HYDERABAD, ANDHRA
PRADESH
for
Transmission and Bulk
Supply Licensee
October 7, 1999
Section 26(5) of the Andhra Pradesh Electricity Reform Act, 1998, requires that a licensee shall provide to the Commission, at least 3 months before the ensuing financial year, full details of its calculation for that financial year of the expected aggregate revenue from charges which it believes it is permitted to recover pursuant to the terms of its licence and thereafter it shall furnish such further information as the Commission may reasonably require to assess the licensee’s calculation.
This filing shall provide information on:
(1) the aggregate revenue requirement that the licensee believes
it is permitted to recover according to the Sixth Schedule of the Electricity
(Supply) Act, 1948, with such modification as may be specified and approved by
the Commission, and
(2)
the expected revenue at the
prevailing tariff rates.
The Licensee shall file annually the Expected Revenue from Charges (ERC).
(1) On or before December 31 of each year, the licensee shall file an ERC containing the information in respect of the ensuing financial year, the current financial year and the previous financial year.
(2) Within 90 days of the date on which the licensee has furnished all the information that the Commission requires, the Commission shall notify the licensee either:
(a) that it accepts the licensee's calculations; or
(b) that it does not consider the licensee's calculations to be in accordance with the methodology or procedure specified and approved by the Commission, and such notice to the licensee shall:
(i) specify fully the reasons why the Commission considers that the licensee's calculation does not comply with the methodology or procedures specified and approved by the Commission or is in any way incorrect, and
(ii) propose a modification or an alternative calculation of the expected revenue from charges, which the licensee shall accept.
A tariff means a schedule of standard prices or charges (termed ‘rates’), together with terms and conditions for the application of the tariff to a supply of electricity or electricity-related services.
The Commission may revise these filing guidelines at any time. For example, the results of the Commission’s consultation on tariff philosophy issues may trigger some changes.
The ERC shall include support for the licensee’s view of the aggregate revenue requirement that it believes it is permitted to recover by providing details of the amounts permitted under the Sixth Schedule of the Electricity (Supply) Act, 1948, with such modification as may be specified and approved by the Commission. This shall be summarised in the forms prescribed in Appendix 1, unless the Commission specifies otherwise. In all cases, detailed supporting data and documentation must also be provided which validates the data provided in Appendix 1 by reference to audited data or, where audited data are not available, by reference to other verifiable sources. Full details of any workings, assumptions or methodologies necessary to derive the data in Appendix 1 from audited or other verifiable data sources must also be provided with the filing. Detailed supporting data are to e supplied as specified in the appropriate sections below.
The data in Forms 1.1 to 1.6 of Appendix 1 should be provided in the prescribed format. The data in Forms 1.1 to 1.4 should be entered for three years:
Audited figures for the previous financial year
· Estimated figures for the current financial year. These estimates should be based on actual figures for the first six months of the current financial year and estimated figures for the second six months of the current financial year. The estimated figures for the second half of the current financial year should be based on actual audited figures of the second half of the previous financial year with adjustments that reflect known and measurable changes expected to occur between them. These adjustments must be specifically documented and justified.
· Forecast figures for the ensuing financial year. These figures should be based on the current year figures, with adjustments that reflect known and measurable changes expected to occur between them. These adjustments must be specifically documented and justified.
Form 1.1 specifies calculation of the capital, generally following XVII (1) of the Sixth Schedule. The licensee shall provide full details of calculation of each capital base item and enclose supporting financial and technical data for all relevant financial years. If any portion of the capital base is used in or financed from activities other than those specified in the license, full details shall be submitted to the Commission.
The Commission requires the item No. XVII(1)(ii) of the Sixth Schedule should also include the amount of subventions from the State Government. The purpose of this change is to prevent the licensees from earning a return on subventions from the State Government. This change will be appropriate, since the licensee is not entitled to earn a return on assets that it did not purchase.
Form 1.1 shall be provided separately for the capital base applying to two periods, those being:
· That part of the capital base which relates to investments made on and from the 16th day of October 1991 till the 31st day of March 1999, including the asset base at the time of transfer to APTRANSCO; and
· That part of the capital base which relates to investments made thereafter .
