be dealt as per the provisions of Regulations 61, 62 and 150 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. 17. NORMS OF OPERATION FOR TRANSMISSION BUSINESS (1) Normative Annual Transmission System Availability Factor (NATAF) for recovery of Annual Fixed Charges for AC System shall be considered at 98%. (2) Transmission System Availability shall be computed as per the formulae and methodology specified in Appendices-I, II and III of these Regulations. 18. TRANSMISSION CHARGES FOR TRANSMISSION LICENSEEE The Transmission Charges (inclusive of incentive) for AC system to be billed, in terms of Regulation 112 to 115 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017, for a calendar month for transmission system or part thereof shall be computed as follows: a) For TAFM ≤ 98%, AFC x (NDM/NDY) x (TAFM/98%) b) For TAFM: 98% TAFM 99%, c) For TAFM: 99% TAFM 99.75%, d) For TAFM ≥ 99.75%, where, AFC =Annual Fixed Cost specified for the year in Rupees NATAF =Normative Annual Transmission availability factor, in per cent NDM =Number of days in the month NDY =Number of days in the year TAFM =Transmission System availability factor for the month. 19. INCENTIVE SHARING MECHANISM FOR RE-FINANCING OF LOAN (1) The incentive due to lower rate of interest on account of re-financing of loan in terms of Regulation 71 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Transmission Licensee shall be computed as the product of total quantum of loan availed and difference of weighted average rate of interest on actual loans versus margin of 2.00%plus (+) SBI MCLR.. (2) The incentive on account of re-financing of loan computed as per sub clause (1) above shall be shared equally between the Consumers and the Transmission Licensee. [PART III DELHI GAZETTE : EXTRAORDINARY 29 Part 4 BUSINESS PLAN FOR Distribution LICENSEE 20. RATE OF RETURN ON EQUITY (1) Wheeling Business: Return on Equity in terms of Regulation 4(1) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 shall be computed at the Base Rate of 14.00% on post tax basis. (2) Retail Business: Return on Equity in terms of Regulation 4(1) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 shall be computed at the Base Rate of 2.00% on post tax basis. (3) Carrying Cost: Return on Equity in terms of Regulation 2(16) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for computation of weighted average rate of interest for funding of Regulatory Asset/accumulated Revenue Gap through debt and equity shall be considered at 14.00% on pre-tax basis. (4) The Equity for the purpose of Return on Equity for Wheeling and Retail Business shall be lower of the Normative Equity determined as per Regulation 63 of the Delhi Electricity Regulatory Commission (Terms And Conditions For Determination of Tariff) Regulations, 2017 or Equity available as per Audited Financial Statement of the relevant year: Provided that balance Equity left over after funding requirement of capitalisation as per Audited Financial Statement shall be utilised towards funding of accumulated Revenue Gap, if any. 21. TAX ON RETURN ON EQUITY The base rate of return on equity as allowed by the Commission under Regulation 17(1) and Regulation 17(2) of these Regulations shall be grossed up with the Minimum Alternate Tax or Effective Tax Rate of the respective financial year in terms of Regulation 72 and 73 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017, as per the following formula: Rate of Return on Equity= 16/[(100-Tax Rate)/100] where, Tax Rate is Minimum Alternate Tax (MAT) or Effective Tax Rate, as the case may be. Illustration- (i) In case of the Distribution Licensee paying Minimum Alternate Tax (MAT) say @ 20.96% including surcharge and cess, then, Rate of Return on Equity shall be = 16/[(100-20.96)/100] = 20.24% (ii) In case of Distribution Licensee paying normal Corporate Tax including surcharge and cess: (a) Estimated Gross Income from Distribution business for FY 2017-18, say is Rs. 1000 Cr. and (b) If estimated Advance Tax for the year on above is Rs. 240 Cr., then, Effective Tax Rate for the year 2017-18 = 240/1000 = 0.24 or 24%, and Rate of Return on Equity shall be = 16/[(100-24)/100] = 21.05%. 