| TARRIF
ORDER FOR 02-03/03-04/04-05
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ORDER
OF THE
AND Case No. T.P. - 14 of 2003-04
Present : For the petitioners for 2002-03 Dr.
G. D. Gautama, Chairman, W.B.S.E.B. For the objectors who took part in/appeared at the hearing for 2002-03
Mr. Rajesh Marwah, Director, M/s. EDCONS (MKS) EDCONS
(MKS) Casting Private Limited
West
Bengal Cold Storage Association
Prestige
Properties Pvt. Ltd., 2,India Exchange Place, Kolkata-1.
Objectors who had filed written objections for 2004-05 Shri
P. Chakraborty
Dated:
The 9th June, 2004
CHAPTER 1: INTRODUCTION :
1.2 The West Bengal State Electricity Board is a board under the 1948 Act and has now become a licencee under the Electricity Act, 2003. In terms of the Licencee, the WBSEB is supplying Electricity in the State of West Bengal except in the parts covered by other licencees. In terms Section of 172 of the Act, the Board shall be deemed to be a State Transmission Utility and licencee for a period of one year 72 from 10th June, 2003 and shall perform the duties and functions of the State Transmission Utility and licencees in accordance with the provision of this Act, rules and regulations. The State Government has power to authorize the State Electricity Board to continue to function as the State Transmission Utility or licencee for such period beyond such period of one-year as mutually decided by the Central Government and the State Government. The Commission has not received any such notification of the Government of West Bengal extending such period. 1.3 The WBSEB had earlier filed tariff petitions for fixation of tariff for financial year 2000- 01and 2000-01 for which tariff order dated 7th December, 2001 has been recorded for the concerned years. The above order of the Commission has been challenged by WBSEB before the Hon’ble High Court at Calcutta and Commission has not received any direction on such order. 1.4 WBSEB has filed tariff petition for 2002-03 and 2003-04. 1.5 Notifications were issued in prominent newspaper published from Kolkata (Two in English and two in Bengali) both for 2002-03 and 2003-04 separately calling upon the interested parties to file objections, if any revision of tariff proposed through the petitions of the WBSEB and directions were issued to WBSEB to file rejoinders for such objections within the specified time. The interested parties were afforded opportunities for inspection of the petitions and other relevant records and to take copies their of as per CBR. 1.6 The objections were received from the objectors for the financial year 2002-03. The names of such parties has been given earlier. The hearings of the petition for the financial year 2002-03 was taken on 26-27 November of 2002 after due notification in the news paper and the objectors who have filed objections were allowed to take part, in addition to other persons who intend to be heard. The list of objectors who were heard in the public hearing has been given in the earlier part of the order. The notice of the hearing was published in prominent newspaper in Kolkata (two in English and two in Bengali). 1.7 The objections were received from the objectors against the tariff petition for the 2003-04, the names of whom have been given in the earlier part of the order. The hearing was allowed to be attended by all the persons who had filed written objections and also to other persons who intend to raise points during the hearing. The notice for hearing was given in prominent newspaper of Kolkata (two in English and two in Bengali). The hearing for the tariff petition of the 2003-04 was held between 10 to12th March, 2003. 1.8 The Commission has also passed an interim order dated 23rd April, 2000 on the tariff petition for the year 2003-04, in excise of its power under CBR (conduct of business Regulations, 2000) and allowed an adhoc increase of 52 paise / KWH with effect from 1st April, 2003 with the terms and conditions mentioned therein. Present order also disposes of the interim order dated 23rd April, 2003 in the manner stated in this order.
1.10 As per the Electricity Act 2003, the function of the Commission has been given under section 86 of the Act. The tariff is to be determined by the Commission and the power of the determination for tariff has been given under section 62 and the procedure for tariff order is given under section 64 of the Act. The guidance for specifying the terms and conditions for determination of tariff has been given under section 61 of the Act with a proviso that the terms and conditions for determination for tariff as per the earlier Acts shall continue to apply for a period of one year or until terms and conditions are specified the under section whichever is earlier. The Commission has already issued the terms and conditions under section 61 for consultation before its notification and its acceptance and notification will take some more time. The Act also has separated provisions relating to generation, transmission, distribution, sale of energy and trading of energy. Section 172 dealt with transitional provisions. Section 174 of the Act gives over riding effect notwithstanding anything inconsistent contained in any other law except protection provided for Consumer Protection Act, Automatic Energy Act and Railway Act in terms of section 173 of the Act. The appeal against the orders of the Commission lies to Appellate Tribunal for Electricity under Section 111of the Act, 2003. These are some of the important provisions of the Electricity Act, 2003 having bearing on present tariff petition and appropriately dealt with as may be required in the order. 1.11 WBSEB submitted its tariff petition for the year 2004-05, which bears the case No. TP 40/2003-04 on 30th December, 2003 under the Electricity Act, 2003. The Licencee was instructed to publish the application in leading newspaper of Kolkata (two in English and two in Bengali) in the form and manner as has been directed by the Commission wherein it has been also stated that objectors may file written submission/objection in support of or against petition directly to the commission within time and persons can inspect the copy of the petition in the office of the Commission and obtain copies thereof if required apart from opportunity to inspect the petition at selected offices of WBSEB. 1.12 The objections have been received from the objectors the names of whom have been given in the earlier part of the order. 1.13 The present petitions are for fixation of tariff relating to the years 2002-03, 2003-04 and 2004-05. The Commission has carefully considered the question as to whether the tariff order for each year should be issued separately or a combined tariff order should be issued keeping in view the balance of convenience and inconvenience both in favour of utility and consumers. The Commission also noted that the financial year 2002-03 and 2003-04 are already over and 2004-05 has started. In case the Commission issues separate Tariff orders for previous years, then it may create problem not only to the utility which has to collect areas for last 2 years. But also to consumers who have to pay arrears for such period. The consumers particularly Commercial, Industrial and Domestic consumers have made a plea that the tariff should normally be revised from a perspective date as it’s difficult for commercial and industrial consumers to recover the additional cost from their consumers and it jeopardize the earlier planning if tariff is revised from retrospective effect. The Commission is therefore issuing one combined order keeping in view the above concerns and also has dealt pros and cons appropriately in theorder and tariff is being revised retrospective effect from the start of Financial Year 2004-05. It may be added that the Commission has taken this as a policy and is being followed in case of other licencees also. Accordingly, the present order for tariff petitions for the year 2002-03, 2003-04 and 2004-05 is being recorded keeping in view of the provisions of the Act, 2003 and also directions of the Hon’ble Supreme Court of India and Hon’ble High Court at Calcutta on interpretation which are relating and may be applicable. Due cognizance has been taken of the relevant and applicable provisions of Act of 1998 while determining the revenue requirement and the tariff of the relevant years to the extent applicable. CHAPTER
– 2 : THE CASE OF WEST BENGAL STATE ELECTRICITY BOARD (WBSEB)
2.2 It was stated that WBSEB is a State Electricity Board constituted under Section 5 of the Electricity (Supply) Act, 1948 and is in the business of generation, transmission and distribution of electricity in the state of West Bengal. The area of the WBSEB is extended to whole of the West Bengal except for the part of the areas covered by licencees and the sanction holders. 2.3 It was further stated that the Board has determined the cost, revenue and tariff in accordance with Section 29 of the ERC Act 1998 and direction given by the Hon’ble Commission in its tariff order dated 7th December, 2001 against WBSEB’s tariff petition for the year 2000-01 and 2001-02 in the absence of separate tariff regulations. The Board has requested a rate of return of 3% on net fixed asset less consumers’ contribution at the beginning of the year after accounting for all expenses properly chargeable to revenue in accordance with the Section 59 of the Electricity (Supply) Act 1948. 2.3.1 Accordingly, the Board has attempted to reduce cross subsidies and rationalize the tariff for various classes of consumers in line with Section 29 of the ERC Act and Section 42(b) of the CBR. 2.4 According to the Board, they recognize the need to measure the losses accurately and are taking steps to reduce the margin of error in loss determination and to reduce the overall T & D loss by 2% to 34%. 2.5 The Board has presumed a subsidy support from the Government of West Bengal of Rs. 100 crores which was equivalent to the subsidy granted by the Government of West Bengal during last year. 2.6 According to the Board their total expenditure including surplus required for the year 2002-03 is Rs. 3699.25 crores and Rs. 3618.46 crores net from sale of power. The Board further indicated that the revenue from the existing tariff is Rs. 2638.62 crores and after accounting for subsidy of Rs. 100 crores the net shortfall is Rs. 879.84 crores which they proposed to recover from the increase in tariff and increase in meter rent and other charges. 2.7 The Board further stated that as the Board is in the process of strengthening its management information system and is making considerable efforts to meter all consumers the Commission may grant a waiver for not conforming to prescribed data formats. 2.8 The Board further indicated that the cost estimate for power purchase are based on existing tariff of the utilities supplying power to WBSEB and if their tariff is revised upward then the revised power purchase price may be taken while revising tariff of WBSEB. 2.9 T & D loss 2.9.1 The Board indicated that the T & D loss at 30% for the year 2000-01 excluding the energy supply to bulk licencee inflated the existing revenue by Rs. 325 crores. They also find that exclusion of transmission loss associated with supply of power to licencees is not correct as in EHV network the loss of transmission of power is 4 to 5% as per report of the Committee of Experts on sub-transmission and distribution system constituted by the Ministry of Power, Govt. of India and including the sale of energy to bulk licencees the net T & D loss allowed by the Commission works out to 27.6% for 2000-01. On similar basis the T & D loss allowed for 2001-02 works out to 25.2%. 2.9.2 The Board further indicated that while the Board fully appreciates the necessity of reduction of T & D loss gradually, reduction of T & D loss to the level fixed by the Commission with further bench-mark to reduce the T & D loss progressively by 2.5% each year is absolutely difficult to achieve. The Board is making all out efforts to reduce such losses and has also committed itself to time bound schedule for reduction of these losses in terms of MOU signed by the Government of West Bengal and Government of India. The Board also gave details of T & D loss allowed by some other Commissions for different years. 2.9.3 The Board further informed that it would take some time to implement the observation of the Committee of experts on sub-transmission and distribution system constituted by the Government of India. 2.9.4 The Board further informed based on their sample study the system loss for 1999-2000 to be 39.2% of the energy input and the Board has started taking steps to facilitate accurate estimation of technical and commercial losses. Simultaneously, action has been initiated to ensure billing of the consumers, stoppage of theft of energy etc. and Board felt that T & D loss could only be reduced to 34% in the year 2002-03. Board further informed that they have been deprived of concentrated load and mainly operating in rural areas. 2.9.5 On energy balance, the Board worked out the consumption based on T & D loss of 34.04% and gave various details of their power purchase including source of purchase from various utilities. 2.9.6 The Board indicated that power purchase planning has been done keeping in view the estimated system demand based on average load growth, maximum generation that may be available from the Board’s power stations, Board’s commitment to supply peak demand of the system, to maintain peak-off-peak ratio in respect of drawal of power from power suppliers required as per prudent utility practice and optimization of power purchase cost. 2.9.7 The Board further gave information relating to peak demand, system demand and other relevant details in regard to purchase of power. 2.9.8 On the question of purchase of power from DVC, it was opined by the Board that since DVC Act has not been repealed consequent upon promulgation of Electricity Regulatory Commission Act, Board cannot develop any infrastructure within the valley area at a voltage of 30 KV and above without obtaining permission of DVC in terms of the DVC Act 1948. 2.9.9 The Board projected the net purchase of 14475.02 MU at a cost of Rs. 2474.36 crores and with transmission charges the total power purchase cost works out to Rs. 2528.89 crores at per unit cost of Rs. 174.71 per unit. This will be subject to increase based on tariff increase sanctioned for the utilities. 2.10 As regards own generation and cost of power generation the Board gave the details of own generation from various stations including hydel stations, gas stations and diesel stations. 2.10.1 The Board also gave justification for low PLF of the Teesta Canal Fall Hydel Project (TCF). It was stated by the Board that during project formulation it was anticipated that Teesta Barrage Project of Irrigation Department consisting of several barrages and canal systems will be completed much before the hydel power project on Mahananda Main Canal. Although the power station has been commissioned during ’97-’99, the downstream canal systems are yet to be completed. As a result there is no outlet for designed peak discharge of 330 cusec to any other river. The irrigation department in view of the above reasons has restricted water flow to maximum of 110-130 cusec even during monsoon. During non-monsoon (December to May) the project is getting adequate water. 2.10.2 The Board further intimated that constant interaction is being made with the Irrigation Department for availability of designed peak water by completing the balance work, providing additional escape and increasing the capacity of Dauk Barrage discharge to downstream so that optimum generation can be achieved during monsoon. 2.10.3 The Board gave the figures of gross energy expected from their hydel generation with the PLF of 29.09% at 479.50 M.U. The total energy expected to be exported (at Busbar) is 476.71 MU. 2.10.4
As regards generation from gas stations, the Board gave details
of their 100 MW gas turbine stations at Kasba, Haldia and Siliguri
which was stated to have been built in late 70’s when there
was severe power crisis. 2.10.6 The Board further informed that the operation of gas turbine was not required due to comfortable availability of power in WBSEB system and they contended that possibility of running all gas turbine sets could not be completely ruled out either due to failure of regional grid or due to reduced level of availability of power due to simultaneous outage of number of thermal units. However, they did not indicate the generation of energy from gas station during 2002-03. 2.10.7 For diesel station the Board gave detail of diesel generation plant at Rudranagar in Sagar Island and they had assumed a generation of 0.5 MU of electricity in 2002-03. 2.11 On employees cost the Board contended that employees cost per kwh in WBSEB is lower than all India average and they further pointed out that as WBSEB supplied power mostly to rural and remote areas the Board is left with no choice, but to maintain a certain minimum level of employees to serve its consumer, even though the Board had few areas of concentrated loads. 2.11.1 According to the Board, they have shortage of technical manpower to the extent of 5811 against the sanctioned strength of 28588 and the Board has no alternative, but to opt for contractual engagement particularly in technical activities to meet the work targets set in the recently signed MOU between Government of India and Government of West Bengal. The Board further informed that in the non-technical jobs the Board has a shortage of 4844 manpower against sanction of 17558 but for non-technical jobs, shortage is being managed by Board’s own manpower through different reorientation training programmes. 2.11.2 The Board also justified payment towards overtime, terminal benefit and other employees cost. 2.11.3
The Board also gave details and justification for claiming the increase
in operation and maintenance expenses, administration and establishment
charges, bad debts, interest and financing charges, depreciation
etc. 2.13 The Board also gave justification for cost overrun of Teesta Canal project and the main reasons according to Board were, adverse Rs.-Yen exchange rate, delay in acquisition of land and eviction, local problems during initial period of construction, non-availability or delay in construction drawings from the Consultants, non-availability of adequate fund, suspension of work, defective supply of equipment / material and mismatching of different materials and dewatering more than the earlier assessment. 2.14 The Board also gave suggestion for increase in meter rent and other income and segmentwise tariff for various categories of consumers, introduction of payment of fixed charges for certain categories, rationalization of monthly demand charge, late payment surcharge, tariff for supply of power to labourlines in tea gardens and withdrawal of certain rebates and incentives including concessions to new industries, expanding industries and sick and closed industries. The Board gave figures relating to their financial requirement for the year.
