BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION BHOPAL

Transcription

1 Determination of ARR and Retail supply Tariff for MPAKVN for the FY BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION BHOPAL CASE NO: Filing of the Petition for ARR and Tariff determination for the FY under tariff principles laid down in the Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Supply and Wheeling of Electricity and Methods and Principles for Fixation of Charges) Regulations, 2015 (RG-35(II) Of 2015) along with other guidelines and directions issued by the MPERC from time to time AND under Part VII (Section 61 to Section 64) of the Electricity Act, 2003 read with the relevant Guidelines. Filed by:- MADHYA PRADESH AUDYOGIK KENDRA VIKAS NIGAM (INDORE) LTD 3/54, Press Complex, Free Press House, Indore (Madhya Pradesh)

2 BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION BHOPAL Filing No: Case No: IN THE MATTER OF Filing of the Petition for ARR and Tariff determination for FY under tariff principles laid down in the Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Supply and Wheeling of Electricity and Methods and Principles for Fixation of Charges) Regulations, 2015 (RG-35(II) Of 2015) along with other guidelines and directions issued by the MPERC from time to time AND under Part VII (Section 61 to Section 64) of the Electricity Act, 2003 read with the relevant Guidelines. AND IN THE MATTER OF Madhya Pradesh Audhogik Vikas Nigam (Indore) Ltd. 3/54, Press Complex, Free Press House, Indore (M.P.) PETITIONER THE PETITIONER ABOVE NAMED RESPECTFULLY SUBMITS Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 2

3 TABLE OF CONTENTS 1. Executive Summary Preamble ARR and Tariff determination for FY Introduction Introduction Compliance of the Directives of the Hon ble Commission Submission to the Hon ble Commission ARR for FY & FY and Tariff Determination for FY Preamble Projection of energy requirement for FY & Distribution Losses Energy Requirement and Energy Balance Power Purchase Power Purchase Cost Transmission Charges SLDC Charges Capitalisation Funding of Capitalization Operation & Maintenance Expenses Depreciation Interest & Finance Charges Interest on Working Capital Lease Rent Return on Equity and tax on income Provision for Doubtful Debts Other Income Aggregate Revenue Requirement for FY and FY Revenue from existing tariff for FY and FY Revenue Gap/ (surplus) Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 3

4 4. Tariff Proposal for FY Revenue Gap for FY Tariff Proposal Proposed changes in the tariff structure (LT and HT Category): Proposed tariff schedule for FY Revenue from sale of power for FY at proposed tariffs Prayer Annexure 1: Tariff Schedule for FY Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 4

5 LIST OF TABLES Table 1 : Projection of Sales, No. of Consumers and Connected Load... 8 Table 2 : Projection of Distribution Loss (%) for the FY & Table 3 : Energy Balance for FY and FY Table 4 : Projected Transmission charges (in Rs Cr) for FY and FY Table 5 : Projected SLDC charges (in Rs Cr) for FY and FY Table 6 : Projected power purchase expenses for FY and FY Table 7 : Funding Plan of Capitalization (in Rs Cr) for FY 18 and FY Table 8 : O&M expenses (in Rs Cr) for FY and FY Table 9 : Net Depreciation (in Rs Cr) for the FY and FY Table 10 : Interest & Finance Charges (in Rs Cr) for FY & Table 11 : Interest on Working Capital (in Rs Cr) for FY & Table 12 : Lease Rent (in Rs Cr) for FY & Table 13 : Return on Equity (in Rs Cr) for FY & Table 14 : Doubtful Debt in Rs Cr) for FY & Table 15 : Other Income (in Rs Cr) for FY & Table 16 : Aggregate Revenue Requirement (in Rs Cr) for FY and FY Table 17: Total Revenue Gap/ (Surplus) (in Rs Cr) Table 18 : Revenue at proposed tariff (in Rs Cr) for FY Table 19: Historical Trend in Category-wise Units sold (in MU) Table 20 : Category-wise Growth rates of Units Sold Table 21 : Historical Trend in Category-wise No. of Consumers Table 22 : Growth rate of no. of Consumers Table 23 : Historical Trend in Category-wise Connected Load Table 24 : Growth Rate for Connected Load Table 25 : Assumptions for the forecast for LT Non Domestic for FY 18 and FY Table 26 : Projections LT Non Domestic for FY 18 and FY Table 27 : Assumptions for the forecast for PWW & Street Light for FY 18 and FY Table 28 : Projections for PWW & Street Light for FY 18 and FY Table 29 : Assumption for Sales forecast for LT Industrial for FY and FY Table 30 : Projections LT Industrial for FY and FY Table 31 : Assumptions for forecast of HT Industrial for FY and FY Table 32 : Projections for HT Industrial 33 kv for FY and FY Table 33: Projections for HT Industrial 11 kv for FY and FY Table 34 : Projection of Sale, No. of Consumers and Connected Load Table 35 : Distribution Loss for the FY & Table 36 : Energy Requirement for FY and FY Table 37 : Renewable Power Purchase Requirement for FY and FY Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 5