22. MARGIN FOR RATE OF INTEREST ON LOAN (1) Margin for rate of interest for the Control Period in terms of Regulation 4(2) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution Licensee shall be allowed as the difference in weighted average rate of interest on actual loan as on 1 st April, 2017 and 1 (one) year Marginal Cost of Fund based Lending Rate (MCLR) of SBI as on 1 st April, Provided that the rate of interest on loan (MCLR plus Margin) shall not exceed approved base rate of return on equity for wheeling business i.e., 14.00%. (2) The Distribution Licensees shall follow transparent mechanism to avail Loans and, to the extent possible, shall endeavour to invite open tender for availing Loans. 23. OPERATION AND MAINTENANCE EXPENSES (1) Normative Operation and Maintenance expenses in terms of Regulation 4(3) and Regulation 92 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution Licensees shall be as follows: Table 8: O&M Expenses for BRPL for the Control Period Particulars Unit 2017-18 2018-19 2019-20 30 DELHI GAZETTE : EXTRAORDINARY PART III] Particulars Unit 2017-18 2018-19 2019-20 Table 9: O&M Expenses for BYPL for the Control Period Particulars Unit 2017-18 2018-19 2019-20 Table 10: O&M Expenses for TPDDL for the Control Period Particulars Unit 2017-18 2018-19 2019-20 Table 11: O&M Expenses for NDMC for the Control Period Particulars Unit 2017-18 2018-19 2019-20 (2) The Distribution Licensees shall be allowed own (Auxiliary) consumption, at Zero Tariff for actual recorded consumption subject to a maximum of 0.25% of total sales to its retail [PART III DELHI GAZETTE : EXTRAORDINARY 31 consumers for the relevant financial year as part of O&M expenses for the relevant year: (3) Actual recorded own (Auxiliary) consumption in excess of 0.25% of total sales to its retail consumers for the relevant financial year, shall be billed at Non Domestic Tariff of respective year’s Tariff Schedule and shall form part of revenue billed and collected for the same year. (4) Impact of any statutory Pay revision on employee’s cost as may be applicable on case to case basis shall be considered separately, based on actual payment made by the Distribution Licensees and shall be allowed by the Commission after prudence check at the time of true up of ARR for the relevant financial year. 24. CAPITAL INVESTMENT PLAN (1) The tentative Capital Investment Plan in terms of Regulation 4(4) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution licensee shall be as follows: Table 12: Capitalisation for BRPL for the Control Period (in Rs. Cr.) Particulars 2017-18 2018-19 2019-20 Total Capitalization 425 439 449 1313 Smart Meter 87 87 87 262 Less: Deposit Work 40 41 42 123 Total 472 485 494 1452 Table 13: Capitalisation for BYPL for the Control Period (in Rs. Cr.) Particulars 2017-18 2018-19 2019-20 Total Capitalization 331 345 349 1025 Smart Meter 64 64 64 191 Less: Deposit Work 11 11 12 34 Total 384 398 401 1182 Table 14: Capitalisation for TPDDL for the Control Period (in Rs. Cr.) Particulars 2017-18 2018-19 2019-20 Total Capitalization 423 414 414 1251 Smart Meter 66 66 66 198 Less: Deposit Work 50 50 50 150 Total 439 430 430 1299 (2) The Licensee shall submit the quarterly Capital investment plan along with scheduled date of Commissioning in the Annual Tariff Petition for the relevant year, which shall form the basis for computing the Fixed Cost in terms of Regulation 130 (c) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (3) The Distribution Licensee shall submit an application including details of actual Capitalisation on quarterly basis for physical verification and true up of capital cost within 1 (one) month of the completion of the relevant quarter. (4) The quarterly Capital Cost submitted by the Distribution Licensee as per aforesaid sub- Regulation (3) shall be trued up by the Commission and financial impact on account of variation in projected capital cost in the tariff order vis-a-vis actual capital cost & scheduled date of