2.15.1 After the presentation of the petition a preliminary scrutiny was made in the office of the Commission and the utility was asked to give certain information and clarifications in addition to those the utility itself has given in the petition 2.15.2 In their clarification dated 2nd May, 2002, the Board explained the reasons for claiming the arrears of DVC tariff, legal information in regard to compulsion of purchase of costlier power from DVC in the light of Section 29 and 49 of the ERC Act vis-a-vis DVC Act. 2.15.3 The Board further clarified that the power purchase planning has been done keeping in view the optimization of power purchase cost and for radial load the concept of merit order purchase does not hold good. The Board gave details philosophy of power purchase showing that the costliest power has been drawn by the Board through interconnection for the balance requirement from NTPC. 2.15.4 The Board gave details of the capacity of the hydel projects and availability of each machine. 2.15.5 The Board further narrated the reasons for delay and cost overrun of Teesta Canal Hydro Electric Project. The Board further submitted the reasons for maintenance of gas turbine stations. 2.15.6 The Board further gave justification for the increase in employee’s cost, even when the employees of STPS and BTPS has been transferred to WBPDCL. 2.15.7 The Board furnished further details of capital work-in-progress and statement of loans, calculation of interest, capitalization of interest and its basis and capitalization of expenses. 2.15.8 The Board also gave the details and their views relating to the procurement of meters from the respective consumers. 2.15.9 The Board further informed that the generation from the Rangpoo Hydro Electric Project was not taken earlier which may be taken to the tune of 4 MU. 2.15.10
The Board further submitted its views on classification of the consumers
including cross subsidy. CHAPTER
– 3 : OBJECTIONS AGAINST TARIFF PETITIONS FILED BY WBSEB AND
3.2 M/s. EDCONS (MKS) CASTINGS PVT. LTD. stated in their objections that they were opposed to the new clause inserted in WBSEB tariff dated 7.12.2001 whereby the WBSEB, apart from enforcing the AMGR shall also charge a demand charge at a rate of 75% of the average maximum demand of the preceding 12 months. They pointed out that the earlier tariff had set the limit of demand charge as 50 KVA for 11 KV and 1500 KVA for 33 KV supply. It was stated that the WBSEB was adequately covered by the minimum charge clause (AMGR) and the present rate of demand charge had only duplicated the liability of the industries. The WBSEB justified the charging of minimum charge and monthly demand charge based on the tariff order of the Commission. The Board also suggested no relief in payment of demand charge for the period when establishment of consumer could not operate due to certain eventualities. 3.3 An objection has come from the MES at Alipur. It has been stated that the MES is responsible for supply and distribution of electricity to the Defence Establishment in the Cantonment and Military stations. MES is purchasing bulk power from the WBSEB for supply to the Defence Establishment. It was further stated that the consumption in MES is for residential as well as office accommodation and the MES, therefore, is a purely domestic consumer, although it bought power in bulk and incurred huge expenditure for its distribution network and also maintenance of the network by its own fund. It has been indicated that there is no policy guidelines regarding the category in which electric consumption by MES is to be treated and the MES has been placed in the HT domestic category of consumers. They insisted that separate category in tariff schedule of WBSEB for supply to MES be created. 3.3.1 The MES indicated that if there is any difficulty to introduce a separate category for them they should be granted a licencee status. 3.3.2 MES further indicated that minimum charges payable to the WBSEB on the basis of connected load should not be applicable to MES consumers. They further indicated that the Delhi Electricity Regulatory Commission had placed the MES in the licencee category in a bid to rationalize the tariff structure and similar action was taken by the Regulatory Commission in Gujrat, Karnataka and Rajasthan. They demanded a licencee consumer status. The Board indicated that licence status to MES could not be accommodated in view of the provisions of Indian Electricity Act 1910 and all high voltage industrial consumers were having some inherent domestic and commercial load as in the case of MES and tariff was ideally required to be fixed on the basis of cost of supply at a particular voltage. The Board further contended that defence establishment was having both domestic and commercial load and justified the levy of fixed charge on the basis of contract demand. 3.4 M/s. Birla Carbide & Gas (A unit of Birla Corporation Ltd.) came up with an objection through their Secretary. It was indicated that they were major consumer of power and the tariff proposal, if approved by the Commission would be a death knell for the Birla Carbide & Gases. 3.4.1 They indicated that the existing tariff of WBSEB is far above the justifiable level of cost of supply to high voltage consumers. They insisted that tariff should be fixed without resorting to cross subsidy as was directed by the Supreme Court. They further indicated that the proposals of WBSEB in the instant petition were inconsistent with the principles and statutory provisions of different clauses of Section 29 of the ERC Act 1998. 3.4.2 They indicated that Calcium Carbide was a power intensive industry and power constituted almost 45% of the cost of production of Calcium Carbide and insisted again that the tariff should be based on cost of supply to high voltage customers.
3.4.4 They gave comparative figures for India and other neighbouring countries regarding power tariff to say that compared to Bhutan and China, the tariff in West Bengal was abnormally high. 3.4.5 Giving figures regarding power purchase by WBSEB the objectors submitted that the average cost of power purchase as quoted by WBSEB did not appear to be based on actual facts. 3.4.6
On the question of T & D loss it was indicated that the loss
for 33 and 11 KV supplies have been clubbed together and they gave
a voltagewise analysis for the high voltage supplies to say that
losses for high voltage consumers in no case could be beyond 9%
for high voltage supply. 3.4.8 On the question of load factor rebate it was stated that the WBSEB did not concede load factor rebate to Rate S(b) on a plea that these consumers were in the concessional category although they did not specifically mention this fact in the tariff proposal. 3.4.9 On the question of maximum demand charge the objector stated that the demand charge is totally unjustified and on late payment surcharge they stated that it should be brought down, even from the present level of 1.25% per month. 3.4.10 They indicated the differentiating factors of Birla Carbide and Gases and prayed for rejection of the tariff petition of WBSEB for 2002-03 or, in alternative, to direct the WBSEB to re-work the tariff after making fair disclosure of its cost and energy loss and the cost reduction / efficiency improvement measures. 3.5 M/s. Jayasree Insulators raised objections on the thumb-rule inflation of the likely expenses. It was stated that the Board had projected power generation which was a mere 11% capacity utilization and despite this they are seeking a hike in the expenses by 6%. 3.5.1 The Board, according to the objectors should be directed to re-work their projected power purchase and repair and maintenance costs. 3.5.2 On transmission and distribution losses, the projection was set to be abnormally high and was illogical. According to the Objectors it could never have been more than 5% for EVH and HV consumers. 3.5.3 The Board, according to the objectors has prayed for the power purchase at a higher rate for three stations – Kahalgaon, DVC and Bakreswar and they also projected its purchase particularly when they are operating at 11% capacity. 3.5.4 According to the objectors the finance charges of the Board are increasing in absolute terms as well as percentage terms and it may be due to poor quality of planning on the part of the Board. 3.5.5 The objectors also questioned the expenses on employees cost, repair and maintenance including consumables. 3.5.6 They also prayed for special rate for exporting unit and reviewing the restriction on rebate for power factor. 3.5.7 The objectors also pointed out the poor quality of power both on account of frequency and voltage etc.
The Board justified the capacity utilization as availability of
power from Board’s Generating Stations has gone down due to
transfer of Bandel and Santaldih power stations and gave clarification
on the purchase rate from Kahalgaon Power Station of NTPC, DVC and
Bakreswar Thermal Power. The Board further justified the projected
T & D loss of 34% as it was lower than the T & D loss approved
by different ERCs and contended that they were not in a position
to reduce the loss as directed by the Commission within such small
period. The Board further justified the higher T & D loss in
view of the Supreme Court judgement in the case of CESC Ltd. in
which the Supreme Court has allowed more T & D loss than allowed
by the Commission. The Board is also averse to give any concessional
tariff to exporting units, enhancement of power factor rebate and
contended that the Board had no significant role in controlling
fluctuation of frequency. The Board contended that the tariff to the Society was initially fixed at a very low level with the idea that the Society should ultimately be called upon to pay at the rate of average cost of supply at 11 KV and in the tariff they had linked this rate with their cost of supply. 3.7 Shri Badrinarayan Alloy and Steel Ltd. raised objection and requested for continuation of power subsidy to them, reduction in security deposit and rebate towards the power line drawn for their industrial unit at their cost as WBSEB is earning by providing power from that line to other consumers. The Board stated that concession to HT and EHT industries under approved rehabilitation package was to be given for 3 years and extension of such concession had been upheld by the Hon’ble Commission. The Board further stated that they had suggested withdrawal of this concession as it lead to additional burden on others. The Board justified the calculation of security deposit, withdrawal of concession in case of non-payment of bills in time and justified for tapping or extending the supply to other consumers. 3.8
Multi Serve Rolls Ltd. raised objection on account of frequent power
failures and consequential losses and contended for removal of maximum
demand charge, due intimation to consumers for break down and maintenance,
electricity duty be charged on energy charge and not on demand charge. 3.8.2 The provisional bill should not be raised without indicating the reasons and the final bill should be raised within reasonable time. 3.8.3 AMGR should not be charged due to closure of factory and the load factor penalty clause be removed. The Board justified the levy of maximum demand charge, fixed charge and stated that instructions had been given to give prior notice to consumers for break down and maintenance. 3.9 Tea Association of India, Indian Tea Planters Association and Indian Tea Association etc. gave joint objections. The objectors pointed out that the electric supply for their labour colony should be charged on the same basis as prevailing prior to the tariff order dated 7th December, 2001 in the light of the meeting held between the Hon’ble Labour Minister, the Hon’ble Power Minister, representative of the Power Department and Labour Department of the Government of West Bengal and Association of Tea producers of West Bengal and Trade Unions in Tea Gardens in West Bengal. They also gave in details the reasons and justifications for their request.
3.9.2
The objectors also objected to the method of levying the demand
charge and requested for seasonal industry such as tea industry
a concessional demand charge. The objectors also requested to reduce
the off-peak rate of energy and the tariff as applicable to their
category is high which should not be increased to that extent. The Board justified the non-admissibility of load factor rebate to the objector. 3.11 All Bengal Electricity Consumers’ Association raised objections on price hike proposed by the WBSEB on the tariff hike proposal. 3.11.1 According to the objectors, the ground for enhanced tariff and changing conditions of supply are contrary to the ERC Act 1998, Indian Electricity Act 1910, Indian Electricity Supply Act 1948, the report of the Comptroller and Auditor General of India and the norms prescribed by CEA. 3.11.2 The objectors felt that the Commission may look into the various parameters provided under Section 29 of the ERC Act and the interest of the consumers be safeguarded.
3.11.4 The objectors felt that the tariff petition may not be admitted as WBSEB’s proposal is not complete and there are gap in data submission or there is improper data which is not in the interest of the consumers. They further pointed out that even though the Commission has observed important deficiencies, inaccuracies and incomplete data etc., but the position has not improved during this year also. 3.11.5
According to the objectors WBSEB can not charge the amount for the
consumption of electricity from the consumers without a meter in
terms of Section 26(1) of Indian Electricity Act 1910. The objectors
pointed out that about 40% consumers are unmetered and meter rent
has been taken by WBSEB for defective meters and advance money is
taken from the consumers for the meter. They again prayed that the
consumers may be allowed to purchase their meters in terms of the
Act and pointed out the orders of the Commission in this regard
dated 7th December, 2001 and also objected to the proposal of increasing
meter rent. 3.11.7 The objectors also raised objection on low hydel generation of electricity. Objectors also pointed out the discrepancy in power purchase cost and generation figures and objected to the purchase of costly energy from DVC.
3.11.9 According to the objectors the administrative and establishment expenditure of the WBSEB is on higher side. 3.11.10 The objectors also raised objections on the increase in interest and financing charges and pointed out the observation of the CAG in regard to loss suffered by the Board for sale of power to CESC Ltd. and its default in payment of dues. 3.11.11 The objectors also raised points on sale of power to Singur Haripal Rural Electric Cooperative Society Ltd. below the cost of supply and pointed out the observation of the CAG on account of loss suffered for such sale to the Society. 3.11.12 They also pointed out defects as pointed out by the CAG for non-billing. 3.11.13 The objectors also raised objection on proposal for increasing miscellaneous charges, late payment surcharge and withdrawal of certain concession and rebates to various consumers. 3.11.14 The objectors also raised the points on non-provision of interest on security deposit. 3.11.15 The objectors also raised other miscellaneous points regarding disconnection of electric supply, improvement of meter reading, compensation for low voltage, load shedding, power cut, transfer of past dues to new consumers, introduction of minimum charge and its basis of assessment, fuel surcharge, levy of fixed charge, levy of demand charge and its basis, continuation of cross subsidy, high cost of agricultural tariff and incorrect method of its computation. The Board stated that Board wanted to cover average cost of power and issue relating to subsidy and cross subsidy is to be decided by the Commission, the direction given by the Commission in its order dated 7.12.2001 had been complied as far as practicable, programme had been initiated to provide meter to all consumers, justified the cost of meter purchase and meter rent, justified the T & D loss of 34%, justified the generation from Ramam Power Station and indicated the reasons for low generation from Teesta Canal. The Board admitted the substantial increase in cost of power purchase, but justified the same in view of the transfer of BTPS and STPS and due to additional requirement of power to meet the load growth. The Board further stated that they are not in favour of extension of any special rebate to any group of consumers, wanted continuation of late payment surcharge in case of non-payment and requested for increase in the late payment surcharge. The Board felt that no interest on security deposit was payable, but still Board was paying interest on security deposit to some category of consumer, justified service connection charge, minimum charge and disconnection of power supply in case bills were not paid. 3.12 Bharat Chamber of Commerce raised objections on avoidable T & D loss and felt that T & D loss should be restricted to 25% as already fixed by the Hon’ble Commission in its earlier tariff order. It was further contended that consumer’s interest be safeguarded and Board’s performance be critically scrutinized. 3.12.1 The objectors also observed that the technical loss in respect of HV consumers is only 6.7% and it needs further improvement. The objectors are of the view that the high T & D loss are due to aging, overloading, repetitive repairing etc. of distribution transformers including improper maintenance of connectors. They are also of the view that the technical losses are more as overhead lines are mainly through overhead conductors and the conductors are too old with many joints and improper maintenance. 3.12.2 They also pointed out that too many tapings have been taken on a feeder causing voltage drop resulting in high current flow, more IR losses and overloading in peak hours. The objectors also pointed out the inadequacy in capacitor installation which lacks proper design. 3.12.3 According to the objectors, the LT commercial losses vary from 9.103% to 45.62% and in case of one feeder it has been shown as 87.95% which means practically entire power is supplied free. The main reason of commercial losses, according to the objectors are meters have become too old and obsolete, under-billing of consumption in connivance with meter readers, bills made of average reading, installation of meter in location that are inaccessible, unauthorized tapping and hooking, non-checking and calibration of meters periodically and inefficiency, irresponsible and callous work of the department and top management in overlooking the above. 3.12.4 The objectors also objected the WBSEB’s demand of definite minimum financial return from the consumers without guaranteeing in return, any definite minimum quality and continuity of supply. 3.12.5 According to the objectors, as provided in ERC Act 1998 and confirmed by the Hon’ble Supreme Court, the cross subsidy should be eliminated so that no consumer pays more than the average cost of supply. 3.12.6 The objectors also prayed for raising load factor for the purpose of penalty and abolition of AMGR. 3.12.7 The objectors also quoted the decision of the Supreme Court in Man Industrial Corporation vs. Rajasthan State Electricity Board, AIR 1976 SC 1100, AIR 1986 Rajasthan 137 in which the Hon’ble Court has upheld the similar view of the Commission, where demand charge is reduced for the periods during which load of the consumer is totally shed / interrupted for the fault of the WBSEB or its system. The Board justified the projected T & D loss of 34% as it was lower than the T & D loss allowed by other ERCs and stated that it could not achieve the target as fixed by the Commission and further informed that Act to asses the pilferage of electricity was made effective from 15th July, 2002 and Board had also taken up a programme for replacement of defective meters and provide meters to 100% consumers. The Board also intimated the steps taken for visiting supply station to monitor the activities associated with meter reading, billing, replacement of defective meters, disconnection of non-paying consumers. The Board further informed that the technical loss in the system will be reduced to some extent after completion of transmission project and construction of new substation and lines and installation of new capacitor. The Board also supported the objector in respect of load factor penalty and gave their views on billing demand. 3.13 Socialist Unity Centre of India – West Bengal State Committee raised objections similar to the objections raised by All Bengal Electricity Consumers’ Association and listed in para 3.11. The Board gave the similar reply on the observations as had been given in the case of objection from All Bengal Electricity Consumers’ Association as stated in para 3.11. 3.14 M/s. Eastern India Textiles Mills Association raised objection regarding compensation to industry for losses of production due to poor quality / interruption of power supply and adjustment of load factor accordingly. 3.14.1 The objectors also requested for increase in the rebate on achieving higher load factor. 3.14.2 The objectors also requested for withdrawal of cross subsidy in view of the recent Supreme Court of India’s order in the matter of CESC and if any subsidy is to be provided same should be made by the State Government. 3.14.3 They further indicated that the concessional tariff to certain industries should be withdrawn and energy rate should be worked out according to cost of supply to a particular voltage. 3.14.4 They further contended to consider and make a policy which should encourage co-generation of power. 3.14.5 They also pointed out the high T & D loss in the WBSEB system and requested that the direction of the Commission given in the order dated December, 2001 to WBSEB for reduction of T & D loss should be continued and higher T & D loss due to inefficiency / inactiveness of the utility should not be permitted as it is against the consumer interest. The Board contented that they had no control over frequency fluctuation, voltage fluctuation and tripping as frequency was controlled by ERLDC and justified the high voltage pointed out by the objector within the Electricity Rules 1956. The Board was also not in favour of special rate for exporting units, justified the load factor rebate and suggested it should be on incremental consumption and not on total consumption, justified realization of fixed charge through demand charge and gave justification for the DVC tariff and higher power purchase cost in view of transfer of BTPS and STPS to WBPDCL and additional requirement of power due to load growth. The Board also justified the high employees’ cost and refrained from giving any comments on BTPS and STPS as it stand transferred. The Board also felt that the direction of minimum billing demand from 1500 KVA to 1000 KVA as proposed could not be agreed to. The Board further contended that the other observations were not related to the year 2002-03 and they had not, therefore, replied on the same. 3.15 M/s. CESC Limited came up with the objection that since CESC is a licencee, drawing power from WBSEB for redistribution only, CESC’s consumer interest need to be protected and CESC be charged with tariff which is reflected to the cost of supply at 132 KV. 3.15.1 They further contended that the off-peak tariff for the power supply from WBSEB may be suitably fixed keeping in view the marginal cost of generation of its own power stations (Budge Budge, Titagarh and Southern) as purchase of power at a higher rate from WBSEB is not in the interest of the CESC’s consumer. They further pointed out the mistakes in the drawal of power during peak and off-peak as shown by WBSEB in their petition. 3.15.2 They also requested that the delayed payment surcharge may continue to be @ 1.25% per month. The Board justified the special mechanism for fixation of tariff to licencee i.e. CESC and justified the off-peak tariff which they felt should be linked with the marginal cost at which WBSEB had to purchase power and also commented on the quantum of off-peak energy. 3.16 M/s. Hooghly Chamber of Commerce and Industry also raised points similar to the points raised by Eastern India Textiles Mills Association and further requested for dispention of annual minimum guaranteed revenue and maximum demand charge. 3.16.1 They further contended that the cost of generation from gas power station is very expensive and it should be closed as early as possible. 3.16.2 They further pointed out that the power generation of Teesta Hydel Project is too low because of non-availability of adequate water. They further pointed out that from the documents it is not still clear whether project is completed or still under-process and the cost of generation had not been shown by the Board.