6 Table 38 : Source wise Power Purchase (in MU) for FY and FY Table 39 : Power purchase from MPPMCL for the allocated capacity for the FY Table 40: Power Purchase from MPPMCL for the allocated capacity for the FY Table 41: Total Power Purchase Cost (in Rs Cr) from MPPMCL Table 42 : Total Power Purchase Cost (in Rs Cr) for FY and FY Table 43 : Projected Transmission charges (in Rs Cr) for FY and FY Table 44 : Projected SLDC charges (in Rs Cr) for FY and FY Table 45: Capitalisation plan (in Rs Cr) for the FY and FY Table 46 : Funding Plan of Capitalization (in Rs Cr) for FY and FY Table 47 : Employee Cost (in Rs Cr) for the FY and FY Table 48 : A&G expenses (in Rs Cr) for the FY and FY Table 49 : R&M expenses (in Rs Cr) for FY and FY Table 50 : O&M expenses (in Rs Cr) for FY and FY Table 51 : Depreciation (in Rs Cr) for FY and Table 52 : Net Depreciation (in Rs Cr) for the FY and FY Table 53 : Interest on Normative Loans (in Rs Cr) for the FY 18 and FY Table 54 : Interest on Consumer Security Deposit (in Rs Cr) for FY 18 and FY Table 55 : Interest & Finance Charges (in Rs Cr) for FY & Table 56 : Interest on Working Capital (in Rs Cr) for FY and FY Table 57 : Lease Rent (in Rs Cr) for FY and FY Table 58 : Lease Rent (in Rs Cr) for FY & Table 59 : Return on Equity (in Rs Cr) for the FY & Table 60 : Doubtful Debt in Rs Cr) for FY & Table 61 : Other Income (in Rs Cr) for FY & Table 62 : Proposed ARR (in Rs Cr) for FY and FY Table 63 Projected Revenue (in Rs Cr) at existing tariff for the FY Table 64 Projected Revenue (in Rs Cr) at existing tariff for the FY Table 65: Revenue Gap/ (Surplus) in Rs Cr for FY and FY Table 66: Fixed & Energy Charges as per Existing Tariff & Proposed Tariff for FY Table 67 : Revenue at Proposed Tariff (in Rs Cr) for FY Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 6

7 1. Executive Summary 1.1. Preamble Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd., (hereinafter referred as the Petitioner, MPAKVN, the Company or the Licensee ), is a Company incorporated under the Companies Act, 1956 (Now Companies Act, 2013) having its registered office at 3/54, Press Complex, Free Press House, Indore. The Petitioner is a deemed distribution licensee under the fifth Provision to Section 14 of the Electricity Act, The area of supply of the Petitioner is SEZ Indore (Pithampur) within the State of Madhya Pradesh ( MP ) The Government of Madhya Pradesh ( GoMP or State Government ), has passed the Special Economic Zone Policy in August The Indore Special Economic Zone (Special Provisions), Act 2003 was also enacted in the year This Act has been passed by the Madhya Pradesh Vidhan Sabha on dated 28th March 2003 (Madhya Pradesh Act No 23 of 2003), The Indore Special Economic Zone (Special Provisions), Act 2003 an Act to provide for the development, operation, maintenance and administration of Indore Special Economic Zone It is submitted that licensee MPAKVN Ltd. is the wholly owned undertaking of Government of Madhya Pradesh and working for the Industrial Promotion & Development in the State. MPAKVN Ltd has three subsidiary Companies viz. SEZ Indore Ltd (Specially formed for the operation, development, maintenance and administration of SEZ for which MPAKVN Ltd is a Deemed Distribution Licensee), Crystal IT Park Indore Ltd. and Pithampur Auto Cluster Ltd In the backdrop of the above facts and circumstances, the present application is being submitted by the Petitioner (MPAKVN Indore Ltd.) under Section 61 and Section 62 (1) (d) of the Electricity Act 2003 for the Determination of ARR and Tariff for Distribution and Retail supply business for the FY under tariff principles laid down in the Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Supply and Wheeling of Electricity and Methods and Principles for Fixation of Charges) Regulations, 2015 hereinafter referred to as MYT Regulations, 2015 which were made effective from 1 st April 2016 and up to 31 st March While filing the present ARR and Tariff Petition for the FY under the Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 7

8 prevailing Regulations, MPAKVN has endeavoured to comply with the various applicable legal and regulatory directions and stipulations including the directions of the Hon ble Commission in the Business Rules of the Commission, the Guidelines, previous ARR of Discoms and Tariff Orders and the Regulations Based on the information available, the Petitioner has made sincere efforts to comply with the Regulations of the Hon ble Commission and discharge its obligations to the best of its capabilities. However, if any further material information becomes available in the near future, the applicant craves leave of the Hon ble Commission to file such additional information and consequently amend/ revise the application The Tariff Proposal for FY has been prepared and submitted in the relevant section of this petition Shri Ashutosh Kanungo, Superintending Engineer of MPAKVN has been authorized to execute and file all the documents on behalf of the petitioner in this regard. Accordingly, the current filing is signed and verified by, and backed by the affidavit of Shri Ashutosh Kanungo, Superintending Engineer ARR and Tariff determination for FY MPAKVN has projected the sales for various customer categories based on the provisional sales during the first half of FY and CAGR trends of the past years. The following table summarises the projected sales, number of consumers and connected load within various tariff categories for the FY & Table 1 : Projection of Sales, No. of Consumers and Connected Load Category Sales (MU) No. of Consumers (Nos.) FY FY FY FY Connected Load (KVA) FY FY LT Consumers Non Domestic Public Water Works and Street Light Industrial LT Total HT Consumers Industrial ,927 75, KV ,815 75, KV Non Industrial HT Total ,927 75,820 Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 8