commissioning vis-a-vis actual date of commissioning shall be dealt under the Annual true up of relevant financial year as follows: (a) Any excess tariff recovered on account of variation in projected capitalization in the tariff order vis-a-vis trued up capitalization by more than 10% during the year, shall be adjusted 32 DELHI GAZETTE : EXTRAORDINARY PART III] in the Revenue Gap/Surplus of the relevant year along with interest rate at 1.20 times of the bank rate prevalent on 1 st April of respective year: Provided that any excess tariff recovered on account of variation in projected capitalization in the tariff order vis-a-vis trued up capitalization due to reasons beyond the control of the Distribution Licensee i.e., delay in ‘In-principle’ approval of the schemes, road cutting permission from the concerned agencies etc., shall be adjusted in the Revenue Gap/Surplus of the relevant year along with interest rate equal to bank rate prevalent on 1 st April of respective year. (b) Any shortfall in tariff recovered on account of variation in projected capitalization in the tariff order vis-a-vis trued up capitalization by more than 10% during the year, shall be adjusted in the Revenue Gap/Surplus of the relevant year along with interest rate at 0.80 times of the bank rate prevalent on 1 st April of respective year. 25. TARGET FOR DISTRIBUTION LOSS (1) The Distribution Loss target in terms of Regulation 4(9)(a) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution licensees shall be as follows: Table 15: Target for Distribution Loss for the Control Period Sr. No. Distribution Licensee 2017-18 2018-19 2019-20 1 BSES Rajdhani Power Limited 10.93% 10.19% 9.50% 2 BSES Yamuna Power Limited 13.00% 11.69% 10.50% 3 Tata Power Delhi Distribution Limited 8.38% 8.19% 8.00% 4 New Delhi Municipal Council 10.30% 9.63% 9.00% (2) The amount for Overachievement/Underachievement on account of Distribution Loss target shall be computed as per the formula specified in the Regulation 159 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution Licensee. (3) Any financial impact due to Underachievement on account of Distribution Loss target by the distribution licensee for the relevant year shall be to the account of distribution licensee as specified in Regulation 161 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (4) Any financial impact due to Overachievement on account of Distribution Loss target by the distribution licensee for the relevant year shall be shared between the Distribution Licensee and Consumers as follows: i. in case actual Distribution Loss is between the loss target and loss target minus [50%*(Previous Year Target-Current Year Target)] for the relevant year shall be shared in the ratio of 2/3 rd to Consumers and rd to the Distribution Licensee; ii. in case actual Distribution Loss is less than loss target minus [50%*(Previous Year Target-Current Year Target)] for the relevant year shall be shared in the ratio of 1/3 rd to Consumers and 2/3 rd to the Distribution Licensee. Illustration.- a) Sales (A) = 1000 MU d) Power Purchase allowed by the Commission in Tariff Order [D=A/(1-C)] = 1111 MU CASE 1 [Actual Loss> Loss Target] a) Actual Distribution Loss (F) = 12% b) Actual Power Purchase done by the Distribution Licensee [G=A/(1-F)] = 1136 MU c) The Distribution Licensee has under-achieved the Distribution Loss target from 10% to 12% resulting into procurement of additional 25 MU (G-D). d) 100% Loss to Distribution Licensee = (25*5)/10 = Rs. 12.50 Cr. [PART III DELHI GAZETTE : EXTRAORDINARY 33 a) Actual Distribution Loss (F) = 9% b) Actual Power Purchase done by the Distribution Licensee [G=A/(1-F)] = 1099 MU c) The Distribution Licensee has Over-achieved the Distribution Loss target from 10% to 9% resulting into lesser procurement of additional 12 MU (G-D). d) 1/3 rd of Incentive to Distribution Licensee = (12*5)/10*(1/3) = Rs. 2 Cr. e) 2/3 rd of Incentive to Consumers = (12*5)/10*(2/3) = Rs. 4 Cr. g) Actual Power Purchase done by the Distribution Licensee [G=A/(1-F)] = 1087 MU Incentive up to overachievement of loss target minus [50%*(Previous Year Target-Current Year Target)] rd of Incentive to Consumers = [(1111-1099)*5)/10]*2/3 = Rs. 4 Cr. ------- (i) Balance 1/3 rd to Distribution Licensee = [(1111-1099)*5)/10]*1/3 = Rs. 2 Cr.