On the question of poor quality of power and interruption, WBSEB
stated that the same was due to rampant, theft and pilferage of
electricity. The WBSEB also indicated the steps being taken for
development of new sub-station, drawing of new lines etc. As regards
subsidy / cross subsidy they intimated that in this tariff petition
rationalization had been proposed to some extent, but the final
view on the matter is to be taken by the Commission. The WBSEB also
indicated that Annual Minimum Guaranteed Revenue could be abolished
provided demand charge was suitably enhanced and rationalized. But,
they were not in favour of abolition of demand charge. On the question
of electricity duty on demand charge, WBSEB contended that they
could not comment as the rates were fixed by the Government of West
Bengal. 3.17.1 It was indicated that due to poor quality of power their production is affected as there are frequent interruptions, fluctuating voltage and frequency, even though they have gone for 132 KV from 33 KV. In support of the above, they also enclosed the data from April 2001 to October 2002 for such interruptions and fluctuations. 3.17.2 It was contended by the objectors that due to such fluctuation not only they loose on account of production, but also the sophisticated equipment and requested to prevail upon WBSEB to improve the quality of power and advise methodology for reasonable compensation for loss of production and damage to equipment. 3.17.3 They suggested more incentive for off-peak hours, improvement of load factor incentive, better incentive for power factor etc. 3.17.4 They contended that the co-generation of power should be encouraged and rationalization of demand charges in case of standby demand for such co-generation should also be encouraged. 3.17.5 They further contended that there should not be any electricity duty on demand charge. 3.17.6 The objectors questioned the justification of continuation of gas power stations of WBSEB of 100 MW where the operation of gas station is not required, but substantial expenditure for its maintenance etc. is being incurred. 3.17.7 They further pointed out that the WBSEB’s argument that its power stations have to be kept operationally ready to meet any emergency situation arising from total power failure in the eastern region grid, is not correct as on no occasion WBSEB was required to run any of its gas power stations even though there was many trippings in the eastern region grid and WBSEB system is connected to grid. 3.17.8 They further pointed out that the Teesta Hydel Project was taken up for implementation without cost benefit analysis and there has been huge cost overruns due to inordinate delay and the manner of its implementation for which consumer should not be called upon to bear by increased tariff. 3.17.9 They further pointed out that as per CEA guidelines rural electrification subsidy should be borne entirely by the State Government and the rate of 10% of the total revenue of WBSEB which should be a sum of Rs. 370 crores against the projected revenue, but in the tariff petition it has only been taken as Rs. 100 crores. 3.17.10 They further contended that the Annual Minimum Guaranteed Revenue should be discontinued and concession given to the industries should not be cross subsidized by other industries. 3.17.11 They further indicated that the T & D loss of WBSEB as shown by them is too high which itself may not be correct as they are providing unmetered supply not only to a large segment of MV / LV consumers, but also to many HV consumers. They have yet to install energy meters on outgoing feeders. They also pointed out the flaws in their accounting of energy and T & D losses. 3.17.12 They prayed that the norm of T & D loss as fixed by the Commission stand justified and there should not be any upward revision in the sum keeping in view the ceiling of 15% stipulated by the CEA in its guidelines for reduction of transmission and distribution losses issued in February 2001 and also reported T & D loss as pointed out by CAG in its report of 1998-99. 3.17.13 The objectors also analyzed what are the energy sales and energy supply plan based on the normative T & D loss. 3.17.14 The objectors also gave in a tabular form the revenue requirement claimed by WBSEB for 2001-02 as claimed by them, as admitted by the Commission and as claimed by WBSEB for 2002-03.
3.17.16 The objectors also commented on the higher O & M cost, employees cost, administrative and general charges. 3.17.17 The objectors also pointed out that in the absence of accounts their claim for interest and depreciation could not be scrutinized and commented by them. They further stated that the expenses to be capitalized have been reduced by them. 3.17.18 The objectors also pointed out that other income has been substantially reduced mainly on account of amount of late payment surcharge of CESC as decided by the Government. 3.17.19 They further pointed out that in the Government’s decision there was a rider and if CESC has not fulfilled the condition then WBSEB should not have reduced the amount of late payment surcharge. 3.17.20 The objectors also requested for reasonable energy cost for EHV (132 KV) supply keeping in view the T & D loss of the system for such supply and the cost of supply. 3.17.21 The objectors also requested that there should not be any cross subsidy from EHV consumers and the tariff should be related to voltage of supply.
On the question of more incentive during off-peak hours Board requested
that it might be ensured that other consumers are not adversely
affected, particularly those who draw power uniformly during different
parts of the day. They further contended that load factor rebate
should not be given in two part tariff and load factor rebate should
be given only to those consumers who draw power at a load factor
above the system load factor and on the incremental consumption
only and they further suggested that interruption of power should
not be excluded while computing the load factor rebate. They justified
the increase in cost of Teesta Canal and T & D loss. Their T
& D loss was less than the loss as allowed by some other ERCs
and justified the T & D loss over the target fixed by the Commission
in lieu of the Supreme Court judgement in case of CESC. As regard
duty on demand charge they said that it was to be decided by the
State Government. The Board contended that they have no objection
for abolition of AMGR, but the demand charge as well as basis of
realization of demand charge be fixed accordingly. The Board further
informed that they had proposed to withdraw concessional tariff
to industries and had given the details of list of data where outstanding
debtors were above Rs. 1 lakh. They gave details of factual information
of power purchase from DVC and for cross subsidization it was stated
that the matter was to be decided by the Commission. The Board contended that the special rebate of 25 p. per unit in addition to normal rate of rebate for timely payment was to be decided by the Commission and justified for realization of fixed charge. The Board also said that Commission was to decide for change in consumption slabs. 3.19 Eastern Spinning Mills & Industries Limited raised similar objection to the objection raised by Eastern India Textiles Mills Association and Hooghly Chamber of Commerce and Industry. 3.19.1 They further stated that due to frequent escalation in power tariff of 33 KV, their investment for upgradation of 33 KV had lost the cost benefit for which upgradation was made by them. 3.19.2 They further contended for special rate for exporting units.
3.19.4 The objectors gave comparative figures of plant availability of Bandel and Santaldih and suggested that due to low level of availability the fixed cost on the same should not be passed on to the consumers. 3.19.5 The objectors also pointed out inadequacy of data of the hydel station due to which they were not able to raise their objections. 3.19.6 The objectors also pointed out the low PLF of Gas and Diesel stations suggesting the recovery of fixed cost to the extent of its utilization. 3.19.7 The objectors also raised objection on the high heat rate, high auxiliary consumption and inadequacy of the data and the document relating to power purchase. 3.19.8 They also gave the figures of purchase from NTPC, DVC and stated that the energy required to be procured is overestimated. 3.19.9 They gave comparative figures for the number of employees of various Boards and felt that the number of employees per consumer is high in case of WBSEB. 3.19.10 The objectors also commented on the high capital expenditure, working capital management. 3.19.11 The objectors also pointed out the high T & D loss. 3.19.12 The objectors suggested for no further increase in EHV tariff and asked for reduction in the current tariff as there is already high tariff for EHV segment. 3.19.13 The objectors pointed out on subsidy from the Government, accounting of interest waiver and Government subsidy, high financing cost, under statement of revenue, capital expenditure, fuel surcharge cost, bad debts, higher rebate for power factor and load factor. As regard poor quality of power in terms of frequency fluctuation, voltage fluctuation and tripping Board mentioned that frequency was controlled by ERLDC and the Board’s role was very insignificant so far as control of frequency was concerned, and they further contended that the voltage variation indicated in the objection was within the variation limit under Electricity Rule 1956. They further contended that load factor rebate was not called for in two-part tariff and ideally it should be given to those consumers whose load factor of drawal was more than system load factor and only on incremental consumption. They also indicated that no special rebate should be given for exporting unit and they justified the additional power purchase cost in view of transfer of BTPS and STPS to WBPDCL and additional requirement due to load growth. They justified the number of employees against reply given for other consumers and felt that minimum demand may not be reduced from 1500 KVA to 1000 KVA as they had to ensure realization of fixed charge. They had not made any comments on BTPS and STPS as the power stations already stand transferred to WBPDCL and gave details relating to DVC tariff. On the other issues they felt that issues did not relate to the year 2002-03 and hence not given any comments. 3.20 All India Krishak O Mazdoor Sanghatan, West Bengal State Committee came up with a number of objections from the farmers which according to them are victim of injustice and exploitation of WBSEB due to abnormal and excessive rate hike of tariff for Agro-Irrigation categories. 3.20.1 They further pointed out that the lump sum annual charge are based on exaggerated consumption and excess realization of tariff based on such exaggerated consumption. 3.20.2 The objectors also pointed out that the Commission order dated 7.12.2001 was obtained by WBSEB based on the suppressed facts and distorted by the fictitious figures.
3.20.4 The objectors also raised objection by giving figures of discrepancy in proportionate revenue earnings from 5 HP STW in comparison to small industries and categorization of irrigation pumps, elimination of electricity run pump, imposition of additional fixed charge in lieu of fuel surcharge.
The Board contended that the STW consumers are enjoying subsidized
tariff and the cross subsidy was being provided by HV and EHV consumers
and they further contended that the tariff for agricultural sector
should be brought to 50% of the average cost in not more than 3
years as per Chief Minister’s conference held in 1996, but
5 years had been passed, but the said stipulation is yet to be achieved.
They further felt that the tariff for supply of power to unmetered
STW consumers is required to be enhanced as even with the proposal
in the petition it would still be lower than the average cost of
supply and issue of subsidy / cross subsidy will be decided by the
Commission. As regards metering, they intimated the programme for
metering to all consumers had been taken. The Board gave the same reply which they had given in case of para 3.20.
3.22.1 They prayed that metering should be completed within a time bound programme. 3.22.2 They also contended that the proposal for 50% rise in tariff by Board should be ignored. 3.22.3 They also prayed that the excess charge fixed by Board based on wrong information should be revoked. 3.22.4 They also pointed out that Additional charges already collected by Board should be refunded. 3.22.5 They also prayed that punitive action should be taken against Board for violating the order regarding metering and furnishing false statement to the Commission. Board gave similar reply as they have given for para 3.20. 3.23 The objection was also raised on behalf of Shri T. B. Chakraborty, Shri S. Banerjee, Shri Asoke Taru Pradhan and the objections were similar to the objections raised by some of the other objectors. The Board informed that they had fixed subsidized tariff in respect of consumers for lowest consumption block for domestic and commercial sector with the assumption that these consumers are poorer section of the society though there is a scope of debate against such assessment and further felt that the domestic consumers consuming electricity at 300 / 400 units per month may not fall under the below poverty line. The Board did not gave any comment on the suggestion for fixation of tariff on the basis of poverty level as the issue of cross subsidy is to be looked after by the Commission.
The Board contended that the realization of fixed charge from low and medium voltage consumers is in vogue, purchase of meters is made through normal bidding process and the consumers had to maintain sufficient security deposit based on estimated energy bills of two months for the consumers covered under the monthly billing system. The Board further contended that they pay interest on cash security at Postal Savings Bank rate only after termination of the contract even though the Supreme Court had held that no interest is payable. 3.25 Shri Vasavi Industries Limited came up with their objections and also indicated the philosophy of the tariff determination and tariff design. They also gave the tariff implication of SVIL and tariff for Ferro Alloy Industry. 3.25.1 The objector felt that since WBSEB is purchasing bulk of power from outside, the tariff to be charged from them (other EHV consumers) should be at their purchase cost plus T & D loss of 2% and based on cost related tariff for the purpose of energy charge. 3.25.2 On demand related cost they contended that the sum should be worked out on pro-rata basis. The expenditure related to 132 KV level only and accordingly they also gave detailed calculation to reach the figures of cost of supply for such consumers. 3.25.3 They further requested that load factor rebate should be available to SVIL. 3.25.4 The objector also raised objection on condition of supply relating to security deposit, delayed payment surcharge.
3.25.6 The objector also pointed out the high T & D loss and suggested that the T & D loss should not exceed the T & D loss fixed by the Commission for the year particularly when the detail furnished are not sufficient to justify the losses as claimed. 3.25.7 The objector also gave figures and pointed out that the power purchase is not as per the allocation and as per merit order purchase. 3.25.8 They also gave the comparative figures of number of employees per kwh of electricity sold in case of some of the Boards to conclude that the number of employees in WBSEB is already much higher where as WBSEB has indicated a shortage of 5811 against their sanctioned strength indicating that there is still no realization about the low productivity record. 3.25.9
The objector also commented on high employees cost, operation and
maintenance expenses, administrative and general expenses, high
expenses on Teesta Canal project, reduction in capitalization of
expenses, increase in interest and finance charges. The WBSEB did not contradict the prayer of fixation of tariff based on cost from the point of principle of fixation. The Board stated that they are not in favour of special tariff to the particular class of industry. On demand related issue the Board contended that stipulation for refund of demand charge for interruption of power supply needs review and they further pointed out some discrepancy in the basis of calculation of demand related cost by the objector. The Board further felt that the load factor rebate should not be separately applicable in two-part tariff system, particularly in addition to the concession on energy charge to new industries, as it would lead to additional burden on others. The Board justified the security deposit on the basis of energy bill equivalent to two months and stated that the Hon’ble Supreme Court had already held the realization of security deposit on the basis of three months energy bills. The Board justified their proposal of T & D loss of 34% which was lower than the actual for 2001-02 and the steps Board had taken to provide 100% metering at consumer premises. The Board further informed that effective steps had been taken to replace the defective meters and placement of static meter in phased manner. 3.26 Andul Fabricators Limited raised objection on high meter charges, abolition of fixed charges, abolition of cross subsidy and payment of interest on security deposit. The Board justified the increase in meter rent against three phased meter. The Board justified the recovery of fixed charge for L & MV consumers as it was in vogue since long in many power utilities and upheld by many ERCs. The Board further informed that even though no interest was payable on cash security deposit as per the decision of the Supreme Court of India, but still Board was paying interest on cash security to L & MV consumers at Post Offices savings bank rate after termination of contract. Note
: Some of the common objections raised by the objectors in certain
cases has not been listed against individual objectors. CHAPTER – 4 : OBJECTONS RAISED AT THE HEARING for 2002-03.
4.2 Out of the 27 objectors who had filed written objections, some of the objectors made their submission during hearing and six more objectors, who had not filed objection in writing, were also permitted to join hearing. The list of the objectors who have raised objections during hearing has been included in the earlier part of the order. 4.3 The objectors who filed written objections and made submission during hearing mostly confined to their written objections which they have filed earlier and already included in chapter–3 of the order. The same had not been repeated to avoid duplication. 4.4 Some of the objectors who have filed written objection also raised the issue that the WBSEB had not given complete reply or reply to all their written objections and therefore, it may be treated that WBSEB had no comments on the same and they accepted the points raised by the objectors. 4.5 The following objectors who have not filed written objection and was permitted to join the hearing raised the following objections : 4.5.1 Eastern India Motion Pictures Association submitted that all the cinema halls should be charged at the rate of industrial, and not on commercial rate and informed that Department of Industry, Government of West Bengal had declared the cinema halls as industrial unit. They were asked to give a copy of such notification in the form of affidavit which they agreed to handover by 28th November, 2002. They also raised points relating to excess T & D loss and not passing of burden of inefficiency of the utility to the consumers, improvement in the working of the Board etc. 4.5.2 Mintry Tea Co. Ltd. wanted quality supply of electricity for Tea Gardens and also raised points relating to T & D loss and demand charge. 4.5.3 Shri Chandan Chakraborty, a consumer informed that the handloom weavers in Nadia are suffering a lot and requested that the electro-magnetic meters should be replaced at the cost of the consumers as the consumers are mostly working at their residence and the commercial rate on the basis of number of handlooms should not be charged. 4.5.4 West Bengal Power Development Corporation Ltd. raised the point of discrepancies in the figures of power purchase as assumed by WBSEB based on PLF of Kolaghat and Bakreswar and also justified the export of power as WBSEB shall not be able to absorb the full power. 4.5.5 M/s. Indian Aluminium Co. raised the issue of cross subsidy and requested for review of laid down policy relating to captive power plants using conventional fuel and its charges. They also raised the points relating to transmission and wheeling of power, banking of power and permission to HT consumers to choose the supplier of power depending upon technical feasibility. 4.5.6 All Bengal Electricity Consumers’ Association informed about discrepancy in tariff relating to cinema halls and some other details relating to harassment of the consumers. 4.5.7 At the hearing certain points were raised by two Jt. Directors and Members of the Commission and WBSEB was permitted to reply to these points within 15 working days. The points raised and replied thereto shall be taken in the next chapter. 4.5.8
Dr. Bhattacharya gave reply on behalf of WBSEB on some of the objections
raised by the parties relating to extension of concession to sick
industries, reasons for non-granting of licences to MES, rate of
high voltage consumers, abolition of load factor penalty, rationalization
of demand charges, justification of Annual Minimum Guaranteed Charges,
tariff for labourlines in Tea Gardens, cost based tariff, justification
of expenses of Board relating to employees cost and maintenance
cost, load factor rebate, security deposit, meter rent, quality
of power and also stated that the Board had no control on frequency,
justification of additional power purchase, justification for T
& D loss, tariff rate for handloom, cinema hall, Singur Haripal
Rural Electric Cooperative Society Ltd., tariff rate for off-peak
hour, justification for purchase from DVC and sales projection for
WBSEB, continuation of fixed charge and ad-hoc billing and disconnection
of supply. They also clarified on the objection raised by the consumers
on implementation of the Commission’s order wherein in their
tariff petition they have said that the same has been implemented
as far as practicable. Mr. Ganguly, Member (Operation) also clarified
on behalf of the WBSEB some of the above issues clarified by Dr.