9 Category Sales (MU) No. of Consumers (Nos.) Connected Load (KVA) FY FY FY FY FY FY TOTAL ,779 76, As compared to the distribution loss levels of 2.87% for the FY , the Petitioner has significantly reduced the loss levels during first half of the FY Accordingly, it is estimated that the distribution loss will come down to 2.37% and 2.02% in FY & respectively. The Hon ble Commission is humbly requested to approve the distribution loss levels as estimated by the Petitioner. Table 2 : Projection of Distribution Loss (%) for the FY & S. No Particulars FY FY Distribution Losses 2.37% 2.02% Transmission losses of 2.87% for FY as well as FY are considered based on the loss levels approved by the Hon ble Commission in the Retail supply Tariff Order of Discoms for the FY dated 31 st March, External losses are not considered as the entire energy requirement is expected to be met by supply from MPPMCL Based on the information provided above, energy requirement of the company for the FY & FY is as shown below: S. No Particulars Table 3 : Energy Balance for FY and FY FY FY % MU % MU 1 Energy Sales LT Sales HT Sales Total Energy Sales Distribution Losses 2.37% % Energy Requirement at T-D Boundary ( 1+2) Intra-state transmission losses 2.87% % Energy requirement at the State periphery (3+4) Inter-state transmission losses 0.00% % 0 7 Total energy requirement (5+6) Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 9

10 MPAKVN shall procure power from MPPMCL as per agreement signed on 29 th March, It is pertinent to note that as per the Supplementary Agreement signed on 31 st March, 2017, the contracted capacity of MPAKVN with MPPMCL has been enhanced to 45 MW. MPAKVN is also planning to purchase renewable power in line with Renewable Power Obligation for FY and FY Further, the transmission charges of MPPTCL have been determined based on the revised transmission charges for the MYT period FY to FY determined by the Hon ble Commission vide its Order in Petition No. 70/ As explained in the paragraph 1.2.5, since MPAKVN is now allocated 45 MW from MPPMCL and since, the transmission charges are determined on the basis of earlier allocated capacity, the Petitioner has computed the transmission charges on prorata basis for the FY and the same have been projected for FY The estimated transmission charges for FY and FY have been tabulated below Table 4 : Projected Transmission charges (in Rs Cr) for FY and FY S.No Particulars FY FY Transmission charges The operating scheduling charges of SLDC for the FY have been determined on pro-rata basis as per the SLDC Tariff Order dated 26th April, 2017 and the charges have been kept the same for the projection for the FY The estimated SLDC charges for FY and FY has been tabulated below Table 5 : Projected SLDC charges (in Rs Cr) for FY and FY S. No Particulars FY FY SLDC Charges The summary of the power procurement expenses including transmission and SLDC charges projected for FY and FY are summarised in the following table: S No Source of Power Purchase Table 6 : Projected power purchase expenses for FY and FY Quantum (MU) FY FY Rate (Rs/kWh) Power Purchase Cost (in Rs Cr) Quantum (MU) Rate (Rs/kWh) Power Purchase Cost (in Rs Cr) Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 10

11 S No Source of Power Purchase Quantum (MU) FY FY Rate (Rs/kWh) Power Purchase Cost (in Rs Cr) Quantum (MU) Rate (Rs/kWh) Power Purchase Cost (in Rs Cr) 1 MPPMCL Renewables Solar Non-Solar Transmission Charges SLDC Charges Total charges MPAKVN submits that assets worth Rs Crore have been capitalised in FY , the funding for which is through various sources categorised under four headings namely: Consumer Contribution, Grants, Equity and Debt. A grant of Rs Crore has been received for one of the asset commissioned viz. the 132 kv Substation. The remaining expenditure after consumer contribution & grants is proposed to be funded through debt and equity in the ratio of 70:30. For the FY , capital expenditure of Rs Cr is projected to be incurred and the same shall be capitalized during the FY The detailed breakup of funding of capitalization for FY & FY is mentioned below: Table 7 : Funding Plan of Capitalization (in Rs Cr) for FY 18 and FY 19 S.No Particulars FY FY Total Capitalization Consumer Contribution Grants Balance Capitalization for the Year Debt Equity For the purpose of projections of Operations and Maintenance (O&M) expenses, employee expenses have been considered as per the normative values notified in the MYT Regulations, 2015 for FY and FY Further, as per the provision of the para 34.1 of the Regulations, normative employee cost indicated by the Hon ble Commission excludes dearness allowance, pension, terminal benefits and incentive to be paid to employees and hence, these have been considered over & above the cost notified in the MYT Regulations, A&G expenses have been projected on normative basis for FY and FY as notified in the MYT Regulations, Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 11

