ORDER
OF THE
WEST BENGAL ELECTRICITY REGULATORY
COMMISSION
FOR THE YEAR 2017 – 2018
IN
CASE NO: TP – 72 / 16 - 17
IN RE THE TARIFF APPLICATION OF CESC LIMITED
FOR THE YEAR 2017 – 2018
UNDER SECTION 64(3)(a)
READ WITH SECTION 62(1) AND SECTION 62(3)
OF THE ELECTRICITY ACT, 2003
DATE: 04.07.2018
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 1
INTRODUCTION
West Bengal Electricity Regulatory Commission 2
1.1. The West Bengal Electricity Regulatory Commission (hereinafter referred to as
the “Commission”), a statutory body under the first proviso to section 82(1) of the
Electricity Act, 2003 (hereinafter referred to as the “Act”), has been authorized in
terms of the section 86 and section 62(1) of the Act to determine the tariff for a)
supply of electricity by a generating company to a distribution licensee, b)
transmission of electricity, c) wheeling of electricity and d) retail sale of
electricity, as the case may be, within the State of West Bengal.
1.2. CESC Limited, a Company under the Companies Act, 1956, is a distribution
licensee in the State of West Bengal for supply of electricity in Kolkata and some
areas in the districts of Howrah, Hooghly, North 24 Parganas and South 24
Parganas of the State. It was a licensee under the provisions of the Indian
Electricity Act, 1910 (since repealed) and has become a deemed licensee in
terms of the first proviso to section 14 of the Act with effect from 10.06.2003 i.e.
the date of coming into force of the Act.
1.3. West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff)
Regulations, 2011 has come into effect from 29th April, 2011. The said Tariff
Regulations, 2011 was further amended by notifying the West Bengal Electricity
Regulatory Commission (Terms and Conditions of Tariff) (Amendment)
Regulations, 2012 in the extra ordinary edition of The Kolkata Gazette dated 27th
August, 2012 and was further amended by notification in The Kolkata Gazette
dated 30th
1.4. In terms of definition contained in regulation 1.2.1 (xxx) of the West Bengal
Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations,
2011, as amended from time to time (hereinafter referred to as the ‘Tariff
Regulations’), each control period after third control period shall be normally for a
period of five ensuing years or such other period of number of ensuing years as
July, 2013.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
3
may be decided by the Commission from time to time. The Commission vide
order dated 19.07.2013 in Case No. SM-7/13-14 decided the fourth control
period consisting of three ensuing years and the tenure of the fourth control
period was for the years 2014 – 2015 to 2016 – 2017. It was also decided by the
Commission vide his order dated 04.05.2016 in Case No. SM-13/16-17 that the
fifth control period shall also be consisting of three ensuing years for the period
from 2017 – 2018 to 2019 – 2020. But, after careful consideration of all relevant
factors, decided vide its order dated 14.12.2016 in Case No. SM-15/16-17 that
the fifth control period shall be for one year and consist of 2017 – 2018 only.
1.5. In terms of the Tariff Regulations and subsequent suo-moto orders of the
Commission dated 04.05.2016 and 14.12.2016, the tariff applications for the fifth
control period consisting of the year 2017 - 2018 under the Multi Year Tariff
(MYT) framework was required to be submitted by CESC Limited by 30.12.2016.
The effective date of the fifth control period is 1st
1.6. Accordingly, CESC Limited, complying with the provisions of the Tariff
Regulations, prepared the application for determination of its tariff for the year
2017 – 2018 under the fifth control period and submitted the same to the
Commission on 30.12.2016. This tariff application was admitted by the
Commission and was numbered as TP-72/16-17.
April, 2017.
1.7. CESC Limited was thereafter directed to publish, as required under section 64(2)
of the Act, the gist of the tariff application as approved by the Commission in their
website and newspapers as specified in the Tariff Regulations. The gist was,
accordingly, published simultaneously on 25.02.2017 in ‘Ekdin (Bengali), ‘Dainik
Statesman (Bengali), ‘Jansatta’ (Hindi), ‘Hindu Business Line’ (English) and also
on 14.03.2017 in ‘Ei Samay’ (Bengali), ‘Bartaman’ (Bengali), ‘Dainik Vishwamitra’
(Hindi) and ‘The Times of India’ (English). The gist along with the tariff petition
was also posted in the website of CESC Limited. The publication invited the
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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attention of all interested parties, stake holders and the members of the public to
the application for determination of tariff of CESC Limited for the fourth control
period and requested for submission of suggestions, objections and comments, if
any, on the tariff application to the Commission within the due date. The
extended date of submission of suggestion and objection was 30.03.2017.
Opportunities were also afforded to all to inspect the tariff application and take
copies thereof.
1.8. The suggestions, objections and comments on the aforementioned application of
CESC Limited for determination of tariff for the fifth control period were received
only from All Bengal Electricity Consumer Association (ABECA) within the
specified time limit and the same have been recorded in a summarized form in
Chapter 3 of the instant order. However, suggestions and objections were also
received from the General Secretary, Ganatantrik Nagarik Samity, Howrah on
11.04.2017, i.e., after the due date of submission and thus not considered by the
Commission.
1.9. The Commission determines the tariff in accordance with the Electricity Act, 2003
and the Tariff Regulations framed thereunder and for this purpose, the
Commission has estimated the expenditure for 2016 – 2017 to arrive at the
estimated expenditure / cost under different heads for the years 2017 – 2018.
1.10. The estimation made for 2016 – 2017 by the Commission in this order shall not
be construed by CESC Limited as admission of at least such estimated amount
in APR for 2016 – 2017. On the other hand, if in APR any deduction is made then
as a conclusion from such decision one shall not expect that the impact of such
deduction is to be continued in fifth control period as this will tantamount to
imposing a penalty of infinite nature or double penalty for the same inefficiency.
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 2
THE CASE OF CESC LIMITED
West Bengal Electricity Regulatory Commission 5
2.1 CESC Limited (in short ‘applicant’) has submitted the application for
determination of Annual Revenue Requirements (ARR) and tariffs for the fifth
control period, covering the year 2017 – 2018, in accordance with the Tariff
Regulations read with the two orders issued by the Commission in File No. B-
11/20 and Case No. SM-15/16-17, both dated 14th
2.2 CESC Limited has prayed for an average tariff of 821 paise per unit for 2017 -
2018 which is higher than the average tariff of 702.44 paise per unit allowed by
the Commission for 2016 – 2017 plus Monthly Variable Cost Adjustment of 29
paise per unit at the time of publication of its gist for tariff petition for 2017 –
2018. The applicant has claimed that there has been sharp increases in prices of
both primary and secondary fuel and that the Company, notwithstanding such
steep rise in fuel costs coupled with inflationary pressure, is able to contain its
prayer to a reasonable level due to several efficiency measures undertaken by it
in line with the Commission’s directions.
December, 2016. The
applicant has projected the ARR and tariff for 2017 – 2018 and has prayed for
allowing the same. The applicant has also prayed for other dispensations which
are mentioned in subsequent paragraphs.
2.3 In the tariff application several charts have been furnished by CESC Limited
showing the steady plant availability of their generating stations and also steady
generation in their pulverized fuel generating station. In their opinion, there is no
further scope for improvement and, as a matter of fact, sustaining the present
level of excellence is a challenge in itself. According to CESC Limited, the
company has achieved further improvement in consumer service and continues
its special thrust on consumer services.
2.4 CESC Limited has submitted that it is alive to the spirit of the Tariff Regulations
including the special thrusts given on compliance of environmental standards,
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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safety standards and that it will strive towards achieving the same. They are also
simultaneously augmenting network at all levels of distribution system for
ensuring security of supply.
2.5 It has been submitted that average tariff of CESC Limited is much lower than
those prevailing in the cities of Delhi and Mumbai. It is also submitted that with
the rising fuel cost, increase in input cost, insistent inflationary pressure and need
to enhance energy security and reliability, it is no longer feasible to operate at
such tariff. Global prices for both Aluminium and Copper, which are the major
materials for electrical plants and equipments, have shot up over last few years.
2.6 Highlighting that “Distribution is the most critical segment of the electricity
business chain”, as observed by the National Electricity Policy, and that it is this
segment that carries the maximum risk within the power sector, CESC Limited
submits that the tasks being performed by a distribution licensee have been
rendered significantly difficult by an ever-increasing customer expectation and
the statutory obligation of a distribution licensee for providing universal service.
The present consumer base of CESC Limited, as stated, is more than 30 lakh
and 55% of this consumer base contributes less than 10% of their energy sale.
Added to such onerous obligations, the distribution licensees are required to
combat the social menace of power theft and in doing so CESC Limited has to
run its theft control operation in a hostile environment, often involving physical
violence. Under such circumstances, safeguarding the sustainability of the
operation of a distribution licensee is, according to the tariff applicant, of vital
importance in the interest of their consumers in general and particularly the
smaller segment thereof and CESC Limited suggests that the same should be
achieved by ensuring revenue sufficiency to meet its costs and by allowing it a
return commensurate with the risks it takes. In the opinion of CESC Limited, the
much sought after private sector participation in promoting investment in
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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electricity industry which has a long gestation period in addition to being capital
intensive, will not be forthcoming unless the problem of risk is addressed and the
regulatory uncertainties are adequately mitigated.
2.7 It has been submitted by CESC Limited that regulated licensees are statutorily
required to provide critical services under hostile circumstances. They should be
in a position to finance their ongoing operations including essential repairs and
maintenance. CESC Limited has sought to illustrate through charts that even in
the face of a high inflationary trend over last several years, its average tariff has
not been increased significantly during that period.
2.8 CESC Limited has submitted their performance on the basis of achieved PLF. As
per performance graph depicted in the submission of petition, CESC Limited has
established that they have attained the maximum possible efficiency level and
sustaining the present level of excellence is a challenge for them. Though the
Commission stipulated stringent standards of performance of distribution
licensees in its Regulations, the company is committed to adhere to the
standards set by the Commission.
2.9 CESC Limited has submitted that while the company has handled the pressure
well in the past through sustained performance improvement, the current space
of continuous and unrelenting inflationary pressures are becoming difficult to
withstand and is being reflected in higher levels of both operating and capital
expenditures, increased administrative and general expenditures, higher
employee cost, etc. It is also submitted that efficiency measures can contain
costs upto a certain extent and curtailment of necessary expenditure is bound to
manifest itself as service inadequacies and eventually goes against the interest
of the consumers.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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2.10 CESC Limited has informed that the company does not receive any external
subsidy from any agency.
2.11 It has been claimed that CESC Limited's Plant Availability is one of the best in
the country. Its planned maintenance is done in such a way that downtime is
reduced to a very significant extent and thus, it is claimed, has allowed
generation to take place at a high Plant Load Factor whenever there is demand.
It has been stated that the Company operates its pulverized fuel fired power
stations viz. Budge Budge, Southern and Titagarh at a higher merit order
dispatch schedule thereby achieving optimization of fuel consumption and
generation efficiency. It has also been claimed that generation has been planned
assuming capacity utilization governed by – a) availability of generating plant, b)
adequacy of demand and pattern of load, particularly diurnal and seasonal
variations of a city system like Kolkata, c) availability of required quality of fuel
and constraints of fuel transportation, d) constraints of ash removal, e) economic
dispatch schedule considering peaking load / radial load / agreement issues, f)
price discovery in short-term market, g) energy security plant, etc. and
requirement of planned maintenance. Despite the highly fluctuating day and night
demand as also seasonal demand, the Company is already operating at high
levels of PLF / PAF and the Company feels it deserves incentives for maintaining
a high operating level.
2.12 Enumerating various awards, on environmental related performance, which
CESC Limited has won, both at the State level and at the National level, CESC
Limited has sought to show how it has been successfully carrying out its
environmental responsibilities, particularly in monitoring and controlling
emissions and effluents. Emission level at the power stations of CESC Limited,
as stated, is far better than the standards set by West Bengal Pollution Control
Board. The generating stations of CESC Limited, as has been submitted in the
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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tariff petition, are merited with a number of awards and certificates and the
relevant photographs are annexed with their tariff application.
2.13.1 On the front of distribution loss, CESC Limited has claimed that as per the report
of Government of India, the accumulated loss and debt figures of the electricity
distribution sector stand at Rs. 3.8 lakh crores and Rs. 4.3 lakh crores
respectively. The applicant submits that theft of electricity is the main contributor
to such loss. CESC Limited submitted that they operate their loss control activity
in a hostile environment where stiff opposition from miscreants, physical violence
and continuous threat to their staff are on the rise. CESC Limited, it has been
submitted, took all possible actions to reduce its distribution loss substantially in
the last few years. The reduction in loss, as stated, was possible through
concerted efforts by all concerned inspite of hostile environment and stiff
opposition from miscreants, ingenious methods / technologies deployed by
pilferers and continuous decline in HT sales in comparison to LT sales. It is also
submitted that energy audit at distribution transformer level is being continued. A
number of loss prone areas have been identified and authorities are kept
apprised. The sensitive nature of most of such areas precludes administrative
and judicial supports being forthcoming.
2.13.2 It is also the submission of CESC Limited that higher the proportion of low
voltage sales, higher is the distribution loss on account of technical reason. It is
also submitted that proportion of sales of electricity to high voltage consumers
has been steadily going down in CESC’s area from 51% in the year 1993-94 to
less than 32% in the year 2015-16. This factor, as stated, has adverse impact on
CESC’s distribution loss, which is entirely beyond their control.
2.13.3 CESC Limited, as stated, has taken all possible actions in dealing with the
pilferage menace and has achieved progressive improvement in the last few
years. As stated, intense level of activity in meter checking, surprise inspection,
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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removal of hooking, vigilance, filing of FIRs, following up cases in legal forums,
etc. are being continued. Implementation of High Voltage Distribution System
(HVDS), as has been submitted by the applicant, has been made in some areas
and proposes to implement the same in some fringe areas too. But the result is
not much encouraging. The optimum result cannot be yielded if the support of
State Administrative Authorities is not received. Moreover, there are also some
inherent difficulties in conventional approach of HVDS implementation in urban
areas like space constraints, safety issues, underground network, reliability of
supply etc. CESC Limited, as stated, is planning modified HVDS approach for
new DTR capacity with minimal LT network, basically a LT-less service, i.e., a)
distribution transformers are installed at mid-point to relieve the overloaded
adjacent transformers, almost without LT network and b) for concentrated load
without housing / commercial complex, distribution transformers are installed
within the premises with modicum of LT network. Innovative services / making
arrangements, extension of High Voltage Distribution System (HVDS) and
replacement of LT OH line by Airial Bunched Cables (ABC) are being taken up in
theft prone areas. CESC Limited, as stated, is continuing with extensive public
awareness campaign covering print and electronic media. Regular visits to
schools are also made to instill awareness against their social menace
particularly among the young.
2.14 CESC Limited submits that its dispatch schedule maximized its own generation
to the extent feasible and cost effective. The generation of New Cossipore
generating station, as submitted by CESC Limited, has been ceased effective
from 2014 in accordance with the direction of CEA and phasing out of Titagarh
generating is presently under consideration as per the communication of CEA
dated 6th May, 2014. The company tied up with Haldia Engineering Limited (HEL)
for long term power purchase agreement to the extent of 600 MW of gross
capacity to ensure uninterrupted power supply to the consumers. CESC Limited
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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has also stated to reduce consumption of coal at high price by substituting
generation with purchased power, particularly during lean period to the extent
cost becomes attractive. CESC Limited has also stated that it consistently
pursues application of modern technology for optimum load dispatch and mix of
various sources of power is selected in such a way that the same works out to be
the most economic one under the given circumstances. CESC Limited has also
endeavoured to procure power from other renewable and cogeneration sources
through diligent efforts.
2.15.1 CESC Limited has described how it has estimated sales, i.e. by application of
CAGR of past period (i.e., Financial Year 2004 to Financial Year 2017) for all
categories of consumers. For stable categories of sales, a period of reference
has been selected appropriately to minimize impact of unusual variations. For
new consumer classes, it has used respective periods of stable sales for analysis
or has estimated on the basis of available consumption trend. For sale to HT
Industrial consumers it has used present consumption trend of existing
consumers using CAGR method. Pointing out that it is very difficult to assess
future sales, it suggests that any variation from recovery of fixed costs permitted
in the tariff order on account of variation of sales volume data should be adjusted
through a suitable mechanism based on actual sales data when available at a
future date.
2.15.2 Through a number of charts, CESC Limited has presented forecasts about how
the long term growth rate of LT domestic sales achieved so far is expected to be
sustained, how growth in the LT commercial and industrial segments are
expected to be positive, thereby leading to a positive growth of the total LT sales,
how long term steady growth in HT commercial sales is expected, how the HT
public water works sales is expected to be on the rise, how HT sales to Metro
Railways show a positive growth trend, how the overall trend of HT industrial
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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sales is likely to be neutral, and how the overall outlook in HT sales reflects a
positive trend.
2.16.1 CESC Limited has claimed that it continues its special thrust on consumer
services and highlighted certain initiatives as enumerated below.
2.16.2 CESC Limited states that it is following the Grievance Redressal Procedure set
up as per guidelines of the Commission and that the Grievance Redressal
Officers ensure that all complaints and grievances of the consumers are dealt
with promptly and within the time limits set by the Commission.
2.16.3 The entire operational area of CESC Limited, it is claimed, is covered by
emergency service round-the-clock. There are teams of experienced linesmen /
electricians attending to emergency calls from LT consumers round the clock.
Besides, the Company runs a special help desk having dedicated telephones
and manned by experienced personnel for meeting the emergency needs and
outages of supply of HT consumers. Further, there are Nodal Officers assigned
for all HT consumers.
2.16.4 CESC Limited is operating a 24 hour call centre as a part of their constant
endeavour towards meeting its customer satisfaction which handles cases of
supply breakdowns and other supply related complaints of LT consumers. Power
theft can also be reported at the call centre, without divulging name/address of
the complainant. As an extension of Call Centre, a Commercial Call Centre is
operating to provide end-to-end solutions to all commercial complaints viz. billing,
metering and payment, etc. Various information provided in the company’s
website for the consumers includes planned outage, power saving guideline,
safety tips, power consumption guide, details of district offices, cash offices, etc.
The consumers can also report complaints through the website. The consumers
can get his bill through e-mail as well. Recently the provision for an application
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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for new supply, change of name against existing consumer number and
additional load requirement has been incorporated in their website.
2.16.5 Billing related activities, CESC Limited has claimed, are being carried out in
structured schedule so as to ensure adequate lead time from payment. On e-mail
registration with the company, the bill is sent via e-mail immediately upon
generation. Meter reading through Tablets has been introduced and the
consumer receives an SMS indicating the meter reading and the units advanced,
immediately after recording the same in the Tablet.
2.16.6 CESC claimed that they have come up with CESCAPPS, a mobile application
with several facilities, such as, bill details including last payment details, bill
payment, bill calculator, duplicate bill request, consumption and payment history,
e-bill registration, complaints, new connection application status, etc. CESC also
introduced an option of receiving electricity bills in vernacular languages (Bengali
/ Hindi) for all the consumers.
2.16.7 CESC submitted that information relating to scheduled meter reading date,
reading details, bill delivery date, billed amount, receipt of cheque etc., is
communicated to the consumers through SMS on a regular basis. CESC Limited
has the option of number of bill payment viz. mobile app (CESCAPPS) using
credit / debit card or net banking through company’s website, electronic payment
through multiple payment gateways, on line payment by credit card / debit card,
ECS, cheque drop box at different locations, payment through wallet of mobile
service providers (Vodafone, m-pesa, Airtel money) advance payment etc.,
besides payment at 40 cash offices.
2.16.8 Senior officers of CESC Limited continue to visit individual HT consumers to
obtain their feedback. CESC Limited has also stated that it acts upon such
feedback.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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2.16.9 In order to increase consumer awareness, the licensee regularly sends message
through electricity bills as well as sends mailers to the consumers about safety,
power consumption, power theft, grievance redressal, etc.
2.17 Budge Budge, Southern and Titagarh generating stations of the company, it has
been stated, are accredited with certification both under the ISO 14000 and the
ISO 9000. Besides a number of regional offices, the Testing Department and the
Materials functions have also been brought under the ISO certification. Further,
CESC Limited’s three pulverized coal generating stations are accredited under an
international standard on Occupational Health & Safety Assessment Series
(OHSAS).
2.18.1 CESC Limited, as stated, has always accorded high priority to safety matters. The
Company has active Safety Committees in each of its generating stations as also
in the distribution wing. The generating stations are continuing a "Safety, Health
and Environment" programme. On the distribution side, the emphasis is on
improved practices, tools and tackles. Moreover, safety is overviewed by an inter-
departmental committee. Its Human Resource Department conducts regular
programmes / workshops covering all sections of employees and holds annual
competitions covering all safety aspects.
2.18.2 CESC Limited, as stated, has always involved itself in socially relevant projects.
The Company has tied up with leading English daily and now participates, during
the Durga Pujas, in campaigns dealing with safety, social responsibility and civil
consciousness.
2.18.3 CESC Limited has stated that they have installed about 5000 number of state-of-
the-art technology SF6 Gas Insulated RMU for protection and operation of its
primary distribution network (6 kV / 11 kV) and this has improved their safety
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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aspect to a great extent. It is also stated that the Oil Circuit Breakers are replaced
in phases by Vacuum / SF 6 Circuit Breaker to avoid fire hazards.
2.19.1 CESC Limited submits that it has estimated the fuel cost on the basis of the
generation plan as projected in the instant tariff application and the estimate is
based on the norms set by the Commission in the Tariff Regulations. CESC
Limited has referred to a Notification, issued by the Ministry of Environment &
Forests, requiring use of coal with limited ash content in urban areas. It has
submitted that the Tariff Regulations also recognize the need to comply with
environmental standards. It is also submitted by the company that it would not be
possible to ensure reliability of supply of energy on a regular basis, if adequate
coal is not supplied by Coal India’s subsidiaries which are powerful Government
monopolies.
