CHAPTER 6
CRITICAL EXAMINATION TARIFF PROPOSAL

• Regulatory Assets 
• Demand and Load Forecast
• Agricultural Load Factor
• Other categories of Consumers
• Aggregate sale projections for 2002-03
• T&D losses
• Total Energy Requirement
• Thermal Generation
• Hydel Generation
• Total Generation  (Owned By The Board)
• Cost of Generation
• Power Purchases and cost thereof
• Employees Cost
• General and Administration Charges
• Repairs and Maintenance
• Miscellaneous Receipts and Charges

6.1         Regulatory Assets

The Petitioner has requested for creation of regulatory asset as mentioned earlier in the Chapter on Board’s Proposal. During the technical sessions and subsequent discussions, the Commission had asked the Petitioner to submit a time frame within which it would be able to make a turnaround. As long as the Petitioner is not able to make a turnaround, creation of regulatory assets and its subsequent recovery would further burden the consumers. Another aspect, which deserves attention while addressing the issue of creation of regulatory assets is the level of accuracy in determining the losses incurred by the Petitioner. Currently when there is no certainty about the correctness of the losses as projected by the Petitioner, a regular feedback to the Commission about the same, an action plan to reduce these losses and a diligent implementation of the same, determination of regulatory assets would be only a guesswork and an unnecessary burden on the consumers. Hence, for the time being, creation of regulatory assets is not being allowed. The Petitioner should come up with a turnaround strategy to demonstrate as to when it would be able to achieve the break-even point in its cost of operation and convince the Commission that the operations of the utility are going to be efficient and matching with the expectations of its consumers. The petitioner must stake suitable steps in this direction and only then present the details at the time of filing the tariff petition for the year 2003-04. The request for regulatory asset will be examined then, if full and detailed justification is given for each item of unrealized revenue that is proposed for inclusion in Regulatory Asset.

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6.2   Demand and Load Forecast 

6.2.1    The Commission, in the last tariff order had observed that ‘in the absence of Board’s audited accounts and necessary data in this regard, the passing of tariff order is like shooting an arrow in the dark’. The Commission feels that a similar situation exists before the Commission in this year too.
 

6.2.2    The Petitioner has generally adopted a 5 year Compound Annual Growth Rate (CAGR), consumer category-wise, to project number of consumers, connected load and energy sales for the year 2002-03. In certain categories, where the Petitioner felt that the 5 year CAGR is not likely to be achieved, it has modified the growth rate for projecting data. Accordingly the Petitioner projects to sell 15,062 million units of electricity to different categories of consumers in the year 2002-03. 

6.3    Agricultural Load Factor 

6.3.1    The Commission had asked the Board to conduct a survey for assessing pattern of energy consumption and determination of load factor for agriculture pumps. The MPSEB, in their proposal for determination of tariff for the year 2002-2003 submitted details of energy consumption for 1275 pumps, together with additional details of 291 pumps installed in Narmada Basin, for determination of energy consumption and thereby has projected the energy requirement for the year 2002-2003 for agriculture pumps. 

6.3.2        The pattern of survey for majority of pumps is summarized below: 

The above constitutes over 90% of the total pumps covered in the sample study. 

The pattern of survey in respect of majority of 291 pumps installed in Narmada Basin, where good water potential is available through out the year is summarized below:

The determination of per hp per month consumption for the year 2002-2003 appearing at pages 235 to 250 and pages 47 to 49 of the Petition by the Board on the basis of which the determination of load factor for agriculture pumps has been done, is not the representative figure because duration of consumption is limited from 1 to 3 months only. The details furnished regarding consumption in respect of 137 pumps (metered pumps) for complete one year has also not been considered any where for determination of Tariff as mentioned over concluding pages by MPSEB. 

The consultants to the Commission studied the energy consumption for 167 pumps spread over 7 regions of MPSEB for a period of one year. Of these certain pumps were not covered by MPSEB’s study which are summarized below: 

The consumption of energy in respect of these 167 consumers under study with can be considered as representative of agriculture consumption.

The check meters are normally installed at locations of fair availability of water. The assessment of consumption for agricultural pumps on the basis of check meter reading is slightly on higher side. The consideration of LF of 11.5% for agriculture pumps for the year 2001-02 is thus fairly reasonable.

During field visits very less availability of water potential was observed particularly in Ujjain and Indore Regions. The consumption of power during 2002-2003 shall not therefore remain different to what was observed during 2001-2002. During the course of public hearings, consumers complained about shortage of power available to agricultural consumers. Taking these into consideration and availability of power projected for 2002-03, the Commission allows the agricultural consumption projected at 4772.72 million units by the Board.

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6.4    Other categories of Consumers

The availability of power has been discussed at clause 4.7. Keeping in view availability of power and T&D losses, discussed at clause 4.6, the Board has 27854.46 million units available for sale, which is more than the projected sale of energy. The Commission has examined the increased availability and the sale mix projected by the Board. If the sourcing of energy is restricted to the sales projected by the Board, it would result into surrendering the allocated share of energy from Central Sector Stations. This when seen in the light of shortage of power in the State, does not appear to be justified. The Board should procure energy to the extent projected by them and undertake additional sale in the State. For the purpose of allocation of expected revenue from various categories of consumers, the Commission has proportionately increased the projected sale to subsidized categories in the LT segment.