Bhattacharya and also about detailed metering plan of the Board.
CHAPTER – 5 : POINTS RAISED ON BEHALF OF THE COMMISSION for 2002-03.
5.2 Further details have been sought on Purulia Pump Storage including copy of techno-economic analysis and justification of the investment for the same. 5.3 Question has been raised that why the approval of the Commission has not been obtained under Section 22 of the ERC Act 1998 for the Purulia Pump Storage particularly in the light of the decision of the Hon’ble Supreme Court dated 3rd October, 2002 in case of CESC. 5.4 Further details have been sought on the O & M expenses on gas turbine stations along with cost of generation particularly when the generation against the 100 MW capacity is insignificant. The reasons for insignificant generation and whether the facilities are actually running are to be indicated as it was pointed out that against 40 MW capacity at Kasba generation is only 0.629 M.U. 5.5 Further details have been sought on the legal opinion obtained by WBSEB on DVC in the light of the provisions of the ERC Act and the Hon’ble Supreme Court judgement dated 3rd October, 2002.
5.7 The discrepancy in the figures of power purchase as included in WBPDCL tariff petition for 2002-03 and as assumed by WBSEB was also specifically pointed out and clarification sought on the actual drawal of power from WBPDCL from each station and estimated drawal for the balance period of 2002-03. 5.8 Also question has been raised why the Board has admitted and agreed for export of cheaper power by WBPDCL to other States and purchasing costly power from DVC and NTPC. 5.9 Information has been sought on allocation of original and revised share of power from NTPC vis-a-vis actual drawal up-to-date and estimated drawal for the balance period of this financial year and impact of the ABT for short drawal on original and revised allocations. 5.10 Question has been raised on the outcome of the matter which WBSEB had taken up with NTPC and other utilities in regard to high rate of income tax charged by them as pointed out in the last tariff order. 5.11 Information has been sought on the method followed in ascertaining sales and T & D loss when substantial part of the supply is unmetered. 5.12 Clarification has been sought why the right of consumer under Section 26 of Electricity Supply Act is being denied specially when WBSEB is not able to provide meters or replace the defective meters even after a considerable period. 5.13 Board has been asked to justify why co-generation and captive generation has not been encouraged instead of importing costly power, continuing Gas Turbine and further capital investment for purchase of such costly power or creating facility for generation of costly power. The point is to be clarified keeping in view that co-generation and captive generation has the impact in reduction of additional costly power purchase during peak hours and consequential additional costly powers during off-peak hours. 5.14 Further details have been sought for high expenses and increase in expenses on employees’ salaries, R & M expenses, provision for bad debts and interest. It has been pointed out that two old stations i.e. Bandel and Santaldih had already been transferred to WBPDCL from 1.4.2001. 5.15 On the question of Government subsidy, details sought for R.E. subsidy as per CEA norm, how non-payment of electricity duty, if any, from Government is treated in accounts and confirmation, if any received from the Government on the subsidy to be received by Board. 5.16 Information sought on load factor of the system and load factor taken into calculating Annual Minimum Guaranteed Revenue. 5.17 A question arose that Board during hearing had said that they had no control over frequency as it was being controlled by RLDC then how the Board exerted control over their own generation / purchase keeping in view variation in load demand without controlling frequency. The Board has been asked to justify their statement that they have no control over frequency and voltage on their system and the impact of loss / wastage of energy, if any, along with consequential effect on equipment along with their monitoring system. 5.18 The Board has been asked to give their realistic assessment of T & D loss for next 5 years along with their views and the reasons for increase of T & D loss although heavy investments in capital assets is being made to control such losses. 5.19 It was pointed out that the figures furnished during hearing regarding vigilance raid, FIR and action against Board employees appears to be insufficient keeping in view the huge T & D loss suffered by the Board and showed inadequate action on its part. This is to be justified along with the details of action taken and furnished a programme for reduction of such huge T & D loss. 5.20 Clarification has been sought on a detailed realistic plan for achieving 100% metering and programme and means to achieve the same. 5.21 The Board is to give their views on the policies on co-generation and captive generation. 5.22 The Board is to give techno-economic justification for capital addition during the year along with improvement proposed to be achieved in the system, increase in efficiency and benefits to be derived by the consumer. 5.23 The Board is to give the details of load factor, maximum demand, number of consumers, consumption in each category, standard name plate details of the drive motors for STW pumps and submersible pumps, the method of measuring consumption for STW and submersible pump, determination of load factors and other parameters in respect of agricultural consumers and the method and basis of such consumption. 5.24 The Board is to indicate the action taken by them on some of earlier recommendation/orders relating to connection of meters to unmetered consumers, repair of defective meters, improvement in stable and uninterrupted power supply at rated voltage and frequency, plan for improvement against irregular supply by WBSEB particularly when Board wanted assured recovery of their charges in case of non-drawal by consumers, details of consessional tariff extended to the new consumers after passing of the Commission’s order. 5.25 The Board is to indicate how effective energy audit was carried out in two out of five circles particularly when in the absence of adequate metered supply substantial portion was an assessed consumption. 5.26 The Board is to give the reliable data of cross subsidization as percentage of average cost of supply based on audited documents along with demand of each category of consumers, and their consumption / estimated consumption. In case of unmetered / defective metered supply, it has to be also indicated that how the demand and demand charges had been calculated and allocated. 5.27 During the hearing the agricultural consumers’ representatives had raised the issue relating to their exploitation by the Board and also pointed out that being poor people they were not being able to put their case appropriately as per the Act in the required manner, but however, they felt that due to poorness and ignorance they were being exploited by the Board by taking higher assessed consumption and not installing the meters. They further felt that with the installation of meters and reasonable rate their bills will go down substantially. They prayed for the intervention of the Commission and gave the figures of many years in this regard. 5.27.1 The representative of the agricultural consumers pointed out that most of the agriculture of West Bengal is in the delta of the Ganga and the availability of subsoil water is quite high and they need very little power for the purpose of irrigation and that too also only during limited period. The quality and duration of power supply by WBSEB is also a question mark. 5.28 The Commission felt the necessity of providing some assistance to such group of agricultural consumers and deputed Shri D. Mukerjee, Jt. Director (Tariff-Engineering) to look into their complaints and seek further details from WBSEB so that the matter could be considered by the Commission. Shri D. Mukherjee, Jt. Director (Tariff-Engineering) was authorized to provide all necessary assistance to agricultural consumers or their representatives as may be required by them. 5.29
Based on the above, Shri D. Mukherjee met the representatives of
agriculturist and understood their problems and sought further details
from WBSEB relating to consumers’ of shallow tubewell and
submersible pump category for the year ending 31st March, 2001,
31st March, 2002 and September, 2002 in a tabular form giving the
name of consumers separately for Government and individual / private
consumer, number of metered consumers, number of unmetered consumers,
connection provided during the period, meter installed during the
period, percentage of progress from the last 2 years, consumption
as per the meter supplied, connected load and assessed consumption
in case of unmetered supply. CHAPTER
– 6 : FURTHER REPLIES OF WBSEB ON POINTS RAISED ON BEHALF 6.1 The WBSEB submitted clarification on certain points as detailed hereunder and on other points they agreed to submit the same shortly, but for which no clarification had been received. 6.2 As regards non-completion of TCF project and low generation, the Board stated that they were getting less water due to non-completion of downstream canal system and poor condition of the upstream canal. The Board had taken meetings time to time with I&WD to increase the discharge to achieve optimum generation, but due to land acquisition problems and other associated issues the downstream outfall system could not be taken up by I & WD. The WBSEB also stated projected annual expenditure of TCF for 2002-03. The WBSEB stated that the figures of generation / availability and reasons of cost escalation and delay for completion of the project had been already given in the petition and subsequent clarifications. They did not give any indication when 330 cusec of flow shall be available for TCF project. 6.3 On the Purulia pump storage, they submitted a copy of the cost benefit analysis. The Board further felt that no concurrence of the Commission is required for such investment as the Board had already got the approval from the Central Electricity Authority and they quoted Section 22(2)(A) of the ERC Act. The Board further contended and tried to distinguish the judgement of the Supreme Court in case of CESC stating that even though the Supreme Court had observed that the project cost as worked out by CEA is not binding on the Regulatory Commission and the Commission had power to examine the project cost, but tried to distinguish it on the basis that CEA had not examined the project cost of that power station for the purpose of fixation of tariff and such examination was done for some other purpose under provision of Section 44 of the Electricity Supply Act 1948. 6.4 The Board gave only projected expenditure of gas turbine station for 2002-03 and quoted the page number of the tariff petition in which such information was available. The Board further stated that reasons for retaining the gas turbine station had been given in the petition as well as the subsequent clarification and stated that the cost of new projects or purchases will be lower than the cost of generation of gas turbine stations. They further informed that based on the present price of HSD, per unit fuel cost of the power was about 8 to 9 rupees. 6.5 On power purchase from DVC, the Board indicated the details of power purchase cost including peak demand and stated that justification for merit order purchase has been given in the tariff proposal. However, the Board conceded some discrepancy in their power purchase from different agencies and gave revised figures for power purchase. However, though the Board has given quantitative figures of revised power purchase plan, but they have not given the financial costs thereof due to such amended power purchase plan. The Board further contended that the figures of drawal from WBPDCL would not match with figures of same as assumed by WBPDCL as WBPDCL would include the figures on normative parameters and WBSEB would include the same in accordance with their actual ability to supply by WBPDCL to WBSEB and there would be substantial gap between the schedule of normative parameters and actual drawn. 6.6 On export of power, the Board intimated that they had agreed for export of power by WBPDCL only from Bakreswar Power Station subject to availability of surplus power as the tariff of Bakreswar was to be more or less identical with that of NTPC. As NTPC power was likely to be cheaper consequent upon increase in the level of export gradually from eastern region to other regions which will reduce a portion of fixed charge of NTPC power station in the region. 6.7 On the question of original and revised share of power and actual drawal of power from NTPC’s different power stations, the Board gave the necessary details. The Board further informed that WBSEB would draw its entire allocation under ABT system and energy drawn from NTPC power station in excess of actual requirement of power to meet the demand of its ultimate consumers will be sold to the neighbouring regions.
6.9 The Board gave details of the basis of calculating the slabwise sales figure. For HV and EHV consumers it was based on first six months available data which had been extrapolated to get the figures for the full year. Figures for low and medium voltage had been estimated on sample energy bill data and extrapolated at the historical actual growth rate. For unmetered supply to STWs, consumption was assessed based on the average capacity of pump, load factor, efficiency etc. and for unmetered supply to public lighting was assessed on the basis of demand raised in conjunction with applicable tariff. 6.10 On meter to be supplied by the consumers, Board admitted that there is a provision in Indian Electricity Act 1910 for supply of meter by the consumer, But contended that as the meter was a vital equipment, the Board gave importance on quality of meter and the Board had testing facilities to test the entire meters for installation at the consumers’ premises. Board agreed to promote the consumer for testing of the meters from the test house approved under the Bengal Electricity Duty Act in case they faced difficulty in administration of testing of meters at their own testing laboratory. 6.11 The Board felt that the captive policy in respect of non-conventional energy including mini-micro hydel plant upto 3 MW and captive hydel generation upto 100 MW was very liberal. The policy in respect of captive power through conventional fuel was a bit stringent as indiscriminate permission of captive generation would lead to lower PLF of the power stations already developed in the state and corridor of providing cross subsidy would be reduced. 6.12 The Board gave details regarding O & M expenses of plant and machinery and transmission. 6.13 The Board gave details about miscellaneous expenses and stated that concession allowed to new consumer is accounted in a separate head instead of netting of the revenue. 6.14 The Board justified the high rate of payment of interest keeping in view the drawal of loans during earlier period. 6.15 On R.E. subsidy the Board stated that R.E. subsidy as per CEA norm is 10% of the total sale, but since Government only released Rs. 100 crores as R.E. subsidy for the year 2001-02 the same figure has been projected for the financial year 2002-03 which is to be confirmed by the State Government. The Board further informed that the electricity duty payable is adjusted in accounts with R.E. subsidy on the basis of Government order and balance is kept in the liability account. 6.16 The Board gave details of the basis of charging AMGR. As per the data, the load factor considered ranges between 5% to 28% for different categories and consequent energy to be drawn to cover AMGR per annum. 6.17 The Board intimated that the present system load factor of the Board is 63% excluding power supply to CESC and radial mode of purchase from DPL, DPSCL and DVC. 6.18 The Board contended that as their hydel generation capacity is only 164.70 MW their capability to control frequency is very limited. However, they admitted that they have under frequency relays at different feeders through which load is automatically shed in the event frequency falls below stipulated minimum. 6.19 The Board gave their assessment for the projected T & D loss for 5 years and contended that the T & D loss showed a downward trend but is higher than the target fixed by the Commission. The Board justified the high T & D loss due to disproportionate higher sale to medium and low voltage section and inadequate infrastructure. The Board further contended that the data of vigilance raids was only from the period 15th July, 2002 to 22nd November, 2002 and Board was increasing the raids gradually. 6.20 The Board further intimated that the Government of West Bengal has framed policies on captive generation through non-conventional energy source including mini-micro hydel generation of 3 MW, captive hydel generation upto 100 MW and captive generation through conventional fuel which is to be followed by all power utilities in the state of West Bengal excluding DVC and further felt that the Government policy is very liberal except for few stringent commercial terms stipulated in policy on captive generation through conventional fuel. It was further informed that there is no separate policy for co-generation of power. 6.21 On metering it was informed by the Board that they will install / commission 100% meter on sub-station upto 11 KV level by 31.3.2003. They further gave plan for installation of meters for unmetered shallow tubewell between the periods 2002-03 to 2007-08 and by that time will achieve 100% metering of STW consumers. They further gave the method of measuring consumption of shallow tubewell consumers. The Board further informed that no utility can ensure uninterrupted power supply and Board is trying to supply stable power and keeping the period of interruption minimum. 6.22 On the question of the term practicable used for implementing the Commission’s direction the Board clarified that the direction of the Commission is being implemented by them to the best of its ability. 6.23
The Board gave a list of consumers who enjoyed 30% concession in
the energy charge after passing Commission order, but they could
not give other clarification as the query was not clear to them.
CHAPTER
– 7 : THE CASE OF WEST BENGAL STATE ELECTRICITY BOARD (WBSEB)
7.2 It was stated that WBSEB is a State Electricity Board constituted under Section 5 of the Electricity (Supply) Act, 1948 and is in the business of generation, transmission and distribution of electricity in the state of West Bengal. The area of the WBSEB is extended to whole of the West Bengal except for the part of the areas covered by licencees and the sanction holders. 7.3 It was further stated that the Board has determined the cost, revenue and tariff in accordance with Section 29 of the ERC Act 1998 and direction given by the Hon’ble Commission in its tariff order dated 7th December, 2001 against WBSEB’s tariff petition for the year 2000-01 and 2001-02 in the absence of separate tariff regulations. The Board has requested a rate of return of 3% on net fixed asset less consumers’ contribution at the beginning of the year after accounting for all expenses properly chargeable to revenue in accordance with the Section 59 of the Electricity (Supply) Act 1948. 7.3.1 Accordingly, the Board has attempted to reduce cross subsidies and rationalize the tariff for various classes of consumers in line with Section 29 of the ERC Act and Section 42(b) of the CBR. 7.4 According to the Board, they recognize the need to measure the losses accurately and are taking steps to reduce the margin of error in loss determination and to reduce the overall T & D loss by 2% to 32%. 7.5 The Board has presumed no subsidy support from the Government of West Bengal against Rs. 100 crores during last year.