2.19.2 CESC Limited has submitted that for maintaining reliable supply of power
adequate quantity of fuel stock is required. But stock is critical for maintaining a
high PLF level and it would be difficult for them to sustain PLF at a high level
unless it is given a guaranteed coal supply stream. There has been a sharp
increase in coal price and further additional charges are payable under FSA.
Further, additional cess and duties have been introduced and enhanced. Oil
prices are also highly volatile and have exhibited sharp rises. The projected costs
of fuel are based on the latest Notification, issued by Coal India, the prevailing oil
price and the Regulations framed by the Commission in this behalf. As per CESC
Limited, quality of coal supplied by CIL is very poor. There has also been a
change in the sampling system. Third party sampling has been phased out and
replaced by sampling and testing only at the loading end. CESC has signed a
tripartite agreement for such sampling and analysis of coal by CSIR – CIMFR, but
the sampling and analysis is yet to commence due to lack of requisite
infrastructure / manpower at majority of the locations. It is also submitted that in
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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absence of Coal Regulator, CIL and its subsidiaries enjoy the monopoly of
catering need of coal to the domestic users resulting in sharp rises in the cost of
coal during the last few years.
2.20 Maintenance of generation at a high PLF, CESC Limited has submitted, involves
removal of a high volume of ash. In the opinion of the licensee, this calls for use
of a judicious mix of coal and a comprehensive approach towards ash
management including washing of coal.
2.21 CESC Limited has submitted that its Plant Availability Factor (PAF) is one of the
best in the country. Budge Budge generating station is in the highest merit order
in the dispatch schedule.
2.22.1 On the issue of repairs and maintenance in generation plants, the applicant has
tried to make out a case of incurrence of additional maintenance costs, because
CESC Limited is committed to the maintenance of a high PAF level and also
because its plants are ageing and require enhanced maintenance so as to
continue to function efficiently.
2.22.2 According to the Company, it also strictly adheres to a comprehensive preventive
maintenance schedule which it itself has developed, covering the entire gamut of
its generating plant and distribution network. The tariff applicant pleads that such
appropriate repairs serve the interest of the consumers. CESC has submitted that
since rise in O&M expenses, especially repairs and maintenance, is linked to
minimum wages notification as well as wage negotiation with the contractors, the
company may be constrained to pray for certain dispensations from the
Commission in this regard during the APR stage, with due justification and
necessary details. It is also submitted that with ageing of company’s generating
stations and simultaneous load growth, necessity of bringing economic power
from outside assumes importance in the context of power procurement.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
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2.22.3 CESC Limited has submitted that the demand pattern in CESC Limited’s licensed
area is widely varying pattern at a range between 2000 MW, (peak summer) and
550 MW (lean winter). Since the demand profile is beyond the control of the
licensee, a gap between plant availability factor and plant load factor is inevitable.
According to the Electricity Act, 2003, CESC Limited may look beyond its licensed
area for selling of surplus power, subject to market, economics and evacuation
constraints. In this regard, CESC Limited has initiated suitable action and is
making continuous effort to the extent feasible and cost effective, through dual
strategy of increasing sale to persons other than its own consumers and reducing
power purchase. Target for sale to persons other than own consumers have been
set for the year 2017 – 2018 considering both capacity and relative economics.
2.24 It has been submitted that CESC Limited may sell electricity to other persons after
meeting the demand of own consumers, but surplus capacity at their generating
stations exists generally during off-peak period. As the power scenario in the
country and power market condition are presently not very encouraging for sale of
power utilizing surplus capacities during the off-peak period, they make a
conservative target of sale to persons other than consumers and licensee during
the year 2017 – 2018 considering both capacity and relative economics.
2.25 CESC Limited has also submitted that Intra-State ABT is in operation in the State
in accordance with the directions of the Commission and the relevant
Regulations. Due to intra-state ABT operation, some quota of Unscheduled
Interchange (UI) of energy from state grid is inevitable which cannot be assessed
beforehand.
2.26 CESC Limited has submitted that with the inflationary pressure persisting, interest
rate is still hovering on the higher side. For the purpose of projection and
estimates, interest rate has been assumed at hundred basis points lower than SBI
PLR as on 31.03.2016.
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West Bengal Electricity Regulatory Commission
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2.27 CESC Limited has stated to estimate capital expenditure in line with Regulations
and following certain objectives like security of supply, downtime reduction,
prevention of frequent failures, overloading reduction, controlling load shedding
and distribution loss, catering to ever increasing load growth, attaining
redundancy for network and associated facilities, providing safety to operating
personnel, meeting pollution control norms, optimal utilization of distribution
assets, etc.
2.28 CESC Limited has furnished item wise summarized reports on the directives
issued by the Commission as applicable.
2.29 On the Commission's directive towards reduction of impact in FPPCA, the
company reports that calculation were furnished in the FPPCA petition for 2015 –
2016 signifying reduced impact in FPPCA claim.
2.30 CESC Limited has provided reasons / justifications for higher expenditure than
the admitted amount in their APR petition for 2015 - 2016.
2.31 CESC Limited has stated that a report in respect of 100% supply of power
through meter only is submitted with APR petition for 2014 – 2015.
2.32 CESC Limited has stated that a development plan for replacement of bulb by LED
lamp and installation of roof-top solar panel primarily in residential complexes,
commercial complexes, street light, institutions, hospitals etc. in stages has been
provided vide communication dated 24.09.2015. It is also submitted that the
company is considering to embark upon a programme to popularize LED
luminaires amongst its consumers in association with EESL. In respect of
promotion of LED usages, adequate financial provisions may be allowed to the
company in ARR, as deemed appropriate.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
19
2.33 CESC Limited has submitted that it has made exhaustive effort in procuring
power from co-generation and renewable energy sources and has also submitted
a report regarding compliance status of renewable and co-generation obligation,
along with the instant tariff application. The company has placed documents to
show that it had issued advertisements seeking to purchase power from
appropriate sources. Negotiations are on with developers of wind power, solar
power, biomass plant, MSW plant, etc., particularly regarding prices offered,
connectivity and other related issues. The company has effected net metering
arrangement for roof-top solar PV power plant in its distribution system at some
places in and around Kolkata.
2.34 CESC Limited has appended to the instant tariff application a report on energy
audit measures undertaken by it. CESC Limited has also submitted reports on
safety and occupational health hazard.
2.35 It is reported that CESC Limited is continuing its efforts in persuading large
consumers to undertake energy audit in their premises / factories. A copy of the
mailer for energy audit sent to such consumers has been appended to the tariff
application.
2.36 CESC Limited has submitted a report along with the instant tariff application
giving details of its efforts to reduce emission and meet environmental
responsibilities.
2.37 CESC Limited submits that it has furnished, in accordance with the Tariff
Regulations, all relevant information and supporting materials in specified forms,
but it simultaneously undertakes to make available such other or further
information, particulars and documents as may be considered appropriate and
called for by the Commission.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
20
2.38 It has been submitted that in the event any rebates / incentives are allowed in the
tariff structure, and/or if new tariff categories/classes are introduced, then the
same may be allowed in such a manner that the net revenue requirements as
may be determined by the Commission are fully protected and the Company is
able to collect the same in its entirety.
2.39 CESC Limited has also stated that it has presented, in the instant tariff
application, a tariff structure on a pro-rata basis as per the existing structure and
that further differentiation in terms of section 62(3) of the Act may be made by the
Commission as may be deemed appropriate.
2.40 The tariff applicant has, in conclusion, prayed for (a) confirmation of the
Aggregate Revenue Requirements for 2017 – 2018 as contained in Annexure - 1
of the tariff application and granting of commensurate tariff increase in
accordance with the Tariff Regulations; (b) allowing additional amounts for the
appropriate years for any increase in power purchase cost from HEL beyond what
has been considered in the petition; (c) allowing appropriate adjustments towards
fuel and power purchase cost adjustment and annual performance review of
earlier year(s); (d) allowing additional amounts towards development fund as
deemed appropriate by the Commission; (e) confirming the capital expenditure
proposed as contained in the Annexure – I read with the perspective plan; (f)
early disposal of the application as the business of Commission would permit and
(g) passing of such further order or orders as the Commission may deem fit and
proper.
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 3 OBJECTIONS, COMMENTS, ETC.
West Bengal Electricity Regulatory Commission 21
3.1. Suggestions, objections and comments on the tariff application of CESC Limited
for the fifth control period covering the year 2017 – 2018 received within
30.03.2017 i.e., the due date, from the person are mentioned in paragraph 1.8 of
Chapter-1. The main points of the suggestions, objections and comments etc. are
summarized in the following paragraphs in this chapter. The Commission’s views
on the relevant objections, comments etc. are also recorded in this Chapter.
3.2. The submissions and the relevant issues pertaining to tariff determination of fifth
control period made by All Bengal Electricity Consumers’ Association (hereafter
referred as ABECA) are as follows against which commission’s views are given.
i) ABECA has raised their objection in regard to enhancement of tariff from
702.17 paise per unit in 2016 – 2017 to 821.32 paise per unit in 2017 –
2018 with justification that tariff of electricity in other States is much lower
than that of West Bengal and that NTPC has reduced the cost of
generation and tariff as well, and some of the States have reduced the
tariff to the extent of 50% from the tariff prevailing in those States
presently. According to ABECA, the enhancement of tariff, as claimed by
CESC Limited is not reasonable and justified and therefore they claimed
reduction of existing tariff by 50% instead of enhancement of tariff.
ii) ABECA has denied the reasons, as mentioned by CESC Limited in their
tariff petition for 2017 – 2018, for price hike with counter justification as
follows:
a) The logic of increased activities due to increased number of
consumers is not tenable as the increased number of consumers lead
to increase in income and profit thereby reduces the cost of supply.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
22
b) The logic of increased fuel cost is also not tenable. Better quality of
coal at 25% reduced rate could have been obtained from the coal
block allotted to CESC Limited by the Government of India, but CESC
Limited has failed to utilize the same judiciously. Hence, the plea of
coal price hike cannot be a reasonable ground for hike in tariff rate, as
claimed by CESC Limited. Moreover, it appears from the tariff petition
of CESC Limited that the average coal price at Budge Budge
generating stations has been reduced to Rs. 2893.00 per tonne from
Rs. 3160.00 per tonne in 2016 – 2017 while the average coal price at
Southern generating station has been reduced to Rs. 4202.00 per
tonne from Rs. 4250.00 per tonne in 2016 – 2017.
In view of above, according to ABECA, tariff hike on the ground of coal
price hike is not reasonable and justified.
The Commission has taken a note of the above objections and shall
consider the same while determining the Aggregate Revenue
Requirement (ARR) and tariff for CESC Limited for the year 2017 – 2018.
iii) ABECA submitted that reduction in distribution loss, in turn, reduces the
electricity tariff. According to ABECA, as per tariff petition, the distribution
loss of 11.8% in 2014 – 2015 is reduced to 11.6% in 2015 – 2016. But
CESC Limited has claimed distribution loss to the extent of 14.3% for
2017 – 2018 registering an increase of 2.7% in respect of 2015 – 2016.
Similarly, CESC Limited has claimed ATC loss to the extent of 14.8% in
2017 – 2018 tariff petition whereas the ATC loss in 2015 – 2016 was 12%
i.e., an increase of 2.8%. This increased distribution / ATC loss leads to
unnecessary increase in tariff of electricity which is not reasonable and
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
23
justified. Hence, ABECA opposed the tariff hike proposal of CESC
Limited. In this context, ABECA has referred the tariff order dated
28.10.2016 of the Commission wherein CESC Limited was directed to
reduce the technical loss to 4% for cities and 5% for urban areas.
The Commission noted the contents. The norms of distribution / ATC loss
have been specified for each distribution licensees in the Tariff
Regulations of the Commission. The Commission only follows the norms
while determining tariff for any licensee.
iv) ABECA has raised certain issues on PLF percentage projected by CESC
Limited.
In this context, the Commission’s view is that normative PLF for each
generating station of CESC Limited is set in the Tariff Regulations of the
Commissions and the Commission follow the same while preparing the
tariff order.
v) According to ABECA, while the cost of coal is reduced to a great extent in
comparison to the price in 2016 – 2017, then how the total generation
cost of each generating station is projected high?
The contention is noted by the Commission.
vi) ABECA raised certain objections regarding fixed charges under gross
revenue requirement, i.e., bad debts, depreciation, return on equity, O&M
expenses, etc.
The Commission has taken a note of it.
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 4 SALES, ENERGY BALANCE & VARIABLE COST
West Bengal Electricity Regulatory Commission 24
4.1 CESC Limited is a distribution licensee having three (3) generating stations of its
own. A substantial part of its energy requirement is met out of its own generation
and the balance is met by purchase from other agencies. The proper assessment
of the sales during the year for which the tariff is to be determined on prospective
basis is of prime importance. The Commission is, therefore, taking up first the
examination of sales projection of CESC Limited.
4.2 Sales Projection
4.2.1 While projecting sales, CESC Limited has stated that the estimation of sub-
category-wise demand has been done through Geometric Mean Analysis
(Compounded Annual Growth Rate) for all categories of consumers. For stable
categories of sales, a reference of previous trend has been used. The applicant
has submitted the break-up of category-wise actual consumptions from 2012-13
to 2015-16, estimated consumptions for 2016-17 and the projections for 2017-18.
It has also shown sales of its power to WBSEDCL in a very limited way. CESC
Limited also consumes power in his own premises. CESC Limited has projected
growth rate of sale to own consumers on the compounded growth rate
methodology for the period from 1995 – 1996 to 2015 – 2016. Accordingly,
projected figures of supply are as follows:
Figures in MU Sl. No. Category of Supply Projected for 2017-18
1 Sale to Consumers 9680 2 Sale to WBSEDCL 40 3 Consumption in own Premises 24 4 Total (1 + 2 + 3) 9744.00
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
25
4.3 Sources of Energy:
4.3.1 The Commission is now to view the sources of energy requirements of CESC Ltd
to meet its supply obligations to its consumers and to effect the projected
quantum of export. As mentioned earlier, a substantial part of its total energy
requirement is met out of ex-bus generations from its own power stations. The
quantum of ex-bus generation that will be available to CESC Ltd., will depend on
capacity utilization of the plants and the rates of auxiliary energy consumption
therein. Balance energy required is proposed to be purchased mainly from Haldia
Energy Limited (in short ‘HEL’) through long term arrangement, a small quantum
from renewable and co-generation sources and a significant quantum from short
term arrangement / power exchange, termed as ‘supplemental’.
4.4 Sent Out from Own Generating Station:
4.4.1 CESC Limited projected the generation at Southern generating station at lower
level than that was achieved during the year 2015 – 2016. CESC Limited has not
given any written clarification in their submission for such decreased trend and
projection for generation at Southern generating station. ABECA, however, has
pointed out the low PLF projection by CESC Limited for Southern generating
station. For energy availability from own sources, Commission has not accepted
the projection of CESC Limited regarding Southern generating stations as those
are lower than the computed generation as per normative Plant Load Factor
(PLF) for incentive specified in the Tariff Regulations. The Commission has
considered the generation from Budge Budge generating station during the year
2017 – 2018 at a PLF of 85.6% as against 87.9% which was achieved during the
year 2015 – 2016. The Commission considers the generation at Southern
generating station at a normative PLF of 80% during the year 2017 – 2018 as
projected by CESC Limited. The Commission does not consider any generation
at Titagarh generating station for the year 2017 – 2018. The Commission has
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
26
allowed auxiliary energy consumptions at the rates as per norms as specified in
the Tariff Regulations. Accordingly, admitted generation, auxiliary energy
consumptions and net sent out energy from each generating station of CESC
Limited are given below:
4.5 Distribution Loss:
4.5.1 The Commission has allowed distribution loss as per norms specified in the
Tariff Regulations against sale of energy to consumers and WBSEDCL in radial
mode and also for consumptions in its own premises as projected by CESC
Limited. Accordingly, the distribution loss for 2017 – 2018 as admitted by the
Commission is shown in the following table:
Distribution Loss for 2017 – 2018 Particulars Proposed Admitted Sale (MU) 9744 9744
Normative Distribution Loss (%) 14.3 14.3 Loss (MU) 1393 1393
4.6 Purchase of Power:
4.6.1 CESC Limited has projected purchase of power from HEL. The quantum of
purchase from HEL as projected by CESC Limited is 3855 MU for 2017 – 2018 is
admitted by the Commission. CESC Limited has projected purchase of power
from co-generation sources through electricity trader at a level of 108 MU for the
year 2017 – 2018 and the same is admitted by the Commission. This should not
Generation by Generating Stations of CESC Limited in MU for 2017 – 2018
Power Station As proposed As Admitted
Generation
Auxiliary Net Generation Auxiliary Net
Budge Budge (750 MW capacity) 5625 450 5175 5687 512 5175 Southern (135 MW capacity) 360 32 328 946 85 861 Titagarh 0 0 0 0 0 0 Total 5985 482 5503 6633 597 6036
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
27
be construed as giving clearance by WBERC of meeting the obligation on
purchase from renewable and co-generation sources of energy in full. The power
purchase quantum against supplementary purchase from other sources including
solar during the year 2017 – 2018 has been considered by CESC Limited at a
level of 1903 MU. Considering availability of the quantum of power from own
sources, the Commission admits 1 MU from solar and 1369 MU of power to be
purchased from supplementary sources, viz., energy exchange and traders etc
4.6.2 While the energy balance is drawn, it is considered that CESC Limited will adopt
economic despatching schedule / merit order despatch in terms of the Tariff
Regulations and other relevant Regulations. Surplus energy is required to be
appropriately sold out / banking / swap to a person other than consumers and
licensee in order to bring down the consumer’s tariff. The Commission will review
the matter while truing up during the APR of concerned years.
4.6.3 The purchase of energy from different sources, as projected by CESC Limited
and as admitted by the Commission based on the availability from own
generation are given below:
Power Purchase for 2017 – 2018 Particulars Proposed Admitted
Haldia Energy Limited 3855 3855 Co-generation 108 108
From other sources 1902 1369 Solar 1 1 Total 5866 5333
4.7 Energy Balance:
4.7.1 On the basis of the analyses done in the foregoing paragraphs, the Commission
admits the following Energy Balance for CESC Limited for the year 2017 – 2018:
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
28
ENERGY BALANCING FOR CESC LIMITED SL NO PARTICULARS UNIT 2017 – 2018
1 Generation from Existing Units MU 6633 2 Aux Energy Consumption of existing units MU 597 3 Ex-bus Generation [(3) = (1) – (2)] MU 6036 4 Energy Purchased from WBSEDCL MU 0 5 Energy Purchased from HEL MU 3855 6 Supplementary Energy Purchase and purchase from co-generation MU 1478 7 Energy at input of CESC [(3) to (6)] MU 11369 8 Unit Sold To Consumers MU 9680 9 Unit Sold to WBSEDCL in radial mode MU 40
10 Unit Utilized in Own Premises MU 24 11 Target Norms of Distribution loss % 14.30 12 Normative T& D loss on (8+9+10) as per rate of (11) MU 1625
4.8 Fuel Cost:
4.8.1 An examination of the projected fuel cost claimed by CESC Limited for the
ensuing year 2017 – 2018 of the fifth control period under different heads for its
power station has been taken up in this paragraph.
4.8.2 Fuel cost for different power stations of CESC Limited presently in operation as
per its projection comes as under:
Fuel Cost in Rs. in Lakh Power Station 2016-17
Budge Budge 128121 Southern 11884
4.8.3 In the tariff application for the fifth control period, CESC Limited has proposed
fuel cost on the basis of norms of plant load factor, auxiliary energy consumption
rate, oil consumption rate, station heat rate and transit and handling losses of
coal as specified in Schedule 9A of the Tariff Regulations. However, while
proposing fuel cost for the year 2017 – 2018 under the fifth control period, CESC
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
29
Limited has not envisaged any price increase in average price of coal or average
price of oil in its projections for 2017 – 2018.
4.8.4 The Commission has adopted the procedure for calculation of the fuel cost in
accordance with normative parameters applicable to CESC Limited as specified
in the Tariff Regulations and allowed fuel cost to CESC Limited as mentioned in
subsequent paragraphs.
4.8.5 While determining the average price of coal and average price of oil for the year
2017 – 2018 of the fifth control period, the Commission has noted that CESC
Limited has projected cost of coal based on the grade wise price of coal as per
Notification of Coal India Limited (CIL) issued upto 29th
4.8.6 In reply to the Commission’s letter dated 15.11.2017 CESC Limited furnished
detailed computations of price and UHV of captive washed coal, based on the
actual available bill for November, 2017. Considering determined UHV of captive
washed coal, the Commission noted that the coal grade corresponds to G10
grade of coal from CIL. But the price considered by CESC Limited is much lower
than the administered total price of G10 grade as per CIL notification. The
Commission accordingly admits the submitted price and UHV as proposed by
CESC Limited.
May, 2017 including other
applicable notifications for indigenous coal, latest available prices for imported
coal and present price trend for oil. A number of statutory levies have been made
applicable. Related charges are also factored in terms of present Fuel Supply
Agreement (FSA).
4.8.7 CESC Limited has mentioned that as per FSA with CIL supply beyond 90% of
Annual Contracted Quantity (ACQ) attracts higher charges for which they have
claimed additional fuel cost for all the four generating stations. The Commission
has considered the price of coal as per the CIL notifications as mentioned in
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
30
paragraph 4.8.5 above including other applicable subsequent notifications with all
necessary charges, levies, duties and cess etc. to arrive at the average price of
coal for the year 2017 – 2018. However, any major variation in fuel price in
subsequent period should be adjusted through Monthly Variable Cost Adjustment
(MVCA) as per provision made in the Tariff Regulations.