6.5           Aggregate sale projections for 2002-03

Accordingly the projected sale to different class of consumers is summarized below:

                                                               Million units

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6.6    T&D losses

6.6.1        The Board has indicated that during the year 2002-03 it would be able to reduce T&D losses by 5% from 48.77% during 2001-02. During the discussions held with the State Govt. on 12 November 2002, Chairman, MPSEB mentioned that presently the T&D losses of the Board are estimated to be 43%. Secretary, MPSEB clarified that these losses are excluding the losses in RE co-operative societies network.

6.6.2    The T&D loss computed for the year 2001-02 based on 11.5% agricultural load factor comes out to 49.35% as against 48.77% mentioned by the Board in the petition. The target for reduction of annual T&D loss by the end of March 2003 is fixed at 42%. However, for calculating Annual Revenue Requirement for 2002-03, the average T&D loss has been taken as 43.77%. The Board shall report the actual T&D losses to the Commission on monthly basis. 

6.7    Total Energy Requirement 

6.7.1    Thus on the basis of the sale to different category of Consumers and T&D losses taken at 43.77%, the total energy required by the board for 2002-03 would be:  

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6.8   Sourcing of Energy Requirement 

6.8.1    Energy Generation  

6.8.1.1         Thermal

In order to improve the performance during 2002-2003 and in the following years, the Board shall be required to undertake serious efforts. It would need to take remedial actions in respect of the deficiencies noted earlier so as to cut down on the partial loading of the units and reduction in their forced outages resulting ultimately in the overall improvement of various parameters. Accordingly, it is directed that:

(i)     The Board shall adhere to the scheduled annual overhauling / maintenance programmes of the various units and ensure its implementation. Capital overhauling of the units shall also be carried out periodically in accordance with the norms stipulated by the manufacturers.

(ii)     Board shall make all efforts in taking up the refurbishment/ renovation / modernization work of the various units so as to improve upon their working life and performance.

(iii)  Board shall make adequate funds available so as to meet the regular maintenance needs of the generating units.

(iv)  In order to keep the operating parameters in check and also to take care of due and proper maintenance of various generating units and their auxiliaries, it would be prudent to impart training and refresher courses to the concerned employees from time to time on the operation and maintenance of various units.

(v)   Board shall take up the matter with the Government of India and Coal India Ltd. for supply of adequate quantity of coal to its various thermal power stations. Matters regarding quality of coal wherever it is not upto the desired value shall also be taken up with the Coal India for improvement. Entering into Fuel Supply Agreement with coal companies will be a right step in this direction.

(vi)  Further, Energy Audit of the power stations is bound to improve upon the performance parameters. Therefore, a time bound programme shall be taken up by the Board in this direction.

(vii) The Board should also evolve an appropriate incentive scheme to motivate the employees for achieving highest possible generation. Similarly punitive measures may also be envisaged in the event the actual performance is lower than the desired minimum.

(viii)  The Board is directed to file a report of action taken on the above points every six months by 30th  April and 30th October every year. 

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6.8.1.2  Plant Utilisation Factor (PUF) 

The Commission has reworked the targets for achieving PUF after taking into consideration the following:

i)                    The annual maintenance programme of the units. |
ii)                   Considering partial loss of  5%, and a loss in Generation to the tune of 10% owing to forced outages of the unit.
iii)                 Considering the effect of rains and wet coal during the rainy season of four months.
iv)                 Considering the generation at a load factor of  75% of availability round the year, as indicated by MPSEB in its petition. 
v)                  Considering the age and physical condition of the old units 
vi)                 Taking into consideration that in absence of renovation and modernization work for  2x120 MW units  at Amarkantak TPS, these units cannot generate beyond the unit capacity of  90 MW each. 
vii)               That the generating  units especially the old ones do not have adequate spares  

6.8.1.3       Amarkantak Thermal Power Station

Looking into all these circumstances and limitations, Commission has fixed a generation target of 202 MUs (46.12%) for Amarkantak  power house I and  1147 MUs (54.56%)  for Amarkantak  PH- II. This makes a target of 1349 million units of generation with PUF of 53.11 % for the whole Amarkantak    complex for the year 2002-2003. 

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6.8.1.4     Satpura Thermal Power Station

In addition to the scheduled overhauling of various units at STPS, Unit no. 2 (62.5 MW of power station no. 1) has been earmarked for capital overhaul during 2002-03. Considering this and looking to the circumstances and limitations explained earlier, the proposal of MPSEB for generation of 75 Million Units at a PUF   of  74.9% for Satpura complex is reasonable and is accepted. 

6.8.1.5     Sanjay Gandhi Thermal Power Station Brisinghpur

Unit no. 1 and 2 (2x120 MW) were commissioned during the year 1993-94 and are 8-9 years old. Units 3 and 4 (2x210 mw) were commissioned during 1999 and are only 2-3 years old. Taking into consideration this fact and as explained above, the projection of MPSEB for a generation of 5200 million units for the complex with a PUF of 70.70% needs upward revision. The Commission has therefore determined a generation target of 2633 million unit (PUF of 71.67%) for Phase I and a generation of 2700 MUs.(PUF of 73.4%) for Phase II with overall generation of 5333 MUs. with PUF of 72.47% for the complex as a whole for the current year of 2002-2003. 

Accordingly the aggregate thermal generation would be 14,182 million units at an overall PUF of 71.25% (M.P. Share: 13,382 million units).  Power station wise PUF proposed by the Board and now being fixed by the Commission for the year 2002-2003 is tabulated as given below:-