12 MPAKVN has entered into agreement with PTC India Ltd on 29th September, 2016 to carry out all R&M Expenses of its Electrical Network and also to provide consultancy services in various techno-commercial matters relating to the distribution and supply of electricity in the Special Economic Zone. Agreement with PTC India Ltd. will remain in force for FY & FY also. The Hon ble Commission is humbly requested to approve R&M expenses as per the agreement signed with PTC India Ltd MPAKVN has projected MPERC fees for FY and FY same as actual of FY viz. Rs Crores The gist of total O&M expenses for FY and FY is as given in table below: Table 8 : O&M expenses (in Rs Cr) for FY and FY S.No Particulars FY FY Employee Expenses Repair & Maintenance Expenses Administrative & General Expenses MPERC Fees Operation & Maintenance Expenses MPAKVN has considered the opening gross block of fixed assets of FY as per closing of FY as submitted in the True-up Petition for the FY The projected assets addition in FY & FY has been considered to calculate addition to GFA. Depreciation has been calculated taking into consideration the opening balance of assets in the beginning of the year and the projected capitalisation. Asset head wise depreciation rates are provided in Annexure II of MYT Regulations, 2015 and the same rates are applied to work out depreciation. Further, the depreciation on assets funded through consumer contribution and grants has been reduced to arrive at the net depreciation for each year. The projected depreciation for the FY & FY has been tabulated below Table 9 : Net Depreciation (in Rs Cr) for the FY and FY S.No Particulars FY FY Depreciation Less: Consumer contribution/ grant amortized Net Depreciation Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 12

13 Regulation 31 provides the method of calculation of interest and finance charges on loan capital. MPAKVN does not have any borrowed capital, however, considering the provisions of the regulation, normative loans have been worked out. Interest has been calculated by applying weighted average interest rate of three State Discoms of 7.28% as per Retail supply Tariff Order for the FY Interest on consumer security deposit has been paid to the consumers according to the Hon ble Commission's regulations for security deposit. Interest rate is considered as prevailing RBI bank rate of 6.75%, as on 1st April, The projected interest and finance charges for the FY & are summarised below: Table 10 : Interest & Finance Charges (in Rs Cr) for FY & S.No Particulars FY FY Interest on normative loan Interest on Consumer Security Deposit 3 Total The interest on working capital has been calculated on the basis of provisions of the Regulation 36 of MYT Regulations, Interest rate is considered at a rate equal to the State Bank Advance Rate (SBAR) as on 1st April, 2017 at 14.05%. The projection of the Interest on Working Capital is as shown below. Table 11 : Interest on Working Capital (in Rs Cr) for FY & S.No Particulars FY I For Wheeling Activity Inventory for 2 months based on ARR considered at 1% of GFA for previous year FY /12th of O&M Expenses months of Receivables from Wheeling charges - - Total Working Capital Rate of Interest 13.85% 13.85% 1 Interest on Working Capital II For Retail Activity Inventory for 2 months based on ARR for previous year - - Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 13

14 S.No Particulars FY FY O&M expenses for one month months of Receivables of average billing Minus: 1/12th of Power Purchase expenses Minus: Consumer Security Deposit Total Working Capital Rate of Interest 13.85% 13.85% 2 Interest on Working Capital Total Interest on Working Capital The petitioner humbly requests that it has incurred considerable expenses towards the lease rent payable by the petitioner for the land used for the purpose of power business. The petitioner has worked out land premium and lease rent charges for such portion of the land as given in the following table. Table 12 : Lease Rent (in Rs Cr) for FY & S.No Particulars FY FY Lease Rent As per the MYT Regulations, 2015, a 16% on the equity base is allowed by Hon ble Commission. Accordingly, MPAKVN has computed the Return on Equity considering a rate of return at 16%. The return on equity has been computed on average equity based upon the opening balance of equity and normative additions during the year, which has been arrived at by considering 30% of the capitalization net of consumer contribution and grants as funded from equity as already explained above. Accordingly, the normative return on equity for the FY & is as shown below. Table 13 : Return on Equity (in Rs Cr) for FY & S.No Particulars FY Equity associated with GFA as on the beginning of the year 30% of addition to net GFA considered as funded through equity Total equity associated with GFA at the end of the year FY Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 14