4.8.8 From the submitted Form D(2) to Annexure – I of the Tariff Regulations for
Southern generating station, the Commission noted that average transportation
charges for the coal to be to be sourced from ECL is Rs. 779.85 per M.T. The
charges considered for Budge Budge generating station for the coal to be
sourced from ECL is Rs. 615.09 per M.T. The Commission decides to consider
transportation charges of coal to be sourced from ECL at a level of Rs. 615.09
per M.T. for both Budge Budge and Southern generating stations. Accordingly,
the computed total average cost of transportation of coal from Southern and
Budge Budge generating stations at a level of Rs. 774.68 per M.T. and Rs.
796.00 per M.T. is admitted.
4.8.9 Hence, the average oil price and the average coal price based on the proposal of
CESC Limited for grade mixing of coal from different sources along with their
price, considered for the power stations of CESC Limited for the year 2017 –
2018 are shown below:
Power Station Average Coal Price in Rs./MT for the period 2017 – 2018
Average Oil Price in Rs./KL for the period 2017 – 2018
Budge Budge 2886 47460 Southern 3980 49361
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
31
Detailed computation of coal price for 2017-18 has been given in the enclosed
table at Annexure 4A to this chapter for the respective generating station.
4.8.10 Heat value of oil as 9638 Kcal/lit and 9579 Kcal/lit for Budge Budge and Southern
generations stations respectively has been considered as proposed by CESC
Limited as it is almost the same as per the estimated value of 2016-17. In
response to the letter of the Commission dated 15.11.2017, CESC Limited
submitted detailed computation of UHV of coal in terms of regulation 5.8.15 of
the Tariff Regulations. The Commission admits the same for the purpose of fuel
cost computation at this stage.
Power Station Heat value of coal in Kcal/Kg
As proposed for the period 2017 – 2018
As admitted by the Commission for the period 2017 – 2018
Budge Budge 3393 3393 Southern 3986 3986
4.8.11 On the basis of above average price of coal and average price of oil and as per
above heat value of fuel and normative parameters as specified in Schedule 9A
of the Tariff Regulations, the allowable fuel costs are shown by detailed
computations in the table at Annexure 4B enclosed to this chapter.
4.8.12 The summarized statement of admitted fuel cost for the power stations of CESC
Limited for the fifth control period is given hereunder:
Power Stations Total fuel cost (Rs. in Lakh) 2017-18 Budge Budge 123281.00 Southern 28389.00
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
32
4.9 Cost of Power Purchase:
4.9.1 CESC Limited has projected the cost of power purchase for the year 2017 –
2018 under the fifth control period as follows:
Sl. No. Sources MU Rs. In lakh 1 Haldia Energy Limited 3855 210246 2 Cogeneration 108 4098 3 Solar 1 56 4 Supplemental 1902 61113 Total 5866 275513
Besides the fixed charges per month, CESC Limited has to pay energy charges
on actual energy drawal energy per month as per rate admitted and other
charges including MVCA as detailed below:
Sl. No. Sources
Projected Fixed
charges
Projected Energy charges
Projected other charges
including MVCA 1 Haldia Energy Limited 88586 100982 20678 2 Cogeneration 0 3866 232 3 Solar 0 54 2 4 Supplemental 0 55843 5270 Total 88586 160745 26182
4.9.2 While projecting the cost of power purchase for the year 2017 – 2018 under fifth
control period, CESC Limited has considered following rate of energy charge and
fixed charges per unit for purchase of power from different sources during the
year 2017 – 2018.
Sl. No. Sources Fixed charges Re/Unit
Energy charges Re/Unit
1 Haldia Energy Limited 2.30 2.62 2 Cogeneration 0 3.58 3 Solar 0 5.38 4 Supplemental 0 2.94
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
33
CESC Limited has also projected transmission charges, SLDC charges, other
charges with adjustment of incentive / rebate for timely payment, where
applicable. Commission considers the fixed charge and energy charge only as
per tariff order for 2016 – 2017 without considering the MFCA as projected by
CESC Limited for HEL power. MFCA claimed / to be claimed by HEL shall be
taken care of by CESC Limited in their MVCA computation. The transmission
loss for evacuation of HEL power through dedicated transmission line as claimed
by CESC Limited is not considered by the Commission at present and shall be
considered in FPPCA and APR for 2017 – 2018. Transmission loss, if any, shall
be considered in FPPCA and APR for 2017 – 2018 on the basis of data that
would be submitted by CESC Limited for establishing actual loss. CESC Limited
also has to bear STU charges, SLDC charges and STU loss for drawing power
from HEL and other sources. The SLDC charges and losses as claimed by
CESC Limited have not been considered by the Commission. CESC Limited
shall come up with the STU charges paid / to be paid by them on actual basis as
per respective tariff orders and associated STU losses in their FPPCA and APR
application for 2017 – 2018. The difference between the power purchase cost
allowed in this order and the actual power purchase cost paid / to be paid by
CESC Limited for 2017 – 2018 and additional charges, if any, shall be recovered
through Monthly Variable Cost Adjustment (MVCA) which shall be reconciled in
the relevant FPPCA and APR for the concerned year..
4.9.3 The cost of power purchase from co-generation sources including transmission
and SLDC charges net of rebate / incentive for the year 2017 – 2018 is
considered @ 379.48 paise / kWh as projected by CESC Limited.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
34
4.9.4 The cost of purchase of supplementary power including transmission charge,
SLDC charge and other charges is considered @ 321.31paise / kWh for the year
of 2017 – 2018 as projected by CESC Limited under fifth control period.
4.9.5 The cost of solar power is considered @ 560.00 paise / kWh inclusive of other
charges as projected by CESC Limited for the year 2017 – 2018.
4.10 The power purchase costs of CESC Limited for the quantum of power admitted
under paragraph 4.6.3 of this order for the year 2017 – 2018 have been worked
out as under. This power purchase cost is subject to truing up during Fuel and
Power Purchase Cost Adjustment in terms of the Tariff Regulations on the basis
of actual audited figures for the respective years.
Power Purchase Source
Power Purchase Cost as admitted by the Commission for 2017 – 2018
Energy
(MU) Capacity charge
(Rs/Lakh)
Energy charge and
other charges (P/Unit)
Energy charge and
other charges
(Rs/Lakh)
Transmission charges for
evacuation of HEL power (Rs/Lakh)
Total Cost (Rs/Lakh)
Haldia Energy Limited
3855 88586 253.83 97851.00 11401.00 197838.00
Cogeneration 108 379.48 4098.00 0.00 4098.00 Solar 1 560 56.00 56.00 Other Supplemental
1369 321.31 43987.00 0.00 43987.00
Total 5333 88586.00 145992.00 11401.00 245979.00
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 4A
West Bengal Electricity Regulatory Commission 35
PROJECTED COAL PRICE AND HEAT VALUE FOR BUDGE BUDGE GENERATING STATION
MT Rs./MT Rs. Rs./MT Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/KgBCCL WIII 60303 2940.48 177319765 4714.00 284268342BCCL WIV 353204 2830.09 999599108 3854.00 1361248216ECL G4 38766 4811.30 186514856 6101 5600 6454 6049 6200 5600 5677.04 220076017.8ECL G5 129221 4350.85 562221188 5801 4940 6049 5597 5600 4940 5237.88 676843588.3ECL G6 55996 3089.80 173016441 5501 4200 5597 5089 4940 4200 4800.16 268789618.3ECL G7 142143 2703.40 384269386 5201 4200 5597 5089 4940 4200 4363.15 620191174.5ECL G8 17229 2608.36 44939434 4901 3360 5089 4324 4200 3360 3993.57 68805193.88MCL-E-auction G12 94762 1700.57 161149414 3701 1300 3865 3113 2400 1300 2160.11 204696001.1Do G13 176602 1644.20 290369008 3401 1300 3865 3113 2400 1300 1721.28 303980889.4CCL-E-auction G10 590109 2021.57 1192946651 4301 2400 4324 3865 3360 2400 3311.90 1954379297CCL-E-auction WIV 732252 2985.87 2186409279 3854 - - - - - 3854.00 2822099208Captive-ROM 766711 973.10 746086474 2697 - - - - - 2697.00 2067819567Captive-W 1150067 1650.15 1897783060 3270 - - - - - 3270.00 3760719090
4307365 9002624066 2090 14613916203 3392.77
Coal price 2090Transport 796Total 2886
Source Grade Quantity GCVPrice of coal
Unit Price X Quantity
Weighted Average Price Per
MT
Minimum UHV of
coal grade
Max GCV of Band (X2)
Min GCV of Band
(X1)
Wt. Av. UHV as
per WBERC
Max UHV of Band
(Y2)
Min UHV of Band
(Y1)
Mean UHV Interpolati
on
Qty X Mean UHV
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
36
PROJECTED COAL PRICE AND HEAT VALUE FOR SOUTHERN GENERATING STATION
MT Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/Kg Kcal/KgECL G4 7670 4811.30 36902671 6101 5600 6454 6049 6200 5600 5677.04 43542874.07ECL G5 125464 4350.85 545875044 5801 4940 6049 5597 5600 4940 5237.88 657164887.8ECL G6 19998 3089.80 61789820 5501 4200 5597 5089 4940 4200 4800.16 95993549.29ECL G7 12601 2703.40 34065543 5201 4200 5597 5089 4940 4200 4363.15 54980048.19ECL G8 2465 2608 6429607 4901 3360 5089 4324 4200 3360 3993.57 9844146.667ECL G13 83003 1508 125158564 3401 1300 3865 3113 2400 1300 1721.28 142871121.3CCL-e-auction WIV 22737 2986 67889726 3854 - - - - - 3854.00 87628398
273938 878110976 1092025025 3986.39
Coal price 3205.51Transport 774.68Total 3980
Mean UHV Interpolation Qty X Mean UHV
Wt. Av. UHV as per
WBERC
Max GCV of Band (X2)
Min GCV of Band (X1)
Max UHV of Band (Y2)
Min UHV of Band (Y1)
3205.51
Source Quantity GCV Minimum UHV of coal grade
Price of coal
Unit Price X Quantity
Weighted Average Price Per
MT
Grade
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 4B FUEL COST DETERMINATION OF
BUDGE BUDGE GENERATING STATION
West Bengal Electricity Regulatory Commission 37
PROPOSED ADMITTED1 Gross generation MU 5687.00 5687.002 Aux rate % 9.00 9.003 Auxiliary Consumption MU 512.00 511.834 Ex-bus generation (3=1D-2) MU 5175.00 5175.175 Heat rate KCAL/KWHR 2470.00 2470.006 Total Heat (5=1×4) M. KCAL 14046890.00 14046890.007 GCV of OIL Kcal/lit 9638.00 9638.008 Specific Oil Consumption Ml/kwh 1.30 1.309 Oil Consumption (8=1×7) KL 7393.10 7393.10
10 Average Price of Oil Rs/KL 47460.00 47460.0011 Cost of oil (10=8×9 ÷100000) Rs(lakh) 3509.00 3509.0012 Heat generated from oil (11=6 × 8÷1000) M Kcal 71255.00 71254.7013 Heat from coal (12=5-11) M Kcal 13975635.00 13975635.3014 Heat value of coal Kcal/Kg 3393.00 3393.0015 Coal required (14=12×1000÷13) MT 4118961.00 4118961.1916 Coal required with Transit loss MT 4150087.00 4150087.0017 Weighted Average Price of coal Rs/MT 2886.00 2886.0018 Cost of Coal (17=15 x16÷100000) Rs. (lakh) 107370.00 119772.0019 Total Cost of Fuel (18=10+17) Rs. (lakh) 110879.00 123281.00
SL No. ITEM UNIT
2017 - 2018
Tariff Order of CESC Limited for the year 2014 – 2015
ANNEXURE – 4C FUEL COST DETERMINATION OF
SOUTHERN GENERATING STATION
West Bengal Electricity Regulatory Commission 38
PROPOSED ADMITTED
1 Gross generation for sale to own consumers and licensee MU 360.00 946.00Aux rate % 9.00 9.00
2 Auxiliary Consumption MU 32.00 85.003 Ex-bus generation (3=1-2) MU 328.00 861.004 Heat rate KCAL/KWHR 2900.00 2900.005 Total Heat (5=1×4) M. KCAL 1044000.00 2743400.006 GCV of OIL Kcal/lit 9579.00 9579.007 Specific Oil Consumption Ml/kwh 2.10 2.108 Oil Consumption (8=1×7) KL 756.00 1986.609 Average Price of Oil Rs/KL 49361.00 49361.00
10 Cost of oil (10=8×9 ÷100000) Rs(lakh) 373.00 981.0011 Heat generated from oil (11=6 × 8÷1000) M Kcal 7241.72 19029.6412 Heat from coal (12=5-11) M Kcal 1036758.28 2724370.3613 Heat value of coal Kcal/Kg 3986.00 3986.0014 Coal required (14=12×1000÷13) MT 260099.92 683484.7915 Coal required with Transit loss MT 262065.00 688650.0016 Weighted Average Price of coal Rs/MT 3980.00 3980.0017 Cost of Coal (17=15 x16÷100000) Rs. (lakh) 10428.00 27408.0018 Total Cost of Fuel (18=10+17) Rs. (lakh) 10801.00 28389.00
SL No. ITEM UNIT2017 - 2018
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 5
FIXED CHARGES
West Bengal Electricity Regulatory Commission 39
5.1. The analysis of the fixed charges projected by CESC Limited for the year 2017 –
2018 under fifth control period under the Multi Year Tariff approach under
different heads of accounts has been taken up in this chapter.
5.2. Employee Cost:
5.2.1 The expenditures projected by CESC Ltd for different ensuing years towards
employee cost are as under:
Rupees in Lakh Sl. No. Particulars 2017 – 2018
1 Generation 22701 2 Distribution 43147 3 Sales function 14931 4 Central overhead 13975 5 Total [(5) = sum (1) to (4)] 94754 A Salaries and Wages for own employees in
regular establishment 89601
B Salaries and wages to contractual manpower at generating station 5153
C Total [(C) = (A) + (B)] 94754
The above projected expenditures chargeable to different cost centres are net of
capitalization. The projected amounts for generation function, however, include
cost of contracted employees. In case of other cost centres, such costs are
considered for charging to Repairs and Maintenance. It has been stated that for
the generating stations, in order to remain within the man/MW norm stipulated in
the Tariff Regulations, the number of existing workforce therein (both own
employees and contracted employees) have been restricted to the aforesaid
normative ceiling while projecting employee cost for the concerned years.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
40
5.2.2 The Commission has carefully examined the projected amounts of expenses and
it has been observed that the applicant has asked for an average annual
increase of 8% for the year 2017 – 2018 over the estimated expenditure of the
previous year for the respective generating stations, distribution functions, sales
functions and central overhead. CESC Limited has claimed that this increase has
been necessitated by significant inflation requiring higher D.A. compensation and
statutory changes including considerable rise in minimum wages, increase in
ceiling for gratuity payment etc. The month wise rate of inflation as per Consumer
Price Index (CPI Index) for industrial workers for the years 2013 – 2014 to 2016 –
2017 (upto January, 2017) are shown in Annexure – 5A. The average inflation
rate as per CPI for the year 2016 – 2017 (upto January, 2017) comes to 4.45%.
As employee cost is sensitive to CPI, the CPI based inflation rate is considered
for employee cost projection in fifth control period. Thus, the Commission
considers that 4.45% (inflation rate for 2016 – 2017) increase over the employee
cost for 2015 – 2016 shall take care of the normal increase in employee cost for
the year 2016 – 2017 for the cost centres for the own employees in regular
employment. The Commission also considers annual increase in employee cost
for cost centres for the own employee in regular establishment @ 4.45% for the
year 2017 – 2018 instead of 8.00% as projected by CESC Limited since the
inflation rate in CPI numbers are found to have decreased during 2016 – 2017.
The employee cost for the contracted manpower is dealt with separately in
subsequent paragraph.
5.2.3 CESC Limited has not considered any cost for the year 2017 – 2018 in respect of
New Cossipore generating station.
5.2.4 It is seen from Form 1.17(h) to Annexure – 1 of the tariff application that the
actual employee cost for own employees for the year 2015 – 2016 was Rs.
74513.00 lakh after net of capitalization. If 4.45% inflationary hike over the
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
41
employee cost of 2015 – 2016 is considered, the estimated employee cost for
2016 – 2017 would be Rs. 77829.00 lakh. The Commission considers the
estimated employee cost for 2016 – 2017 as Rs. 77829.00 lakh. The break-up of
employee cost of Rs. 77829.00 lakh for 2016 – 2017 is shown as below:
(Rs. in lakh)
Sl. No. Generating Station 2016 – 2017 (estimated by the Commission
1 Budge Budge 5163 2 Titagarh 6340 3 Southern 4327 Sub-total 15830
4 Distribution including sales 50038 5 Central overhead 11961 Total 77829
5.2.5 The Commission noted that CESC Limited has allocated the total employee cost
of central office, as submitted in Form 1.17 of Annexure 1 to Tariff Regulations,
under distribution and sales function. The Commission, however, decides to
allocate the employee cost of central office to all the functions in the ratio of their
admitted employee cost for 2016 – 2017 as shown in the table below paragraph
5.2.4 of this chapter. Accordingly, admitted employee cost of the base year 2016
– 2017, after allocation of central office employee cost, is given in the table
below:
Rs. in lakh
Sl. No. Generating Station 2016 – 2017 (estimated by the Commission
1 Budge Budge 6101 2 Titagarh 7491 3 Southern 5113 Sub-total 18705
4 Distribution including sales 59124 Total 77829
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
42
5.2.6 Taking the estimated amount of Rs. 77829.00 lakh as expenditure towards
employee cost during 2016 – 2017 as base, the allowable amounts for the year
2017 – 2018 under different cost centres considering the annual increase @
4.45% comes to Rs. 81294.00 lakh as under:
Rs. in lakh
Sl. No. Generating Station 2017 – 2018 (Admitted by the Commission
1 Budge Budge 6372 2 Titagarh 7825 3 Southern 5341 Sub-total 19538
4 Distribution including sales 61756 Total 81294
5.2.7 Regarding expenditure claimed by CESC Limited for contracted manpower in
regular establishment in generating station the Commission considers 75% of the
expenditure claimed by CESC Limited for the year 2017 – 2018. However, for
Titagarh generating station, employee cost of contracted manpower in regular
establishment is not admitted as the power plant shall remain inoperative during
2017 – 2018. The admitted amount for different cost centres at the aforesaid
rates of average annual increase come as under:
5.2.8 It is, however, pertinent to mention that, in terms of the Tariff Regulations, the
employee cost is an uncontrollable factor. Any reasonable variation of actual
Rupees in Lakh Employee cost for contracted man power in regular establishment
Sl. No Power Station As Proposed by CESC As admitted by the
Commission 2017 – 2018 2017 – 2018 1. Budge Budge TPS 3888 2916 2. Titagarh TPS 963 0 3. Southern TPS 301 226 Total 5152 3142
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
43
chargeable amount of expenses under this head of fixed charges is subject to
adjustment through the APR based on the audited accounts.
5.3 Coal & Ash Handling Expenses:
5.3.1 CESC Limited has claimed Rs. 1267 lakh for 2017 – 2018 towards coal and ash
handling expenses. It has been stated that, in order to contain overall
expenditure in this regard, the applicant has taken quite a number of steps
including utilization of ash. However, to ensure availability of adequate coal for
smooth functioning of the generating stations and for sustaining Plant Load
Factor (PLF) at the desired high level, certain critical expenditures are found
inevitable.
5.3.2 The amount of expenditure under this head of account is related to the scale of
operation of the generating plants. The Commission has, however, considered to
operate the plants at the normative level of PLF for their generating station at
Budge Budge and Southern. In this regard the Commission has taken the
following considerations:
a) Since there is variation in actual generation compared to generation at
normative level during 2015 – 2016, the Commission decides to bring the
actual expenditure for 2015 – 2016 at normative generation level.
b) Since the item of cost is predominantly sensitive to inflation index of CPI, the
Commission decides to consider average inflation rate of related period.
The item of cost has been viewed considering the amount claimed by CESC
Limited and present inflation as per Consumer Price Index (CPI) published in the
website of the Labour Bureau, Government of India for the period 2016 – 2017,
as shown in Annexure – 5A comes at 4.45%. The Commission considers a hike
in coal and ash handling cost @ 4.45% for the year 2016 – 2017 over the actual
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
44
at normative level of generation. The Commission considers the same level of
inflation of 4.45% to arrive at the allowable expenditure for the year 2017 – 2018.
On the basis of such considerations, the cost proposed by CESC Limited for their
existing units is thus revised and admitted and allocated cost of such coal and
ash handling expenses is shown in the following table. The expenditure claimed
by CESC Limited under this head is based on their projected generation for the
respective generating stations. Expenditure for the year 2017 – 2018 as derived
based on the above methodology and admitted is based on the normative
generation of the respective generating stations which will be viewed on the
basis of actual generation during truing up in APR for 2017 – 2018.
Generating station
Normative generation in 2015 –
2016
Actual generation in 2015 –
2016
Actual expenditure
in 2015-2016
Actual expenditure
at normative generation
level in 2015-2016
Admitted expenditure in 2016-17 with escalation of 4.45% over normative
exp.
Expenditure during 2017-
18 with escalation of 4.45% over
2016-17
As claimed by CESC Limited
Admitted Coal and
Ash Handling
Charges for 2017 - 2018
(MU) (MU) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) Budge Budge
5590 5632 877 870 909 949 1042 949
Southern 950 527 190 342 357 373 224 373 Total 6540 6159 1067 1212 1266 1322 1266 1322
5.4 Water Charges:
5.4.1 The expenditure towards water charges is related to the quantum of water to be
used in the generating stations and rate of charges to be paid for use of water.