7.7 The Board further stated that as the Board is in the process of strengthening its management information system and is making considerable efforts to meter all consumers the Commission may grant a waiver for not conforming to prescribed data formats. 7.8 The Board further indicated that the cost estimate for power purchase are based on existing tariff of the utilities supplying power to WBSEB and if their tariff is revised upward then the revised power purchase price may be taken while revising tariff of WBSEB. 7.9 T & D loss 7.9.1 The Board indicated that the T & D loss at 30% for the year 2000-01 excluding the energy supply to bulk licencee inflated the existing revenue by Rs. 325 crores. They also find that exclusion of transmission loss associated with supply of power to licencees is not correct as in EHV network the loss of transmission of power is 4 to 5% as per report of the Committee of Experts on sub-transmission and distribution system constituted by the Ministry of Power, Govt. of India and including the sale of energy to bulk licencees the net T & D loss allowed by the Commission works out to 27.6% for 2000-01. On similar basis the T & D loss allowed for 2001-02 works out to 25.2%. 7.9.2 The Board further indicated that while the Board fully appreciates the necessity of reduction of T & D loss gradually, reduction of T & D loss to the level fixed by the Commission with further bench-mark to reduce the T & D loss progressively by 2.5% each year is absolutely difficult to achieve. The Board is making all out efforts to reduce such losses and has also committed itself to time bound schedule for reduction of these losses in terms of MOU signed by the Government of West Bengal and Government of India. The Board also gave details of T & D loss allowed by some other Commissions for different years. 7.9.3 The Board further informed that it would take some time to implement the observation of the Committee of experts on sub-transmission and distribution system constituted by the Government of India. 7.9.4 The Board further informed based on their sample study the system loss for 1999-2000 to be 39.2% of the energy input and the Board has started taking steps to facilitate accurate estimation of technical and commercial losses. Simultaneously, action has been initiated to ensure billing of the consumers, stoppage of theft of energy etc. and Board felt that T & D loss could only be reduced to 32% in the year 2003-04. Board further informed that they have been deprived of concentrated load and mainly operating in rural areas. 7.9.5 On energy balance, the Board worked out the consumption based on T & D loss of 32% and gave various details of their power purchase including source of purchase from various utilities. 7.9.6 The Board indicated that power purchase planning has been done keeping in view the estimated system demand based on average load growth, maximum generation that may be available from the Board’s power stations, Board’s commitment to supply peak demand of the system, to maintain peak-off-peak ratio in respect of drawal of power from power suppliers required as per prudent utility practice and optimization of power purchase cost. 7.9.7 The Board further gave detailed information relating to peak demand, system demand and other relevant details in regard to purchase of power.
7.9.9 The Board projected the net purchase of 16460.02 MU at a cost of Rs. 2678.80 crores and with transmission charges the total power purchase cost works out to Rs. 2721.93 crores at per unit cost of Rs. 165.37 per unit. This will be subject to increase based on tariff increase sanctioned for the utilities. 7.10 As regards own generation and cost of power generation the Board gave the details of own generation from various stations including hydel stations, gas stations and diesel stations. 7.10.1 The Board also gave justification for low PLF of the Teesta Canal Fall Hydel Project (TCF). It was stated by the Board that during project formulation it was anticipated that Teesta Barrage Project of Irrigation Department consisting of several barrages and canal systems will be completed much before the hydel power project on Mahananda Main Canal. Although the power station has been commissioned during ’97-’99, the downstream canal systems are yet to be completed. As a result there is no outlet for designed peak discharge of 330 cusec to any other river. The irrigation department in view of the above reasons has restricted water flow to maximum of 110-130 cusec even during monsoon. During non-monsoon (December to May) the project is getting adequate water. 7.10.2 The Board further intimated that constant interaction is being made with the Irrigation Department for availability of designed peak water by completing the balance work, providing additional escape and increasing the capacity of Dauk Barrage discharge to downstream so that optimum generation can be achieved during monsoon. 7.10.3 The Board gave the figures of gross energy expected from their hydel generation at 548.50 M.U. The total energy expected to be exported (at Busbar) is 545.51 MU. 7.10.4
As regards generation from gas stations, the Board gave details
of their 100 MW gas turbine stations at Kasba, Haldia and Siliguri
which was stated to have been built in late 70’s when there
was severe power crisis. 7.10.6 The Board further informed that the operation of gas turbine was not required due to comfortable availability of power in WBSEB system and they contended that possibility of running all gas turbine sets could not be completely ruled out either due to failure of regional grid or due to reduced level of availability of power due to simultaneous outage of number of thermal units. However, they indicated the generation of energy from gas station during 2003-04 at 1.0 M.U. from Haldia. 7.10.7 For diesel station the Board gave detail of diesel generation plant at Rudranagar in Sagar Island and they had assumed a generation of 0.5 MU of electricity in 2003-04. 7.11 On employees cost the Board contended that employees cost per kwh in WBSEB is lower than all India average and they further pointed out that as WBSEB supplied power mostly to rural and remote areas the Board is left with no choice, but to maintain a certain minimum level of employees to serve its consumer, even though the Board had few areas of concentrated loads. 7.11.1 The Board also justified payment towards overtime, terminal benefit and other employees cost. 7.11.2 The Board also gave details and justification for claiming the increase in operation and maintenance expenses, administration and establishment charges, bad debts, interest and financing charges, etc.
7.13
The Board also gave suggestion for increase in meter rent and other
income and segmentwise tariff for various categories of consumers,
introduction of payment of fixed charges for certain categories,
rationalization of monthly demand charge, late payment surcharge,
tariff for supply of power to labourlines in tea gardens and withdrawal
of certain rebates and incentives including concessions to new industries,
expanding industries and sick and closed industries. CHAPTER
– 8 : OBJECTIONS BY DIFFERENT PERSONS AND RESPONSE OF
Prestige Properties Private Limited have submitted that they have set up a new project at Damjur, Howrah under WBSEB and in the project report project cost has been calculated taking the present rate of power and nominal increase over the years. If hike in power as demanded by WBSEB is granted by the Commission, it will render their project totally enviable. Hence, they have submitted that WBSEB should not be given an increase in tariff more than 5% of the present rate of the year 2003-04. The project of Prestige Properties Pvt. Ltd. is a ferro-alloy industry and as such they should be allowed special rate as admitted in other states. 8.1.2 Against this observation, WBSEB has stated that it is not in favour of any special tariff to a particular class of industry. However, it has left it to the decision of the Hon’ble Commission regarding extension of subsidy to a specific class of industry. 8.2.1 Objections raised by Hooghly Chamber of Commerce and Industry Hooghly Chamber of Commerce and Industry have pointed out that the quality of power in West Bengal is poor and as a result industries face production loss as well as damage of equipments. It is their submission that WBSEB should compensate industry for loss of production due to poor quality of power supply. They have also insisted on computation of load factor considering interruption of supply. It has also been pointed out by the objector that collection of electricity duty on maximum demand charges is unjustified and has requested the Commission to recommend the State Government for non-levy of electricity duty on demand charge. Pointing out to the Hon’ble Supreme Court’s order in the matter of CESC it has been claimed that the consumer should not be put to penalize on account of cross subsidy. According to them, energy rate need to be worked out according to the cost of supply at a particular voltage and concessional tariff to certain industries need to be withdrawn. It is also their submission that actual transmission and distribution loss applicable to a particular voltage should be considered for calculating the cost of supply at that voltage to avoid cross subsidy. They have further submitted that Commission should adhere to its directive of T & D loss norms while fixing tariff of WBSEB for the year 2003-04. Gas Power Stations of WBSEB are incurring high overhead charges with insignificant generation as such gas power stations of WBSEB need to be closed down at the earliest. It has also been asked that the Commission may find out the present status of Teesta Hydel Project and take practical approach in fixing tariff of WBSEB. It is also their observation that tariff should be fixed keeping in mind consumer’s interest only. 8.2.2 Against these observations WBSEB has submitted that rampant theft and pilferage of electricity is one of the reasons for poor quality of power supply as alleged by Hooghly Chamber of Commerce and Industry. But the situation is improving gradually consequent upon promulgation of State Act to arrest pilferage of electricity and now the interruption of supply has been minimized to some extent. Voltage has also improved. Board has also taken steps for developing new sub-stations and drawal of new lines towards improvement of quality of power supply. On the frequency fluctuation, it has stated that frequency is controlled by the Eastern Regional Grid. As to the levy of electricity duty on demand charge, Board says that the rates have been fixed by the Government of West Bengal. On the issue of subsidy and cross subsidy, the utility has left it to the decision of Hon’ble Commission. However, in the tariff proposal, attempt has been made by WBSEB to rationalize cross subsidy. WBSEB fully agrees with the necessity to bring down T & D loss progressively. It is true that WBSEB could not achieve the T & D loss fixed by the Hon’ble Commission for 2003-04, but it has reduced the T & D loss by 4% than what was actually established during 2001-02. The T & D loss projected by WBSEB at 32% within 2003-04 has been claimed to be reasonably comparable with the T & D loss allowed by other State Electricity Regulatory Commissions. As to the necessity of retention of Gas Turbine Stations, this has been explained in their tariff petition and the additional expense for these three Gas Turbine Stations is to the tune of Rs. 183 lakhs. WBSEB has given the reasons for increase in the cost of Teesta Hydel Project in their previous tariff petitions as well as in other clarifications given to the Commission subsequently. 8.3.1 Objection by Birla Carbide and Gases (BCG).
8.3.2 In reply to the objection raised by the objector, WBSEB has stated that BCG is enjoying much lower tariff than the standard industrial tariff. According to the WBSEB, a consumer taking supply at a particular voltage should pay at identical rate. WBSEB states that cross-subsidy has been maintained in their tariff proposal as it cannot be eliminated right now from the point of socio-economic considerations. However, they have left it to the decision of the Commission in the matter of cross-subsidy. As regards discrepancy in the figures of purchases and sales of power at different pages WBSEB has clarified the discrepancies between the two figures. On the question of increase in the cost of Transmission & Distribution during 2003-04 over 2002-03, WBSEB has tried to justify such increase because of commissioning of some large transmission projects which gives rise to increase in interest and depreciation charge. On T&D loss WBSEB has stated that although it has not been able to achieve the T&D loss target fixed by the Commission it is gradually reducing the T&D loss @2% per year. Regarding anomalies of sale figure pointed out by BCG, WBSEB explains that the objector has not correctly compiled the figures. On the point of realization of demand charge WBSEB mentions that realization of demand charge on certain percentage of contract demand is in vogue in many SEBs and the said procedure has been upheld by many regulatory commissions. WBSEB has further stated that the load factor rebate is inbuilt in a two-part tariff. The overall rate gradually decreases with increase in load factor. Substantial load factor rebate separately stands in the way of recovery of the fixed charge of the utilities. WBSEB has furnished the clarifications on the TOD tariff rates. Regarding employees’ cost, WBSEB states that number of employees with reference to per thousand consumers or per million sale of energy are not relevant parameters for comparison of the employees’ cost. Many power utilities engage outside agencies for various services and payment of fees to these outside agencies are not reflected in the employees’ cost. WBSEB claims that their employees’ cost per Kwh is lower than the national average figure in spite of the fact that WBSEB is traditionally deprived of the remunerative load of cities of Calcutta, Howrah, Industrial load in Durgapur and Asansol area which are being administered by other utilities. It further states since WBSEB operates predominantly in the rural areas requirement of employees’ cost will naturally be higher. On the objections against proposed upward revision of LPSC, WBSEB replies that LPSC realized from the consumers is considered as revenue receipts as “non-tariff income”. If the non-tariff income gets reduced due to reduction in LPSC rate, revenue from sale of power has to be increased. This gives rise to the increase in tariff to higher extent penalizing the consumers, who pay the bill in time. As per WBSEB, LPSC rate cannot be compared with bank interest rate and LPSC rate should be stringent enough to allure the consumers to pay the bill in time so that WBSEB can pay in time ifs power purchase bill through LC and avail substantial rebate for prompt payment. 8.4.1 Objections raised by Century Extrusions Ltd. The objector has mentioned that the quality of power supply given by the WBSEB is very poor. There is wide fluctuation in voltage and interruptions in power supply are also frequent and all these make objector suffer heavy financial loss due to loss in production, increase in rejection and damages of electrical equipments. The objector feels that there is enough scope for improvement in power supply by WBSEB. Objector has also pointed out towards high T & D loss in the WBSEB’s system and suggested for constitution of a Consumers Grievance Redressal Cell. The company has strongly objected to the proposal of WBSEB for realization of demand charges at 85% of the contract demand. It has also proposed for continuation of load factor and power factor rebate and calculation of load factor on the basis of maximum demand recorded during normal/peak hours. It has also pleaded for proportionate reduction in demand charge for non-use of electrical power due to reasons beyond its control. It has also advocated for continuation of concessional energy charge to new HT/EHT industries as well as existing HT/EHT industries going for expansion and sick industries. It has also opposed the proposal of WBSEB for tariff hike every year in respect of bulk consumer to the extent of 28 to 67%. According to the objector, cross-subsidy need to be continued. They have also demanded suitable provisions in the tariff order for compensation to bulk consumers for the losses incurred due to interruption and fluctuation in voltage / frequency. 8.4.2 In reply to the above objections of the Century Extrusions Ltd., WBSEB has stated that rampant theft and pilferage of electricity is one of the reasons for interruption/poor quality of supply. However, the situation is improving upon taking effective steps by the Board consequent upon promulgation of State Act to arrest theft of electricity. The Board has also stated to be constructing new sub-stations and lines for improving quality of power supply. On the issue of subsidy and cross-subsidy as well as realization of demand charge similar reply as in para 3.3.2 has been given by WBSEB. On load factor rebate and power factor rebate WBSEB has stated that in two-part tariff structure rebates on both these cases are in-built. 8.5.1 Objections raised by West Bengal Cold Storage Association. According to the objector WBSEB’s proposal for tariff revision is one sided as it will only benefit the Board, but prejudicially it affect the interest of the consumers, particularly proposal for hike in charges in respect of cold storage consumers is not at all rational and congenial to the interest of the cold storage consumers. According to the objector, cold storage protects the interest of the poor and marginal farmers by preserving their agricultural production. The power demand in a cold storage demonstrates a varying profile and thus makes the status of the industry different from other consumers of the Board and therefore, can reasonably ask for a special scale of charges in line with the existing tariff of the Board. According to the objector, Board has not acted in consonance with the stipulations of section 29(3) of the ERC Act by proposing withdrawal of the concessional scale of charges for cold storage consumers on the pretext of tariff rationalization. The transmission and distribution losses in the WBSEB’s system is very high because of abnormally high commercial losses which according to the objector is an outcome of inefficient working of the Board. Thus, the Cold Storage Association opposes refixation of the T&D loss level of the Board for the year 2003-04. It is also held by the objector that there is no provision in the ERC Act, 1998 for fixation of tariff retrospectively. Since the rate at which cold storage is going to charge its consumers are decided by specialized body formed by the State Government, there is no scope for the cold storage consumers to recover any amount from the cold storage users for any retrospective revision. The objector has also opposed to the levy of demand charge as proposed by the WBSEB i.e., on 85% of the contract demand. It has also pleaded for allowing load factor rebate to the cold storage consumers and advocated continuation of power factor rebate/penalty. 8.5.2 In reply to the above objection WBSEB points out that cold storages have been enjoying special tariff. Under the present regulatory process, according to WBSEB, consumers taking supply at a particular voltage should ideally be called upon to pay at an identical tariff. The issue of concessional tariff to any particular class of consumer has been left to the decision of the Hon’ble Commission. On the point of excess T & D loss, WBSEB states that it has already reduced the T & D loss by 4% during the last two years and expects to reduce the same further by 2% during 2003-04. T & D loss of 32% proposed by WBSEB during 2003-04 is claimed to be comparable with the T&D loss allowed by other Regulatory Commissions. Realization of demand charge on certain percentage of contract demand, according to WBSEB, is in vogue in many SEBs and procedure has been upheld by many State Electricity Regulatory Commissions. WBSEB does not agree to extend load factor rebate to an industry which is already enjoying concessional tariff. At present the industries who are not getting any concession or concessional tariff are entitled to load factor rebate. On the point of power factor rebate, it states that in a two-part tariff power factor rebate is in-built in the tariff. 8.6.1 Objections by M/s. Jaya Shree Textiles. The objector has submitted that its unit is incurring losses due to frequent power interruptions and fluctuations in voltage and frequency of supply. It has requested the Commission to consider a reasonable compensation in the tariff for loss of production and damage of equipment suffered by it as a result of interruption in power supply and improper voltage of frequency of supply. It has also pleaded for more incentive during off-peak hours namely 60% of the normal rate. It has also requested to consider load factor rebate to at least 40 paise/ Kwh where monthly load factor is more than 85%. Load Factor Rebate, according to the objector, be determined without considering interruption period. It has also stated to abolish the ceiling of 2% on power factor rebate. It has opined that the gas power stations of the WBSEB be closed down and in the tariff computation expenses on gas power stations should not be included. It has also pointed out that cost of generation from Teesta Hydel Project is very high and also generating partly and as such capital cost on a reasonable basis be considered for the purpose of tariff. It has also objected to T&D loss of 32% claimed by the WBSEB in its tariff petition as the T&D loss has not been assessed correctly because of unmetered supply to many consumers. It has calculated the energy requirement of the WBSEB on the basis of T&D loss norm of 22.5% fixed by the Commission for 2003-04. It has recalculated the energy sales and supply plan on the basis of Commission’s T&D loss norms. On the revenue requirement claimed by the WBSEB it is of the opinion that the O&M cost is higher compared to the WBSEB’s claim for 2002-03, the employees’ cost increased by about 17% over the cost admitted by the Commission for 2001-02, administrative and general expenses have not been commensurate with the reduction on this count upon transfer of the two power stations to the WBPDCL. The expenses capitalised should be more as per capitalization rate fixed by the Commission. Interest claimed by WBSEB in the petition for 2003-04 is very high compared to the said figure of 2001-02. It has also been submitted by the objector that the interest payable to State Government should be calculated after deduction of subsidy receivable by WBSEB from the State Government. The objector has stated that WBSEB should claim interest from CESC on its outstanding dues. Depreciation claim of WBSEB for 2003-04 as well as provision for doubtful debts are stated to be very high. The objector is of the opinion that in view of CESC’s failure to pay as per the State Government decided schedule of payment, the WBSEB should not waive LPSC on CESC’s dues. It has also submitted that in fixing tariff for 132 KV supply only 2% T&D loss should be considered as in case average T&D loss is considered for all the consumers it will result in cross-subsidization to other consumers at the cost of 132 KV consumers contrary to the Hon’ble Supreme Court’s directive. Submission of the objector is that the tariff should be related to voltage of supply and not to the nature and purpose of supply, average cost should be related to voltage of supply. Single rate tariff system as fixed in case of CESC has been objected. 