15 S.No Particulars FY FY Average equity associated with GFA at the end of the year 5 Return on 16% MPAKVN has considered provision for bad debts to the tune of 0.5% of the yearly revenue in accordance with clause 35 of the MYT Regulations, 2015 as tabulated below: Table 14 : Doubtful Debt in Rs Cr) for FY & S.No Particulars FY FY Revenue at existing Tariff Doubtful 0.5% of the Yearly Revenue MPAKVN has considered the other Income for the FY & to be same as FY filed in the True up Petition for FY given in table below: Table 15 : Other Income (in Rs Cr) for FY & FY FY S.No Particulars 1 Miscellaneous Income Interest Received on Deposit with MPSEB Shutdown Charges Power Application Processing Fees Total Other Income Accordingly, the ARR for FY and FY proposed by MPAKVN is as follows: Table 16 : Aggregate Revenue Requirement (in Rs Cr) for FY and FY S. No. Particulars FY (Projection) FY (Projection) 1 Purchase of Power Power Transmission Charges Power Scheduling & Operation Charges O&M Expenses Employee Expenses R&M Expenses A&G Expenses Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 15

16 S. No. Particulars FY (Projection) FY (Projection) MPERC and MPPMCL Fees & Other Depreciation Interest & Finance Charges Interest on Working Capital Lease Rent Sub Total (1 to 8) Return on Equity Income Tax Doubtful Debt Total Expenditure ( ) Less: Other Income Aggregate Revenue Requirement (14-15) The revenue from sale of power (net of PF incentive) for FY and FY has been estimated based on sales and connected load projected in this petition. Accordingly, the Net revenue from the sale of power for the FY & FY is projected to be Rs Crores and crores respectively Accordingly, the projected revenue gap for FY and FY at existing tariffs is as under: Table 17: Total Revenue Gap/ (Surplus) (in Rs Cr) S.No Particulars FY FY Aggregate Revenue Requirement Revenue at Existing Tariff Revenue Gap/ (Surplus) To meet the aforementioned revenue gap for the FY , the Petitioner has proposed a revised tariff schedule which shall fetch an additional revenue of Rs Cr (net of PF incentive) based on the projected sales & connected load for FY The consumer category wise revenue for FY estimated by MPAKVN is as given in the following table: Particulars Table 18 : Revenue at proposed tariff (in Rs Cr) for FY Fixed Charges FY Variable Charges Revenue (net of PF incentive) LT CATEGORIES LV 2 : Non- Domestic Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 16

17 Particulars Fixed Charges FY Variable Charges Revenue (net of PF incentive) LV 3 : Streetlights & PWW LV 4 : LT Industry HT CATEGORIES HT I : 33 kv Industrial HT I : 11 kv Industrial Total Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 17

18 2. Introduction 2.1. Introduction Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd., (hereinafter referred as the MPAKVN or Petitioner or the Company or the Licensee ), is a Company incorporated under the Companies Act, 1956 (which has now been superseded by the Companies Act, 2013) having its registered office at 3/54, Press Complex, Free Press House, Indore. The Petitioner is a deemed distribution licensee under the fifth Proviso to Section 14 of the Electricity Act, The area of supply of the Petitioner is SEZ Indore (Pithampur) within the State of Madhya Pradesh ( MP ) The Government of Madhya Pradesh ( GoMP or State Government ), has passed the Special Economic Zone Policy in August The Indore Special Economic Zone (Special Provisions), Act 2003 was also enacted in the year This Act has been passed by the Madhya Pradesh Vidhan Sabha on dated 28th March, 2003 (Madhya Pradesh Act No 23 of 2003) and was enacted to provide for the development, operation, maintenance and administration of Indore Special Economic Zone The Madhya Pradesh Electricity Regulatory Commission (hereinafter referred to as MPERC or the Hon ble Commission ), an independent statutory body constituted by Government of Madhya Pradesh vide Gazette Notification dated 20th August, 1998 under Electricity Regulatory Commission s Act, Subsequently after the M.P. Vidyut Sudhar Adhiniyam, 2000 came into effect from 03rd July, 2001, the State Regulatory Commission was deemed to have been constituted under State Act. The Electricity Act 2003 (No. 36 of 2003) enacted by parliament has come into force w.e.f. 10th June, 2003 and the Commission is now deemed to have been constituted and functioning under the provisions of Electricity Act The Hon ble Commission has issued the MPERC (Terms and Conditions for determination of tariff for supply and wheeling of electricity and methods and principles for fixation of charges) Regulations, 2015 (hereinafter referred as MYT Regulations, 2015 ) which were effective from 1st April, 2016 and up to 31st March, The present application is being submitted by the Petitioner under Section 61 and Section 62 (1) (d) of the Electricity Act 2003 for the determination of ARR and Retail Supply Tariff for the FY under tariff principles laid down in the MYT Regulations, 2015 for approval by the Hon ble Commission. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 18

