Sri
K Sreerama Murthy, Member
Sri
Surinder Pal, Member
Dated:
O.P. No. 07 of 2005
1. The
Kuppam Rural Electric
Co-operative Society Limited
has been exempted from the requirement of obtaining a Distribution and Retail
Supply Licence for the supply area specified in the Licence granted to it earlier under AP Electricity Reform
Act, 1998 for one year, from
2. The
RESCO filed its ARR/ERC for the year 2005-06 on
3. The Commission analyzed the RESCO’s filings and the representations made to the
Commission in the filings, and considered the additional information submitted
and clarifications provided by the RESCO. The Commission’s decisions thereon
are detailed herein.
4.
Revenue
Requirement
(a)
CAPITAL BASE
(i)
Original Cost of Fixed Assets (OCFA) and Capital Works - in – progress (CWIP):
The RESCO has projected
Rs.2634.00 lakhs under OCFA and Rs.
313.00 lakhs under CWIP in the ARR / ERC filings for
the year 2005-06. Based on the audited accounts for the year 2003-04 and the
approved ARR for FY 2004-05 and projections for the ensuing year submitted by
the RESCO, the OCFA is arrived at Rs.2341.37 lakhs,
after adjustment of consumer
contributions and
grants from other sources received by the RESCO.
(ii)
Working Capital :
(a) Average
Cost of Stores
(b) Average Cash and Bank
Balances
The RESCO has projected Rs. 3.00 lakhs towards average
cost of stores and Rs. 8.00 lakhs
towards average cash and bank balance.
The Commission admits Rs.2.50 lakhs towards
average cost of stores representing one month’s average repairs and maintenance
expenses and Rs.12.18 lakhs towards average cash and
bank balance representing one month’s all other expenses excluding power
purchase cost.
(iii) Accumulated Depreciation:
The figure projected by
the RESCO (Rs. 1847.00 lakhs)
in the filing has been accepted without change, based on the latest audited accounts
for the year 2003-04 and the projections for the current year and the ensuing
year.
(iv)
Other items:
The RESCO has projected
Rs.415.00 lakhs towards loans, Rs.89.00 lakhs for consumer security deposits and the Commission has
accepted the same.
(v) Summary of Capital Base:
With the above changes,
the Net Capital Base of Rs. 607.00 lakhs projected by the RESCO comes down to Rs. 318.05 lakhs as per the
details given in the following table:
Table- 1
Statement of Capital Base
Rs. in Lakhs
|
Sl. No. |
Positive elements |
RESCO |
APERC |
|
1 |
Original Cost of Fixed
Assets |
2634.00 |
2341.37 |
|
2 |
Capital
Works-in-progress |
313.00 |
313.00 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of
Stores |
3.00 |
2.50 |
|
|
b) Avg
Cash and Bank balance |
8.00 |
12.18 |
|
A |
Total of positive
elements of Capital Base |
2958.00 |
2669.05 |
|
|
Negative elements |
|
|
|
1 |
Accumulated
Depreciation |
1847.00 |
1847.00 |
|
2 |
Approved Loans |
415.00 |
415.00 |
|
3 |
Consumer Security
Deposit |
89.00 |
89.00 |
|
B |
Total of negative
elements of Capital Base |
2351.00 |
2351.00 |
|
|
Net Capital Base (A-B) |
607.00 |
318.05 |
(b) EXPENDITURE ITEMS
(i) Wages and Salaries :
The RESCO made a
projection of Rs.90.80 Lakhs and the same has been
approved by the Commission under this Head.
(ii)
Administration & General Expenses and Repairs & Maintenance:
The RESCO made
projections of Rs.45.00 lakhs and Rs.
35.00 lakhs under these heads which are reduced to
Rs.17.20 lakhs and Rs.30.00 lakhs
respectively based on the audited accounts for the year 2003-04 and approved
ARR for FY 2004-05.
(iii)
Other expenditure items :
The projections of the
RESCO under Approved loan interest (Rs.3.50 lakhs),
Depreciation (Rs.271.91 lakhs), Contribution
to Employee funds (Rs.1.50 lakhs), Legal charges
(Rs.1.00 lakh), Auditors' Fees (Rs.