Form 1.1. shall be supplemented by the following forms:
a) Form 1.1a: Fixed Assets
b) Form 1.1b: Depreciation
c) Form 1.1c: Written down costs of fixed assets retired on account of obsolescence, inadequacy, superfluity, etc.
d) Form 1.1d: Capital Expenditure
e) Form 1.1e: Work in Progress
f) Form 1.1f: Sale and Lease Back of Assets
g) Form 1.1g: Domestic Loans and Debentures
h) Form 1.1h: Foreign Loans and Debentures
Form 1.2 calculates the reasonable return of the licensee, as specified in sections XVII(9) and (10) of the Sixth Schedule. The capital base and standard rates used depend on the age of investments involved, as defined in section XVII (10) of the Sixth Schedule.
Form 1.3 broadly follows sections XVII(2)(b) and (c) of the Sixth Schedule. The licensee shall provide full details of calculation of each expenditure item and enclose supporting financial and technical data for all relevant financial years.
Form 1.3. shall be supplemented by the following forms:
a) Form 1.3a: Costs of Purchased Power
b) Form 1.3b: Employee costs
Form 1.4 calculates the income of the licensee from sources other than the tariff. However, this form should not include revenue from other businesses. It follows section XVII (2)(a) of the Sixth Schedule with the exception of items No. XVII(2)(a)(i)-(iii). In addition, total receipts in the form of surcharges for late payment are to be included in this form as a separate item. The resulting total of non-tariff income shall be deducted from the total revenue requirement to calculate the net tariff revenue requirement.
Form 1.5 calculates the excess of clear profit over reasonable return and the rebate to be provided by the licensee when tariffs are next re-set. The adjustment is described in Section II of the Sixth Schedule. Form 1.5 includes an item that adjusts the rebate by the amount of clear profit that the Commission may allow or disallow the licensee to keep as a result of performance based regulation. This is to provide an incentive for the licensee to improve its performance in accordance with Section 26(2)(b) of the Andhra Pradesh Electricity Reform Act, 1998. The final amount of the rebate should be added to the rebate account for the previous financial year as per Section II of the Sixth Schedule. The previous year shall be used in preference to the current financial year, because audited data will not be available for the current financial year.
Form 1.6 calculates the resulting aggregate revenue requirement that the licensee believes it is permitted to recover from tariffs under the Sixth Schedule in the ensuing financial year.
The ERC shall include a calculation of the expected revenues from tariff charges by applying tariff prices to quantities supplied. This may be made in the form of a statement in the Form 2.1 included in Appendix 2. This should include a statement of and supporting documentation for the forecast quantities supplied under each rate for the ensuing financial year. The quantities, together with prices, shall be capable of providing the expected revenue under each rate and hence in aggregation the total expected revenue from tariffs for the year.
The licensee shall also provide revenues from tariff charges for the previous financial year as well as the current financial year in the same format.
If divergence between the aggregate revenue requirement and the expected revenues for the ensuing financial year is significant, the ERC shall include a statement of how the licensee proposes to deal with this divergence.
Reductions in transmission losses are an important objective under section 26(2)(b) and (c) of the Andhra Pradesh Electricity Reform Act, 1998. Revenue and tariff determinations will need to take account of such reductions. The ERC shall include a detailed statement of transmission losses.
The licensee shall submit transmission loss figures in Forms 3.1, 3.2 and 3.3 of Appendix 3, including metering status reports. These forms should be completed for the following three periods: i) the first six months of the previous financial year, ii) the second six months of the previous financial year, and iii) the first six months of the current financial year.
The licensee must also provide plans for reducing losses, both technical and non-technical, together with relevant load flow studies and details of the investment required to achieve the planned reductions. Plans for strengthening the energy audit shall be also included. All such plans should be presented time-wise, commencing with the ensuing financial year and covering at least the following five years. They should be substantiated by relevant analysis as to achievability and cost, and indicate the loss improvements expected to result from each program in the plan.
Section 26(9) of the Andhra Pradesh Electricity Reform Act, 1998, requires that a licensee shall provide details of the proposed tariff or amendment to a tariff to the Commission together with such further information as the Commission may require to determine whether the tariff or amended tariff would satisfy the provision of Section 26(7) of the Andhra Pradesh Electricity Reform Act, 1998.
(1) Where the licensee proposes:
a) to change all or any of the tariff rates and/or
b) to formulate a new tariff or tariffs,
the licensee shall provide to the Commission, at least 3 months before the proposed date for implementation, a filing of the proposed tariff or amendment to a tariff (FPT) containing such details as the Commission may require. The FPT must contain the information specified below, and the licensee shall also provide such further information as the Commission may require. The Commission may change the filing requirements at any time, and may do so after the consultation on tariff philosophy issues.