19 2.2. Compliance of the Directives of the Hon ble Commission The Petitioner hereby submits the status of the directives issued by the Commission in its previous Tariff Order for MPAKVN. Filing of True-up Petitions for the past years The Commission, in its Order for FY , directed the Petitioner to submit segregated audited accounts for the power business audited by the statutory auditor along with True-up petitions for FY to FY It is submitted that the Petitioner has already submitted the audited financials for the years FY to FY along with the True-up Petitions of the respective years. The Petitioner has also filed the audited financials along with the True-up Petition for FY The Petitioner shall continue to maintain separate audited accounts for the ensuing years in line with the directives issued by the Hon ble Commission. Technical studies of the Distribution network to ascertain voltage wise cost of supply The Hon ble Commission in its Order for FY directed MPAKVN to carry out a detailed study on voltage wise losses on Distribution network and furnish a report It is submitted that the proposal for the study is under consideration and the findings of the study and report shall be submitted for the kind perusal of the Hon ble Commission soon. Long term power purchase arrangements The Hon ble Commission, in its Order for FY , directed the petitioner to finalize long term power procurement arrangements so as to ensure availability of supply under long term contracts from 1st April, 2013 onwards to the extent required during coming years The Petitioner humbly submits that a Bulk Power Supply Agreement (BPSA) has been signed between MP Power Management Company Ltd. (MPPMCL) and MPAKVN Indore on 29th March, 2016 for supply of power on Long term basis up to 40 MW which is effective from 1st April, Further, as per the Supplementary Agreement signed on 31 st March, 2017, the contracted capacity of MPAKVN with MPPMCL has been enhanced to 45 MW. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 19

20 2.3. Submission to the Hon ble Commission As per clause 8.4 of MYT Regulations, 2015, last date for submission of petition was 31 st October, 2017 which was extended by the Hon ble Commission till 31 st December, 2017 vide letter no. MPERC/RE/2017/1788 dated 08/12/2017 upon receipt of request letter from MPAKVN MPAKVN hereby submits the Petition under Section 62 of the Electricity Act, 2003 for determination of ARR and Retail supply Tariff for the FY as per MYT Regulations, Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 20

21 3. ARR for FY & FY and Tariff Determination for FY Preamble This section outlines the ARR for FY and FY of MPAKVN, which takes into consideration: Actual data for the FY to FY ; Provisional data for the first Half (H-1) of FY ; Provisions of MYT Regulations, 2015; MPAKVN had filed petition for determination of ARR & Retail supply tariff for FY for Special Economic Zone (SEZ) area of Pithampur based on the tariff principles laid down in MYT Regulations, 2015 for Control Period FY to FY on 13 th December, The Hon ble Commission, vide its Order dated 7 th April, 2017, had determined the ARR and retail supply tariff for the power business of MPAKVN for the FY MPAKVN now files Petition for the determination of ARR and retail supply tariff for the FY based on the actual data available for the past years and the provisional data available for the first half (H-1) of the FY Projection of energy requirement for FY & Clause 24 of the MYT Regulations, 2015 provides the method for the estimation of sales for each year of tariff period. The relevant provision is reproduced as below: The estimation of the sale for each year of the Tariff period shall be based on the category wise and slab wise actual / audited data of the sale of electricity, number of consumers, connected / contracted load, etc. of the preceding three years as well as considering any other relevant factors or studies carried out that may result in to variance in estimation of sale to that of based on actual / audited data. Reasons for variance with the historical trends shall be submitted by the Licensee with due justifications for consideration of the Commission. The year wise projections of the aforementioned parameters for the tariff period shall also be provided along with the tariff petition The reasonableness of growth in number of consumers, consumption, demand of electricity and trend of reduction of losses in previous years and anticipated growth in the next years and any other factor, which the Hon ble Commission may consider relevant, may be examined and subsequently approved for deciding the quantum of electricity to be purchased by the Licensees with such modifications as deemed fit. Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 21

22 It has been observed from past experience that the historical trend method has proved to be reasonably accurate and well accepted method for estimating the load, number of consumers and energy consumption. In light of the above, MPAKVN has estimated the sales for various customer categories primarily based on the CAGR trends during past years. Wherever the trend has seemed unreasonable or unsustainable, the growth factors have been corrected, to arrive at more realistic projection. Primary basis for projection of sales is as under: Historical data of category wise actual sales for the period FY to FY Provisional data for the first half (H-1) of the FY The break-up of the past sales (in MU) and the CAGR growth rates for different periods (5 years, 3 years and year on year) thereof are outlined in the following table. It may be noted that the 5 year CAGR growth rate is for the period between FY & FY while the 3 year CAGR growth rate is for the period between FY & FY The year on year (YoY) growth rate is for the period between FY & FY Table 19: Historical Trend in Category-wise Units sold (in MU) Category Sales (MU) FY FY FY FY FY FY LT Consumers Non Domestic Public Water Works and Street Light Industrial LT Total HT Consumers Industrial Non Industrial HT Total TOTAL Table 20 : Category-wise Growth rates of Units Sold Category Sales CAGR (in %) 5 Year CAGR 3 Year CAGR Y-o-Y LT Consumers Non Domestic 0.00% % 45.55% Public Water Works and Street Light % 23.48% 55.05% Industrial % -0.43% % Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 22