—(ii) Incentive for overachievement less than loss target minus [50%*(Previous Year Target-Current Year Target)] rd of Incentive to Consumers = [(1099-1087)*5)/10]*1/3 = Rs. 2 Cr. ---------- (iii) Balance 2/3 rd to Distribution Licensee = [(1099-1087)*5)/10]*2/3 = Rs. 4 Cr. ---(iv) Total incentive to Consumers (i) + (iii) = Rs. 6 Cr. Total incentive to Distribution Licensee (ii) + (iv) = Rs. 6 Cr. 26. TARGET FOR COLLECTION EFFICIENCY (1) The targets for Collection Efficiency for FY2017-18 to FY2019-20 of the Distribution Licensees shall be (2) The financial impact on account of Collection Efficiency target shall be computed as per the formula specified in Regulation 163 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution Licensee. (3) The financial impact on account of over-achievement in terms of Regulation 164 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 for the Distribution Licensee, from 99.50% to 100% shall be shared equally between Consumers and the Distribution Licensees. 27. TARGET FOR RENEWABLE PURCHASE OBLIGATION (1) The targets for Renewable Purchase Obligation (RPO) in terms of Regulation 124 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 of a Distribution Licensee from FY 2017- 18 to FY 2019-20 shall be computed as a percentage of total sale of power to its retail consumers in its area of supply excluding procurement of hydro power. The target for Renewable Purchase Obligation shall be as follows: Table 16: Targets for Renewable Purchase Obligation Sr. No. Distribution Licensee 2017-18 2018-19 2019-20 1 Solar Target (Minimum) 2.75% 4.75% 6.75% 2 Total 11.50% 14.25% 17.00% (2) The Distribution Licensee shall comply with its RPO through procurement of either Solar energy or combination of Solar energy and Non-Solar energy with minimum purchase of Solar energy as specified in the table above: Provided that the Distribution Licensee may purchase solar energy in excess of the minimum solar Target as specified in aforesaid sub-Regulation (1), Provided further that the Distribution Licensee may purchase Renewable Energy Certificate (‘REC’) for any shortfall in meeting their total RPO targets for any financial year within three months from the date of completion of the relevant financial year. (3) Renewable Energy generation recorded through Renewable Energy meters installed in the premises of net metering Consumers shall be deemed to be part of RPO of the Distribution Licensee as specified in Delhi Electricity Regulatory Commission (Net Metering for Renewable Energy) Regulations, 2014, for 34 DELHI GAZETTE : EXTRAORDINARY PART III] the relevant year: Provided that in case the annual generation from solar generation system recorded through Renewable Energy meters exceeds the Capacity Utilisation Factor (CUF) of 19%, the Distribution Licensee shall get the Renewable Energy meters tested by Independent third party, National Accreditation Board for Testing and Calibration Laboratories (NABL) accredited meter testing lab. (4) The cost of Renewable Energy of purchased by the Distribution Licensee through Power Purchase Agreement approved by the Commission and the total power injected into the grid through net metering arrangement, in excess of RPO target shall be part of power purchase cost of the Distribution Licensee for the relevant year. (5) Non-compliance of the RPO targets by the Distribution Licensee shall attract penalty at the rate of 10% of the weighted average Floor Price of Solar and Non-Solar Renewable Energy Certificate, as specified by Central Electricity Regulatory Commission for the relevant year, for quantum of shortfall in RPO. (6) The amount of penalty imposed on the Distribution Licensee due to non-compliance of the RPO targets shall be reduced from the ARR during True up of the relevant Financial Year in terms of the Regulation 124 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. 