NOTIFICATIONS
BY HEADS OF DEPARTMENTS, Etc.,
_______
PUBLIC WORKS NOTIFICATIONS
ANDHRA PRADESH
ELECTRICITY REGULATORY COMMISSION
Regulation
for TREATMENT OF OTHER BUSINESSES OF
transmission
licensees and distribution LICENSEES
Regulation No.3 of 2005
Introduction
Section 41 of the Electricity Act, 2003, allows a transmission licensee, with prior intimation to the Commission, to engage in any business for optimum utilization of the Licensee’s assets, on the condition that a proportion of revenues, derived from such business, and as specified by the Appropriate Commission, shall be utilised for reducing the Licensee’s charges for transmission and wheeling. Similarly, Section 51 of the Act allows a distribution licensee with prior intimation to the Commission, to engage in any business for optimum utilization of its assets, subject to the Licensee utilising a proportion of revenues derived from such business and as specified by the Commission, reducing its charges for wheeling.
The Commission formulated a draft
Regulation on these matters and sought comments/ suggestions from interested
persons by publishing the same in the A.P.Gazette on
In exercise of powers conferred by Sections 41 and 51
read with Section 181 of the Electricity Act 2003 (36 of 2003) and all other
powers enabling it in that behalf, the Andhra Pradesh Electricity Regulatory
Commission hereby makes the following Regulation providing for the treatment of
Other Businesses of Transmission Licensees and Distribution Licensees, the
proportion of revenues from Other Business to be utilised for Licensed Business
and the matters incidental and ancillary thereto:
1.
Short title, extent and commencement:-
i.
This
Regulation may be called the Andhra Pradesh Electricity Regulatory Commission
(Treatment of Other Businesses of Transmission Licensees and Distribution
Licensees) Regulation, 2005.
ii. This Regulation shall be applicable to all intra-State Transmission
Licensees and the Distribution Licensees in the State of
ii.
This
Regulation shall come into force on the date of its publication in the Andhra Pradesh gazette.
2.
Definitions
and interpretation:-
i. In this Regulation, unless the context otherwise requires:
(a) “Act” means the Electricity Act, 2003;
(b) “Commission” means the Andhra Pradesh Electricity Regulatory Commission;
(c) “Licence” means a licence granted under Section 14 of the Act to undertake intra-State Transmission or Distribution of electricity;
(d) “Licensed Business” shall mean the function and activities the Licensee is required to undertake in terms of the Licence granted or as a deemed Licensee under the Act.
(e)
“Licensee” means a person who
has been granted a licence under Section 14 of the Act to undertake intra-State
Transmission or Distribution of electricity and includes a deemed licensee
undertaking intra-State Transmission or Distribution within the State of
(f) “Other Business” means any business of the Licensee other than the Licensed Business;
(g)
“State” means the State of
3.
Intimation
of other business:-
(1) In the event a Licensee engages in any
other business for optimum utilization of the assets, he shall give prior
intimation in writing to the Commission of such Other Business, along with,
inter-alia. the following
details
(a)
the nature of the Other Business;
(b)
the proposed capital investment in the Other
Business;
(c)
the impact of the use of assets and facilities of
the Licensed Business for the Other Business;
(d)
the manner in which the assets and facilities of the
Licensed Business and of the Other Business shall be used, demonstrating that
there would be no adverse impact on the Licensed Business and on the ability of
the Licensee to carry out the duties and obligations of the Licensed Business;
and
(e)
proposal for
sharing the revenue derived from the Other Business with the Licensed Business,
in the manner envisaged in clause 5(3). The proposal should include the
methodology used for arriving at the proposed sharing, supported by business
plan of the Other Business (including expected annual revenues for the next
five years):
Provided that a Transmission licensee shall not
engage in the business of trading in electricity.