23 Category Sales CAGR (in %) 5 Year CAGR 3 Year CAGR Y-o-Y LT Total 18.04% 36.88% 39.88% HT Consumers Industrial 13.55% 17.51% 9.87% Non Industrial 0.00% 0.00% 0.00% HT Total 13.55% 17.51% 9.87% TOTAL 13.57% 17.56% 9.95% The break-up of the category-wise number of consumers and the CAGR growth rates for different periods (5 years, 3 years and year on year) are as follows: Table 21 : Historical Trend in Category-wise No. of Consumers Category Consumers (in No) FY FY FY FY FY FY LT Consumers Non Domestic Public Water Works and Street Light Industrial LT Total HT Consumers Industrial Non Industrial HT Total TOTAL Table 22 : Growth rate of no. of Consumers Category No. of Consumers CAGR (in %) 5 Year CAGR 3 Year CAGR Y-o-Y LT Consumers Non Domestic 0.00% 0.00% 20.00% Public Water Works and Street Light 20.11% 18.56% 0.00% Industrial % 0.00% % LT Total 9.73% 39.12% 6.06% HT Consumers Industrial 3.96% 1.00% 0.00% Non Industrial 0.00% 0.00% 0.00% HT Total 3.96% 1.00% 0.00% TOTAL 6.65% 14.47% 2.99% The break-up of the connected load profile and the CAGR growth rates for different periods (5 years, 3 years and year on year) thereof is as follows: Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 23

24 Table 23 : Historical Trend in Category-wise Connected Load Category Connected Load (in KVA) FY FY FY FY FY FY LT Consumers Non Domestic Public Water Works and Street Light Industrial LT Total HT Consumers Industrial 41,202 42,192 45,817 48,449 53,758 62,661 Non Industrial HT Total 41,202 42,192 45,817 48,449 53,758 62,661 TOTAL 41,670 42,505 46,038 48,672 54,288 63,423 Table 24 : Growth Rate for Connected Load Category Connected Load CAGR (in %) 5 Year CAGR 3 Year CAGR Y-o-Y LT Consumers Non Domestic 0.00% 0.00% 89.82% Public Water Works and Street Light 29.98% 13.39% 2.04% Industrial % 15.09% 22.25% LT Total 10.25% 51.09% 43.82% HT Consumers Industrial 8.75% 11.00% 16.56% Non Industrial 0.00% 0.00% 0.00% HT Total 8.75% 11.00% 16.56% TOTAL 8.76% 11.27% 16.83% Growth Projections for FY & : This section discusses in detail the basis for estimating the growth projections for various categories of consumers as enumerated above For projecting the sales, no. of consumers and connected load for FY & , FY has been considered as the base year. LT Non Domestic Category There were 18 consumers in the LT Non-Domestic category in the FY out of which 12 were permanent consumers and 6 were temporary consumers with a consumption of 0.45 MUs The petitioner has projected a growth rate of 10% in projecting the sales, Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 24

25 connected load and number of consumers for the FY and FY Table 25 : Assumptions for the forecast for LT Non Domestic for FY 18 and FY 19 S.No LT- Non Domestic Category Growth Assumption 1 Consumer Demand based 10.00% Growth Expected Temporary 10.00% Growth Expected 2 Consumption- Sold Units Demand based 10.00% Growth Expected Temporary 10.00% Growth Expected 3 Connected Load Demand based 10.00% Growth Expected Temporary 10.00% Growth Expected Based on the above growth rates, the projections for the LT Non Domestic category in consumers, connected load and sale of energy have been determined as below: Table 26 : Projections LT Non Domestic for FY 18 and FY 19 S.No LT- Non Domestic FY FY Consumers (in No.) Connected Load (in KVA) Consumption (in MUs) Public Water Works (PWW) and Street Light The petitioner has considered growth rate of 11% for the estimation of sales and a growth rate of 18.6%, 13.4% for the estimation of consumers and connected load respectively based on the 3-year CAGR growth. Table 27 : Assumptions for the forecast for PWW & Street Light for FY 18 and FY 19 S.No PWW and Street Light Growth Assumption 1 Consumers (in No.) 18.56% 3 Year CAGR 2 Connected Load (in KVA) 13.39% 3 Year CAGR 3 Consumption (in MUs) 11% Growth Expected Based on the above growth rates, the projections for the PWW & Street Light category consumers, connected load and sale of energy are as detailed below: Table 28 : Projections for PWW & Street Light for FY 18 and FY 19 S.No PWW and Street light FY FY Consumers (in No.) Connected Load (in KVA) Consumption (in MUs) Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 25

26 LT Industrial The petitioner has considered growth rate of 15% for the estimation of sales, number of consumers, connected load based on the past trends and expected increase in the industrial consumers in the second half (H-2) of the FY Table 29 : Assumption for Sales forecast for LT Industrial for FY and FY S.No LT Industrial Growth Assumption 1 Consumers (in No.) 15.00% Growth Expected 2 Connected Load (in KVA) 15.00% Growth Expected 3 Consumption (in MUs) 15.00% Growth Expected Based on the above growth rates, the projections for the LT Industrial category in consumers, connected load and sale of energy have been determined as below: Table 30 : Projections LT Industrial for FY and FY S.No LT Industrial FY FY Consumers (in No.) Connected Load (in KVA) Consumption (in MUs) Industrial HT 33 KV & 11 KV The Petitioner has considered an year-on year increase of 11% for the estimation of sales based on the provisional data for the first half of the FY and past trends. The growth rates of connected load and number of consumers is as indicated in the following table: Table 31 : Assumptions for forecast of HT Industrial for FY and FY S.No HT - Industrial 33 KV & 11 KV Growth Assumption 1 Consumers (in No.) 5% Growth Expected 2 Connected Load (in KVA) 10% Growth Expected 3 Consumption (in MUs) 11% Growth Expected Based on the above growth rates, the projections for the HT Industrial 33 KV & 11 KV category for the number of consumers, connected load and sale of energy have been determined as below: Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 26