The Commission decides to allow water charges based on the following
considerations:
a) Since there is variation in actual generation compared to generation at
normative level during 2015 – 2016, the Commission decides to bring the
actual expenditure for 2015 – 2016 at normative generation level.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
45
b) Since the item of cost is predominantly sensitive to inflation index of CPI, the
Commission decides to consider average inflation rate of related period.
The item of cost has been viewed considering the amount claimed by CESC
Limited and present inflation as per Wholesale Price Index (WPI) index published
in the website of the Economic Advisor, Government of India for the period April,
2016 to January, 2017 as shown in Annexure 5A to this order. The average
inflation rate as per WPI for the aforementioned period of 2016 – 2017 comes at
2.88%. The Commission considers a hike in water charges @ 2.28% for the year
2016 – 2017 over the actual at normative level of generation and then considers
an increase at the same level of 2.88% to arrive at the allowable expenditure for
the year 2017 – 2018. On the basis of such considerations, the cost proposed by
CESC Limited for their existing units is thus revised and admitted and allocated
cost of such water charges is shown in the following table. The expenditure
claimed by CESC Limited under this head is based on their projected generation
for the respective generating stations. Expenditure for the year 2017 – 2018 as
derived based on the above methodology and admitted is based on the
normative generation of the respective generating stations which will be viewed
on the basis of actual generation during truing up in APR for 2017 – 2018.
Generating station
Normative generation in 15 – 16
Actual generation in 15 – 16
Actual expenditure
in 2015-2016
Actual expenditure
at normative generation
level in 2015-2016
Admitted expenditure in 2016-17 with escalation of 2.88% over
normative exp.
Expenditure during
2017-18 with
escalation of 2.88%
over 2016-17
As claimed by CESC Limited
Admitted water
Charges for 2017 - 2018
(MU) (MU) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) (Rs. in lakh) Budge Budge 5590 5632 5 5 5 5 6 5 Southern 950 527 40 72 74 76 48 76 Total 6540 6159 45 77 79 81 54 81
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
46
5.5 Operation and Maintenance Expenses (O&M) / Rates and Taxes, Lease Rental, Insurance and Outsourcing Cost (Call Centre):
5.5.1 After analyzing the tariff application of CESC Limited for the fourth control period,
the Commission has allowed O&M expenses for the generating stations in
accordance with the norms specified in Schedule 9A of the Tariff Regulations
and applicable for 2016 – 2017 in absence of any norms specified for the year
2017 – 2018 in Schedule 9A of the Tariff Regulations. The O&M expenditure for
2017 – 2018 for the generating stations will be viewed applying the average
inflation rate for the years under the last control period over the norms specified
for 2016 – 2017 in terms of regulation 2.8.6.1 of the Tariff Regulations in the APR
for 2017 – 2018, if no norms for 2017 – 2018 are specified in Tariff Regulations
subsequently. For Titagarh generating station, the Commission does not
consider any operation and maintenance charges as the power plant is stated to
be remained inoperative during 2017 - 2018.
5.5.2 O&M Expenses for Distribution function, Rates & Taxes and Insurance:
The Commission has made prudent analysis of the charges claimed by CESC
Limited under the following heads
(i) different sub-heads of O&M expenses for distribution function;
(ii) Rates and Taxes charges; and
Rupees in Lakh O & M expenses for generation as proposed and admitted by the Commission
Sl. No Power Station As Proposed by CESC As admitted by the Commission
2017 – 2018 2017 – 2018 1. Budge Budge TPS 10439 9840 2. Titagarh TPS 3883 0 3. Southern TPS 2223 2097 Total 16545 11937
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
47
(iii) Insurance charges.
While determining fixed charges on such heads for the fifth control period (2017
– 2018) the following considerations have been done.
5.6.2.1 CESC Limited has referred the average inflation rate of 6%. Commission finds no
merit in considering such inflation rate for estimate purpose. The Commission
instead of considering the rate of 6% in general for projection purpose decides to
proceed in a further rational manner by following a methodology that has been
applied for all distribution licensees subject to case specific differences in some
cases to protect the interest of the consumers as far as possible after meeting
requirement of reasonable tariff determination to provide the ends of justice to all
of the concerned stakeholders as deemed fit by the Commission. Moreover by
the time of processing the tariff application by Commission the inflationary trend
shows downward direction. The Commission decides to determine projected
inflation rate and the resultant escalation rate in view of such inflation rate as
detailed out in subsequent paragraphs.
Commission observed that Central Electricity Regulatory Commission based on
a hybrid index of WPI (Wholesale Price Index) & CPI (Consumer Price Index)
has observed an annual inflation trend of 8.35% while fixing the norms of O&M
expenses in Central Electricity Regulatory Commission (Terms and Conditions of
Tariff) Regulations, 2014 (hereinafter refer to as ‘CERC Tariff Regulations’) for
central sector utilities for the period 2014-2019. This inflation trend of 8.35 % is
computed based on five year average of WPI and CPI indices for FY 2008-09 to
FY 2012-13 considering 60% and 40% weightage on WPI and CPI respectively.
However, while fixing norms of O&M cost (which includes employee cost also)
the annual escalation rate on O&M expenses during the period 2014-2019 has
been considered as 3.32% for A.C. transmission system as per the statement of
reasons of the CERC Tariff Regulations for the said period. This 3.32% is the
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
48
110% of the actual Compounded Annual Growth Rate (CAGR) (3.02%) of O&M
expenses for A.C. transmission system during the period 2008-09 to 2012-13
computed on the basis of 70% weightage on actual O&M cost of per bay of sub-
station and 30% weightage on actual O&M cost of per CKM transmission line.
Taking the above mentioned principle adopted by CERC as a guideline
Commission also decides to find out a reasonable annual escalation rate for
CESC Limited for all sub-heads of O&M expenses for distribution function, rates
& Taxes and insurance with certain deviation based on certain reasons as
explained below:
a) The inflation trend between February, 2014 and January 2017 has been
computed where weightage has been given to WPI & CPI at the ratio of 60:40
in line with the norms fixation methodology under CERC Tariff Regulations.
This is being done in order to capture the realistic trend of 2017-18 as far as
possible so that projection for the year can have better accuracy.
Accordingly based on the WPI numbers and CPI numbers as available in the
website of Economic Advisor of GOI for WPI and Labour Bureau of GOI for
CPI the computed inflation trend for the above 36 months are given in the
following table 5.6.2.1-I.
Table- 5.6.2.1-I TREND OF INFLATION RATE FOR THE PERIOD FEBRUARY 2014 TO JANUARY 2017
Average inflation rate as per WPI from February 2014 to January 2017 0.986 Average inflation rate as per CPI from February 2014 to January 2017 5.590 Average inflation rate as per WPI + CPI (60:40) from February 2014 to January 2017 2.830 Note : For detail data at Annexure – 5A may be seen
b) Different sub heads under O&M expenses, rates and taxes and insurance are
effected by inflationary trend but at different degrees depending on the
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
49
characteristics of such head or sub-head. In this context two recognized
inflationary trends used in the country are WPI index and CPI index. Along
with this two types of inflationary rate for power sector another third type
inflationary rate used by the Commission is based on hybrid index (WPI+CPI)
as explained in paragraph (a) above. In table-2 in Annexure-5B the basis of
inflationary rate considered for such heads and sub-heads of expenditure are
given. In this context it is to be noted that all these heads of expenditure are
treated as heads under O&M function of CERC tariff regulations. Thus the
inflation rate considered for tariff computation is as per the following table
5.6.2.1- II.
Table 5.6.2.1-II INFLATION TRENDS
Financial Years CPI WPI Combined WPI & CPI (60 : 40) Remarks
2013-14 9.72 5.98 7.47 Actual 2014-15 6.30 2.15 3.81 Actual 2015-16 5.65 (-) 2.51 0.75 Actual 2016-17 4.45 2.88 3.51 As per 10 months trend
2014-15 to 2016-17 5.47 0.84 2.69 Averaged on annual basis 2013-14 to 2016-17 6.53 2.13 3.89 Averaged on annual basis
Note : For detail data at Annexure – 5A may be seen
In 2016 – 2017 as the trend is downward than the value under Table 5.6.2.1-
II such value has been considered with due insulation against uncertainty
wherever required through providing necessary certain additional float.
c) For finding out the expenditure to be admitted by the Commission, the
estimated expenditures of 2016-17 submitted by CESC Limited are
scrutinized by the Commission so that overestimated value can be
rationalized to a reasonable extent. This is being done as otherwise the
existence of overestimated expenditure for 2017 – 2018 may result into
unreasonably higher admitted amount for fifth control period as because the
computation for projection of expenditure for 2017 – 2018 are done by
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
50
applying the annual escalation rate over the estimated figure of 2016 – 2017.
On the estimated value as provided by CESC Limited for 2016 – 2017
Commission finds that against some elements the estimation of expenditure
seems to be on higher side as it has been noticed that the estimated
expenditure for some elements in 2016 – 2017 as made by CESC Limited
has a sharp increase which is not commensurate with the previous trend
even after considering the inflationary trend and impact of business volume
increase in the same way as has been considered for other distribution
licensee. The Commission cannot accept such over estimation. In any year
this deviation can occur for any item of expenditure but it cannot be
considered as a trend for future projection. The estimated expenditure of
elements which are identified to be overestimated by CESC Limited for 2016
– 2017 are on the heads of repair & maintenance, audit fees, rates and taxes
and insurances. Thus for realistic projection for 2017 – 2018 the impact of
business volume increase has been given as 2% on items which are
sensitive to Consumer strength moderately. Such impact has been
considered as 1% where the expenditure of item is sensitive to distribution
line length. In such case Commission has done its own estimation based on
the Table-1 of Annexure–5B by applying its prudence which is explained
below item wise..
i) The estimated expenditure of Audit fees during 2016 – 2017 is higher
than the earlier trend. The Commission considers the hybrid inflationary
trend of 2.83% as the escalation for 2016 – 2017 over the actual for 2015
– 2016 .
ii) The estimated expenditure of repair maintenance, other administrative &
general expenses and rates & taxes for CESC Limited is high in 2016 –
2017 compared to earlier trend. Thus Commission estimates the
expenditure of 2016 – 2017 by giving inflationary impact on actual value
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
51
of 2015 – 2016 along with additional impact of 1% due to business
volume increase as is being done for other distribution licensee for the
same period.
iii) The Commission noted marginal increase in estimated expenditure under
insurance heads for CESC Limited. Thus the Commission estimates
expenditure for 2016 – 2017 by giving inflationary impact of 2.83% as per
table 5.6.2.1-II during 2016 – 2017.
All the above estimated expenditure for 2016 – 2017 by the Commission will
be used by the Commission only for the projection of expenditure during 2017
– 2018.
d) Where the past CAGR of expenditure of any above referred elements for any
period between 2013 – 2014 and 2016 – 2017 which has been considered as
basis for escalation rate for future projection for the fifth control period and is
lesser than the corresponding inflationary rate of the same period as provided
in table 5.6.2.1-II in such case in line with CERC’s principle 110% (an
additional 10% margin over actual growth rate) of such growth rate is
considered as the annual escalation rate for 2017 – 2018 for the following
reasons.
i) To ensure the interest of different stakeholders in a much better way from
the point of view of availability considerations of the network asset and
different services
ii) also to provide a comfort to CESC Limited in carrying out O&M of the
assets by extending an additional insulation against uncertainty arising
out of increased expenditure for any unforeseen reason.
It is to be noted that for the said period the expenditure considered for 2016 –
2017 is estimated one by the Commission and for 2012-13, 2013-14, 2014-15
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
52
& 2015-16 actual expenditure has been taken. In general, the non zero least
positive value out of the three periods (2012-13 to 2015-16, 2013-14 to 2015-
16 and 2014-15 to 2015-16) is considered for projection of estimated
expenditure of heads of any year under the fourth control period. The CAGR
for certain period is also considered where Commission finds that such
decision will provide more rationale and better accuracy in the projected
admitted cost.
e) Where the projected expenses by CESC Limited is less than the estimated
value of 2017-18 by the Commission and also actual value of 2015-16 in
such case no escalation is being allowed for fifth control period because
CESC LIMITED’s projection is considered as admitted figure.
f) Where the past data shows irrational/asymmetric character in such case
Commission by applying due prudence take an appropriate escalation rate
which is discussed in relevant portions.
g) Where annual escalation rate or CAGR of past period crosses the concerned
inflation rate of the said past period in such case escalation rate for projected
expenditure due to business volume increase is computed from past trend by
reducing it with the concerned inflation rate of the relevant past period and
that has been explained in the relevant portions. In such case the annual
escalation rate for 2017 – 2018 are as follows:
Annual Escalation Rate (%) for any ensuing year = A+ R × BGR+Ad_F
Where A = Inflation rate (%) based on CPI or WPI or hybrid
(WPI+CPI) index as applicable for the fixed charge
element.
R = Ratio of percentage annual increase in expenses in
the past period and percentage increase in
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
53
business volume parameter during the same
period.
BGR = Projected growth rate (%) for the ensuing year of
the business volume parameter to which the fixed
charge element under consideration is sensitive.
Ad_F = Additional float in % as decided by commission to
provide insulation against uncertainty in projected
inflation or business volume growth.
For such annual escalation rate calculation the annual increase (%) in
expenses as required for calculation of R is decided by the Commission by
taking the lowest positive CAGR value from among CAGR of 2014-15 to
2015-16 (i.e., annual increase rate) or CAGR of 2013-14 to 2015-16 or CAGR
of 2012-13 to 2015-16 subject to different aspects considering rationality or
level of asymmetric character of past data as has been explained in the
relevant portion. However, as a matter of principle wherever R on
computation found to be higher than one then in such case R is considered
not more than 1 as Commission is of the opinion that rate of increase in
expenses due to business volume increase cannot surpass the rate of
increase in business volume parameter unless there is any specific reason
which can be established by the licensee. Similarly when R is found to be a
value between 0.5 and 1 then also in ensuing year annual escalation rate is
further reduced by a small quantum with an objective of gradual improvement
in efficiency of the licensee in expenditure control by utilizing different
resources in a more effective manner.
Where necessary while computing additional expenditure represented by
(R×BGR) of any element of fixed charge due to increase in business volume
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
54
that additional expenditure is modified in a reasonable and rational manner
after taking the impact of above mentioned sensitivity parameter on the
additional expenditure. Details of such modification and any other specific
consideration are detailed out in relevant portion where each element of fixed
charge is dealt with. For controllable factor additional float of 0.5% is given to
cover any expenditure hike due to any unforeseen reasons.
h) Commission decides that for the ARR determination in the tariff order of fifth
control period the impact of increase in business volume on different sub-
heads/ heads will also be considered from the point of sensitivity of the
head/sub-heads to certain business volume parameter. For such purpose in
the business process of CESC Limited there are two important business
volume parameters such as Distribution line length (DDL) in Circuit Kilometer
(CKM) and Consumer strength. Different elements of fixed charge elements
are sensitive to either of the above two parameters and where such element
is sensitive to consumer strength there is variation in the degree of such
sensitivity. After applying such degree of sensitivity the number of business
parameters considered in this tariff order are Distribution Line Length (DLL),
Consumer Strength in moderate degree(CSM), Consumer Strength in high
degree (CSH) and Consumer strength with lesser degree than CSM
(CSM-L). The Table 1 under Annexure 5B shows the concerned business
volume parameter sensitivity against different elements of the fixed charges.
i) CESC LIMITED has projected consumer strength for 2017 – 2018 and
accordingly the growth rate has been derived. But for distribution line length
the projected annual escalation rate considered by the Commission for 2017
– 2018 is 4.83%.
While projecting the above figure it has been considered that as the original
tariff application is submitted at the last quarter of 2016 – 2017, thus it can be
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
55
considered that the estimated data for 2016 – 2017 will have high degree of
accuracy.
During truing up in Annual Performance Review (APR) of the year of 2017 –
2018 such projected distribution line length in CKM and Consumer Strength
in number as given in Table 5.5.2.1-III below shall be considered as the basis
against which the expenditure has been admitted during concerned tariff
order and accordingly truing up will be taken up.
Table 5.5.2.1-III
Particulars Unit 2016 – 2017 2017 – 2018 Distribution Line Length (DLL) (CKM) 21804 22857 Consumers (Number) 3066000 3158500
j) For computation of computed expenditure by the Commission on different
heads for 2017 – 2018 the base expenditure over which the above escalation
rates are applied has been considered on the estimated expenditure of 2016
– 2017 made by CESC Limited and duly modified in some elements by the
Commission as explained in paragraph (g) above. This is being done as the
application of tariff is submitted at the end of December, 2016 and is likely to
have little inaccuracy with respect to actual expenditure or in other word
having better accuracy.
k) Based on the above principle the projected expenditure on above mentioned
different elements of fixed charges for 2017 – 2018 has been computed and
then compared with the claimed amount of CESC Limited for the said year
and whichever is lowest is being admitted in this tariff-order.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
56
5.6.2.2 O&M Expense determination for distribution function:
Based on the laid down principle in paragraph 5.6.2.1 above admissible
expenses under different sub-heads of O&M are determined. In this context
tables in Annexure – 5B may be referred to for the past trend of expenditure
escalation rates considered by the Commission.
5.6.2.3 CESC Limited has claimed an amount of Rs. 1232.00 lakh as Service Tax &
Entry Tax on cable laying works. Such cost is not categorized as a separate item
and considered as a part of repair and maintenance work. Since the Commission
estimated Rs. 17786.00 lakh as allowable repair and maintenance cost against
the claim of Rs. 19740.00 lakh, the component of tax applicable to the expenses
on repair and maintenance work is proportionately allowed by the Commission
for Rs. 1110.00 lakh. The admitted amount of tax is included in the repair and
maintenance cost and is not shown as a separate item in this order.
5.6.2.4 CESC Limited is advised that such component of taxes which form part of the
cost of works and services should not be claimed as a separate item in future
submission of tariff and / or APR petitions.
5.6.2.5 The Commission noted from the determined CAGR of past periods, incorporated
in table – II under Annexure – 5A that rate of growth is quite inconsistent and
irrational. Accordingly, the Commission decides not to consider CAGR of any
period as given in Table – II. Based on the methodology as mentioned in sub-
paragraph (d), (j) and (k) of the paragraph 5.6.2.1 above, the admitted amounts
of different components of O&M expenses under distribution segment for 2017 –
2018 are given below:
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
57
Table 5.5.2.2-I Rs. in lakh
Sl No. Particulars As Claimed by
CESC Ltd As Admitted by the
Commission 2017 – 2018 2017 – 2018
1. R & M Charges 19740 18896 2. Rent 1242 1231 3. Audit Fees 209 209 4. Legal charges 666 617 5. Other A&G expenses 16258 15986 6. A&G expenses (2+3+4+5) 18375 18043 7. O&M expenses for distribution (1+6) 38115 36939
Note : For detail calculation three tables 1,2 & 3 under Annexure-5B may be seen
5.6.2.6 Some Small Expenditure: Some of the small items viz., a) rates & taxes and b)
insurance are uncontrollable in nature till the third control period and thus they
are all dealt separately under paragraphs as below.
a) Rates & Taxes:
The Commission observed that the CAGR growth during 2012-13 to 2015-16
is quite inconsistent. Accordingly, the Commission decides to consider the
hybrid inflation rate for the period as determined in the Table 5.6.2.1-I along
with increase due to business volume growth to determine the admissible
cost for 2017 – 2018. The admitted amounts are given in Table below. The
entire amount is allocated to the generation function as proposed by CESC
Limited. Rupees in Lakh
Rates and Taxes Sl. No Power Station As Proposed by CESC As admitted by the Commission
2017 – 2018 2017 – 2018 1. Budge Budge TPS 438 406 2. Titagarh TPS 27 25 3. Southern TPS 98 90 4. New Cossipore TPS 0 0 Sub-Total 563 521
5. Distribution 330 308 Total: 893 829
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
58
b) Insurance:
The CAGR for different periods from 2012 – 2013 to 2015 – 2016 has been
computed in table – II of Annexure – 5A. The Commission observed that such
growth rates are quite inconsistent. Accordingly, the Commission decides to
consider the hybrid inflation rate for the period as determined in the Table
5.6.2.1-I along with increase due to business volume growth to determine the
admissible cost for 2017 – 2018. The amount so derived is as below and the
entire amount is allocated to generation function as proposed by CESC
Limited.
5.6.2.7 It is to be noted that the estimated expenditure those are only determined by the
Commission for 2016-17 against any head or subheads as discussed above in
sub paragraph (i) to (iv) of paragraph 5.6.2.1(c) has been considered as base
year expenditure for those heads for tariff determination purpose only for fifth
control period. In case any of such estimated expenditure made by the
commission is found to be less than the audited actual expenditure for 2016-17
vis-à-vis business volume parameter increases then the consequential impact on
the projected expenditure against concerned heads/sub-heads for the period
2017 – 2018 will be passed through tariff in APR of concerned year separately
irrespective of whether such item is controllable factor or uncontrollable factor.
During truing up exercise in APR of the concerned year the estimated
expenditure of all the elements of different heads as mentioned in paragraph
Rupees in Lakh Insurance
Sl. No Power Station As Proposed by CESC As admitted by the Commission
2017 – 2018 2017 – 2018 1. Budge Budge TPS 878 475 2. Titagarh TPS 110 60 3. Southern TPS 186 101 4. New Cossipore TPS 0 0 Sub-Total 1174 636
5. Distribution 287 163 Total: 1461 799
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
59
5.6.2.1(c) above for 2016-17 are to be considered as has been incurred against
the actual value of the business volume parameter (i.e., DLL and consumer
strength) that has been achieved at the end of 2016-17. In case the actual value
of DLL or consumer strength in 2016-17 is found to be higher than the estimated
value that has been considered for 2016-17 in this tariff order then impact of such
enhanced amount will be added to the projected value of DLL or Consumer
strength for the period 2017 – 2018 of the tariff order to find out the target
business volume parameter against the projected expenditure that has been
admitted in the tariff order. On the basis of such revised targeted business
volume parameter the truing up exercise in APR will be done while applying the
regulation 2.6.10(v) of the Tariff Regulations.