(2) The information to be provided by the licensee must include:
a) A statement of the current tariff rates and all applicable terms and conditions, and the expected full-year revenue from the current tariff rates in the year in which the new tariff is to be implemented. This should be shown in Form 2.1 of Appendix 2.
b) A statement of the proposed tariff rates and charges, including a full statement of all applicable terms and conditions. This statement should be shown in a form appropriate to the proposed tariff structure. Details should also be supplied of the publicity intended to be given to new tariff options when they are to be implemented.
c) A statement of the revenue requirement for the period of twelve months following the date of implementation of the proposed tariff or the tariff amendment. This should be provided in the forms included in Appendix 1. If the tariff is to be implemented within 3 months of the beginning of the ensuing financial year, the statement can include the revenue requirement for the ensuing financial year.
d) A statement of the expected full-year revenue of the proposed tariff for the same financial year as in c). This should be given in Form 4.1 of Appendix 4. If the proposed tariff is to be introduced after the start of the financial year, a statement of the proportion of expected revenues and quantities supplied under each proposed rate during remaining months of the financial year shall be included. This may be made on Form 4.2 of Appendix 4.
e) A statement of the estimated change in annual expected revenues that would result from the proposed tariff changes in the year in which they are to be implemented, stated in Rupees and percentage terms. This is should be made in Form 4.3 of Appendix 4.
f) An embedded cost study detailing unit embedded costs by voltage level of service. Indicate specifically how any external subsidies are reflected in the embedded cost study. The study shall include all relevant details and methods used. In addition, total annual embedded costs by voltage level should be included in Form 4.4 of Appendix 4.
g) A study of marginal costs of the licensee’s business, including time-differentiated marginal costs by a) voltage levels or b) customers, and a written explanation of the methods used to calculate marginal costs. In addition, the statement shall include a comparison of the percentage of marginal costs recovered by the current and proposed tariff. Unit marginal cost by time period, units sold, and revenues from charging marginal costs by voltage level should be presented in Form 4.5 of Appendix 4.
h) A written explanation of the manner in which the proposed tariffs improve the efficiency of the price signal provided to customer vis a vis the marginal unit costs in Form 4.5 of Appendix 4.
i) A written explanation of the rationale for the proposed tariff changes and calculations of any proposed new tariff. Any other information, as required by the relevant license or specified by the Commission.
Pursuant to Section 26(7)(a) of the Andhra Pradesh Electricity Reform Act, 1998 cross-subsidies must be restricted to only those categories where the need arises. Cross-subsidies take the form of tariff differentials between classes of customers that do not reflect differences in the circumstances of supply or sale to such classes. These differences include quantity, load factors, power factor, level and timing of peak demand, conditions of interruptability, location of premises being supplied, date and duration of the agreement or any other relevant factors. The Commission may by Order allow a licensee to provide cross-subsidies to a particular customer group over an appropriate period of time to be determined by the Commission.
The tariff filing shall include a statement that calculates the amount of cross subsidy in the existing tariffs and in the proposed tariffs. This should be done in two ways: (1) comparing embedded costs with current and proposed class revenues using Form 4.6 of Appendix 4, and (2) comparing marginal cost revenue with current and proposed class revenues using Form 4.7 of Appendix 4. If the proposed tariffs include a cross subsidy, a statement is required, as applicable, to show how this complies with any cross-subsidy scheme notified by the Commission.
The tariff filing shall include a statement showing full details of the calculation of each type of subsidy received, due or assumed to be due from the State Government, the purpose of such subsidy and documentation showing how the subsidy is reflected in the embedded cost study. This statement shall also include the embedded costs calculated without consideration of the subsidy. Allocation of each type of external subsidy among voltage levels should be shown in Form 4.8 of Appendix 4. Summary information should be shown in Table 4.4 of Appendix 4. The subsidy calculations shall also compare the amount of subsidy to be received in the year in which the tariff is to be implemented with the amount of subsidy received in the previous year and, where relevant, the current year.
The Commission may require the licensee to provide any additional information necessary to assess the licensee’s filing. In particular, the licensee must provide reports on the following as part of the FPT:
(a) Representative System Load curves for weekdays and weekends for various seasons (such as summer, winter and monsoon). Indicate in each case if any load restriction was imposed, Also provide expected system load curves for the ensuing year and indicate the expected supply curves in each case.
(b) Load-duration curves for the past year and the current year and the expected load duration curve for the ensuing year. Indicate the energy unserved on the load-duration curves.
(c) Plans, both short-term and long-term, for rationalisation of existing manpower.
(d) Plans to improve transmission system performance.