(2)
The Licensee shall have the absolute responsibility
to ensure that the utilization of the assets and facilities of the Licensed
Business for Other Business shall not in any manner affect the performance of
the obligations under the Licensed Business or the quality of service required
from the Licensee, and any such utilization shall be entirely at the cost and
risk of the Licensee.
(3)
Failure to submit prior intimation in writing to the
Commission will invite a penalty which may extend up to the annual revenue of
the Other Business.
4.
Accounts:-
(1) The Licensee shall for each of the Other Business
(a) maintain separate accounting records , such as amount of
revenue, costs, assets, liabilities, reserves, or provisions which have been
charged from or to the Other Business. He shall maintain a description of the
basis for the charge
or its determination by apportionment or allocation between the various
business activities;
(b) prepare on a consistent basis from such records accounting
statements for each financial year comprising a profit and loss account, a
balance sheet and a statement of sources and application of funds;
(c) provide in
respect of the accounting statements prepared, a report by the Auditors in
respect of each financial year, stating whether in their opinion the statements
have been properly prepared and give a true and fair view of the revenue,
costs, assets, liabilities, reserves and provisions reasonably attributable to
the business to which the statements relate;
(d) submit copies of the accounting statements and Auditor’s
report not later than six months after the close of the financial year to which
they relate; and
(e) submit to the Commission such additional information that
the Commission require from time to time.
(2) The Licensee shall establish to the satisfaction of the
Commission that the Other Business bears an appropriate share of overhead costs
and other common costs.
(3) Any person authorized by the Commission shall be entitled to
inspect and verify the accounts of the Licensee and the licensee shall render
all necessary assistance to such person.
(1) The Licensee shall not in any manner utilize the assets and
facilities of the Licensed Business or otherwise directly or indirectly allow
the Other Business to be undertaken in a manner that the Licensed Business
results in subsidising the Other Business.
(2) The Licensee shall not in any manner, directly or indirectly
encumber the assets and facilities of the Licensed Business for the Other
Business or for any activities other than the Licensed Business.
(3) The Other Business shall pay to the Licensed Business a
reasonable proportion of the revenue of the Other Business, subject to a
minimum amount which may reflect the allocable costs or market value of the
assets and facilities of the Licensed Business utilised/being utilised for
Other Business.
(4) The Commission will determine the reasonable proportion of
revenue of the Other Business and the minimum amount to be paid to the Licensed
Business, on a case-to-case basis, as and when a licensee informs the
Commission about his intention of utilizing the assets and facilities for use
for any Other Business. In deciding the amount to be paid by the Other
Business, the Commission will consider the submissions of the Licensee, but may
use any alternate approach or methodology that it considers appropriate:
Provided that as
and if deemed appropriate by it, the Commission may determine the reasonable
proportion of revenues, etc. to be paid to the Licensed Business in respect of
a class of Other Businesses as a whole, instead of on a case-to-case basis.
6. Powers of the Commission:-
(1) The Commission may at any time direct investigation of the
assets and facilities of the Licensed Business for the Other Business of the
Licensee with a view to ascertaining adherence to this Regulation, covering
inter alia:
(a)
whether
the costs and expenses are being appropriately adjusted and paid as specified
in clause 5 above; and
(b)
whether the revenues of the Other Business are
properly accounted for to determine the gross turnover and the amounts payable
to the Licensed Business.
(2) The Commission may authorize any officer of the Commission or
any professional person or expert or consultant to carry out the investigation
under sub-clause (1) above and submit a report to the Commission.
7. Issue of orders and practice
directions:-
Subject to the provisions of the Electricity
Act, 2003 and this Regulation, the Commission may, from time to time, issue
orders and practice directions in regard to the implementation of this
Regulation and procedure to be followed, and various matters which the
Commission has been empowered by this Regulation to direct, and matters
incidental or ancillary thereto.
8. Power to amend
The Commission
may, at any time, add, vary, alter, modify or amend any of the provisions of
this Regulation.
(BY
ORDER OF THE COMMISSION)
S.SURYA
PRAKASA RAO
SECRETARY