5.6.2.8 The above expenditure be availed of on adherence to the conditions as
prescribed in regulation 5.23.1 of the Tariff Regulations.
5.6.2.9 CESC Limited is directed to submit the details of the process adopted for
selection of the Insurance Company and the items covered along with the APR
application for the respective years.
5.6 Rent for generating stations:
5.6.1 In terms of Tariff Regulations, rent for generating stations requires separate
disclosure. Rent for Southern Generating Station is allowed separately and not
included in O&M cost in earlier tariff orders. The Commission accordingly admits
Rs. 39.00 lakh for 2017 – 2018 for Southern generating station.
5.7 Lease Rental:
5.7.1 CESC Limited has claimed lease rental to the extent of Rs. 1072.00 lakh which is
admitted by the Commission. The entire amount towards lease rental is allocated
to distribution function only.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
60
5.8 Expenditure for Outsourcing cost of Call Centre: The past trend of annual
escalation rate shows gradual increase in the annual growth rate in the third
control period. Thus such increasing trend in escalation rate of expenditure from
year to year is required to be contained at earliest in reasonable way. Thus the
CAGR of 2015-16 to 2016-17 is considered as the annual escalation rate for
projected call center expenditure for the fourth control period because it is the
lowest positive CAGR out of the three periods under consideration. Thus by
using such escalation rate in the methodology as mentioned in sub-paragraph
(d), (i) and (k) of Paragraph 5.5.2.1 the admitted values found for the above
referred heads for the year of 2017 – 2018 are given in Table below:
Rs. in lakh
5.9 Interest on borrowing:
5.9.1 CESC Limited has submitted in specified formats the detailed computations of
interest chargeable to revenue accounts for the fifth control period based on its
existing as well as projected capital borrowings from different sources. The
position of its outstanding borrowings at the beginning of the year, additional
borrowings during the year, repayment schedule for the year, the outstanding
balance at the end of the year and interest charges on capital account as per
Form – C of the tariff application can be summarized as follows:
Rupees in Lakh Sl. No. Borrowing Particulars 2017-18
1 Outstanding Balance at the beginning of the year 316550 2 Add: Drawal of loan on capital account 59242 Sub-Total (1 + 2) 375792
Sl. No Power Station As Proposed by
CESC As admitted by the
Commission 2017-18 2017-18
1. Outsourcing cost (allocated under distribution function) 1059 964
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
61
3 Less: Repayment of existing loan during the year 54693 4 Outstanding balance at the end of the year 321099 5 Gross interest on capital account for the year 34108 6 Less: Interest capitalized during the year 1933 7 Net interest on capital account (5 – 6) 32175
5.9.2 The rates of interest on existing and proposed rupee borrowings from different
financial institutions are projected between 9.75% and 13.05%. CESC Limited
has proposed drawal of loan of Rs. 59242 lakh and claimed interest of Rs. 3866
lakh during 2017 – 2018 at an interest rate of 13.05%, which is much higher in
consideration of present borrower-friendly money market.
5.9.3 CESC Limited has shown a drawal of balance loan of Rs. 40695.00 lakh for 2016
– 2017 in Form-C to Annexure – 1 of the tariff petition and claimed interest of Rs.
5296.00 lakh at an interest rate of 13.05%.
5.9.4 The Commission noted that weighted average rate of interest on borrowed
capital as per Form C to Annexure – 1 of Tariff Regulations, comprising of
existing loan and fresh drawal is around 10.69%. The Commission, accordingly,
decides to allow interest rate of 10.69% to compute allowable interest on fresh
drawal of loan capital. Further, the Commission has withheld Rs. 30000.00 lakh
of capital expenditure in distribution function as detailed in paragraphs 5.19.1 to
5.19.4 below and considered the capital expenditure during 2017 – 2018 as Rs.
39869 lakh (Rs. 69869 lakh – Rs. 30000 lakh). At a debt:equity ratio of 70:30, Rs.
27908 lakh is considered for fresh loan during 2017 – 2018. Interest on drawal of
loan as referred to in paragraph 5.9.2 and 5.9.3 above thus works out at Rs.
5842.00 lakh instead of Rs. 9162.00 lakh @ 13.05% interest claimed by CESC
Limited.
5.9.5 CESC Limited is directed to take necessary steps to swap the existing high cost
borrowings through drawal from the favourable money market at a cheaper rate
of interest. Admitted interest on capital borrowing is thus derived at Rs. 28855.00
lakh.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
62
5.9.6 The amount allowed by the Commission is allocated to generating stations and
distribution system for the year 2017 – 2018 as shown in the table given below
based on the projections made by CESC Limited in regard to the purpose and
utilization of the said loan and considerations given by the Commission in earlier
paragraphs.
5.10 Interest on Temporary Accommodation:
5.10.1 CESC Limited has claimed Rs. 23711 lakh on account of interest on temporary
accommodation for the year 2017 – 2018. CESC Limited has submitted
computation of such interest in Form 1.17(a) and claimed the same amount
without referring to any details of such borrowings.
5.10.2 In terms of regulation 5.6.5.4 of the Tariff Regulations, the Commission may
allow, if considered necessary, interest on temporary financial accommodation
taken by a generating company / licensee from any source to a reasonable
extent due to unrealized arrears from the consumers / beneficiaries.
5.10.3 As per Form – C to Annexure – 1 of the tariff application, it has been observed
that amount of Rs. 23711 lakh has been projected towards interest on short term
loan on revenue accounts for the year 2017 - 2018. CESC Limited has not given
Rupees in Lakh Interest on capital borrowing
Sl. No Power Station As Proposed by CESC As admitted by the Commission
2017 – 2018 2017 – 2018 1. Budge Budge TPS 2933 2933 2. Titagarh TPS 0 0 3. Southern TPS 348 348 Sub-Total 3281 3281
4. Distribution 28894 25574 Total: 32175 28855
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
63
the amount of loans, source of the loan, date of drawal, amount of repayment
during the years, if any, and other details in this respect, as required under Form-
C in order to ascertain the amount of interest allowable. The Commission does
not consider any interest on temporary accommodation at the tariff determination
stage and directs CESC Limited to submit details of drawal in the APR for 2017 –
2018. The Commission will examine necessity of such loan based on tariff gap
during the year and will decide accordingly.
5.11 Foreign Exchange Rate Variations:
5.11.1 CESC Limited has not projected any amount of additional liability for repayment
of foreign loan during the fifth control period in the tariff petition and thus, the
Commission does not consider such liability for the said period.
5.12 Interest on Consumer’s Security Deposits:
5.12.1 CESC Limited claimed Rs. 11722 lakh for 2017 – 2018 on account of interest
payable to the consumers on their security deposits at the rate specified by the
Commission. Actual interest on consumer security deposit for 2015 – 2016 is Rs.
9864 lakh. Based on the CAGR growth of 11.67% for the period 2012 – 2013 to
2015 – 2016, the Commission admits the claim of CESC and allowed Rs.
11722.00 lakh as interest on consumer security deposit.
5.12.2 During APR, CESC Limited is required to submit actual audited data for interest
on consumers’ security deposits and to confirm that the entire amount of interest
payment has been appropriately settled in terms of the Commission’s concerned
Regulations. CESC Limited is, therefore, directed to do the needful accordingly in
this regard. The actual interest paid by CESC Limited for consumer security
deposit will be adjusted in the APR of the concerned year.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
64
5.13 Other Finance Charges:
5.13.1 The amounts of other finance charges projected by the applicant are as follows:
Rupees in Lakh Sl. No.
Particulars 2017 – 2018
1 Net borrowing cost towards front end fees / arrangement fees for loans and bank facilities 509
2 Bank charges for financial services 679 3 Bank charges for cash management services 309 4 Other miscellaneous finance charges 177 Total 1674
5.13.2 The Commission noted that bank charges for cash management services are not
related to loan capital and as such the charges will form part of normal operation
and maintenance. Moreover, claim of other miscellaneous finance charges are
also not admitted by the Commission in absence of details of such charges. The
Commission thus admits Rs. 1188.00 lakh (Rs. 509.00 lakh + Rs. 679.00 lakh) as
other finance charges for 2017 – 2018.
5.13.3 The allocation of the admitted amount as per projection of CESC Limited are
shown in the table given below:
Rupees in Lakh Other finance charges
Sl. No Power Station As Proposed by CESC As admitted by the Commission
2017 – 2018 2017 – 2018 1. Budge Budge TPS 427 303 2. Titagarh TPS 31 22 3. Southern TPS 56 40 Sub-Total 514 365
4. Distribution 1160 823 Total: 1674 1188
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
65
5.14 Interest on Working Capital:
5.14.1 CESC Limited has asked for interest on working capital as under:
5.14.2 The Commission noted that CESC Limited holds a considerable amount of Rs.
167458.00 lakh of consumers’ security deposit as per projection and utilizing as
working capital and accordingly decides not to consider interest on working
capital at present and the same shall be considered during APR of the concerned
year in terms of Tariff Regulations.
5.14.3 The necessity of borrowing working capital, however, cannot be ruled out. If any
such borrowing is done for any of the years, the incidence of interest on that will
be considered for re-imbursement through APR for the concerned year, in terms
of the Tariff Regulations.
5.15 Bad Debts:
5.15.1 The bad debts projected by CESC Limited for the year 2017 – 2018 are Rs.
3991.00 lakh.
5.15.2 In terms of the Tariff Regulations, the Commission may allow amount of bad
debts as actually had been written off in the latest available audited accounts
subject to a ceiling of 0.5% of the annual gross sale value of power at the end of
the current year. The Commission decides not to consider any amount as ‘bad
Rupees in lakh Generating station 2017 – 2018
Budge Budge 1829 Southern 241 Distribution 4676 Total 6746
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
66
debt’ at the tariff determination stage. The recovery of such cost shall be
reviewed in APR for 2017 – 2018 based on audited financial results.
5.16 Depreciation:
5.16.1 CESC Limited has claimed depreciation based on their computations in Form B
to Annexure 1 of Tariff Regulations to the following extent:
Rupees in Lakh Sl. No.
Particulars 2017 – 2018
1 Generation Assets 9610 2 Distribution Assets 27900 3 Metering Assets 2125 4 Other Assets 883 Sub-total 40518
5 Less: Depreciation on assets created by utilizing proceeds from sale of old assets 283
Total 40235
5.16.2 The computations of the above amounts of chargeable depreciation are based
on the additions to the original costs of fixed assets by way of transfer from the
cost of capital works-in-progress and retirement of assets during the relevant
years. However, the Commission has withheld Rs. 30000.00 lakh of capital
expenditure in distribution function as detailed in paragraphs 5.19.1 to 5.19.4
below. Accordingly depreciation of Rs. 1002 lakh, considering average rate of
depreciation at 3.34% derived from data furnished by CESC Limited is withheld.
5.16.3 The chargeable depreciation with such capitalization programme involving
considerable amounts can not be precisely determined. The amount of
chargeable depreciation, in such a case, may vary on account of the variations in
the amounts of year wise planned capitalization as well as in the dates of putting
the assets into commercial operations. The Commission, therefore, stipulates
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
67
that the amounts of depreciation found chargeable as per the audited books of
accounts will be considered for carrying out necessary adjustment in Annual
Performance Review for the concerned year in due course after prudence check
by the Commission. The amounts of depreciation allowed by the Commission
after allocating the same to the generating stations and distribution system based
on fixed asset functionally utilized as proposed by CESC Limited are shown in
the table given below: Rupees in Lakh
Depreciation As proposed by CESC Limited and allowed by the Commission in the tariff order
Year Budge Budge
Generating Station
Titagarh Generating
Station
Southern Generating
Station
New Cossipore Generating
Station
Distribution System
Total
2017-18 9332 683 372 0 28846 39233
5.17 Advance Against Depreciation:
5.17.1 In terms of the Tariff Regulations, advance against depreciation is allowed when
the actual amount of depreciation falls short of the amount of loan repayment in
any financial year. As per the details submitted along with instant tariff revision
application, the total projected loan repayments during the financial year under
the concerned control period is Rs. 54693 lakh for 2017 – 2018. Commission
does not consider the projected loan repayment of Rs. 1017 lakh against the
balance loan of Rs. 40695 lakh for 2016 – 2017. Hence, the amounts of loan
repayment during 2017-2018 has been considered at Rs. 53676 lakh (Rs. 54693
lakh – Rs. 1017 lakh) and allowable advances against depreciation in terms of
the Tariff Regulations work out as under:
Rupees in Lakh Sl. No. Particulars 2017 – 2018
1. Loan repayment 53676 2. Depreciation (vide paragraph 5.14 above) 39233 3. Additional fund requirement (1-2) 14443 4. Maximum ceiling of advance against depreciation 58834 5. Allowable advance against depreciation (lower of 3 & 4) 14443
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
68
5.17.2 The Commission has allowed the amounts of advance against depreciation in
this tariff order and allocates the same to the generating stations and distribution
system based on information furnished by the CESC Limited in its application for
tariff for the fifth control period as shown in the table given below:
Rupees in Lakh Advance against depreciation
As proposed by CESC Limited and allowed by the Commission in the tariff order
Year Budge Budge
Generating Station
Titagarh Generating
Station
Southern Generating
Station
New Cossipore Generating
Station
Distribution System
Total
2017-18 3353 245 134 0 10711 14443
5.18 Write Off of Intangible Assets:
5.18.1 CESC Limited has projected the value of Intangible Assets to be written off for an
amount of Rs. 72 lakh. The Commission views that any written off value should
be based on actual and projection for the same is not admitted at tariff
determination stage. CESC Limited may come up with such proposal in APR for
2017 – 2018 based on actual financial results.
5.19 Return on Equity (ROE):
5.19.1 CESC Limited has claimed return on equity at Rs. 62072.00 lakh for the year
2017 – 2018 and relevant information is provided by CESC Limited in specified
forms. Observations of the Commission on net addition to original cost of fixed
assets during the year 2017 – 2018 are given in paragraph 5.19.2 below and the
detailed computations of the ROE on the basis of such observations are shown
in Annexure 5C.
5.19.2 The Commission observes that the addition to fixed asset in distribution system
during the year 2017 – 2018 as projected by CESC Limited is on higher side.
Every year the Commission had consistently allowed sufficient capital
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
69
expenditure to meet its obligations. This year, the Commission decides to
withhold Rs. 30000.00 lakh in capital expenditure in distribution during the year
2017 – 2018. CESC Limited shall come up with necessary details of capital
expenditure in their APR for the year 2017 – 2018.
5.19.3 The Commission has allocated ROE to the generating stations and to the
distribution system on the basis of the average fixed assets functionally utilized
as evident from the information submitted by the CESC Limited in its tariff
application, after adjusting for the withheld amount.
5.19.4 It is to be clarified that the equity bases admitted for allowing returns as shown in
the referred Annexure are computed for the prospective year and therefore they
need adjustments subsequently on the basis of audited accounts. Such
adjustments will be carried out at the time of APR for the concerned year.
5.20 Income Tax:
5.20.1 The applicant has projected the provision of Rs, 31962 lakh for the year 2017 –
2018 towards taxes payable under the provisions of the Income Tax Act, 1961.
The projections are based on the assumption that the applicant would be paying
Rupees in Lakh Return on equity
Sl. No Power Station
As claimed by CESC Limited for 2017 –
2018
As admitted by the Commission 2017 – 2018
1. Budge Budge TPS 16147 16147 2. Titagarh TPS 1570 1570 3. Southern TPS 1341 1343 4. New Cossipore TPS 0 0 Sub-Total 19058 19060
5. Distribution 43014 42270 Total: 62072 61330
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
70
tax at normal rate applicable to the corporate, net of available credit which is not
readily ascertainable. In terms of the Tariff Regulations, the taxes payable on the
incomes from the core business of the applicant and other applicable taxes under
the provisions of the Income Tax Act are recoverable as pass through from the
consumers. The Commission does not allow any amount towards income tax at
present.
5.20.2 CESC Limited is directed in terms of regulation 5.13 of the Tariff Regulations to
furnish final assessment order of Income Tax Authority for each assessment year
corresponding to relevant financial year or other valid documents along with
Auditor’s certificate in respect of income tax assessed and actual income tax paid
after adjustment of credit of income tax for the relevant financial year while
submitting APR application.
5.21 Performance Incentive:
5.21.1 The petitioner has claimed nothing towards performance incentive during the fifth
control period and thus, the Commission does not consider any incentive for the
said period.
5.22 Reserve for Unforeseen exigencies:
5.22.1 In terms of the Tariff Regulations, CESC Limited has computed and prepared
reserve for unforeseen exigencies @ 0.25% on the opening gross value of fixed
assets and claimed Rs. 3357.00 lakh for 2017 – 2018.
5.22.2 It is evident from the Balance Sheet of CESC Limited as on 31.03.2016 that the
amount of Reserve for Unforeseen exigencies stands at Rs. 19545 lakh on that
date including Rs.1627 lakh appropriated in the previous year towards Reserve
for unforeseen exigencies including interest accrued on such investment.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
71
5.22.3 The Commission decides that for fifth control period no amount will be
considered under the head reserve for unforeseen exigencies in order to have
lesser impact on the tariff increase.
5.22.4 CESC Limited is, however, directed that investment of the amounts so far
created under the head must be done in accordance with the provisions of the
Tariff Regulations. For failure to comply with the provisions of the referred
regulation, double the amount allowed for the purpose will be deducted from the
amount of return on equity as allowed to CESC Limited during APR of any
succeeding years. Income from such investments of Reserve for Unforeseen
Exigencies as was previously directed, shall be reinvested for the same purpose
and shall be shown separately in the application of APR or tariff, as the case may
be, supported by necessary audited data for any year. Moreover, this income
should not be considered under income from non-tariff sources for the
determination of Net Aggregate Revenue Requirement in APR or tariff for any
year.
5.23 Terminal Benefit:
5.23.1 CESC Limited has claimed Rs. 2500 lakh each for the year 2017 – 2018 towards
terminal benefit in respect of New Cossipore generating station. CESC Limited
does not give any details against such claim. The Commission therefore does not
consider such claim. CESC Limited shall come up with their proposal in details
separately to the Commission.
5.24 Corporate Social Responsibility:
5.24.1 The Commission views that cost incurred by the licensee on account of corporate
social responsibility cannot be a pass through and such cost should be
appropriated out of profit of the company and Commission, therefore, does not
admit any amount under corporate social responsibility.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
72
5.25 Service Tax & Entry Tax:
5.25.1 The Commission has already deliberated on this issue in paragraphs 5.6.2.3 and
5.6.2.4 of this chapter.
5.26 Income from other Non-tariff Sources:
5.26.1 CESC Limited has projected incomes from other non-tariff sources as under:
Rupees in lakh
Sl. No. Particulars 2017 – 2018
1 Rental of meters and other apparatus hired out 4932 2 Sale and repair of lamp and other apparatus 229 3 Income from Investments and Bank Balances etc. 2343 4 Surcharge for Late Payments 1291
5 Other General receipts arising from and ancillary or incidental to the business of electricity 1028
6 Total 9823
5.26.2 The proposal of income from other sources of CESC Limited has been admitted
by the Commission with allocation of the income to the generating stations and
distribution system on the basis of the nature of income. Thus the allowed
amounts for income from non-tariff sources are Rs. 9823 lakh for 2017 – 2018.
The incomes from rental of meters and other apparatus hired out, sale and repair
of lamp and other apparatus, service connection fees and surcharge for late
payment have been considered in the distribution system head. Income from
investment and bank balance and other general receipts have been distributed to
generating stations and distribution system in line with the proposal submitted by
CESC Limited in its tariff application. Accordingly, the allocated amounts as
allowed by the Commission are as follows:
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
73
Rupees in Lakh Income form other Non-tariff sources
As allowed by the Commission in the tariff order
Year Income from Non-
tariff Sources Budge Budge
Generating Station
Titagarh Generating
Station
Southern Generating
Station
New Cossipore Generating
Station
Distribution System
Total
2017-18
Income from Investments and General Receipts
915 89 76 0 2291 3371
Other income from distribution system 0 0 0 0 6452 6452
Total 915 89 76 0 8743 9823
5.27 Benefits to be passed on to Consumers:
5.27.1 Sharing of Income from other Auxiliary Services (Advertisement on bill face etc) and other business:
5.27.1.1 CESC Limited has also proposed to pass on 40% of the net income it derives
from bill face advertisements as per the Tariff Regulations. The estimations of
such benefits to consumers, as reproduced hereunder, are agreed to by the
Commission for the year 2017 – 2018. The benefits so allowed are to be reduced
from the expenses of the distribution head to arrive at Net Revenue Requirement
for 2017 – 2018.
Rs in lakh Sl. No. Particulars 2017 – 2018
1 Estimated earnings 216 2 Attributable cost (towards printing) 106 3 Net earnings 110 4 Benefits to consumers (40% of net earnings) 44
5.27.1.2 The earnings from commercial usage of certain assets and sharing of such
earnings @ 40% as projected by CESC Limited are given below. The
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
74
Commission considers the same for adjustment with the expenses of distribution
system before arriving at the net revenue requirement for 2017 – 2018 as under.
