Sri Surinder Pal, Member
Sri R.Radha Kishen, Member
Dated:
20-03-2007
O.P. No. 01 of
2007
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 10-06-2004 to 09-06-2005 as per the orders
of the Commission dated 15-06-2004
which has been extended further
up to 31.03.2008. As per
terms and conditions contained in the said exemption order, the RESCO is
required to file its ARR / ERC for the ensuing year by 30th November
of each year.
2. The RESCO filed its ARR/ERC for the year
2007-08 on 28th December 2006. The ARR/ERC filings by the RESCO were
found to be deficient in certain aspects and therefore, clarifications were
sought from it. The Staff of the Commission were asked to discuss certain
issues related to the ARR/ERC computations with the officials of RESCO on
08-02-2007. The Staff placed before the
Commission the clarifications made available and further details furnished by
the RESCO, along with their own
comments /findings.
3. The Commission analyzed the RESCO’s
filings 2007-08 and considered the additional information submitted and
clarifications provided by the RESCO. The Commission’s decisions thereon are
detailed herein below:
4. Revenue Requirement
(a)
CAPITAL BASE
(i) Original Cost of Fixed Assets (OCFA) and
Capital Works - in –Progress (CWIP):
The
RESCO has projected Rs.2646.47 lakhs under OCFA and Rs. 263.46 lakhs under CWIP
in its ARR / ERC filings for 2007-08. Based on
the audited accounts for the year 2005-06 and the approved ARR for FY 2006-07
and projections for the ensuing year submitted by the RESCO, OCFA figure has been changed to Rs.2561.23
lakhs. CWIP has been calculated and
fixed at Rs.199.06 lakhs.
(ii)
Working Capital consists of :
(a) Average Cost of Stores, and
(b) Average Cash and Bank Balances
The
RESCO has projected Rs. 5.00 lakhs towards average cost of stores and Rs. 6.00
lakhs towards average cash and bank balance.
The Commission has examined these projections and admits Rs.2.92 lakhs
towards average cost of stores representing one month’s average repairs and
maintenance expenses and Rs.18.32 lakhs towards average cash and bank balance
representing one month’s all other expenses excluding the power purchase cost .
(iii) Accumulated
Depreciation:
The
figure projected by the RESCO (Rs. 2423.72 lakhs) in the filing has been
accepted without change, based on the latest audited accounts for the year
2005-06 and the projections for the current year and the ensuing year.
(iv)
Other items:
The
RESCO has projected Rs. 626.23 lakhs towards approved loans, and Rs.115.46
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. 248.90 lakhs projected by
the RESCO increases to (-) Rs. 388.31 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 |
2646.47 |
2561.23 |
|
2 |
Capital Works-in-progress |
263.46 |
199.06 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
5.00 |
2.92 |
|
|
b) Avg Cash and Bank balance |
6.00 |
18.32 |
|
A |
Total of positive elements of Capital Base |
2920.93 |
2781.52 |
|
|
Negative
elements |
|
|
|
1 |
Accumulated Depreciation |
2423.72 |
2423.72 |
|
2 |
Approved Loans |
626.23 |
626.23 |
|
3 |
Consumer Security Deposit |
115.46 |
115.46 |
|
4 |
SD Interest to consumer |
4.42 |
4.42 |
|
B |
Total of negative elements of Capital Base |
3169.83 |
3169.83 |
|
|
Net Capital Base (A-B) |
-248.90 |
-388.31 |
(b) Expenditure Items:
(i) Wages and Salaries:
The
RESCO has projected Rs.170.00 lakhs under this head which has been revised to Rs.150.00 lakhs after discussion with the officials of
the RESCO.
(ii)
Administration & General
Expenses and Repairs & Maintenance:
The
RESCO made projections of Rs.15.00 lakhs and Rs.65.00 lakhs under these heads,
which are fixed at Rs.15.00 lakhs and Rs.35.00 lakhs respectively based on the
audited accounts for the year 2005-06 and approved ARR for FY 2006-07.
(iii) Contributions to Contingencies Reserve :
Since
the RESCO has already accumulated more than 5% of Original Cost of Fixed Assets
(OCFA) as the Contingencies Reserve, the maximum admissible as per the
provisions of the Sixth Schedule to the Electricity (Supply) Act, 1948, the
projection of the RESCO under Contributions to Contingencies Reserve (Rs.8.00
lakhs) has not been accepted. The
RESCO has a Contingencies Reserve of
Rs. 109.57 lakhs which together with interest accumulated to Rs.167.92 lakhs as
on 31.03.2006 which the Commission notes is invested in the form of Special
Reserve Fund.
The Commission
regrets that the RESCO has not invested the sums appropriated to the
Contingencies Reserve in securities authorized under the Indian Trusts Act,
1882. Accordingly, therefore,
The Commission directs that the RESCO shall invest the sums appropriated to the
Contingencies Reserve in securities authorized under the Indian Trusts
Act,1882, and such investment shall be
made within a period of 6 months of the close of the year of accounts
in which such appropriation is made.
The sums already deposited otherwise shall be invested in such securities immediately after the expiry of the
maturity periods of the present deposits/securities.
(iv) Other expenditure
items :
The
projections of the RESCO under Rent, rates and taxes (Rs.0.50 lakhs), Approved
loan interest (Rs.64.11 lakhs), Depreciation (Rs.295.92 lakhs), Legal charges
(Rs.0.30 lakh), and Auditors' Fees (Rs. 0.90 lakh) have been allowed without
any change. Contribution to Employee funds (Rs.18.00 lakhs), and Interest on
Security Deposits (Rs.4.42 lakhs) and other expenses (Rs.11.20 lakhs) have been
revised to the actual calculated figures of
Rs.15.40 lakhs, Rs.6.93 lakhs and Rs. 3.00 lakhs respectively based on
prescribed norms.
(v) Total expenditure:
Based
on the above changes, the total expenditure (exclusive of expenditure on power
purchase) works out to Rs. 587.06 lakhs as against the RESCO's projection of
Rs. 653.35 lakhs as detailed in the following Table:
Table – 2
Statement of Expenditure
(Rs. in lakhs)
|
Sl. No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
170.00 |
150.00 |
|
2 |
Admn & General Expenses |
15.00 |
15.00 |
|
3 |
Repairs and Maintenance |
65.00 |
35.00 |
|
4 |
Rent, Rates & Taxes |
0.50 |
0.50 |
|
5 |
Approved Loan Interest |
64.11 |
64.11 |
|
6 |
Depreciation |
295.92 |
295.92 |
|
7 |
Contbn. to Employee Funds |
18.00 |
15.40 |