Analysis of ARR & Tariff Proposal of CESU for FY 2011-12. February 05, 2011 By World Institute of Sustainable Energy (Consumer Counsel). ARR submission and Proposal of CESU. ARR submission of CESU. In Rs. Cr. Tariff Proposal of CESU.
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Analysis of ARR & Tariff Proposal of CESU for FY 2011-12
February 05, 2011
World Institute of Sustainable Energy
In Rs. Cr.
The licensee requests the Hon’ble Commission to accept the proposal of ARR and bridge the revenue gap through combination of
Analysis of ARR by Consumer Counsel
27% is the distribution cost of proposed ARR
-CESU has proposed 56% hike in ARR for 2011-12
- 35% power purchased is loss and actual sale is 65%
Observation: Utilities demand forecast is on higher side. This will result in higher power purchase cost in ARR and corresponding impact on consumers
Submission : Excess power purchase cost is mainly due to excess loss at LT level. Utilities should be directed to drastically reduce the LT loss level.
Observation: Distribution loss in HT and LT level is much higher than the overall distribution loss (taking together LT, HT and EHT consumption) and approved distribution loss in BP.
Submission: Utility needs to explore various measures to reduce LT and HT distribution loss. Further, faulty metering and power theft needs to be drastically reduced with the help of dedicated flying squad and energy police stations. Such energy police stations directly controlled by senior police officer attached to energy department could improve the efficiency of energy police station.
The utility has proposed the Employee cost of Rs 329.42 Cr in ARR with 47.31% hike from the earlier FY 2010-11
Most of the A&G expenses projected by the utility are based on 7% hike from the current year in line with LTTS order. Further, utility has proposed higher expenses under the heads Rent rate and Taxes, legal expenses, consultancy charges, technical fees, advertisement, inspection fees, franchisee expenses, group insurance, special police stations, SAP, AMR etc without any detailed supporting plan and breakup of cost components. These expenses shall not be allowed to pass through in the ARR.
Utility has proposed Rs. 62.55 Cr as R&M expenses. These expenses were projected as 5.4% of the opening GFA. (Rs. 1158.25 Cr. at the beginning of FY-2011-12)
Utilities GFA approved by commission as on 31.03.2010 were 855.35Cr. Utility has projected the GFA as Rs. 1158.25 Cr. at the beginning of ensuring year. Which seems to be on higher side. Therefore Hon. Commission should consider the new additional GFA (during FY 10-11) over and above approved GFA of Rs. 855.35 and equivalent R&M be allowed to pass through in the ARR.
Utility has proposed Rs 97.43 Cr as net interest charges in the ARR. This includes the major component of interest on world bank loan Rs. 79.38 Cr.
Proposed interest charges should be reviewed with actual interest payments during FY 10-11.
Utility has proposed Rs 17.86 Cr as provision for Bad Debt by considering 99% collection efficiency as against 99% approved in BP.
Provision of bad dept 1% of revenue from sale of power is in line with the collection efficiency targets approved in BP.
As proposed equity capital is constant for the current and ensuring year. There is no equity capital infusion. Hence the Return on Equity should remain same as that of approved for FY 2010-11.
Licensee has proposed Rs 11.64 Cr as RoE which is same as that of last years approved RoE which may be accepted.
Growth in LT consumers
Growth in Kutir Jyoti / BPL consumers