Rs in lakh Sl. No. Particulars 2017 – 2018
1 Earnings from commercial usage of assets (user fee) 1210 2 Allowable benefit to consumers @ 40% 484
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 5A
West Bengal Electricity Regulatory Commission 75
Monthly Rate of Inflation in CPI number for Industrial Worker (%) Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb March Average
2011-12 9.41 8.72 8.62 8.43 8.99 10.06 9.39 9.34 6.49 5.32 7.57 8.65 8.42 2012-13 10.22 10.16 10.05 9.84 10.31 9.14 9.60 9.55 11.17 11.62 12.06 11.44 10.43 2013-14 10.24 10.68 11.06 10.85 10.75 10.70 11.06 11.47 9.13 7.24 6.73 6.70 9.72 2014-15 7.08 7.02 6.49 7.23 6.75 6.30 4.98 4.12 5.86 7.17 6.30 6.28 6.30 2015-16 5.79 5.74 6.10 4.37 4.35 5.14 6.32 6.72 6.32 5.91 5.53 5.51 5.65 2016-17 5.85 6.59 6.13 6.46 5.30 4.14 3.35 2.59 2.23 1.86 4.45 Source : Website of Labour Bureau, GOI : Average Value is being Computed
WPI FROM OFFICE OF ECONOMIC ADVISOR , GOI Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
2011-12 152.10 152.40 153.10 154.20 154.90 156.20 157.00 157.40 157.30 158.70 159.30 161.00 2012-13 163.50 163.90 164.70 165.80 167.30 168.80 168.50 168.80 168.80 170.30 170.90 170.10 2013-14 171.30 171.40 173.20 175.50 179.00 180.70 180.70 181.50 179.60 179.00 179.50 180.30 2014-15 180.80 182.00 183.00 184.60 185.70 185.00 183.70 181.20 178.70 177.30 175.60 176.10 2015-16 176.40 178.00 179.10 177.60 176.50 176.50 176.90 177.50 176.80 175.40 174.10 175.30 2016-17 177.80 180.20 182.90 184.20 183.30 183.20 182.90 183.10 183.20 184.60 185.50
Source : Website of Office of the Economic Advisor, GOI :
MONTHLY INFLATION RATE COMPUTED BASED ON WPI FROM OFFICE OF ECONOMIC ADVISOR, GOI (%) Year Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Average
2011-12 9.74 9.56 9.51 9.36 9.78 10.00 9.87 9.46 7.74 7.23 7.56 7.69 8.96 2012-13 7.50 7.55 7.58 7.52 8.01 8.07 7.32 7.24 7.31 7.31 7.28 5.65 7.36 2013-14 4.77 4.58 5.16 5.85 6.99 7.05 7.24 7.52 6.40 5.11 5.03 6.00 5.98 2014-15 5.55 6.18 5.66 5.19 3.74 2.38 1.77 0.00 0.11 -0.39 -2.06 -2.33 2.15 2015-16 -2.65 -2.36 -2.40 -4.05 -4.95 -4.54 -3.81 -1.99 -0.73 -0.90 -0.91 -0.85 -2.51 2016-17 0.34 0.79 1.62 3.55 3.74 3.57 3.39 3.15 3.39 5.25 2.88
Source : Website of Office of the Economic Advisor, GOI :
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 5B
West Bengal Electricity Regulatory Commission 76
TABLE-1 ANNUAL ACTUAL FIGURE OF DIFFERENT BUISNESS PARAMETERS OF CESC DISTRBUTION FUNCTION HAVING IMPACT ON TARIFF
Sl No Particulars Units
Inflat
ionar
y Ba
sis
Sens
itivity
Pa
rame
ter
& de
gree
of
sens
itivity
2012-13 (Actual)
2013-14 (Actual)
2014-15 (Actual)
2015-16 (Actual)
2016-17 (Estimated by CESC)
2016-17 (As per Audited
Accounts)
2016-17 (Estimated
by WBERC)
1 Total line-length on 31st March CKM 19538.00 20480.00 21200 21531.00 22077 22857 2 Total consumers on 31st March number 2702000 2810000 2920000 3037000 3066000 3158500 Increase in line length % 4.821 3.516 1.561 1.268 4.829 Increase in consumer % 4.00 3.91 4.01 0.95 3.017 3 Repair & Maintenance Expenditure Rs Lakh WPI+CPI DLL 17306.00 15246.00 16130.00 16597.00 18714.00 19282 17237.36 4 - Rent Rs Lakh WPI+CPI DLL 677.00 815.00 879.00 1045.00 1139.00 1109 1074.57 5 - Auditors Fees Rs Lakh WPI+CPI DLL 96.00 90.00 118.00 175.00 214.00 154 179.95 6 - Legal Charges Rs Lakh WPI+CPI CSM 613.00 420.00 526.00 560.00 610.00 393 575.85
7
- Others Administrative and General
Expenses Rs Lakh WPI+CPI CSM 10258.00 8545.00 12557.00 12851.00 14293.00 13413.00 13214.68
8 Total Administrative & General
Expenses(4+5+6+7) Rs Lakh 11644.00 9870.00 14080.00 14631.00 16256.00 15069.00 15045.06
9 Total O&M Function Expenses
(3+8) Rs Lakh 28950.00 25116.00 30210.00 31228.00 34970.00 34351.00 32282.42 10 Lease Rental Rs Lakh WPI DLL 1111.00 983.00 933.00 1072.00 1072.00 1158.00 1072.00
11 Service Tax for distribution work &
Entry Tax Rs Lakh WPI+CPI DLL 728.00 945.00 806.00 1036.00 1130.00 954.00 1065.32 12 Rates & Taxes Rs Lakh WPI+CPI DLL 661.00 636.00 659.00 759.00 828.00 279.00 788.28 13 Insurance Rs Lakh WPI+CPI DLL 750.00 777.00 797.00 770.00 806.00 264.00 791.79 14 Cost of outsourcing - Call centre Rs Lakh WPI+CPI DLL 775.00 950.00 981.00 891.00 971.00 1229.00 916.22 15 Total Rs Lakh 32975.00 29407.00 34386.00 35756.00 39777.00 38235.00 36916.03
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
77
TABLE-2 PROJECTED ANNUAL ESCALATION RATE COMPUTATION OF DIFFERENT PARAMETERS DURING FIFTH CONTROL PERIOD (2017 – 2018)
Sl No Particulars Units
Inflat
ionar
y Bas
is
Sens
itivity
Par
amete
r &
degr
ee of
sens
itivity
CAGR (%) between
Aver
age
Inflat
ion R
ate
durin
g the
Con
cern
ed
perio
d $
Whe
ther I
nflati
on ra
te is
appli
cable
Addit
ional
Gro
wth R
ate
abov
e in
flatio
n rate
Ratio
of E
xpen
ses i
ncre
ase
and s
ensit
ivity
para
meter
inc
reas
e
Escalation rate (%) for
2014
-15 t
o 20
15-1
6
2013
-14 t
o 20
15-1
6
2012
-13 t
o 20
15-1
6
2017
-18
2015
-16
2016
-17
1 Total line-length increase % 6.16 4.70 4.73 6.16 6.16 6.16 2 Total consumers increase % 4.00 5.11 4.71 4.00 4.00 4.00
1(b) Inflation rate as per CPI index 4.45 5.59 5.59 2(b) Inflation rate as per hybrid (WPI +CPI) index 3.51 2.83 2.83
3 Repair & Maintenance Expenditure Rs Lakh WPI+CPI DLL 2.90 4.34 -1.38 3.89 No 3.18 -1.52 -1.52 4 - Rent Rs Lakh WPI+CPI DLL 18.89 13.23 15.57 3.89 No 14.56 14.56 14.56 5 - Auditors Fees Rs Lakh WPI+CPI DLL 48.31 39.44 22.16 2.69 Yes 36.75 7.82 52.18 51.50 51.50 6 - Legal Charges Rs Lakh WPI+CPI CSM 6.46 15.47 -2.97 3.51 No 7.11 7.11 7.11
7 - Others Administrative and
General Expenses Rs Lakh WPI+CPI CSM 2.34 22.63 7.80 2.69 Yes 19.94 4.24 20.97 20.29 20.29
8 Total Administrative & General
Expenses(4+5+6+7) Rs Lakh 9 Total O&M Function Expenses (3+8) Rs Lakh 10 Lease Rental Line Rs Lakh WPI DLL 14.90 4.43 -1.18 2.69 No 4.87 4.87 4.87 11 Service Tax for distribution work & Entry Tax Rs Lakh WPI+CPI DLL 28.54 4.70 12.48 3.51 Yes 25.03 6.26 7.09 6.41 6.41 12 Rates & Taxes Rs Lakh WPI+CPI DLL 15.17 9.24 4.72 3.89 No 5.19 5.19 5.19 13 Insurance Rs Lakh WPI+CPI DLL -3.39 -0.45 0.88 3.89 No 0.97 0.97 0.97 14 Cost of outsourcing - Call centre Rs Lakh WPI+CPI DLL -9.17 -3.16 4.76 3.89 No 5.24 5.24 5.24
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
78
TABLE-3 COMPUTATION OF PROJECTED EXPENSES OF CESC DISTRBUTION FUNCTION FOR FIFTH CONTROL PERIOD (2017 – 2018)
Sl No Particulars Units
Projected Expenses for 2017-
18 by CESC
Computed Expenses for 2017-18 by
the Commission
Admitted Expenses
for 2017-18
Projected Expenses
for 2015-16 by CESC
Computed Expenses for 2015-16 by
the Commission
Admitted Expenses for 2015-
16
Projected Expenses
for 2016-17 by CESC
Computed Expenses for 2016-17 by
the Commission
Admitted Expenses
for 2016-17
1 Total line-length on 31st March CKM 2 Total consumers on 31st March number 3 Repair & Maintenance Expenditure Rs Lakh 19740.00 17786 17786 24175.00 17515 17515 26351.00 17248 17248 4 - Rent Rs Lakh 1242.00 1231 1231 877.00 1410 877 956.00 1005 956 5 - Auditors Fees Rs Lakh 209.00 274 209 124.00 317 124 135.00 188 135 6 - Legal Charges Rs Lakh 666.00 617 617 794.00 661 661 865.00 708 708
7 - Others Administrative
and General Expenses Rs Lakh 16258.00 15986 15986 13284.00 19229 13284 14480.00 15979 14480
8 Total Administrative & General
Expenses(4+5+6+7) Rs Lakh 18375.00 18108.00 18043.00 15079.00 21617.00 14946.00 16436.00 17880.00 16279.00 9 Total O&M Function Expenses (3+8) Rs Lakh 38115.00 35894.00 35829.00 39254.00 39132.00 32461.00 42787.00 35128.00 33527.00
10 Lease Rental Line 1072.00 1124 1072 1111.00 1124 1111 1111.00 1165 1111
11 Service Tax for distribution work & Entry
Tax Rs Lakh 1232.00 1141 0 1215.00 0 0 1324.00 0 0 12 Rates & Taxes Rs Lakh 893.00 829 829 842.00 872 842 918.00 886 886 13 Insurance Rs Lakh 1461.00 799 799 971.00 807 807 1059.00 815 815 14 Cost of outsourcing - Call centre Rs Lakh 1059.00 964 964 1004.00 1015 1004 1094.00 1057 1057
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 5C
West Bengal Electricity Regulatory Commission 79
Rs. in lakh
Sl. No. Particulars Year
2017 – 2018 Generation Distribution Total
1 Actual Equity base at the beginning of the year - - 670512
2 Opening balance of admissible equity base at the beginning of the year 122398 250771 373169
3 Additional / withdrawal to / from equity base during the year - - 62864
4 Actual Equity base at the end of the year – computed [(1)+(3)] - - 733376
5 Net addition to the original cost of fixed assets 3797 36072 39869 6 Normative addition to Fixed Assets @ 30% 1139 10822 11961 7 Normative addition to Equity Base [lower of (2) and (5)] 1139 10822 11961 8 Admissible Equity base at the end of the year [(2)+(7)] 123537 261592 385129 9 Average equity base for the year [{(2)+(8)}/2] 122968 256182 379150
10 Rate of return 15.5% 16.5% - 11 Allowable return 19060 42270 61330
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 6
SUMMARISED STATEMENT OF AGGREGATE REVENUE REQUIREMENT FOR THE YEAR 2017 – 2018
& REVENUE RECOVERABLE THROUGH TARIFF FOR THE YEAR 2017 – 2018
West Bengal Electricity Regulatory Commission 80
6.1 Based on the analyses and findings recorded in the foregoing chapters we are
now drawing the statements of Aggregate Revenue Requirements (ARR)
separately for the year 2017 – 2018 under fifth control period. Such summarized
statements are given in Annexure 6A to 6E of this chapter.
6.2 Accordingly, the amount of revenue to be recovered through tariff, capacity
charges and fixed charges for the year 2017-18 work out as under:
Rs. in Lakh
REVENUE RECOVERABLE THROUGH TARIFF, CAPACITY CHARGES AND FIXED CHARGES IN 2017-18
Sl. No.
Particulars
Generation
Distribution Total Budge Budge
TPS
Titagarh TPS
Southern generating
Station
New Cossipore
TPS
1 Net Aggregate Revenue Requirement (ARR) for 2017 – 2018 175397.00 10341.00 38893.00 0.00 457856.00 682487.00
2 Fuel Cost / Power Purchase Cost 123281.00 0.00 28389.00 0.00 245979.00 397417.00
3 Capacity Charges / Fixed Charges (5 = 3 - 4) 52116.00 10341.00 10504.00 0.00 211877.00 285070.00
6.3 The Commission has considered 40 MU sell to WBSEDCL at radial mode. The
purchase price for such purchase by WBSEDCL from CESC Limited is admitted
in the tariff order for WBSEDCL for the year 2017 – 2018 at 625.00 paise per
kWh. On the basis of that rate the revenue to be earned by CESC Limited from
WBSEDCL on account of sale of 40 MU of energy comes to Rs.2500.00 lakh,
which will be deducted from the net ARR of CESC Limited for the year 2017 –
2018 to arrive at the revenue to be earned through sale to own consumers.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
81
6.4 The Commission has also worked out the average tariff for the consumers of
CESC Limited for 2017 – 2018 and the same is shown in the table below:
AVERAGE TARRIFF FOR CONSUMERS OF CESC LIMITED IN 2017-18 Sl. No. Particulars Unit Total
1 Net ARR for the year 2017 – 2018 as shown in table under paragraph 6.2 above.
Rs. Lakh 682487.00
2 Less: Revenue earned from sale to WBSEDCL Rs. Lakh 2500.00 3 Total revenue to be recovered through tariff (3)=(1)-(2) Rs. Lakh 679987.00 4 Energy sale to own consumers MU 9680.00 5 Average tariff for the consumers [(5)=(3)/(4)*10] Paisa/ KWh 702.47
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 6A
West Bengal Electricity Regulatory Commission 82
PROPOSED ALLOWED
1 Fuel 128121.00 123281.002 Coal & Ash Handling related charges 1042.00 949.003 Employee Cost 6248.00 6372.004 Cost of Contracted Manpower in Regular Establishment 3888.00 2916.005 O & M Expenses 10439.00 9840.006 Rates & taxes 438.00 406.007 Insurances 878.00 475.008 Financing Charges 427.00 303.009 Interest on capital expenditure 2933.00 2933.00
10 Interest on temporary accommodation 0.00 0.0011 Interest on Working Capital 1829.00 0.0012 Depreciation 9332.00 9332.0013 Advance Depreciation 3353.00 3353.0014 Water Charges 6.00 5.0015 Reserve for Unforeseen Exigencies 0.00 0.0016 Intangible Assets written off 0.00 0.0017 Tax on Income & profit 3391.00 0.0018 Return on Equity 16147.00 16147.0019 Incentive 0.00 0.0020 Gross Aggregate Revenue Requirement 188472.00 176312.0021 Less : Misc. other income 915.00 915.0023 Net Aggregate Revenue Requirement 187557.00 175397.00
SL. NO. PARTICULARS
2017 - 2018AGGREGATE REVENUE REQUIREMENT FOR BUDGE BUDGE GENERATING STATION (AMOUNTS RUPEES IN LAKH)
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 6B
West Bengal Electricity Regulatory Commission 83
PROPOSED ALLOWEDFuel 0.00 0.00Coal & Ash Handling related charges 0.00 0.00Employee Cost 5804.00 7825.00Cost of Contracted Manpower in Regular Establishment 963.00 0.00O&M Expenses 3883.00 0.00Rates & taxes 27.00 25.00Insurances 110.00 60.00Financing Charges 31.00 22.00Interest on capital expenditure 0.00 0.00Interest on temporary accommodation 0.00 0.00Interest on Working Capital 0.00 0.00Lease rental 0.00 0.00Depreciation 683.00 683.00Advance Depreciation 245.00 245.00Water Charges 0.00 0.00Reserve for Unforeseen Exigencies 0.00 0.00Intangible Assets written off 0.00 0.00Tax on Income & profit 330.00 0.00Return on Equity 1570.00 1570.00Incentive 0.00 0.00Gross Aggregate Revenue Requirement 13646.00 10430.00Less : Misc. other income 89.00 89.00Net Aggregate Revenue Requirement 13557.00 10341.00
PARTICULARS2017 - 2018
AGGREGATE REVENUE REQUIREMENT FOR TITAGARH GENERATING STATION (AMOUNTS RUPEES IN LAKH)
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 6C
West Bengal Electricity Regulatory Commission 84
PROPOSED ALLOWEDFuel 11884.00 28389.00Coal & Ash Handling related charges 224.00 373.00Employee Cost 5496.00 5341.00Cost of contracted manpower in Regular Establishment 301.00 226.00O&M Expenses 2223.00 2097.00Rent for generating station 39.00 39.00Rates & taxes 98.00 90.00Insurances 186.00 101.00Lease Rental 0.00 0.00Financing Charges 56.00 40.00Interest on capital expenditure 348.00 348.00Interest on temporary accommodation 0.00 0.00Interest on Working Capital 241.00 0.00Depreciation 372.00 372.00Advance Depreciation 134.00 134.00Water Charges 48.00 76.00Reserve for Unforeseen Exigencies 0.00 0.00Intangible Assets written off 0.00 0.00Tax on Income & profit 282.00 0.00Return on Equity 1341.00 1343.00Incentive 0.00 0.00Gross Aggregate Revenue Requirement 23273.00 38969.00Less : Misc. other income 76.00 76.00Net Aggregate Revenue Requirement 23197.00 38893.00
PARTICULARS2017 - 2018
AGGREGATE REVENUE REQUIREMENT FOR SOUTHERN GENERATING STATION (AMOUNTS RUPEES IN LAKH)
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 6D
West Bengal Electricity Regulatory Commission 85
PROPOSED ALLOWEDPower Purchase 275513.00 245979.00Employee Cost 72053.00 61756.00 Other Administrative & General Exp 16258.00 15986.00Rent 1242.00 1231.00Legal & professional Charges 666.00 617.00Audit Fees 209.00 209.00R & M including Consumables 19740.00 18896.00Rates & taxes 330.00 308.00Service Tax & Entry Tax 1324.00 0.00Insurances 287.00 163.00Financing Charges 1160.00 823.00Interest on capital expenditure 28894.00 25574.00Interest on temporary accommodation 23711.00 0.00Interest on consumer security deposit 11722.00 11722.00Foreign Exchange Rate Variation 0.00 0.00Bad Debt 3991.00 0.00Interest on Working Capital 4676.00 0.00Lease rental 1072.00 1072.00Depreciation 29848.00 28846.00Advance Depreciation 10726.00 10711.00Reserve for Unforeseen Exigencies 3357.00 0.00Cost of Outsourcing 1059.00 964.00Intangible Assets written off 72.00 0.00Tax on Income & profit 9032.00 0.00Return on Equity 43014.00 42270.00Gross Aggregate Revenue Requirement 559956.00 467127.00Less : Misc. other income 8743.00 8743.00Less :Benefit passed on to consumers and licensees for auxiliary services 44.00 44.00
Less: Earnings from commercial usage of assets 484.00 484.00Net Aggregate Revenue Requirement 550685.00 457856.00
PARTICULARS 2017 - 2018AGGREGATE REVENUE REQUIREMENT FOR DISTRIBUTION (AMOUNTS RUPEES IN LAKH)
Tariff Order of CESC Limited for the year 2017 – 2018
ANNEXURE – 6E
West Bengal Electricity Regulatory Commission 86
Amounts Rs. in Lakh
PROPOSED ALLOWEDFuel 140005.00 151670.00Power Purchase 275513.00 245979.00Coal & Ash Handling related charges 1266.00 1322.00Employee Cost 89601.00 81294.00Cost of Contracted Manpower in Regular Establishment 5152.00 3142.00O&M Expenses 54660.00 48876.00Rent for generation 39.00 39.00Rates & taxes 893.00 829.00Service Tax & Entry Tax 1324.00 0.00Insurances 1461.00 799.00Financing Charges 1674.00 1188.00Interest on capital expenditure 32175.00 28855.00Interest on Temporary Accommodation 23711.00 0.00Interest on consumer security deposit 11722.00 11722.00Foreign Exchange Rate Variation 0.00 0.00Interest on Working Capital 6746.00 0.00Bad Debt 3991.00 0.00Lease rental 1072.00 1072.00Depreciation 40235.00 39233.00Advance Depreciation 14458.00 14443.00Water Charges 54.00 81.00Reserve for Unforeseen Exigencies 3357.00 0.00Intangible Assets written off 72.00 0.00Cost of Outsourcing 1059.00 964.00Tax on Income & profit 13035.00 0.00Return on Equity 62072.00 61330.00Incentive 0.00 0.00Gross Aggregate Revenue Requirement 785347.00 692838.00Less : Misc. other income 9823.00 9823.00Less :Benefit passed on for auxiliary services 44.00 44.00Less: Earnings from commercial usage of assets 484.00 484.00Net Aggregate Revenue Requirement 774996.00 682487.00
AGGREGATE REVENUE REQUIREMNT OF CESC
2017-18ITEM
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER - 7
TARIFF ORDER
West Bengal Electricity Regulatory Commission 87
7.1 In the previous chapter, the Commission has determined for CESC Limited the
revenue recoverable through tariff during 2017 – 2018 and the average tariff for
the consumers of CESC Limited for 2017 – 2018 as well. The Commission now
proceeds to determine the tariff schedule applicable to the consumers of CESC
Limited and also the associated conditions of tariff for 2017 – 2018.