8.6.2 WBSEB has given replies to the objections on specific issues. On objector’s proposal for more incentive, on consumption during off-peak hours WBSEB is of the opinion that the tariff should be designed in such a manner so that the overall tariff is equivalent to the normal tariff in respect of consumers who draw power uniformly throughout the day. On load factor rebate WBSEB is of the opinion that in two part tariff system load factor rebate is inbuilt. Additional load factor rebate, if at all permitted, be extended only if power is drawn above the system load factor. According to them load factor rebate should admissible on the incremental consumption. It has stated that interruption of power supply in computation of the load factor is not considered by any Regulatory Commission. On the power factor rebate it has stated that in a two part tariff system where demand charge is realized on the basis of the KVA demand, load factor rebate is inbuilt in the tariff. Necessity of retention of the gas turbines has been explained by WBSEB in the tariff petition and the additional expenses for the gas turbine station is only Rs. 183 lakh. Reasons for increase in the cost of Teesta Hydel Project as well as low generation has been dealt in their previous tariff petitions. WBSEB has proposed the withdrawal of concessional tariff to the industries as such concession will put additional burden on other consumers. WBSEB aggress to the necessity to bring down the T&D loss although it could not achieve the target fixed by the Hon’ble Commission. However, WBSEB is lowering the T&D loss by 2% every year and has fixed a target of 32% during the year 2003-04 and the same is reasonably comparable with the T&D loss allowed by other Regulatory Commissions. WBSEB has further mentioned that the Hon’ble Supreme Court in the case of WBERC Vs CESC Ltd. has increased the admissible T&D loss in favour of CESC over the target fixed by the Hon’ble Commission for the year 2001-02 and thus, it opines that there is scope for further review of the T&D loss earlier fixed by the Hon’ble Commission in favour of WBSEB. As to the O&M expenses, WBSEB has pointed out that it has claimed as O&M expenses for the year 2003-04 less than that has been admitted by the Commission in the year 2001-02. On the point of employees’ cost WBSEB has given similar replies as stated at para 3.3.2. WBSEB has given the list of defaulters having outstanding dues above Rs.1 lakhs. On the issue of cross-subsidy, computation of average cost of supply and objection to single rate tariff WBSEB has left the issues to the consideration of the Hon’ble Commission. WBSEB feels that the principle of cross-subsidization shall continue at least for 4 years to come. 8.7.1 Objections by EDCONS (MKS) Castings Pvt. Ltd. The company has filed objection to the abnormal increase of power tariff of approximately 61% for the year 2003-04 over the period 2001-02 proposed by WBSEB. According to the objector when bank interest rates, interest on Government Bonds, depreciation rate are coming down, cost reduction is the only solution and not increase in the selling price. The industry is facing steep competition under globalization. The existing power tariff, according to it, is unjustified and the industry is paying for the utility’s inefficiency. Thus, the company objects and opposes any tariff hike rather there should be drive to reduce the power tariff. 8.7.2 In reply WBSEB says that it has initiated steps for reduction of revenue expenses and increase in revenue receipts through improvement in the management system. The power purchase planning is done in such a manner so that the power purchase cost is optimized. For increase in the revenue income the function of the billing unit are regularly monitored to ensure 100% meter reading and billing, replacement of defective meters and issue of disconnection notices to the defaulters etc. It says that the revised tariff proposed by it is competitive in the domestic market as the same is in conformity with the tariff structure approved by different State Electricity Regulatory Commissions. 8.8.1 Objections by Hooghly Ispat Ltd. The objector has mentioned about power interruption, frequency fluctuations and voltage fluctuations in the power supply by WBSEB. It has submitted that WBSEB should consider the interrupted hours for calculations of load factor. According to it, period of national holidays are also to be deducted in computation of load factor rebate. According to the submission, electricity duty should not be realized on demand charges. It has also pointed out that the industries should not be penalized due to cross-subsidy as per Hon’ble Supreme Court’s orders. It has requested for reduction of T&D loss by the WBSEB. Stringent action against power theft has also been suggested. It has complained about non-settlement of long outstanding disputes in the billing by WBSEB. 8.8.2 In reply WBSEB has observed that interruption of power supply in computation of load factor has not been considered by any Regulatory Commissions. As to the payment of electricity duty on demand charge it has stated that the scale of electricity duty is decided by the State Government. On the point of cross-subsidization it has expressed that the matter has to be looked into by the Hon’ble Commission. It has admitted that the Board is unable to bring the T&D loss to the extent fixed by the Commission but the WBSEB’s tariff proposal for the year 2003-04 is based on T&D loss of 32% which is lower than the T&D loss allowed by different Electricity Regulatory Commissions. On the issue of pilferage of electricity, it has stated that a State Act against pilferage of electricity has also been promulgated on 15.7.2002 wherein a more stringent punishment have been stipulated. WBSEB has intensified its raids at the consumers’ premises for detecting pilferage of electricity. Between 15.7.2002 and 4.2.2003 raids have been conducted by WBSEB at the premises of 16708 consumers, pilferage of electricity detected at the premises of 1605 consumers and FIR lodged against all the offenders and 287 offenders have been arrested. 8.9.1 Objection raised by Tijiya Steel Pvt. Ltd. The objector has pointed out that WBSEB has not proposed rational scale of charges for all its consumers avoiding cross-subsidy in its tariff proposal for 2003-04. It has been submitted that WBSEB has asked for a higher T&D loss in its tariff proposal for 2003-04 in spite of the Commission having set a norm. The Board has not determined the T&D loss based on actual reading of meters and hence the estimated T&D loss is questioned. The objector feels that the high commercial loss of WBSEB is the cause of high T&D loss in the utility’s system. So the T&D loss projected by the Board at 32% for the year 2003-04 is unreasonable in view of the management’s inefficiency. On demand charge the objector has proposed that the earlier method of levying demand charge may be reintroduced. It also feels that the Board’s proposal for deletion of rebate in demand charge on account of interruption of supply is unjustified. On the contrary supply at low voltage should also be considered for rebate in demand charge along with load shedding/interruption in supply. It has also opposed to the idea of giving retrospective effect of tariff. At present load factor rebate is not allowed by the Board to the consumers enjoying concession in the energy charge but the objector is of the view that load factor rebate may be allowed to all industrial consumers of the Board. Board’s proposal for discontinuation of power factor rebate/ penalty has been opposed by it. It has advocated for continuance of the existing concession in tariff for new industries. Board’s proposal for upward revision of LPSC has been opposed by it. 8.9.2 In reply WBSEB on the point of T&D loss repeated its explanation on high T&D loss as in para 3.8.2. On the proposal of demand charge on certain percentage of contract demand WBSEB repeated that such method is in vogue in many SEBs and upheld by many SERCs. On the point of load factor rebate WBSEB has given the same reply as in para 3.6.2. On continuance of power factor rebate WBSEB pointed out that they have asked for enhancement of the demand charge from Rs. 80 per KVA to Rs. 300 per KVA per month which takes care of additional power factor rebate available through monthly demand charge. On the objection against withdrawal of concessional tariff to the industries WBSEB has given the same reply as in para 3.6.2. As to the objection against upward revision of LPSC proposed by WBSEB it has stated that higher rate of LPSC increases the “non-tariff income” of the Board at the cost of a handful of defaulting consumers and decreases the revenue requirement from sale of power and the tariff thus automatically gets decreased to the advantage of the majority of the consumers paying electricity bill in time. 8.10.1 Objection by Hindustan National Glass and Industries. At the outset the objector has stated that their industry is a power intensive industry with electricity cost accounting for 12 to 13% of the total cost of production and have to compete with other global players and as such any disproportionate increase in tariff will affect their production seriously. Being infested with the problem of interruption of power supply and voltage fluctuation as well as frequency variation the objector initiated efforts for setting up a captive power plant but it suffered a setback due to the stringent financial norms fixed by the WBSEB. The objector has raised identical objections as raised by Jayashree Textiles at para 3.6.1 and asked for relief from the Commission on poor quality of power, more incentive on TOD tariff, load factor rebate, consideration of interruption of supply in calculating load factor, structure of power factor rebate/surcharge, on continuation of gas power station by the WBSEB, increase in cost of Teesta Hydel Project, high T&D loss, revenue requirement of the Board, different costs projected by the Board, voltage-wise cost of supply with actual T&D loss, issue of cross-subsidy and single rate tariff system. 8.10.2 In reply WBSEB has given the same explanation on the reasonableness of the projections in the tariff proposal as at para 3.6.2 in response to the objections of Jayashree Textiles, Kolkata. 8.11.1 Objections by Bengal National Chamber of Commerce & Industry. The objector has pointed out the high T&D loss of 32% proposed by WBSEB in its tariff petition for 2003-04. According to the Chamber the T&D loss should not exceed 16%. With the new legislation in force power theft in any form should be possible to be reduced by WBSEB if sincere efforts are taken. According to the Chamber, the target norm fixed by the Commission of reducing T&D loss by 2.5% every year is attainable. WBSEB should carry out intensive energy audit to identify weak links and take remedial measures. Chamber has proposed that drawing of power from DVC be kept limited to the minimum. Operation & Maintenance Costs proposed by WBSEB in its tariff petition is unreasonably high. Rise in employees’ costs in 2003-04 over the previous year, as asked by WBSEB is, according to the Chamber, unreasonable in view of retirement of large number of employees. The Chamber has recommended that WBSEB should introduce VRS wherever possible to bring down the employees’ cost. WBSEB’s claim for administrative and related expenses is high and according to the Chamber it should be limited to 4% of the fixed capital cost. WBSEB should restructure the loan burden by paying off high interest loan and switching over to low interest loans to lower their annual interest burden. The Chamber has proposed that all consumers shall be supplied with meters to arrest misappropriation. WBSEB’s tariff hike for 2003-04, according to the Chamber should be within 10% to 30% over the 2001-02 rates approved by the Commission. 8.11.2 In reply, the WBSEB repeats their arguments in favour of hike in T&D loss, high O&M expenses and employees’ cost as given in para 3.6.2. 8.12.1 Objections by Bharat Chamber and Commerce The Chamber has pointed out that it is not clear whether the power purchase procurement plan proposed by WBSEB in its tariff petition has been designed in a scientific way so that the total cost of power purchase is the minimum. The Chamber has pointed out that WBSEB should examine the compulsion of power purchase from DVC consequent upon ERC Act, 1998. It has advised that WBSEB should gear up its load management machinery so that Board is not required to pay the cost of deemed generation to WBPDCL as cost of inefficient load management. According to the Chamber the approach should be to plan the most optimum power purchase scheme. On employees’ cost the Chamber has analyzed that in spite of some employees being transferred to WBPDCL along with Bandel and Santaldih power stations the employees’ cost of the WBSEB is increasing. The Chamber has vehemently opposed any sort of increase in employees’ cost in WBSEB as it contravenes section 29(c) of the ERC Act, 1998. O&M costs proposed by WBSEB is unreasonable in view of the fact that the two power stations have been transferred to WBPDCL. Any increase in expenditure under O&M, according to the Chamber, simply reflects the inefficiency of WBSEB. This is totally opposed and disputed by the Chamber. Administrative and establishment expenses proposed by WBSEB, as pointed out by the Chamber is increasing every year despite transfer of two power stations to WBPDCL and downward inflationary trend and vehicular costs decreased. According to the Chamber the Government has ordered extreme economic measures for minimum reduction of at least 20% towards administrative and establishment expenses and as such the WBSEB’s proposal for hike in this respect is unreasonable. As WBSEB could not control the debtors efficiently there has been huge accumulation in debtors’ account of Rs. 1933 crores as on 31.3.2002. WBSEB should improve its collection efficiency and take suitable measures under the law to collect the arrear. The huge accumulation in debtors’ account is a sign of inefficient treatment with the defaulting consumers and absence of requisite follow up for collections. On transmission and distribution loss the Chamber states that it should be 22.5% as per Commission’s norm instead of 32% as sought for by WBSEB. Any loss beyond the stipulated norms shall have to be absorbed by WBSEB. Commercial loss in SEB’s system is high because of inefficient, irresponsible and callous working of all rank and file in WBSEB. According to the Chamber WBSEB’s proposal for realization of demand charge at 85% of the contract demand or actual maximum demand or stipulated minimum demand, whichever is higher, on the ground of introduction of availability based tariff for purchasing power from NTPC is not acceptable as purchase from NTPC hardly constitutes 19% of the total power purchase. WBSEB’s proposal on abolition of existing provisions of refund of demand charge on account of interruption of supply is opposed by the Chamber on the grounds that interruptions are due to inefficient load management by the utility. Reliability of power supply given by WBSEB has been deteriorating day by day and therefore action is required to be taken towards upgradation of network, augmentation of sub-transmission system, replacement of old/outdated transformers etc. According to the Chamber industry has the right to demand compensation package for interruption suffered by the industry resulting from inefficient energy management. The Chamber has proposed that the voltage regulation should be well within ±10%, as due to low voltage energy consumption as recorded in the meter is higher than the effective power received. Moreover, as a result of excursion of voltage/current/frequency plants and machineries installed in the industries are getting damaged for which necessary compensation may be thought of. SEB’s metering system is not adequate, meters get out of order very often and takes long time to get those repaired/replaced. During this period average billing is made which is higher than normal consumption and as such no average billing is acceptable to the Chamber. Tariff hike for high voltage consumers proposed by WBSEB is not rational as loss in high voltage system is much lower compared to the low voltage network. The tariff proposal for WBSEB’s HV supply segment has been unduly overcharged. According to the Chamber there should not be any element of cross-subsidy in the tariff with a purpose to avoid artificial anomaly between different classes of consumers. This has been affirmed by the Hon’ble Supreme Court and as such it should be abolished in entirety. The Chamber has proposed that DVC should be brought under the control of the Hon’ble Commission so that uniform policy of tariff could be adopted. DVC tariff is very high and DVC often imposes restrictions in power supply. The Chamber has opposed WBSEB’s proposal for withdrawal of load factor rebate. The Chamber has urged that no interim tariff order as proposed by WBSEB may be accepted. According to the Chamber Annual Minimum Guarantee Revenue clause in the tariff should be abolished totally. 8.12.2 In reply WBSEB has reiterated that their power purchase planning as projected in their tariff proposal has been done in such a manner so that the purchase cost is the optimum. WBSEB has proposed to exhaust cheaper source of state generation first and thereafter the balance requirement to be met from NTPC source. However, WBSEB will have to take the full share of Farakka and Kahalgaon Power Station to meet the peak demand of WBSEB system in view of the fact, the utility cannot ignore its responsibility to meet the peak demand of its system. Of course WBSEB is unable to absorb the full share of NTPC during other period of the day in view of insufficient demand in the WBSEB’s system but to relieve the ultimate consumers from shouldering huge burden of fixed cost of NTPC power station WBSEB has initiated steps to sale surplus power to outside region through Power Trading Corporation. WBSEB has also taken steps to construct a 220 KV sub-station along with nine 33 KV sub-stations to meet the demand of the consumers within the valley area and outside. WBSEB is now awaiting Commission’s direction to do away with purchase from DVC and take power from its own source instead. However, WBSEB will require 2/3 years to develop entire network in the valley area of DVC for dispensing with the power supply from DVC. On employees cost WBSEB states that it has estimated on a realistic assessment basis taking into account reduction in employees’ cost on account of transfer of some employees to WBPDCL. Employees’ cost of 2003-04 has increased mainly due to giving effect for increase of D.A. of 11% as already sanctioned by Government of India. WBSEB submits that the employees’ cost per Kwh in WBSEB is lower than All India Average. On the O&M cost, WBSEB justifies higher cost in O&M for maintaining reasonable quality of power with reduced outages for which enhanced level of upkeep is necessary. Moreover, there has been an addition of asset to the extent of Rs.985.00 crores during 2002-03 upon completion of a large transmission project. Administrative cost of the Board has increased consequent upon intensification of its drive against theft of power to reduce commercial loss upon promulgation of anti-theft law. Vehicular running expenses, vehicle hire charges and traveling charges for frequent raids programme to be conducted through out the state have added to the administrative cost. Further, cost of computer stationeries has increased substantially due to increase in the area of computerization and legal expenses has also increased due to increase in the number of court cases arising out of various tariff orders passed by the Hon’ble Commission. On the point of provision for Bad and Doubtful Debts proposed by WBSEB in its tariff petition it has stated that the Board has taken steps for improvement of collection efficiency like constant monitoring of debtors’ position, timely disconnection of defaulting consumers, installation of mechanized system of cash collection etc. It further states that the entire sale of WBSEB are on credit basis and are spread over vast semi urban and rural areas causing occurrence of Bad and Doubtful Debts. Accumulation of amount of Rs. 1933 crores as outstanding dues was due to revenue management of earlier period on manual system. On the point of excess T&D loss WBSEB has repeated the same justification as in para 3.6.2. WBSEB has justified its proposal for enhancement of demand charge on the ground that in a two-part system demand charge should ensure realization of entire fixed cost of the utility but traditionally demand charge rate was kept at a very low level and it was about 20% of the overall charge. Substantial component of the fixed charge was absorbed in the energy charge. In the event of actual sale of energy is lower than the projected sale the utility will not be able to recover its entire fixed charge. As such hike in demand charge has been proposed on a realistic basis. On the point of reliability of power supply WBSEB states that the Board implements various system improvement projections on regular basis. Big transmission and distribution projects are also taken up by the Board from time to time for improvement of quality of supply and meeting additional demand of the system. In this matter Board also expects cooperation from the consumers not to draw in excess of contract demand during peak hours and more and more participation in the TOD system of metering and billing. The Board has denied that the meters and metering equipments installed by them are of sub-standard quality. Since March 1995 the Board has been supplying electronic meters of international standard and the failure rates of such meters are negligible. Regarding tariff structure in its proposal WBSEB has maintained the philosophy of cross-subsidization but the quantum of cross-subsidy has been reduced. However, the issue related to cross-subsidy has been left to the decision of the regulatory commission. WBSEB has stated that it has not proposed withdrawal of load factor rebate in its tariff petition but the quantum of the rebate has been rationalized. As the demand charge rate has been proposed to be enhanced in the tariff petition power factor rebate will be quite substantial if the consumer can improve the power factor of its drawal. WBSEB has also proposed abolition of AMGR in its tariff petition provided demand charge rate is fixed on a realistic basis.