28. CONTINGENCY LIMIT FOR SALE OF POWER THROUGH DEVIATION SETTLEMENT MECHANISM (UNSCHEDULED INTERCHANGE CHARGES) (1) The Contingency Limit for disposing off of Power through Deviation Settlement Mechanism in terms of the Regulation 152 (c) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Distribution Licensees shall be 5% of Net Power Procured by the Distribution Licensee for the relevant month. (2) In case the Distribution Licensee disposes off more than 5% of the net Power procured by the Licensee for the relevant month through Deviation Settlement Mechanism (Unscheduled Interchange Charges) than the rate of realisation through UI shall be considered at the average rate of power purchase/sale through exchange during same month for Delhi region. 29. INCENTIVE SHARING MECHANISM FOR SALE RATE OF SURPLUS POWER (1) The computation of incentive for Sale Rate of Surplus Power in terms of the Regulation 165 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Distribution Licensees shall be as follows: i. The variable cost of the generating station for which power is surplus and required to be sold through Power Exchanges shall be considered as the previous month’s billed variable cost of such generating station. ii. The variable cost of the generating station for which power is surplus and required to be sold through Banking and Bilateral arrangements shall be considered as the previous month’s billed variable cost of such generating station prevalent at the date of entering into such contracts. iii. The incentive shall be the product of Rate difference (Actual Sale Rate-Variable Cost) and Quantum of Power actually sold. (2) The incentive computed under sub-clause (1) above shall be shared between the Consumers and the Distribution Licensees in the following prescribed manner: - i. The incentive realisation upto 100% recovery of Average Fixed Cost per unit of all Generating sources of relevant year, projected by the Commission in the relevant Tariff Order, prorated to actual sale of Surplus Power shall be shared in the ratio of 2/3 rd to the Consumers and 1/3 rd to the Distribution Licensees. ii. The incentive realisation above 100% recovery of Average Fixed Cost per unit of all Generating sources of relevant year, projected by the Commission in the relevant Tariff Order, prorated to actual sale of Surplus Power shall be shared in the ratio of 1/3 rd to the Consumers and 2/3 rd to the Distribution Licensees. Illustration:- a) Quantum of Sale of Surplus Power (A) = 1000 MU b) Applicable Variable Cost per Unit (B) = Rs. 2.00/kWh c) Actual Sale rate of Surplus Power (C) = Rs. 3.50/kWh e) Approved Average Fixed Cost per unit in the Tariff Order (E)= Rs. 1.00/kWh Incentive realisation upto 100% recovery of Average Fixed Cost per unit = (E*A) = Rs. 100 Cr. shall be shared in the ratio of 2/3 rd (Rs. 67 Cr. ) to the Consumers and 1/3 rd (Rs. 33 Cr. ) to the Distribution Licensees. Incentive realisation above 100% recovery of Average Fixed Cost per unit = [D-(E*A)] = Rs. 50 Cr. shall be [PART III DELHI GAZETTE : EXTRAORDINARY 35 shared in the ratio of 1/3 rd (Rs. 16.67 Cr. ) to the Consumers and 2/3 rd (Rs. 33.33 Cr. ) to the Distribution Licensees. Therefore, i. Total incentive to the Distribution Licensees = Rs. 66.33 Cr. (33+33.33) ii. Total incentive to the Consumers = Rs. 83.67 Cr. (67+16.67) 30. MECHANISM FOR RECOVERY OF POWER PURCHASE COST ADJUSTMENT CHARGES (4) The mechanism for recovery of Power Purchase Cost Adjustment Charges (PPAC) in terms of the Regulation 134 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Distribution Licensees shall be as follows: (1) The Commission shall specify the detailed formula for computation of PPAC in the Tariff Order for the relevant year. (2) The Distribution Licensee shall compute the PPAC for any quarter as per the specified formula for that relevant year: Provided that a quarter refers to one-fourth of a year i.e., January, February and March (Q1); April, May and June (Q2); July, August and September (Q3); and October, November and December (Q4). (3) The PPAC