7.2 The Commission observes that there is no amendment in the average tariff of
CESC Limited for the year 2017 – 2018 with respect to the average tariff as
determined in the tariff order dated 28.10.2016 for the year 2016 – 2017 in case
no. TP-56/13-14. Thus, the Commission decides not to amend the tariff
applicable for all classes of consumers of CESC Limited and also the associated
terms and conditions of tariff as approved in the tariff order for 2016 – 2017.
Accordingly, the tariff schedules applicable to the consumers of CESC Limited in
2017 – 2018 will continue as annexed to this order. The associated terms and
conditions of the tariff are given in subsequent paragraphs.
7.3 The tariff schedule as applicable to the consumers of CESC Limited in the year
2017 – 2018 is given at Annexure - 7A1 for LV and MV consumers and at
Annexure - 7A2 for HV and EHV consumers. The tariff schedule fulfils the
objective of attaining average tariff of each class of consumers within 80% to
120% of the average cost of supply (702.47 paise / kWh as per paragraph 6.4 of
this order) except for lifeline consumers. For lifeline consumers the tariff has
been kept at least of about 50% of average cost of supply in line with the
guidelines in paragraph 8.3(i) of National Tariff Policy.
7.4 Details of different tariff schemes of different classes of consumers and various
associated terms and conditions are specified in various regulations and in
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
88
Annexure C1 and Annexure C2 to the Tariff Regulations. Other associated
conditions of the tariff for 2017 – 2018 shall be as follows:
7.5.1 Load Factor Rebate / Surcharge:
7.5.1.1 In order to reduce the overall system T&D loss and to flatten the load curve by
improving the existing system load factor of CESC Limited, the HT industrial, HT
commercial and HT domestic consumers shall receive voltage wise graded load
factor rebate as per the following table:
LOAD FACTOR REBATE (Paise / kWh)
Range of Load Factor (LF) Supply Voltage Below 33 kV 33 kV Above 33 kV
Above 50% Up to 55% 1 2 3 Above 55% Up to 60% 4 5 6 Above 60% Up to 65% 8 10 12 Above 65% Up to 70% 10 14 18 Above 70% Up to 75% 20 22 24 Above 75% Up to 80% 25 30 35 Above 80% Up to 85% 30 35 45 Above 85% Up to 90% 35 45 55 Above 90% Up to 92% 37 50 60 Above 92% Up to 95% 40 55 65 Above 95% 45 60 70
7.5.1.2 The above load factor rebate shall be applicable on total quantum of energy
consumed in the billing period. (For example a 6 kV industrial or commercial or
domestic consumer at 85% load factor shall be eligible for a rebate @ 30 paise /
kWh on the total quantum of energy consumed in the billing period).
7.5.1.3 Load factor surcharge shall continue at the prevailing rate.
7.5.1.4 The load factor rebate and load factor surcharge shall be computed in
accordance with the formula and associated principles given in regulations 3.9.2,
3.9.3 and 3.9.4 of the Tariff Regulations and at the rates as mentioned in
paragraphs 7.5.1.1 and 7.5.1.3 above.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
89
7.5.2 Fixed / Demand Charge:
7.5.2.1 The fixed charge shall be applicable to different categories of consumers as per
rate as shown in Annexure – 7A1 to this tariff order.
7.5.2.2 The demand charge shall be applicable to different categories of consumers as
per rate as shown in Annexure – 7A1 and Annexure – 7A2 to this order on the
basis of recorded demand as specified in regulation 4.3.3 of the Tariff
Regulations.
7.5.2.3 When a new consumer gets connected to the system, the computation of fixed
charge or demand charge in respect of that consumer for that month shall be
made pro-rata for the number of days of supply in that particular month.
7.5.3 Subject to conditions as specified in regulation 4.13 of the Tariff Regulations, for
all consumers minimum charge shall continue at the existing level.
7.5.4 In case of short term supply to Pandals for community religious ceremonies, a
rebate of 30 paise / kWh on energy charge of each unit will be given if the entire
illumination is done with LED.
7.5.5 For all consumers, excluding consumers having pre-paid meters, rebate shall be
given @ 1% of the amount of the bill excluding meter rent, taxes, duties, levies
and arrears (not being the arrears due to revision of tariff) if the payment is made
within the due date.
7.5.6 In addition to the rebate under paragraphs 7.5.4 and 7.5.5 above, if the payment
is made within due date, then an additional rebate of 1% of the amount of the bill
excluding meter rent, taxes, duties, levies and arrears (not being arrears due to
revision of tariff) would be allowed to the consumers who would pay their energy
bills through e-payment facility (through web by using net banking, debit card,
credit card, electronic clearing scheme) as introduced by CESC Limited. The
prepaid consumers purchasing prepaid voucher through e-payment facility will
get 1% rebate in voucher amount. A rebate of Rs. 5.00 will be admissible
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
90
prospectively if any consumer opts for e-bill following regulation 3.1.10 of West
Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations,
2013. These rebates are applicable subject to effect of the provisions under
paragraphs 7.5.4 and 7.5.5 of this order.
7.5.7 Power Factor Rebate / Surcharge:
7.5.7.1 The power factor rebate and surcharge shall continue for all HV and EHV
categories of consumers to whom these are applicable at present. The rate of
rebate and surcharge and the methods of calculation of such rebate and
surcharge are given below:
Power Factor (PF) Range
Power Factor Rebate & Surcharge on Energy Charge in Percentage For Consumers under TOD Tariff
For Consumers under non-TOD Tariff Normal Period (6.00 AM
to 5.00 PM) Peak Period (5.00 PM
to 11.00 PM) Off-peak Period (11.00
PM to 6.00 AM) Rebate in
% Surcharge
in % Rebate
in % Surcharge
in % Rebate
in % Surcharge in
% Rebate
in % Surcharge
in % PF > 0.99 8.00 0.00 9.00 0.00 7.00 0.00 5.00 0.00 PF > 0.98 & PF < 0.99 7.00 0.00 8.00 0.00 6.00 0.00 4.00 0.00 PF > 0.97 & PF < 0.98 5.00 0.00 6.00 0.00 4.00 0.00 3.00 0.00 PF > 0.96 & PF < 0.97 4.00 0.00 5.00 0.00 3.00 0.00 2.50 0.00 PF > 0.95 & PF < 0. 96 3.00 0.00 4.00 0.00 2.00 0.00 2.00 0.00 PF > 0.94 & PF < 0.95 2.25 0.00 3.00 0.00 1.50 0.00 1.50 0.00 PF > 0.93 & PF < 0.94 1.50 0.00 2.00 0.00 1.00 0.00 1.00 0.00 PF > 0.92 & PF < 0.93 0.75 0.00 1.00 0.00 0.50 0.00 0.50 0.00 PF > 0.86 & PF < 0.92 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 PF > 0.85 & PF < 0. 86 0.00 0.75 0.00 1.00 0.00 0.50 0.00 0.50 PF > 0.84 & PF < 0. 85 0.00 1.50 0.00 2.00 0.00 1.00 0.00 1.00 PF > 0.83 & PF < 0.84 0.00 2.25 0.00 3.00 0.00 1.50 0.00 1.50 PF > 0.82 & PF < 0. 83 0.00 3.00 0.00 4.00 0.00 2.00 0.00 2.00 PF > 0.81 & PF < 0.82 0.00 4.00 0.00 5.00 0.00 3.00 0.00 2.50 PF > 0.80 & PF < 0. 81 0.00 5.00 0.00 6.00 0.00 4.00 0.00 3.00 PF < 0.80 0.00 6.00 0.00 7.00 0.00 5.00 0.00 3.50
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
91
7.5.7.2 The rebate and surcharge against different time periods shall be reflected in the
bill separately and shall be treated separately.
7.5.8 For short term supply, emergency supply and for supply of construction power,
there shall be no rebate or surcharge for load factor and power factor.
7.5.9 Delayed payment surcharge shall be applicable as per regulation 4.14 of the
Tariff Regulations.
7.5.10 All existing charges relating to meter rent for HT consumers, meter testing, meter
replacement, disconnection and reconnection etc. shall continue.
7.5.11 A consumer opting for pre-paid meter shall not be required to make any security
deposit for the energy charge.
7.5.12 All statutory levies like electricity duty or any other taxes, duties etc. imposed by
the State Govt. / Central Govt. or any other competent authority shall be extra
and shall not be a part of the tariff determined under this tariff order.
7.5.13 All the rates and conditions of tariff are effective from 1st
7.5.14 In addition to the tariff determined under this tariff order, CESC Limited will be
further entitled to additional sums towards enhanced cost of fuel and power
purchase, if any, as per provisions of the Tariff Regulations based on the tariff of
this order. While computing MVCA, the direction in paragraph 4.2 of the order
dated 10.08.2015 shall be complied with.
April 2017 and onwards.
This rate will continue till further order of the Commission. The rates mentioned in
Annexure 7A1 and 7A2 to this order exclude the Monthly Variable Cost
Adjustment (MVCA), if any, realized / to be realized by CESC Limited.
7.5.15 The MVCA realized by CESC Limited from 1st April, 2017 shall not be considered
for adjustment, if any, as per this tariff order. The MVCA realized by CESC
Limited is subject to truing up during Fuel and Power Purchase Cost Adjustment
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
92
(FPPCA) and Annual Performance Review (APR) for the year as per provision of
Tariff Regulations.
7.5.16. For any pre-paid and TOD tariff scheme, other charges shall be the charges
applicable to consumers under respective category of non-TOD tariff.
7.5.17. An applicant for short term supplies through pre-paid meter shall have to comply
with all necessary formalities for obtaining supply including payment in
accordance with the Regulations made by the Commission. The same will be
subject to the following conditions:
i. Provision of requisite meter security deposit to be kept with the licensee;
ii. Provision of space for installing weather-proof, safe and secure terminal
services apparatus to protect sophisticated meter; and
iii. Availability of prepaid-meter of appropriate capacity
7.5.18. To avail Rate C-2 for street lighting, the supply should be metered and all the
street lights under the same meter shall be illuminated with LED. For mixed type
of street lights under one meter Rate – C shall be applicable.
7.5.19. For a pre-paid consumer who has purchased voucher prior to issue of this order,
the existing tariff will continue till such voucher is exhausted.
7.5.20. Any matter, which has not been explicitly mentioned in this order, shall be guided
by regulations 2.9.8 and 2.9.9 of the Tariff Regulations.
7.6. It is open to the State Government to grant any subsidy to any consumer or any
class of consumers in the tariff determined by the Commission for CESC Limited.
If at all any such subsidy under the provisions of the Act is intimated to CESC
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
93
Limited and to the Commission by the Government of West Bengal with clear
indication of the consumer or class of consumers to be subsidized and the
amount of the subsidy proposed to be given is paid in advance, the tariff of such
consumer and / or the class of consumers shall be deemed to have been
reduced accordingly as may be indicated by the State Government. However,
such direction of the State Government shall not be operative till the payment is
made by the State Government in accordance with the provisions of the Act and
the Regulations made thereunder, and the tariff as fixed by the Commission shall
remain applicable. In accordance with the Tariff Regulations, the State
Government is required to communicate within 15 days from the date of receipt
of a tariff order, whether it shall give any subsidy to any group of consumers etc.
7.7. CESC Limited shall present to the Commission a gist of this order showing
salient features of tariff / tariffs within three working days from the date of receipt
of this order for approval of the Commission and on receipt of the approval shall
publish the approved gist in terms of regulation 2.9.6 of the Tariff Regulations
within four working days from the date of receipt of the approval of the
Commission.
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
94
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
First 25 489Next 35 540Next 40 641Next 50 716Next 50 733Next 100 733Above 300 892First 60 628Next 40 695Next 50 764Next 150 820
300
724796673
23:00 hrs to 06:00 hrs
Prepaid - TOD
28
707 684
06:00 hrs to 17:00 hrs
Not Applicable
Not Applicable
Monthly consumption in KWH
Not Applicable
Not Applicable
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
All Units 722
735
24
0 to 25 378
Rate G (p) Prepaid
Name of the Tariff Scheme
24
5.00
15 15
760
Rate G Normal
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
17.00 hrs to 23.00 hrs23.00 hrs to 06.00 hrs
06.00 hrs to 17.00 hrs
Above
1. Life Line
Consumer (Domestic)
Rate G (LL) Normal
2. Domestic (Urban)
89723:00 hrs to 06:00 hrs
Rate M (i) (TOD)
06:00 hrs to 17:00 hrs
Normal TOD 2417:00 hrs to 23:00 hrs 836 17:00 hrs to 23:00 hrs 809
Not Applicable
Rate M (i) (pTOD)
4. Short-term Supply Rate STLT Prepaid - TOD
3. Commercial (Urban) Rate M (i) Normal
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
95
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
Monthly consumption in KWH
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Specified Institution
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
All Units
Municipal or Non- Municipal
17.00 hrs to 20.00 hrs All Units
23.00 hrs to 06.00 hrs All Units
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
All Units 488
17.00 hrs to 20.00 hrs All Units 537
23.00 hrs to 06.00 hrs All Units 473
Public Bodies 06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
All Units
Municipal or Non- Municipal
17.00 hrs to 20.00 hrs All Units
23.00 hrs to 06.00 hrs All Units
Rate P(p) Prepaid On all Units 617 28 Rate P
(pTOD)
615
658Normal On all Units 693 Prepaid On all Units Rate C1(pTOD)
28
7 Rate C1 Rate C1(p)
5. Rate P Normal On all Units 634
42
28677
572
Prepaid - TOD
654
42719
608
Prepaid - TOD
42
Normal6
Government School,
Government aided School or
Government Sponsored School
P1 On all Units 495 12 P1 (TOD) Normal (TOD) 12 Not Applicable
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
96
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
Monthly consumption in KWH
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
First 100 553 06.00 hrs to 17.00 hrs All Units 619
Next 100 672 17.00 hrs to 23.00 hrs All Units 681
Above 200 817
23.00 hrs to 06.00 hrs
All Units 576
First 300 677 06.00 hrs to 17.00 hrs All Units 672
Next 300 743 17.00 hrs to 23.00 hrs All Units 739
Next 400 778 All Units 625
Above 1000 823
Not Applicable
Prepaid - TOD24
Rate M (iii) (pTOD)
Poultry, Duckery, Horticulture,
Tissue culture, Floriculture,
Herbal – Medicinal – Bio-diesel Plant
Farming, Food Processing Unit
Not Applicable
Rate M (ii) (pTOD) 24
9. Rate M (iii) Normal 24 2423.00 hrs to 06.00 hrs
8.
Cottage Industry / Artisan / Weavers / Small production
oriented establishment not run by electricity as motive power
Rate M (ii) Normal
Prepaid - TOD
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
97
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
Monthly consumption in KWH
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
All Units 638
17.00 hrs to 20.00 hrs All Units 95723.00 hrs to 06.00 hrs All Units 440
First 500 648 06.00 hrs to 17.00 hrs All Units 760
Next 1500 718 17.00 hrs to 23.00 hrs All Units 1140
Next 1500 758
Above 3500 778
12. Street Lighting Rate C Normal On all Units 658 42
524 50
Not Applicable
42Not Applicable
Not Applicable
Not Applicable
23.00 hrs to 06.00 hrs
11. Industries (Urban) Rate K Normal 50 Rate K (TOD)
On all Units 42 Rate J (TOD)
Prepaid - TOD
Normal - TOD
10. Public Water
Works & Sewerage System
Rate J Normal 658
All Units
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
98
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
Monthly consumption in KWH
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
13 Street Lighting with LED Rate C2 Normal 548 42
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
All Units 688
17.00 hrs to 20.00 hrs All Units 757
Not Applicable
23.00 hrs to 06.00 hrs All Units 640
06.00 hrs to 17.00 hrs On all Units 77917.00 hrs to 23.00 hrs On all Units 1169 Not Applicable
23.00 hrs to 06.00 hrs On all Units 538
Not Applicable
Not Applicable
Not Applicable
42
56
Rate L (TOD)42 Normal -
TOD14.
On all Units
Private Educational
Institutions and Hospitals
15. Emergency Supply Rate E2 Prepaid -
TOD
Rate L Normal On all Units 703
Tariff Order of CESC Limited for the year 2017 - 2018 Annexure - 7A1
99
LOW AND MEDIUM VOLTAGE CONSUMERS
Sl No Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Optional Tariff Scheme – I Optional Tariff Scheme – IIEnergy Charge
Energy Charge
P/kWh P/kWh
Monthly consumption in KWH
Energy Charge Monthly consumption
in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
Fixed Charge/ Demand
Charge* in Rs./KVA/MonP/kWh
Consumer category
Name of the Tariff Scheme
Monthly consumption in KWH
Fixed Charge/ Demand
Charge* in Rs./KVA/Mon
Consumer category
Name of the Tariff Scheme
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
On all Units 744
17.00 hrs to 20.00 hrs. On all Units 1116 Not Applicable
23.00 hrs to 06.00 hrs On all Units 513
660
726Not Applicable
614
06.00 hrs to 17.00 hrs & 20.00 hrs to 23.00 hrs
On all Units 720
17.00 hrs to 20.00 hrs On all Units 1080 Not Applicable
23.00 hrs to 06.00 hrs On all Units 497
Not Applicable
Not Applicable
16. Construction Power Supply Rate LTCON Prepaid -
TOD
17.
Bulk Supply at single point to Co-operative Group Housing Society
for providing power to its members or person for
providing power to its employees
in a single premises
Rate LTCOP Normal On all Units
Note :- * Fixed Charge will be applicable for the Consumer having Contract Demand below 50 KVA and Demand Charge will be applicable for the consumer having Contract Demand of 50 KVA and above.
678 42Rate
LTCOP (TOD)
Normal - TOD
06.00 hrs to 17.00 hrs
4217.00 hrs to 23.00 hrs
23.00 hrs to 06.00 hrs
18. 42Common Services
of Industrial Estate
Rate S (TOD)
Prepaid - TOD
42
Tariff Order of CESC Limited for the year 2017 - 2018Annexure - 7A2
100
HIGH & EXTRA HIGH VOLTAGE CONSUMERS
Sl No
Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
P/kWh P/kWhSummer Monsoon Winter Summer Monsoon Winter
All Units 651 641 631
All Units 977 962 947All Units 449 442 435All Units 642 637 632All Units 963 956 948All Units 443 440 436All Units 622 617 612All Units 933 926 918All Units 429 426 422All Units 689 686 683All Units 1034 1029 1025All Units 475 473 471
5. Commercial (33 KV) Rate B1 Normal All Units 649 646652 384
Rate B (TOD)
Normal - TOD
38417.00 hrs-23.00 hrs
23.00 hrs-06.00 hrs
384 Rate A1 (TOD)
Normal - TOD
06.00 hrs-17.00 hrs
3. Industries (33 KV) Rate A1 Normal All Units 629
23.00 hrs-06.00 hrs
384 Rate I (TOD)
Normal - TOD
06.00 hrs-17.00 hrs & 20.00 hrs-23.00 hrs
Normal
623
695698 384
2. Industries (below 33 KV) Rate A Normal
4.
1. Public Utility Rate I
Commercial (below 33 KV) Rate B
06.00 hrs-17.00 hrs
38417.00 hrs-23.00 hrs
23.00 hrs-06.00 hrs
All Units
(Rs./KVA/month)
(Rs./KVA/month)
06.00 hrs-17.00 hrs
17.00 hrs-23.00 hrs 384
38417.00 hrs-20.00 hrs
626
Name of the Tariff Scheme
Name of the Tariff Scheme
Not Applicable
665Normal All Units 668671
23.00 hrs- 06.00 hrs
Rate A (TOD)
Normal - TOD652 649
All Units 701
647 384
Tariff Order of CESC Limited for the year 2017 - 2018Annexure - 7A2
101
HIGH & EXTRA HIGH VOLTAGE CONSUMERS
Sl No
Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
P/kWh P/kWhSummer Monsoon Winter Summer Monsoon Winter
(Rs./KVA/month)
(Rs./KVA/month)
Name of the Tariff Scheme
Name of the Tariff Scheme
All Units 608 598 588
All Units 912 897 882
All Units 420 413 406
8.
Sports Complex &
Auditorium run by Govt./ local
bodies for cultural affairs
Rate O Normal 740 730 720 34
All Units 639 634 629All Units 959 951 944All Units 441 437 434
7.
Public Water Works &
Sewarage, Pumping
Station under local Authority
Rate U
All Units
All Units
Normal - TOD
06.00 hrs-17.00 hrs & 20.00 hrs-23.00 hrs
608
All Units 713
Normal
65906.00 hrs-17.00 hrs
649 384 Normal - TOD
Cold storage or Dairy with Chilling Plant
Rate CP Normal9. Rate CP (TOD)654
384
707 26710
613 Rate U(TOD)
6. Domestic Rate R Normal
38417.00 hrs-20.00 hrs
23.00 hrs-06.00 hrs
All Units 618
Not Applicable
38417.00 hrs-23.00 hrs
23.00 hrs-06.00 hrs
Not Applicable
Tariff Order of CESC Limited for the year 2017 - 2018Annexure - 7A2
102
HIGH & EXTRA HIGH VOLTAGE CONSUMERS
Sl No
Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
P/kWh P/kWhSummer Monsoon Winter Summer Monsoon Winter
(Rs./KVA/month)
(Rs./KVA/month)
Name of the Tariff Scheme
Name of the Tariff Scheme
06.00 hrs-17.00 hrs All Units 748 738 72817.00 hrs-23.00 hrs All Units 1122 1107 109223.00 hrs-06.00 hrs All Units 516 509 502
06.00 hrs-17.00 hrs & 20.00 hrs-23.00 hrs All Units 674 669 664
17.00 hrs-20.00 hrs All Units 1011 1004 99623.00 hrs-06.00 hrs All Units 465 462 458
All Units 658 653 648
All Units 724 718 713
All Units 612 607 603
06.00 hrs-17.00 hrs
3417.00 hrs-23.00 hrs
23.00 hrs-06.00 hrs
683 678 673 34Rate
HTCOP (TOD)
Normal - TOD
384
Normal
Normal TOD
All Units
384
11. Construction Power Supply
Rate HTCon
12.