The objector has proposed that the amount of benefit extended to the consumers for power failure is to be increased as the amount of production and financial loss due to such failure is very high. The cross-subsidy as per Supreme Court’s order in the matter of CESC Ltd. has been proposed to be withdrawn from the tariff. It has also stated that the actual T&D loss applicable to a particular voltage should be considered while fixing the energy charge for that voltage. Provisional bills claimed by WBSEB occasionally without assigning any reasons should be done away with. The electricity duty should be demanded on energy charge only and not on demand charge. The objector has objected to the T&D loss proposed by the Board in the tariff petition and according to the objector the T&D loss norms fixed by the Commission should be applicable in fixing tariff. 8.13.2 WBSEB, in reply, has stated that the Commission will look into the issue relating to subsidy and cross-subsidy. However in their tariff proposal they have made an attempt to rationalize cross-subsidy. On the point of electricity duty on demand charge WBSEB states that it has nothing to comment because the duty rates are fixed by the Government of West Bengal. As regards high T&D loss WBSEB has repeated the same explanation as in para 3.6.2. 8.14.1 Objection by WBSEB Workmen’s Union According to the objector tariff petition filed by WBSEB is an arbitrary one. The management has not consulted the union. The Union believes that there are ample scope for reduction of O&M as well as administrative and financial costs. The suggestions made by the Union in fixing performance norms for various types of jobs are yet to be established in practice. If their suggestions are implemented the benefit will be enjoyed by the consumers of electricity. According to the Union, WBSEB is absorbing adverse peak off-peak variation whereas CESC Ltd. is a beneficiary. CESC draws 350 MW from WBSEB system in the peak hours and 20 MW in the lean hours keeping their own power station free from load variation. Due to these load variation auxiliary consumption of WBPDCL’s generating stations is high. It is a suggestion of the Union that the Commission may charge 1% of auxiliary consumption of WBPDCL upon CESC Ltd. According to the Union WBSEB’s T&D loss is high as WBSEB is required to distribute energy to the remotest corners of this State. It is a suggestion of the Union that the Commission may consider a percentage of this loss to be passed on to the generating companies/licencees having generating stations. The rate for temporary supply @Rs.100 per Kwh per day proposed by WBSEB should, according to the Union be enhanced to Rs. 400 per day. The Union suggests that in view of ABT in place consumers’ tariff should be two parts, i.e., demand charge and energy charge. The Union says that WBSEB incurred huge losses in the past for providing cheap power to the domestic consumers. So WBSEB be allowed at least 50% of its cost of pensionary benefits as social and mandatory cost. The Union has opposed to the WBSEB’s proposal for high tariff structure for lower category of domestic consumers. It has also opposed to the withdrawal of special concession in energy charge to industrial consumers in the backward districts. It has also suggested retention of concession in energy charge in respect of new, sick and closed industries subject to the realization of the same from the State and Union Government. 3% rate of return to WBSEB, compared to 16% to the licencees is, according to them, unreasonable. 8.14.2 In reply, WBSEB says that the Commission has already fixed normative values parameters associated with generation, transmission and distribution of power. Lot of parameters for revaluation of technical and financial performance of SEBs has also been prescribed by the CEA. On the point of variation of load in the peak and off-peak hours WBSEB says there is a provision of penal charge proposed in the tariff petition for application to CESC Ltd. against drawal of power from WBSEB with high peak off-peak ratio. As to the suggestion of the Union of levying certain percentage of T&D loss of WBSEB upon all generating companies/licencees WBSEB says that it will give rise to the increase in the revenue requirement of those utilities which will again be passed on to the consumers. So the ultimate consumers do not get any relief in the mechanism proposed by the Union. As to the suggestion of the Union for increase in the rate of temporary power supply WBSEB says if the suggestion of the union is implemented the power rate for temporary supply will be exorbitant. As to the suggestion of the Union of allowing 50% of the pensionary benefit in the tariff WBSEB says that 100% pensionary benefit extended to the retired employees of the Board is an admissible expenses chargeable in the tariff. On the continuation of concession and rebates enjoyed by consumers WBSEB says such extension to a particular group of consumers will put an additional burden on the other group of consumers and rationalization of tariff structure is affected. WBSEB has already approached the State Government to enhance the present rate of return of 3% in view of the higher rate of return enjoyed by licencees and generating companies. 8.15.1 Objections filed by Shri Vasavi Industries Limited According to the objector WBERC has not made any regulation for the manner in which the charges for energy may be determined. In the absence of clear rules and regulations with respect to the manner for determination of the charges for energy, the objector feels that the required transparency in determination of tariff cannot be achieved as per Section 37 of the ERC Act. On the issue of average cost of supply, the objector has pointed to the Sections 29(2), 29(2)(c), 29(2)(e), 29(3) and 29(5) of the ERC Act and according to the objector a harmonious construction and combined reading of all the provisions lead to the concept to determine tariff according to the cost of supply to a consumer. The objector is an EHV consumer taking supply at 132 KV from WBSEB and as such charges upto EHV level should be considered in fixing the tariff of the objector. Charges upto EHV level is much less, according to the objector, compared to HV and LV level. The objector points out that an average tariff at EHV should be worked out for application to EHV consumers. The objector is of the view that the concept of average cost is very much related to the voltage of supply to a consumer and if, overall average is taken, the consumers at EHV level share a larger amount than what is the actual average cost related to the EHV. According to the objector, if the tariff is determined on the basis of overall average cost, cost unrelated to supply at EHV will come in and has to be shared by the EHV consumer. Thus, there is always an element of hidden subsidy in this process. The objector has observed that according to the Hon’ble Supreme Court’s order in the case WBERC Vs. CESC Ltd. there is no scope to determine tariff with elements of any hidden or cross subsidy. The objector submits that theirs being a Ferro-Alloy industry the cost of power constitutes about 40% of the cost of production. So for every one paise increase in the power tariff, the cost of production goes up by Rs. 40/- per M.Ton which the market cannot absorb. Any increase in the existing tariff will affect the viability of the industry and may result in the closure of the unit. The objector has proposed that a flat rate energy based tariff without any minimum charge or demand charge may be fixed for Ferro Alloy Industry. Such a tariff is in place in Andhra Pradesh. The unique character of the industry deserves special consideration for a separate tariff based on energy charge only. The objector has pointed out that WBSEB in its tariff proposal has indicated export of surplus power to the outside region at an indicated rate of Rs. 2/- per unit at NTPC bus whereas the said utility has proposed a TOD tariff for EHV consumers at about 440 paise / unit. Such an approach of selling power at higher rate to the consumers of the State and exporting power at cheaper rate is a step detrimental to the interest of the State. The objector has, therefore, proposed that it may be allocated power directly from the NTPC out of the State’s share to provide cheaper power. The objector has drawn the attention of the Commission that WBSEB has proposed to take the entire share of Kahalgaon with a higher rate surrendering a portion of the power from Farakka at a lower rate. The objector has pointed out that WBSEB has not exhibited a good performance in reduction of T & D loss. It has proposed a higher T & D loss for the year 2003-04 in violation of the Commission’s norms in this respect. WBSEB has failed to submit the details as per formats of the Commission for the purpose of appropriate assessment of transmission and distribution loss. The objector has submitted that the Commission may decide the T & D loss on the basis as was done in the year 2001-02. According to the objector actual maximum demand registered in the meter should form the basis for billing the demand charge and WBSEB’s proposal of realizing demand charge on certain percentage of the contract demand is illegal. WBSEB has denied the objector any rebate on load factor, because the industry is in receipt of concession. This is a discriminatory treatment in allowing load factor rebate. According to the objector, concession is granted by the Government for encouraging establishment of industries in the backward district of West Bengal and as such this cannot be allowed as an obstruction towards receiving load factor rebate. The objector does not find it reasonable to allow load factor rebate on the incremental consumption. The objector has, therefore, submitted before the Commission to reject the WBSEB’s proposal of considering load factor rebate on incremental consumption and not to discriminate between the consumers for allowing load factor rebate. According to the objector, security deposit should be valid for a minimum period of one year and it should be fixed based on one month’s average consumption in respect of consumers covered under monthly billing cycle. It has also proposed that WBSEB may resort to a system of Letter of Credit to ensure payment instead of asking for security deposit. WBSEB has inter-related the grant of concession with the timely payment of energy bills and huge penalty is imposed in case of delay in payment of bills to the extent of loss of concession as well as levy of delayed payment surcharge. The objector is of the opinion that having decided the delayed payment procedure by the Commission there is no scope for application of any other procedure by WBSEB. The objector has submitted before the Commission that on each and every expenditure of WBSEB prudency audit may be carried out for ensuring good performance by WBSEB and for protection of the interest of the consumers. According to the objector, cost of generation of WBSEB’s gas station and hydel station combined comes to Rs. 4.70 per unit which is excessively high. Therefore, some sort of benchmarking is necessary which shall make the utility conscious of avoiding infractuous expenditure. According to the objector, expenses incurred towards transmission and sub-transmission system does not commensurate with the performance proposed to be achieved. On the distribution front, also some sort of benchmarking is necessary in regard to availability, adequacy, reliability and consumers service. It is the submission of the objector that the Hon’ble Commission may set the benchmark of performance to ensure transparency in the functioning of the utility. WBSEB in its proposal has shown an amount of Rs. 258.62 crores as power purchase from NTPC Stations for export to outside region and against the same expected revenue is indicated as Rs. 258.62 crores. This is not a correct representation as the anticipated revenue shall be @ Rs. 2/- per unit against purchase price of Rs. 1.786 per unit. WBSEB has proposed an expenditure of Rs. 534.19 crores on account of interest payment on fund under securitization scheme. The objector has raised question on the appropriateness of booking such a huge expenditure as the relevant data and commitments made in connection with securitization scheme are not available. Therefore, the objector has requested the Commission to examine the admissibility of this amount in the tariff. WBSEB has not given justification sought by the Commission with regard to the huge cost incurred in implementing Teesta Canal Project. So the Commission has been requested by the objector to decide the appropriateness in such expenses looking into the interest of the consumers. WBSEB’s proposal for withdrawal of concession in the tariff petition for the year 2003-04 has been objected to. 8.15.2 In reply WBSEB has told that it has nothing to contradict the approach for application of cost based tariff from the point of principle of fixation of tariff. But on the proposal of objector for fixation of a special tariff for Ferro-Alloy Industries, WBSEB states that it is not in favour of formulation of any special tariff to a particular class of industry. Ferro-Alloy industry operate at a high load factor and as such their financial interest is fully covered in a two-part tariff system which is in vogue in WBSEB. On the proposal of the objector for allocation of NTPC power in their favour out of State’s share, WBSEB has pointed out that the issue is not under the purview of the WBERC. On the question of export of power to outside region at the rate of purchase from Farakka Thermal Power Station, WBSEB refers to the explanations in its tariff petition for 2003-04 where it has been amply clarified. WBSEB could not achieve the T & D loss fixed by the Hon’ble Commission, but it is gradually reducing the same at the rate of 2% and for the year 2003-04 it has projected the T & D loss at 32% which it claims, is reasonably comparable with the T & D loss allowed by other SERCs. As to the realization of demand charge, proposed by WBSEB in its tariff petition, on the basis of certain percentage of contract demand, WBSEB points out that this procedure is in vogue since long time past in many SEBs and the procedure has been upheld by many SERCs. On the issue of load factor rebate, WBSEB says that load factor rebate is in built in a two part tariff structure. Demand charge in paise per unit gradually decreases with the increase in load factor in a two part tariff system. So, substantial load factor rebate separately will stand in the way of recovery of the fixed charge of the utility. On the question of realizing security deposit on the basis of one month’s consumption, WBSEB has clarified that after allowing the time for payment of energy bills and disconnection notice period actually when a defaulting consumer is disconnected for non-payment of bills, more than two month’s consumption gets accumulated and so realization of security deposit on the basis of two month’s energy bills is reasonable and justified. Hon’ble Supreme Court of India has held that realization of security deposit on the basis of three month’s consumption is not unreasonable. 8.16. Objections filed by All Bengal Electricity Consumers’ Association. The Association has strongly objected to the tariff hike and other related proposal of WBSEB in view of the CAG report and CEA norm. WBSEB has submitted incomplete particulars in the absence of complete metering and as such the tariff proposal of WBSEB should be rejected by the Commission. According to the objectors WBSEB’s proposal to reduce cross subsidy is contrary to the Section 29(3) of the ERC Act 1998. WBSEB’s projection of power purchase on the basis of 32% T & D loss is strongly opposed by the Association as it is in gross violation of the CEA norm of 15.5% as well as Hon’ble Commission’s own norm of 22.5% for the year 2003-04. Thus, the cost of power purchase has exorbitantly increased. The objector has pointed out that WBSEB proposes to purchase power at a high rate of Rs. 4/- per unit from Government of Sikim, Rs. 2.64 per unit from DVC etc. while the cost of power purchases from Kolaghat and Bandel Power Stations are Rs. 1.43 and Rs. 1.48 per unit respectively. This has been strongly objected to by the Association. According to the objector Bandel TPS and Santaldihi TPS belonged to WBSEB and upon transfer of the same to the WBPDCL the cost of power has increased, the burden of which is coming upon the consumers. Association demands that all the power stations of WBPDCL be transferred to WBSEB for reducing the cost of generation. The objector claims that before proceeding with the tariff proposal of WBSEB its efficiency and performance are to be judged, because in the methodology to be followed for determination of tariff as provided in Section 29(2)(a-g) of the ERC Act 1998 two most important items among others to be examined are the efficiency of the utility and good performance. In the tariff order for 2001-02 Hon’ble Commission has pointed out to lack of many data and particulars and in action on the part of the Board which according to the objector are the inefficiencies and bad performances on the part of the WBSEB. So WBSEB should clearly state what actions have been taken by it to improve its performance. Careful examination of the tariff proposal for 2003-04 reveals that still such inefficiencies are continuing. Hence, the tariff proposal of WBSEB for the year 2003-04 should be rejected. WBSEB in its tariff proposal has stated that it has attempted to reduce the cross subsidies and rationalize the tariffs which according to the objector is contrary to law. The objector points out that still low voltage, load shedding, unmetered supply, non-reading of meters exist in the WBSEB system which proves its inefficiency. In the list of defaulting consumers of WBSEB, the CESC tops the list having outstanding dues of nearly Rs. 1,000 crores. WBSEB should clearly indicate the steps taken by it to realize these dues. Instead of quarterly meter reading and billing, the Association claims that billing and meter reading should be monthly. The Association opposes the proposal of WBSEB to increase the meter rent, testing fees, disconnection and reconnection charges etc. Objector has claimed that the consumers be allowed to purchase their own meters as per IE Act 1910. The rate of interest on the outstanding loan of WBSEB is very high and as such the objector opposes it. WBSEB should apply Section 39, 44 and 50 of the IE Act 1910 to contain theft of electricity before applying the new Act on pilferage and theft. The objector says that WBSEB should show the amount of subsidy to be received from the Government in its revenue requirement. WBSEB’s collection of security deposit on the basis of three month’s consumption is also opposed by the Association. The Association further claims that WBSEB should pay interest on security deposit of the consumer. The objector is also in favour of installing meter at all the premises of the Tea Garden Labour Line and these connections should be treated as LT domestic connections. The objector also opposes to WBSEB’s proposal to the withdrawal of different rebates and concessions in its existing tariff. WBSEB should install meters at the premises of all agricultural consumers. 