computation of any quarter shall be equally spread and adjusted over subsequent quarter only: Provided that the Commission may allow to carry forward PPAC to more than one quarter in order to avoid any tariff shock to consumers in terms of Regulation 136 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (4) The treatment of PPAC computation as per the specified formula shall be as follows: (a) in case PPAC does not exceed 5% for any quarter, the Distribution Licensee may levy PPAC at 90% of computed PPAC with prior intimation to the Commission without going through the regulatory proceedings. (b) in case PPAC exceeds 5% for any quarter, the Distribution Licensee may levy PPAC of 4.50% without going through the regulatory proceedings and shall file an application for prior approval of the Commission for the differential PPAC claim (Actual PPAC % – 4.50%). (5) The Distribution Licensee shall upload the computation of PPAC on its website before the same is levied in the consumers’ electricity bills. (6) Revenue billed on account of PPAC by the Distribution Licensee, without going through the regulatory proceedings, shall be trued up along-with the Power Purchase Cost of the relevant year and no Carrying Cost shall be allowed due to under-recovery of revenue for the same year. (7) Revenue billed on account of PPAC by the Distribution Licensee, without going through the regulatory proceedings, shall be trued up along-with the Power Purchase Cost of the relevant year and Carrying Cost shall be at 1.20 times of interest rate on the excess revenue recovered for the same year. 31. INCENTIVE SHARING MECHANISM FOR RE-FINANCING OF LOAN (1) The incentive due to lower rate of interest on account of re-financing of loan in terms of Regulation 71 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 from FY 2017-18 to FY 2019-20 of the Distribution Licensee shall be computed as the product of total quantum of loan availed and difference of weighted average rate of interest on actual loans versus margin of 2.00% plus (+) SBI (2) The incentive on account of re-financing of loan computed as per sub clause (1) above shall be shared equally between the Consumers and the Distribution Licensee. 32. RATIO OF ALLOCATION OF ARR INTO WHEELING & RETAIL SUPPLY The ratio of allocation of ARR into Wheeling & Retail Supply Business in terms of the Regulation 4(9)(e) of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 shall be as follows: 36 DELHI GAZETTE : EXTRAORDINARY PART III] Table 17: Retail Business Cost of Power Purchase 100% 100% 100% Intra-state Transmission charges 100% 100% 100% SLDC fees and charges 100% 100% 100% Operation & Maintenance Costs 40% 38% 38% Depreciation (including AAD) 21% 23% 19% Return on Capital Employed 26% 28% 28% Income Tax 26% 28% 28% Non Tariff Income 85% 60% 85% Table 18: Wheeling Business Operation & Maintenance Costs 60% 62% 62% Depreciation (including AAD) 79% 77% 81% Return on Capital Employed 74% 72% 72% Income Tax 74% 72% 72% Non Tariff Income 15% 40% 15% 33. TREATMENT OF REVENUE GAP/SURPLUS (1) Various components of ARR of the Distribution Licensees shall be trued up in terms of the Regulation 152 of the DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017. (2) Variation on account of projections of various components of ARR in annual tariff order vis-a-vis trued up expenses for computation of Revenue Gap/Surplus shall be as follows: i. Power Purchase Cost: The variation in Power Purchase Cost shall be adjusted in the Revenue Gap/Surplus along-with Interest for half year as per Regulation 21 and Regulation 29 of these Regulations. ii. Capital Cost: The variation in RoCE, Depreciation and Income Tax on account of variation in Capital Cost related expenses shall be dealt as per Regulation 23 of these Regulations. (3) The Revenue Gap/Surplus computed as per aforesaid sub-Regulation (2) for the trued up year shall be adjusted against the closing balance of accumulated Revenue Gap for the relevant year: Provided that if there is no accumulated Revenue Gap or any Surplus left after adjusting against closing