27 Table 32 : Projections for HT Industrial 33 kv for FY and FY S.No HT - Industrial 33 kv FY FY Consumers (in No.) Connected Load (in KVA) Consumption (in MUs) Table 33: Projections for HT Industrial 11 kv for FY and FY S.No HT - Industrial 11 kv FY FY Consumers (in No.) Connected Load (in KVA) Consumption (in MUs) The following table summarises the resultant projected sales, number of consumers and connected load within various tariff categories for the FY and Table 34 : Projection of Sale, No. of Consumers and Connected Load Category Sales (MU) No. of Consumers (Nos.) FY FY FY FY Connected Load (KVA) FY FY LT Consumers Non Domestic Public Water Works and Street Light Industrial LT Total HT Consumers Industrial ,927 75, KV ,815 75, KV HT Total ,927 75,820 TOTAL ,779 76, Distribution Losses As compared to the distribution loss levels of 2.87% for the FY , the Petitioner has significantly reduced the loss levels during first half of the FY Accordingly, it is estimated that the distribution loss will come down to 2.37% and 2.02% in FY & respectively. The Hon ble Commission is Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 27

28 humbly requested to approve the distribution loss levels as estimated by the Petitioner The Petitioner is making its all sincere efforts to reduce losses but distribution losses of the Petitioner are too less and hence there is very little scope of improvement. Due to Petitioner s efforts, losses have reduced considerably in a limited span of time, despite of the fact that distribution network of the Petitioner has increased coupled with a significant increase in consumption vis-à-vis FY The Commission has set stringent distribution loss target which is difficult to achieve. From distribution loss level of 3.30% for FY in MYT Regulations, 2012, the Hon ble Commission has drastically reduced it to 2.0% for FY in MYT Regulations, 2015 which is around 40% of reduction in one year. For such a small distribution system, achieving such a reduction target for the distribution losses, in the quoted time, is quite difficult Hence, the Hon ble Commission is humbly requested to approve distribution loss levels proposed by the Petitioner for the FY and FY as shown below: Table 35 : Distribution Loss for the FY & FY FY S. No. Particulars 1 Distribution Losses 2.37% 2.02% 3.4. Energy Requirement and Energy Balance Transmission losses have been considered at 2.87% for FY and FY based on the loss levels approved by the Hon ble Commission in the Retail Supply Tariff Order for Discoms dated 7 th April, External losses are not considered as the entire energy requirement is expected to be met by supply from MPPMCL Based on the information provided above, energy requirement of the company for the FY & is as shown below: Table 36 : Energy Requirement for FY and FY S. No Particulars FY FY % MU % MU 1 Energy Sales LT Sales HT Sales Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 28

29 S. No Particulars FY FY % MU % MU Total Energy Sales Distribution Losses 2.37% % Energy Requirement at T-D Boundary Intra-state transmission losses 2.87% % Energy requirement at the State periphery Inter-state transmission losses 0.00% % 0 7 Total energy requirement Power Purchase This section details the power purchase availability thereof for the future years for MPAKVN. The forecast takes into account the sources mentioned in the subsequent paras of this petition A Bulk Power Supply Agreement (BPSA) has been signed between MP Power Management Company Ltd. (MPPMCL) and MPAKVN Indore on 29 th March, 2016 for supply of power on Long term basis up to 40 MW which is effective from 1 st April, Further, as per the Supplementary Agreement signed on 31 st March, 2017, the contracted capacity of MPAKVN with MPPMCL has been enhanced to 45 MW. As per the BPSA "The Bulk Electricity shall be supplied to procurer at the weighted average tariff ass determined/approved by the State Commission in tariff order of MPGENCO of the state for the allocated thermal power station plus trading margin of four (4) paise per unit. Renewable Purchase Obligation The Hon ble Commission has notified MPERC (Co-generation and generation of electricity from Renewable sources of energy) (Revision-I) Regulation, 2010 [ARG- 33(I) (v) of 2015] on October 02, The Commission has considered procurement of power from renewable energy sources through PPA or short term market to ensure RPO compliance. The relevant section of the Fifth amendment of the MPERC (Co-generation and generation of Electricity from Renewable sources of energy) (Revision-I) Regulations, 2010 [ARG- 33(I)(v) of 2015], is reiterated below: 4.1 The minimum quantum of electricity to be procured by all the Obligated Entities from generators of Energy including Co-generation from Renewable Sources of electricity expressed as percentage of their total annual procurement of Electrical Energy during the following Financial Years shall be as under:- Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd. 29