Sri Surinder Pal, Member
Sri R.Radha Kishen, Member
Dated: 20-03-2007
O.P. No. 38 of 2006
The Co-operative
Electric Supply Society Limited …….
Applicant
1. The Co-operative Electric Supply Society
Limited, Siricilla, 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 orders, 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 30th November 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 for 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.3991.00 lakhs under OCFA and Rs. 564.00 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, the OCFA is arrived at Rs.3965.11
lakhs, after adjustment of consumer contributions and grants from other sources
received by the RESCO. CWIP figure has been calculated and fixed at Rs.458.25 lakhs.
(ii) Working
Capital consists of:
(a)Average Cost of Stores, and
(b)Average Cash and Bank Balances
The RESCO has projected Rs. 15.00 lakhs towards average cost of stores
and Rs. 120.00 lakhs towards average cash and bank balance. The Commission admits Rs.4.17 lakhs towards
average cost of stores representing one month’s average repairs and maintenance
expenses and Rs.79.84 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. 3116.00 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 projections by the RESCO towards approved loans (Rs.179.00 lakhs)
and consumer security deposits
(Rs.302.00 lakhs) have been accepted .
(v) Summary
of Capital Base:
With the above changes, the Net Capital Base of Rs.1093.00 lakhs projected
by the RESCO comes down to Rs. 910.37 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 |
3991.00 |
3965.11 |
|
2 |
Capital Works in Progress |
564.00 |
458.25 |
|
3 |
Working Capital |
|
|
|
|
a) Average Cost of Stores |
15.00 |
4.17 |
|
|
b) Avg Cash and Bank balance |
120.00 |
79.84 |
|
A |
Total of positive elements of Capital Base |
4690.00 |
4507.37 |
|
|
Negative
elements |
|
|
|
1 |
Accumulated Depreciation |
3116.00 |
3116.00 |
|
2 |
Approved Loans |
179.00 |
179.00 |
|
3 |
Consumer Security Deposit |
302.00 |
302.00 |
|
4 |
Interest on consumer security deposits |
0.00 |
0.00 |
|
B |
Total of negative elements of Capital Base |
3597.00 |
3597.00 |
|
|
Net Capital Base (A-B) |
1093.00 |
910.37 |
(b) Expenditure
Items:
(i)
Wages and Salaries:
The RESCO has projected Rs. 750.00 lakhs under this head which has been
accepted without change.
(ii)
Administration and
General Expenses and Repairs and Maintenance:
The RESCO made projections of Rs.50.00 lakhs and
Rs. 81.00 lakhs respectively under these two heads. Administration and General Expenses
has been accepted without change, whereas Repairs and Maintenance has been reduced to Rs. 50.00 lakhs based
on the 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 is Nil. The RESCO has a Contingencies Reserve of
Rs.863.80 lakhs as on 31.03.2006 out of which, the Commission notes that
Rs.590.89 lakhs are in the form of
Fixed Deposits in nationalized banks and Rs.127.39 lakhs in the form of Fixed
Deposits in co-operative banks.
The Commission regrets that the RESCO has not invested all 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 Approved loan interest (Rs27.00
lakhs), Depreciation (Rs. 257.00 lakhs) and legal charges (Rs. 2.00 lakhs) have
been allowed without any change. Contribution to Employee funds (Rs.189.00
lakhs), Interest on Security Deposits (Rs. 20.00 lakhs) and other expenses
(Rs.60.00 lakhs) have been adjusted to the actual calculated figures of
Rs.103.13 lakhs, Rs.18.12 lakhs and Rs.5.00 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. 1262.25 lakhs as against the
RESCO's projection of Rs. 1436.00 lakhs as detailed in the following Table:
Table – 2
Statement of expenditure
(Rs. in
lakhs)
|
Sl.
No. |
Particulars |
RESCO |
APERC |
|
1 |
Wages and Salaries |
750.00 |
750.00 |
|
2 |
Admn & General Expenses |
50.00 |
50.00 |
|
3 |
Repairs and Maintenance |
81.00 |
50.00 |
|
4 |
Rent, Rates & Taxes |
0.00 |
0.00 |
|
5 |
Approved Loan Interest |
27.00 |
27.00 |
|
6 |
Depreciation |
257.00 |
257.00 |
|
7 |
Contbn. to Employee Funds |
189.00 |
103.13 |
|
8 |