Analysis of ARR & Tariff Proposal

2011-12 of

SLDC

Consumer Counsel

Presentation Outline

SLDC’s Proposed ARR for 2011-12

Comparison with previous ARR Analysis, observations and

suggestion on ARR parameters Conclusion

Proposed ARR for 2011-12

SL No

Item Cost (Cr)

1 Return on Equity

0

3 Interest on Loan

0

4 Depreciation 312.036

5 O&M expenses

215.78

6 HR Expenses 611.572

7 Interest on Working Capital

31.02

Total 1170.408

Comparison of ARR

Sr No

Perticulars Approved (2009-10 )

Approved ( 2010-11)

Proposed (2011-12)

1 Employee cost including compensation

395.00 364.92 611.572

2 Additional compensation for ABT during 2010-11

150.00 85.00 -

3 R&M expenses 100.00 201.80 215.780

4 A&G expenses (including certification of SLDC personnel)

115.00 75.00 -

5 Depreciation 6.00 27.80 312.036

6 Interest on loan 0 0 0

7 Interest on WC 0 22.33 31.020

8 ROE 0 0 0

Total 766.00 (excluding Rs 200 lakh for EACC)

776.85 1170.408

( 150% rise)

Comparison of Annual SLDC charges

Sr No

Particulars Unit

Approved ( 2010-11) Per annum

Proposed (2011-12) Per annum

1 ARR of SLDC 776.85 1170.408

2 System Operation Charge Lacs 621.48 936.327

3 Market Operating Charge Lacs 155.37 234.082

2 SOC for Intra-state transmission licensee

Lacs

62.15 93.633

3 SOC & MOC for Generating Stations and sellers

Lacs 357.35 421.347

4 SOC & MOC for DISCOM & Buyers

CESU NESCO WESCO SOUTHCO

Lacs

Lacs

357.357

113.8390.82110.7141.99

421.347

134.283100.828 134.157 52.078

Analysis of ARR and Suggestions

Observations & suggestions

Depreciation An amount of Rs 17.536 lacs towards depreciation of assets

in unified Load Dispatch Center & offices in SLDC may be consider in the ARR

However, depreciation claimed towards recovery of total capital expenditure of Rs 294.5 lacs to be spent in 2011-12 shall not be allowed since it is not in line with the provisions under OERC SLDC Regulation, Sept 2010.

O&M expenses The proposed O&M expenses Of Rs 215.78 lacs seems to be

on higher side and shall not be approved by the Commission . SLDC could not able to spent the approved O&M charges (201 lacs) in FY 2010-11& therefore the O&M charges shall be computed as per OERC Regulation : 5.72% escalation over actual O&M expenditure of 2010-11

Observations & suggestions

Human Resources expenses Since FY 2009-10, the SLDC is failed to recruit the requisite

86 number of staff to manage the day to day SLDC operations therefore the proposed Human resource expenses of 611.572 lacs for FY 2011-12 shall be approved after verifying the current status of availability of staff at SLDC

Interest on Working Capital Proposed working capital of 264.01 shall be reduced based

on the approved O&M & Human resource expenses

Some more observations

Issue Status

Transfer of assets of Sub –SLDC at Bhubneshwar, Meramundali, jayanagar, & Bhudipadar to SLDC

No definite time frame is suggested by OPTCL

Functioning of EASSC of SLDC Commission has directed to establish the EASSC and commence the operations wef 01.04.2010 and also have approved fund for EASSC since 2008-09. However EASSC is not operational till date

SLDC should headed by Chief load dispatcher in the rank of Director and the should supported by requisite staff (86 No)

The HR information pertaining to 2009-10,2010-11 reveal the present strength of SLDC 48 without Chief load dispatcher

Non compliance of the direction of Hon Commission

In Conclusion

The SLDC is consider as ‘Brain’ of power system operation.

SLDC is responsible for optimum scheduling and dispatch of electricity, carrying out real time operations for grid control and dispatch of electricity etc..

Non functioning of SLDC at the full strength will affect the power system operations and increases the cost of electricity.

The SLDC has committing delay in implementing the orders of Hon Commission

In Conclusion

Therefore before approving the ARR of 2011-12 the Hon. Commission should verify the status of work , actual expenditure vis a vis projected cost in previous ARR and avoid the unnecessary items / cost to be pass through in the ARR and to the end consumers

The Commission may consider above facts before approving the ARR for FY 2011-12

Thank You