0.70 lakh) and other expenses (Rs.3.00 lakhs) have been allowed without any change. Rent, rates and taxes (Rs.6.00 lakhs)
has been reduced to Rs.3.00 lakhs based on past
trend. Contribution to Contingencies
Reserve (Rs. 6.00 lakhs)
and Interest on Security Deposits (Rs. 1.50 lakhs) have been
adjusted to the actual calculated figures of Rs.5.85 lakhs
and Rs.5.34 lakhs respectively based on prescribed
norms.
(iv)
Total expenditure:
Based on the above
changes, the total expenditure (exclusive of expenditure on power purchase)
works out to Rs. 433.80 lakhs
as against the RESCO's projection of Rs. 465.91 lakhs as detailed
below:
Table – 2
Statement of Expenditure
Rs. in Lakhs
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
90.80 |
90.80 |
|
2 |
Admn & General
Expenses |
45.00 |
17.20 |
|
3 |
Repairs and
Maintenance |
35.00 |
30.00 |
|
4 |
Rent, Rates &
Taxes |
6.00 |
3.00 |
|
5 |
Approved Loan Interest |
3.50 |
3.50 |
|
6 |
Depreciation |
271.91 |
271.91 |
|
7 |
Contbn. to Employee
Funds |
1.50 |
1.50 |
|
8 |
Contbn. to
Contingency Reserve |
6.00 |
5.85 |
|
9 |
Interest on Security
Deposit |
1.50 |
5.34 |
|
10 |
Legal Charges |
1.00 |
1.00 |
|
11 |
Auditors' Fees |
0.70 |
0.70 |
|
12 |
Other Expenses |
3.00 |
3.00 |
|
13 |
Total Expenditure |
465.91 |
433.80 |
|
|
(excluding purchase of
energy) |
|
|
(c) Reasonable Return:
Based on the changes made to the
Capital Base (accepted by the RESCO), the reasonable return works out to Rs. 52.96 as against Rs. 80.99 lakhs projected by it.
The RESCO has projected an amount of
Rs. 110.00 lakhs under this
head and the Commission has accepted the same.
(e) Recovery of advance made to a Polytechnic:
As directed by the Commission, in
the earlier Orders for FY 2001-02, FY 2002-03, FY 2003-04 and FY 2004-05, the
RESCO has to recover Rs.110 lakhs advanced by it to a
Polytechnic in Kuppam. Hence, the RESCO shall continue to recover
the balance amount in regular installments with intimation to the Commission on the status of
recovery at the end of every quarter.
(f) The Revenue Requirement for
the FY 2005-06
(Excluding
power purchase cost)
The Aggregate Revenue Requirement
(excluding power purchase cost) works out to Rs. 376.77 lakhs as against Rs. 436.90 lakhs projected by the RESCO. This is after taking into
account the Reasonable Return of Rs.52.96 lakhs and
Non-Tariff income of Rs.110.00 lakhs.
(g) Efficiency
Gains
The RESCO has not projected any
efficiency gains for FY 2005-06. The Commission desires that the RESCO should
improve its efficiency to reduce losses and collect all the outstanding arrears
towards sale of energy. The Commission
has fixed Rs.20.00 lakhs towards the efficiency
gains, considering its total power demand of 160.79 MU and efficiency already
achieved during the last five years. Thus, the net aggregate revenue
requirement works out to Rs.356.77 lakhs.
(h) Expected revenue from charges:
The RESCO has filed the Expected
Revenue from Charges at Rs.1128.80 lakhs based on
current Tariff Rates effective from 01-04-2004 which has been reduced to
Rs.701.36 lakhs to give effect to the changes for the
agricultural category, where the revenue has been revised as per new modified
Agricultural policy of Government of Andhra Pradesh. This is adopted for the calculation of amount
available with the RESCO for power purchases. Category-wise sales and revenue projected by
the RESCO and as approved by the Commission are given in the table below:
Table – 3
Category-wise Sales and
Revenue
|
Sl. |
|
RESCO |
APERC |
||
|
No. |
CATEGORY |
Sales |
Revenue |
Sales |
Revenue |
|
|
|
MU |
Rs. Lakhs |
MU |
Rs. Lakhs |
|
1 |
LT I - Domestic |
13.01 |
352.97 |
||