Co-operative Group
Housing Society for providing
power to its members or person for providing
power to its employees in a
single premises
Rate HTCOP
10. Emergency Supply Rate E1 Normal
TOD
Not Applicable
Not Applicable
Tariff Order of CESC Limited for the year 2017 - 2018Annexure - 7A2
103
HIGH & EXTRA HIGH VOLTAGE CONSUMERS
Sl No
Type of Consumer
Applicable Tariff Scheme Optional Tariff Scheme
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
Consumer category Consumption per month in KWH Energy Charge
Demand Charge
P/kWh P/kWhSummer Monsoon Winter Summer Monsoon Winter
(Rs./KVA/month)
(Rs./KVA/month)
Name of the Tariff Scheme
Name of the Tariff Scheme
06.00 hrs-17.00 hrs & 20.00 hrs-23.00 hrs All Units 674 669 664
17.00 hrs-20.00 hrs All Units 1011 1004 99623.00 hrs-06.00 hrs All Units 465 462 458
14. Traction/ Metro Rail / Calcutta
TramwaysRate T Normal 693 688 683 105
06.00 hrs-17.00 hrs All Units 642 637 63217.00 hrs-23.00 hrs All Units 706 701 69523.00 hrs-06.00 hrs All Units 597 592 588
All Units 654 644 634All Units 719 708 697All Units 608 599 590
710 707 2617 MES Rate R - M Normal All Units 713
16. Private
Educational Institutions
664
Common Services of Industrial
Estate
Rate E
Normal - TOD
38415. Short-term Supply Rate ST Normal
TOD
Rate E (ei) Normal All Units 65406.00 hrs-17.00 hrs
38417.00 hrs-23.00 hrs
23.00 hrs-06.00 hrs
Rate E (eit)
Not Applicable
Not Applicable
644
384
384
Normal TOD13.
Not Applicable
Not Applicable
All Units
Tariff Order of CESC Limited for the year 2017 – 2018
CHAPTER – 8 DIRECTIONS
West Bengal Electricity Regulatory Commission 104
8.1 The Commission has given some directions in different paragraphs in Chapter-5 of
this order while determining the fixed cost of CESC Limited. CESC Limited shall
comply with those directions.
8.2 The Commission also gave some directions in paragraphs 4.2, 4.3, 4.4, 4.5, 4.6,
4.16 and 4.21 of the tariff order for the year 2016 – 2017 which shall also continue
in this order. CESC Limited shall also comply with those directions.
8.3 CESC Limited has submitted compliance report against some of the directions
given in the tariff order for 2016-2017 and made their submission against rest of
the directions given in the said order. In consideration of the above, the
Commission further directs CESC Limited to comply with the following directions.
8.3.1 While submitting APR application for this year and for any subsequent ensuing
years, in the notes of Financial statement of Annual Account’s of 2017-18 or
through Auditor’s Certificate, CESC Limited shall provide the following information
in the manner as described below:
i) All the expenditure or cost element considered under tariff applications are to
be provided separately for distribution function, generation function and sale of
energy function for the regulatory requirement
ii) The penalty, fine and compensation under Electricity Act 2003 shall also be
shown separately for distribution function, generation function and sale of
energy function.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
105
iii) Any fine, penalty or compensation in any other statue other than Electricity Act
2003 shall be mentioned separately for generation function, distribution
function and sale of energy function along with the reference of the statue.
iv) The figure of AT & C loss for the years concerned in line with the computation
methodology as specified in Form 1.8 of the Tariff Regulations is to be
provided
In case of non submission of the above documents/ information the application of
APR will not be admitted.
. Beside that AT&C loss calculated with arrear recovery for the period
prior to the year for which the accounts is prepared shall also be shown
separately.
8.3.2 While submitting APR application of 2017-18 CESC shall submit the certificate
from the statutory auditor of the annual accounts of the said year for the following
parameters:
i) Based on fixed asset register the parameters to be submitted are
a. the distribution line and the transmission line (if any) which is essential part
of distribution system as per section 2(72) of Electricity Act 2003) length in
CKM for each level of Voltage related to the asset of CESC . For the asset
which is not owned by the CESC but maintained by CESC shall be shown
separately.
b. Similarly the number of transformers and total capacity of transformation in
MVA or KVA for each category of transformers for distribution system are to
be provided.
Tariff Order of CESC Limited for the year 2017 – 2018
West Bengal Electricity Regulatory Commission
106
ii) For the year concerned under the APR the actual number of Consumers, the
consumption level in MU and total Connected load in KVA for each category of
consumers on whom the tariff rate has been issued in the tariff order of the
year corresponding to the APR under consideration.
iii) The figure of distribution loss and AT&C for the year concerned under APR as
per form 1.7 and form 1.8 of the Tariff Regulations.
iv) List of expenditure that arises on account of penalty, fine and compensation
due to non-compliance of any statute or statutory order along with the reasons
for each such type of penalty, fine and compensation.
v) Copies of the audited accounts of all the terminal benefit funds for the year for
which APR is under consideration in a complete shape and not by any
selective pages.
vi) A statement showing monthly deposit in different terminal benefit funds for the
year for which APR is under consideration in persuasion with the direction
given in paragraph 11.0 below.
vii) A detailed cost-centre wise breakup showing total expenditure and employee
strength against each level of all categories of employees including the whole
time directors of the board. If any director or employee discharges any
function of other companies also then the allocation of cost among the
companies shall be shown separately and distinctly against each level.
viii)In pursuance to regulation 5.8.1(vi) of Tariff Regulations the licensee/
generating Company shall submit the total demurrage hour and related
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demurrage charges paid against total no. of rakes for each generating station
for the year concerned along with the APR or FPPCA application of every
ensuing year which shall be certified by the auditors.
ix) In the application of APR, CESC shall also enclose their compliance report on
Renewable Purchase Obligation power in pursuance to clause 8 of the West
Bengal Electricity Regulatory Commission (Cogeneration and Generation of
Electricity from Renewable Sources of Energy) Regulations, 2013 or any of its
subsequent amendment or replacement in future.
In case of non submission of the above documents the application of APR will not
be admitted.
8.3.3 While submitting application for APR of 2017-18 by CESC Limited, if such
application shows any net claim for that year after considering the concerned
FPPCA, then in such case CESC Limited shall suggest in specific terms the
ensuing year(s) in which they intend to recover such claim and by what amount.
Licensee shall also show the consequential impact of such recovery in the
expected average cost of supply in those ensuing years after considering the total
revenue recoverable through the tariff. The total revenue recoverable through the
tariff means the summated amount of the Net Aggregate Revenue Requirement
plus all other amount on account of any release of regulatory asset, FPPCA and
APR for any years which is already decided by the Commission in earlier orders.
CESC Limited shall also mention the carrying cost, if necessary, where it is
applicable in terms of the Tariff Regulations and different orders and direction of
the Commission in this respect. This consequential impact on tariff shall also be
provided in the gist of the APR application.
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8.3.4 In order to ensure that in future actuarial valuation of terminal benefit fund can be
kept in control in a better way by avoiding carrying cost of such liability in future the
following is to be adhered.
i) CESC Limited shall ensure that the amount that is statutorily required to be
deposited in a month in different fund on account of terminal benefit, as a
part of employee cost admitted in the tariff order, is to be deposited in
different terminal benefit funds every month as a first charge item.
ii) On the head of terminal benefit fund, if there is shortage in the deposited
amount in the terminal benefit fund admitted in employee cost through this
order, the balance amount of contribution to terminal benefit fund is
required to be deposited as first charge item over and above what had
already been deposited for the year 2017-18, from the effective date of
recovery of the recoverable amount against this order from the very first
day. So, it is directed that the balance amount of contribution as discussed
above to terminal benefit fund for the year 2017-18, i.e., the difference
between the amount of contribution to terminal benefit funds as allowed in
this order as a part of employee cost and that has already been deposited
in the fund for the year 2017-18, is to be deposited in the respective
different terminal benefit funds. Such balance amount is to be deposited in
different terminal benefit funds in 12 monthly equal installments from the
date on which the recovery through tariff against this order will start.
iii) While submitting application for APR of 2017-18, CESC Ltd shall show
through audited accounts of different terminal benefit funds that the
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contribution to the different terminal benefit funds during the concerned
year as a part of employee cost is deposited in the terminal benefit funds.
In case of non-deposit of amount admitted for terminal benefit fund as provided in
(i) to (iii) above in the respective fund as directed above, Commission may withhold
or deduct the same amount equivalent to amount not deposited.
8.4 In case of expenditure at a level higher than the admitted amount under any
uncontrollable factor in this tariff order on account of fixed charges, while submitting
APR application of any ensuring year CESC Ltd. has to justify in detail such higher
expenditure with supporting documents and evidence on the basis of which the
Commission will take its decision during truing up exercise and it may be noted that
without sufficient justification, the excess expenditure may not be admitted in the
APR fully or partly. Similarly for controllable factors, where applicable, for the same
reasons, supporting documents and evidence are to be submitted to justify their
claim. While truing up any uncontrollable factor on account of fixed charges, the
actual business volume parameter (distribution line length and consumer strength)
and actual inflation rate to which such uncontrollable item is sensitive will be
considered in the same manner and principle as determined under this tariff order
subject to the limitation as per the Tariff Regulations. However, where applicable as
per this tariff order the ratio of expenses increase in percentage on any item and
the sensitivity parameter increase will remain the same as that of this tariff order.
In case of non submission of the above information the application of APR will not
be admitted.
8.5 CESC Ltd. shall conduct a study that whether additional capital investment or O&M
expenditure in the existing generating station of CESC Ltd. will reduce its
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requirement in purchasing power from other sources resulting into overall cheaper
retail tariff for the consumers. A report on this aspect may be submitted to the
Commission within 31.08.2018 with detailed cost benefit analysis with a prayer for
investment approval or approval for additional O&M expenditure where necessary
as per the regulations. If required, where immediate benefit is expected interim
report may also be submitted.
8.6 Regarding purchase of power from different sources the following steps should be
undertaken by CESC Limited in order to control retail tariff of the consumers of
CESC Limited.
i) CESC Limited is to consider for arranging of purchase of power from
different source(s) (including from exchanges) other than the existing
sources having supply pattern and cost involvement/economics more
favourable for consumers of CESC Limited.
ii) CESC Limited shall obtain weekly quota from exchange and accordingly
plan for their own generation vis-a-vis purchase from exchanges to get the
optimum cost.
iii) CESC Limited shall reduce its dependency on costlier thermal sources, in
order to contain the rise in retail price of the consumers in future in a better
way.
iv) Besides, in case of exigency, CESC Limited shall purchase power from
WBSEDCL for the exigency period only at single part tariff at the rate of
757.30 paise / kWh plus MVCA, as applicable..
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8.7 The Commission is statutorily duty bound to promote generation of electricity from
following sources of energy. This direction has been issued for the sake of
transparency and to protect the interest of all the stakeholders in large.
i) Co-generation of electricity from renewable sources.
ii) Co-generation of electricity from fossil fuel sources.
iii) Co-generation of electricity from hybrid sources of fossil fuel / conventional
sources and renewable sources.
iv) Electricity generation from renewable sources.
In order to promote above mentioned type of generation of electricity by applying
regulations 8.3 and 8.4 of the Tariff Regulations and regulations 19.1 and 19.2 of
the West Bengal Electricity Regulatory Commission (Cogeneration and
Generation of Electricity from Renewable Sources of Energy) Regulations, 2013,
the Commission decides that from the APR of the year 2016 – 2017 a deduction
of 5% from Return on Equity will be done if CESC Limited fails to comply with the
Renewable Purchase Obligation as per West Bengal Electricity Regulatory
Commission (Cogeneration and Generation of Electricity from Renewable
Sources of Energy) Regulations, 2013 or any of its subsequent amendment. In
this context, the Commission also directs that CESC Limited shall advertise on
important national media inviting the interested parties of supplying renewable
and cogeneration electricity on every fourth months for next two years in
pursuance to the regulation 3.5 of the said Regulations.
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8.8 CESC Limited is directed to continue with the initiatives taken for energy
conservation to flatten the load curve in the following ways:
i) by retrofitting conventional light with LED lamp, energy efficiency
appliances like fan, A/C, etc.; and
ii) by arranging load management awareness programme for the consumers.
CESC Limited shall also take initiative in development of roof top solar PV and
other renewable sources of energy.
8.9 CESC Limited is directed to conduct energy audit against all 33 KV feeders, 11 KV
feeders and 6 KV feeders and submit the report within three (3) months from the
date of this order.
8.10 CESC Limited is directed to prioritize the areas having high commercial loss,
actions contemplated to be taken for reduction of losses, improvement of billing and
collection efficiency (installation of smart meters, pre-paid meters and pole mounted
meters, etc.) and spot collection of payment within 6 (six) months from the date of
this order.
8.11 CESC Limited had been directed to submit roadmap to achieve reduction of cost of
distribution nearer Re. 1.00 per unit and reduction of technical losses to certain
percentages for different class of areas. CESC Limited in their compliance report
submitted from time to time has put their submission stating about various initiatives
undertaken / plan to undertake by them though no specific roadmap has been
indicated. While appreciating the steps being undertaken by CESC Limited, it is
directed to submit their plan to complete those activities with a view to comply the
direction within 3 (three) months from the date of this order.
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8.12 CESC Limited shall further submit consumption and AT&C losses for each voltage
level as below.
8.13 CESC Limited has taken up a pilot project on installation of smart meter as per
direction of the Commission. CESC Limited is now directed to submit a status
report with benefits to be achieved with the implementation of the project to the
Commission within 3 (three) months from the date of this order.
8.14 Any application for Power Purchase Agreement (PPA), except for short term PPA
meaning PPA for a period not exceeding one year, submitted by any licensee to the
Commission for approval of the PPA shall go through the process of inviting
suggestions and objections from all stakeholders through at least three widely
circulated newspaper publication for consideration of the Commission of all such
suggestions and objections as a process of the approval procedure and subsequent
to such approval only, the PPA can be executed by the licensee and the seller of
the power. While publishing the gist the licensee shall adhere to the order of the
Commission dated 31.05.2017 in Case No SM-16/17-18. For this purpose, while
submitting the application for approval of the said PPA the licensee shall also give a
draft gist for newspaper publication for approval of the Commission. On getting
Voltage Level
Input energy to the voltage
level
Sale to consumer/ licensee
Supply to lower voltage
level
AT&C Loss
33 kV
11 kV
L&MV
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approved gist from the Commission the gist shall be published in the newspapers
within 5 working days. Such gist shall also be posted in the website along with the
application and PPA from the date of gist publication to at least the last date of
submission of suggestions and objections as will be mentioned in the gist. The gist
shall cover the name of seller of the power, type of specific source (such as coal,
gas, hydro, solar, etc.), major important parameters that are required under the
Tariff Regulations for such purchase and the important points of the purpose of
such procurement. The application submitted shall have the above points of the gist
along with detailed justification of such proposed procurement along with all the
information and parameters that are required under the Tariff Regulations or
Regulations of the Commission related to renewable and cogeneration sources of
energy. The application shall also clearly spell that how the interest of the consumer
as well as of the licensee has been safeguarded in the PPA. The application
without such gist and the points as mentioned shall not be admitted. This process is
done in order to meet the end of justice after keeping consistency with the
Electricity Act, 2003.
CESC Limited shall adhere to the above direction of the Commission.
8.15 CESC Limited shall conduct safety audit for its establishments including generating
stations and submit the report along with recommendations of auditor and
implementation plan with the APR application for the year 2017-18.
8.16 While submitting application of APR for the year 2017 – 2018, CESC Limited shall
have to submit the followings through affidavit:
a) That no expenditure has been claimed by CESC Limited through the APR
petition on employee or infrastructure or any other support or O&M activity
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pertaining to any other business of CESC Limited not in relation to their
licensed business.
b) The list of cases related to Tariff, Annual Performance Review (APR) and Fuel
and Power Purchase Cost Adjustment (FPPCA) filed or applied for filing in
Court of Law but the notices have not yet been served to the Commission.
c) A statement showing the utilization of the cash security deposit held by CESC
Limited and income there from duly audited by the statutory auditors.
8.17 CESC Limited shall submit along with their APR petition for the year 2017 – 2018 a
list indicating details of all contracts above Rs. 1 Crore on capital expenditure which
were awarded within last five years from the date of this order and where the
contract values were exceeded by more than 10% of the estimate. The reason for
such deviation shall be indicated for every such case.
8.18 CESC Limited is directed that
a) all kind of short term power purchase have to be executed through the
process of reverse bidding in the national portal, as far as possible.
b) While purchasing renewable power the process of reverse e-bidding in
appropriate model in line with SECI shall be followed.
8.19 CESC Limited has to submit a statement indicating sharing of various assets,
funds, manpower, buildings by all the companies under the umbrella of CESC
Limited.
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8.20 CESC Limited shall submit the copies of all the PPAs for purchase of power from
different sources.
8.21 While tracking actual expenditures for the past years for the components of
Depreciation, Interest, ROE, Employees Expenses, O&M Expenses while
assessing estimation for the year 2016-17 and projection for the year 2017-18
towards determination of ARR for the year 2017-18 it is observed that CESC Ltd
has invested in various subsidiaries through tariff determined by the Commission.
As per section 51 of Electricity Act, 2003 “ A distribution licensee may, with prior
intimation to the Appropriate Commission, engage in any other business for
optimum utilization of its assets. Provided that a proportion of the revenues derived
from such business shall as may be specified by the concerned State Commission ,
be utilized for reducing its charges for wheeling.
Provided further that the distribution licensee shall maintain separate accounts for
each such business undertaking to ensure that distribution business neither
subsidizes in any way such business undertaking nor encumbers its distribution
assets in any way to support such business.“
Hence It is essential to assess the tariff incidence/impact of such investments made
out of revenue earned through tariff determined by the Commission.
This also leads to the issue of use of such Assets as created by CESC Ltd for the
business of such Subsidiary Companies of CESC Ltd and for which annual
expenditure has been serviced through different elements of tariff as determined by
the Commission.
8.22 Accordingly CESC Ltd is being directed to furnish necessary information in the
prescribed format for the last five years (2013-14,2014-15,2015-16,2016-17, 2017-
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18) as annexed with this Tariff Order as ‘Appendix – A’ within one month from the
receipt of such order. CESC Ltd shall also henceforth continue to furnish such
information in the respective APR petitions for the subsequent years or if so asked
for by the Commission as and when required. Such information shall also be
furnished while submitting ARR for determination of tariff every year
8.23 CESC is further directed to submit the following sets of information, in absence of
which the Commission is seriously constrained to deal with the APR petitions for
the year 2013-14 onwards filed by CESC. In this connection, it is pertinent to
mention that CESC was asked to furnish these documents on several occasions,
but complete details are yet to be made available by them to this Commission. The
particulars required to be furnished are given below:
A) For arriving at the price of washed coal:
i) Input cost of raw coal.
ii) Yield % of raw to washed coal with relevant documents.
iii) Washing charge based on Capital invested in washery and relevant
supporting documents.
iv) Other charges relevant for pricing of the washed coal upto the end
consumption point i.e. CESC Budge Budge plant.
v) Quality of washed coal in terms of GCV, ash content (%) and total moisture.
B) Copy of Power Purchase Agreement between Crescent Power and other
generator/traders from whom CESC has been procuring power for their licensed
areas.
C) Balance Sheet, Profit & Loss account with necessary schedules for the areas
pertaining to mining & washery for last 5 years (2012-13) onwards.
Tariff Order of CESC Limited for the year 2017 – 2018
APPENDIX – A
West Bengal Electricity Regulatory Commission 119
USE OF ASSETS OF CESC LTD BY CESC LTD FOR CONSUMERS OF ELECTRICITY AND FOR OTHERS ALONGWITH USE OF ASSETS OF CESC LTD BY ITS SUBSIDIARIES- YEAR-1
Sl No
Item
CESC Ltd Subsidiary 1
Subsidiary 2
Subsidiary 3
Subsidiary 4
Subsidiary 5
Subsidiary 6
Subsidiary 7
Subsidiary 8
Subsidiary 9
Other Subsidiaries
Remarks
Percentage of Use of Assets for the Company Distribution
Function Generation Function
Others
I Fixed Assets A Tangible Assets
1 Land
i Freehold
ii Leasehold
2 Buldings & Structures
3 Plant & Equipment
4 Distribution System
5 Metering Assets
6 River Tunnel
7 Furnitur & Fixtures
8 Office Equipment
9 Vehicles
(Nos to be specified)
10 Railway Sidings
B Intangible Assets
1 Brands/Trademarks
2 Computer Software
3 Mining Rights
II Manpower
(Nos to be specified) III Investment (Return % to be specified)
IV Loans & Advances
(Others To be specified)
V Inventories
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West Bengal Electricity Regulatory Commission
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Note All Assets are to be recorded based on their entity separately
Item wise details are to be furnished under the heads of respective assets as listed above by adding relevant rows
If any Asset Class is not mentioned in the table the same may be added based on the Balance Sheet/ Asset Register
Columns may be added for Subsidiaries
Such Statement is to be furnished for the years as mentioned under directives in the Tariff Order
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