(e) Submit load profiles for substations segregated by voltage levels and supplied parties.
(f) If information in (e) above is incomplete or nonexistent, submit plans for determining load profile on grid substations and to determine system peak at different voltage levels.
(g) Plans for all capital expenditures.
Paragraph 26(2)(b) of the Andhra Pradesh Electricity Reform Act, 1998, stipulates that, while designing the tariff, the licensee should consider the factors which would encourage efficiency, economic use of the resources, good performance, optimum investments and other matters which the Commission considers appropriate keeping in view the salient object and purposes of the provisions of this Act, besides keeping in view the interest of consumers.
The licensee shall provide the following performance indicators for the previous financial year:
a) Number and duration of supply interruptions on transmission networks, separately for 440 kV, 220 kV, 132 kV and 66 kV. Details of steps proposed to improve performance and monitoring.
b) Periods when voltage and/or frequency was beyond the prescribed limits on transmission (440 kV, 220 kV, 132 kV and 66 kV) networks. Details of steps proposed to improve performance and monitoring.
c) Numbers of reported fatal and non-fatal accidents, differentiating between accidents involving humans and those involving animals. An analysis of steps to reduce such accidents must also be provided.
d) Numbers of inadequate or defective meters. Programme and phasing of investment for replacements.
e) Amount of revenue arrears at beginning and end of year analysed age-wise on a six-monthly basis. Reasons for non-collection and details of litigation involving collection of revenue of Rs 5,00,000 or more should also be provided.
Appendix 1
Items in the following Forms are cross-referenced to paragraphs in section XVII of the Sixth Schedule of the Electricity (Supply) Act, 1948. For convenience, shorter wording has been used in here compared to the Sixth Schedule. For the purpose of application of the Guidelines, the full wording of the Sixth Schedule shall be used where applicable.
Revenue Requirement Form 1.1: Capital Base
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Previous year |
Current year |
Ensuing year |
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Ref. |
Data
Required |
Audited |
Estimated |
Projected |
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Rs. in Crores |
Rs. in Crores |
Rs. in Crores |
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1. (a) |
Original cost of fixed asset (excluding consumers contributions) |
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(b) |
Cost of intangible assets |
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(c) |
The original cost of work in progress |
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(d) |
The amount of investment compulsorily made under para-IV of the Sixth Schedule |
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(e) |
An amount on account of working capital equal to the sum of: |
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(e) (i) |
Average
cost of stores (1/12th of the sum of the stores materials and suppliers including fuel in hand at the end of each month of the year) |
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(e) (ii) |
Average cash and bank balance (1/12th of the sum of cash and bank balance whether credit or debit and call and short term deposits at the end of each month of the year) |
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NA |
Capitalized Loss allowed by the Commission* |
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Sub-total of positive elements of Capital Base |
Sum of above |
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Less |
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i) |
The amounts written off or set aside on account of depreciation of fixed assets. |
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ii) |
The
amount of any loan or subvention from the State Government. |
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ii-a) |
The amount of any loans borrowed from organisations or institutions approved by the State Govt. |
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ii-b) |
The amount of any debenture issued by the licensee. |
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iii) |
The amounts deposited in cash with the licensee by consumers, by way of security. |
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iv) |
The amount standing to the credit of Tariffs and Dividends Control Reserve at the beginning of the year of account. |
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v) |
The amount standing to the credit of the Development Reserve at the close of the year. |
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vi) |
The amount carried forward (at the beginning of the year of accounting) in the accounts of the Licensee for distribution to the consumers. |
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Sub-total of negative elements of Capital Base |
Sum of above |
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Net Capital Base |
net figure (first sub-total above minus the second) |
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Note: Separate
table shall be provided for each layer of the Capital Base. The components of
working capital should
be included
only on the sheet for post-31-3-99 assets.
*
Capitalised Loss shall reflect the amount of previous losses allowed by the
Commission to be
capitalized during the transition period.
The licensee
shall provide data in the following formats for the previous year, current
year, and the ensuing year in separate tables:
Form 1.1a: Fixed Assets
Information
shall be provided by voltage class (440 kV, 220 kV, 132 kV, 66 kV) as far as
practicable. Repeat the same format to provide voltage class-wise information.
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Particular of assets |
Balance at the beginning of
the year |
Additions during the year |
Retirement of assets during
the year |
Balance at the end of the year |
Remarks |
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Land and rights |
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Building and
structures |
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Substation
transformers, transformer kiosk, other fixed apparatus of rating 100 MVA and
above |
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