8.17. In reply WBSEB states that T & D loss norm of 15.5% fixed by the CEA is old and obsolete and the same norm is not being considered for any practical purpose. After formation of Regulatory Commissions in different states the actual T & D loss of the SEBs which are being projected in the tariff petition are much higher than 15.5%. The different SERCs have also allowed T & D loss more than 15.5% in favour of the SEBs. Regarding the high power purchase cost from Government of Sikim, WBSEB states that to meet the demand of a village in the State of West Bengal WBSEB makes this purchase from the Government of Sikim as there is no WBSEB’s network nearby the village. Similarly, high tariff of different Central Sector Generating Stations as pointed out by the Association are being finalized by the CERC. Similarly, tariff of WBPDCL is being approved by WBERC. Only the tariff of DVC is still now unregulated, but WBSEB is required to purchase power from DVC within the DVC command area to meet the demand of the WBSEB’s ultimate consumers in view of the stipulation in the DVC Act. WBPDCL is a State Generating Company and was constituted by the GOWB. As a part of the reform in the State Power Sector State Government decided to transfer BTPS and STPS from WBSEB to WBPDCL. WBSEB has nothing to comment on the proposal of the Association for transfer of all the units of WBPDCL to WBSEB. WBSEB admits that it has not been able to achieve the T & D loss target fixed by the Commission, but it has reduced the T & D loss by 4% during the last two years and expects to reduce the loss further by 2% during 2003-04. The T & D loss of 32% as projected by WBSEB in its tariff petition for the year 2003-04 is in conformity with the T & D loss being allowed by different SERCs. As to the loss of Rs. 266 crores on sale of power to CESC Ltd. WBSEB points out that earlier GOWB used to decide the tariff to be charged by WBSEB to its different consumers. The tariff chargeable to CESC Ltd. and Singur Haripal Rural Electric Cooperative Society Ltd was also decided by the GOWB and the observation of the CAG report is not correct as the computation of the alleged loss was based on average cost of power and not on cost of power at 132 KV level at which CESC Ltd. has been receiving power from WBSEB. As to the accumulation of huge outstanding dues of the CESC Ltd. WBSEB points out that the GOWB has fixed up a schedule for liquidation of the outstanding dues by the CESC Ltd. and as on date the outstanding dues paid by the CESC Ltd. is in conformity with the schedule fixed by the GOWB. WBSEB is yet to commission all meters at its sub-station and feeders upto 11 KV level and therefore, has prayed to the Hon’ble Commission to grant an waiver for not conforming to the data format. In filing the tariff petition WBSEB has complied with the provisions of Section 29(3) of the ERC Act 1998 by proposing different tariffs for different classes of consumers and provision for load factor, power factor and TOD tariff WBSEB has not shown any undue preference to any particular consumer in its tariff proposal. WBSEB has maintained the principle of cross subsidy which may be evident from the proposed tariff structure. On the issue of security deposit WBSEB states that realization of security deposit on the basis of three months’ bills has been upheld by Supreme Court of India. Interests on security deposit are being paid by WBSEB to L and MV consumers only after termination of contract. However, interest on cash security deposit furnished by the high voltage consumers are paid on annual basis. 8.18.1 Objections filed by Socialist Unity Centre of India. The objector has made identical observations as All Bengal Electricity Consumers’ Association on the tariff proposal of WBSEB for the year 2003-04. 8.18.2 WBSEB has given same replies as in para 3.17.2. 8.19.1 Objections filed by Indian Tea Association and others. The objector states that the Commission has not yet made clear rules and regulations with respect to the manner for determination of the charges for energy and as a result required transparency in determination of tariff cannot be achieved. It has also objected that the time period offered by the Commission for submission of objection is inadequate. It, thereafter, has pointed out that WBSEB has so far supplied electricity to the Labour Line of the Tea Gardens at the domestic rate and to the street lights at the municipal rates. The manner of charging this way was decided in a meeting with the Government. Since it was a direction in matters of policy involving public interest duly decided by the Government, the objector emphasizes that the Hon’ble Commission is expected to follow this direction as per Section 39 of the ERC Act 1998. Prior to the determination of tariff by the Commission, WBSEB used to supply the Labour Line at a rate covered under Dm-L. In its tariff order for the year 2001-02 Hon’ble Commission fixed the tariff for Labour Line at the appropriate domestic rate. According to the objector WBSEB misinterpreted the tariff fixed by the Commission and started billing the Labour Line of the Tea Gardens at the highest rural rates. The objector states that the charges levied by WBSEB is not as per the direction of the Hon’ble Commission as the Commission desired application of appropriate tariff. The objector, therefore, submits that the tariff for Labour Line should be fixed at par with rural consumers consuming 100 kwh of electricity per month. The objector has also appealed to the Commission for appropriate direction on WBSEB to transfer the job of maintenance, billing and collection from the tea producers to WBSEB. On the issue of industrial supply to the Tea Gardens the objector has pointed out that the Tea Gardens are receiving power at high voltage. In the tariff proposal of WBSEB for the year 2003-04 rates for HV supply have been made to subsidise LV category of consumers. Thus, there is an element of cross subsidy in the tariff proposal of WBSEB which is against the Hon’ble Supreme Court’s verdict in the case of WBERC Vs. CESC Ltd.. As per the judgement of the Hon’ble Supreme Court there is no scope to determine tariff with elements of cross subsidy - hidden or clear. The objector further submits that the tea is a process industry with varying demands for power supply. During the months of December to April power requirement of the Tea Garden is exceedingly low but the industry is required to pay penalty for non-maintenance of required load factor. It is not possible for the tea industry to maintain the stipulated minimum load factor during this off season period and as such considering the tea industry as a seasonal industry Commission may kindly fix a separate tariff for such industry to save the industry from paying heavy penalty on account of poor load factor. The objector has further pointed out that WBSEB’s proposal for realization of demand charge on 85% of the contract demand is not in conformity with the Electricity (Supply) Act 1948 and therefore, not acceptable. Section 2(8) of Electricity (Supply) Act 1948 has defined the maximum demand and WBSEB in its terms and conditions for supply has also included that definition. As per Section 26 of IE Act 1910 the amount of energy supplied to a consumer or the electrical quantity contained in the supply shall be ascertained by means of a correct meter. Thus, according to the objector it is established that the reading of meter is final and binding and no other charges other than what is warranted by the registration in the meter could be demanded by WBSEB from the consumer. Thus, the objector submits that the WBSEB’s proposal in respect of billing demand is an irrational approach. The objector has also pointed to the high T & D loss claimed by WBSEB in its tariff proposal for the year 2003-04. The objector has submitted that the Commission may carry out prudency audit with respect to good performance of WBSEB while determining tariff. It has urged that the Hon’ble Commission may kindly take into account the interest of the consumers and the aspect of good performance as well as improving level of efficiency in fixing the tariff.
8.20.1 Objections filed by Vidyut Chalito Agavir Nalkup Samity, North 24 Parganas The objector has pointed out that since introduction of unmetered supply to the agricultural consumers its members are subjected to exploitation by WBSEB. The objector strongly opposes the proposed tariff hike of 100% submitted by WBSEB for 2003-04 without mentioning any reason for proposing such excessive hike. The objector says that since 1991 there has been a total hike in agricultural tariff to the extent of 807% including the current proposal of WBSEB. The tariff hike proposed by WBSEB for the metered category is 97% over that of 2001-02. Such abnormal increase in the agricultural tariff will increase the cost of irrigation beyond the capacity of its members resulting in large number of disconnections to agricultural pump-sets. WBSEB has fixed annual charges for un-metered shallow tube-well consumers from time to time without indicating unit rate per Kwh. WBSEB has intended to maintain the flat rate tariff with the clear intension to continue with the present system of un-metered power supply to the shallow tube-well consumers in defiance of the Commission’s directions in this respect in the earlier tariff orders. The objector has pointed out that WBSEB has violated section 45 of the ERC Act for ignoring Commission’s directive for providing meters to all consumers. According to the objector proposal of WBSEB for increasing meter rent, testing fee and disconnection and reconnection charges is uncalled for. It has also objected to WBSEB’s notice dated 1.11.2002 seeking to realize fuel surcharge from un-metered STW consumers. The quality of power supply maintained by WBSEB has deteriorated in spite of the Commission’s direction in their earlier tariff order for improving the quality of supply. Therefore, proposal for hike in tariff of WBSEB is not maintainable. In the tariff proposal WBSEB has attempted to reduce the cross-subsidy which has been objected to by the objector on the grounds of present socio-economic conditions prevailing in the agricultural category. The objector has also submitted for rejection of the prayer of WBSEB for giving an interim order. It has also demanded the right for purchasing meter by the consumers. 8.20.2 In reply, WBSEB states that tariff for supply of power to shallow tube-well consumers was not enhanced from 1977 to 1990. The tariff fixed by the Hon’ble Commission for the year 2001-02 in respect of STW consumers is only 96 paise/Kwh. In the Chief Ministers’ conference on 16th October and 3rd December, 1996 it was decided that the tariff for agricultural sector will be brought to 50% of the average cost of power within three years. More than six years has since passed the aforesaid stipulation has not yet been achieved. The tariff in respect of STW consumers is still far below 50% of the average cost of power. The tariff proposed for the year 2003-04 in respect of STW consumers in south Bengal districts as claimed by WBSEB is around 180 paise/Kwh which is lower than 50% of the average cost of power of 409 paise/Kwh. On the issue of installation of meters at the premises of unmetered STW consumers WBSEB has made a plan to complete installation of meters at the premises of all unmetered shallow tube-well consumers by 2007-08. On the issue of monthly meter rent, WBSEB says that meter rent is nothing but fixed charge (interest, depreciation and O&M) incurred by the Board in connection with the administration of meters. As meter rent is realized separately the revenue requirement of the utility through tariff gets reduced. Thus, realization of meter rent in no way affect the financial interest of the consumers as per WBSEB. 8.21.1 Objection filed by All India Krishak-O-Khet Majur Sangathan, West Bengal State Committee. The objector has made identical observations on the tariff proposal of WBSEB for the year 2003-04 as in para 3.20.1 on the issue of exploitation by WBSEB, abnormal and excessive rate of hike, fixation of annual charges without indicating unit rate per Kwh, installation of meters to the unmetered STW consumers, meter rental, testing fee, disconnection and reconnection charges, realization of fixed charge in lieu of fuel surcharge, increase in tariff without maintaining quality of supply. 8.21.2 WBSEB has given identical replies as in para 3.20.2.
WBPDCL has objected to WBSEB’s estimation on export of power from Bakreswar in its tariff proposal. If WBSEB considers WBPDCL’s power stations as their captive units, the total fixed cost should be payable by WBSEB. Till now, this being not the real situation WBSEB cannot dictate the production of WBPDCL’s power stations. WBPDCL being a separate corporate entity, business activities of WBPDCL cannot be guided by WBSEB. The objector is exporting excess power out of its total generation from all the four power stations as a whole. 8.22.2 In reply WBSEB has stated that it is the decision of the Hon’ble Commission that WBPDCL will export power to outside region after meeting the requirement of WBSEB and such export of power shall be only from Bakreswar Thermal Generating Station. WBPDCL, being a state generating company, will have to abide by the operating instructions given from time to time by the SLDC (CLD of WBSEB). WBSEB is of the opinion that since the Hon’ble Commission has decided that the export of power to outside region shall only be from Bakreswar Thermal Power Station, the question of exporting excess power out of its total generation from all the power stations as claimed by WBPDCL, does not arise. It will be detrimental to the interest of the consumers of West Bengal. 8.23.1 Objections filed by Shri Sudhamoy Ghanty, Asansol The objector has given some suggestions on the procurement of coal and its transportation as well as use of the waste products of the power stations to reduce the cost of generation. The objector has also pointed to the high T&D loss in WBSEB’s system. The objector has demanded the stoppage of theft of electricity by installing static meters. 8.23.2 On the above observations of the objector WBSEB has given similar replies as in earlier paras on high T&D loss and pilferage of electricity.
The objector opposes the proposal of WBSEB in its tariff petition for the year 2003-04 towards withdrawal of power subsidy. The objector says that theirs is a sick company operating under a rehabilitation scheme approved by BIFR on the specific terms of eligibility of power subsidy for three years. The withdrawal of subsidy now will jeopardize the rehabilitation programme of the sick company in its effort for revival. The objector says once such a relief is operative at the recommendation of BIFR such relief cannot be withdrawn. Further, the objector is proposing to set up a project for manufacture of sponge iron with the expectation of getting power subsidy for the new project also. In the event the power subsidy is withdrawn the objector would have to plan for relocation of its new project in some other state. Further, the objector has incurred a capital expenditure of Rs. 90 lakh for obtaining power connection from WBSEB. WBSEB is now earning by providing connection from that power line to other consumers without giving any relief to the objector. The objector has made an appeal to the Commission to look into this aspect for reimbursement of the objector’s investment. 8.24.2 In reply, WBSEB states sick industry covered under approved rehabilitation package is entitled to get concession in the energy charge for three years but it has proposed in its tariff petition withdrawal of such concession in energy charge to reduce the burden on other group of consumers. Now it is upto the Hon’ble Commission to decide on the continuation of concession. As to the payment of service connection charge by the objector WBSEB says that as per I.E. Act 1910, service line paid for by a consumer can be tapped or extended for giving supply to other consumers. So as per WBSEB giving of any special attention to the consumer who originally paid the cost of service line which was subsequently tapped for giving supply to other consumers does not arise. According to WBSEB cost of service line beyond Board’s sub-station and upto the consumers premises is to be borne by the consumers as per I. E. Act, 1910 and it has no relation with the extension of power subsidy to the consumers.
The objector has opposed to the enhancement of tariff hike with retrospective effect as it contravenes the provisions of the Consumer Protection Act allowing consumers the right to be informed about the price of goods or services. The objector has also opposed to the practice followed by WBSEB of passing the burden of the outstanding dues which has not been realized from previous consumer to the shoulder of the next consumer for no fault on the latter’s part. It has also demanded that the high T&D loss in WBSEB’s system is due to the management’s inefficiency and the same should not be passed on to the consumers. 8.25.2 WBSEB in reply has stated that accumulated outstanding dues of any previous consumer is transferred to the new consumer in the same premises only in those cases where such transfer is permitted by law. On the point of projected T&D loss it has given similar replies as in earlier paras. 8.26.1 Objection filed by Indian Aluminium Company Ltd. The objector is a consumer of CESC Ltd. at its Belur Plant. It says that in spite of taking effective cost control measures cost of production of the company continues to be high mainly because of exorbitant cost of electricity and is now threatening the very survival of the company. To alleviate the difficulties faced by the company it intends to wheel power from its captive power plant in Orissa or wheel power from the existing power sources in the state of West Bengal or set up a captive power plant at their Belur unit. The objector finds that the current captive power policy of the GOWB is stringent. The current policy does not mention anything about the inter-state wheeling of power nor it is clear about the intra-state wheeling of power from plants with capacities of above 3 MW generated from conventional fuel. The present policy states that for drawing back up power from power utility it will have to pay monthly demand charge at double the normal demand charge rate. The objector has referred to the captive power policies of other SEBs which are very liberal. It has prayed to the Hon’ble Commission for amendments in the West Bengal’s policy on captive power. 8.26.2 WBSEB in reply has stated that the captive policy has been framed by the GOWB and does not permit wheeling of power to this state from the captive plant situated in neighbouring states. The captive policy framed by the GOWB on conventional fuel does not permit the generator to inject captive power to the Grid. However, permission is issued for installation of captive power plant provided it is cheaper than the Grid power and it has received the clearance of the State Pollution Control Board and Environment Department of the GOWB. The captive power policy of different states will vary depending upon the power scenario prevailing in the states. The commercial terms are likely to be very liberal in the state where there is deficit of power but the same are supposed to be stringent in the state with surplus of power. 8.27.1 Objections filed by CESC Ltd. CESC says that since it is a licencee drawing power from WBSEB for redistribution so it needs to be charged at an appropriate tariff giving due recognition to the interest of the CESC’s consumers. It has further stated that its modern fuel efficient power stations are sufficient for meeting the demands in the CESC’s system during off-peak hours. Marginal cost of generation of the CESC’s power stations is 104 Paise/unit. If it is to accept WBSEB’s power during off-peak period backing down its own generation the off-peak tariff should be suitably fixed keeping in view CESC’s consumers’ interest. Present off-peak tariff of 120 Paise/unit is higher than CESC’s cost of generation. CESC is now forced to purchase certain quantum of power during off-peak hours to maintain certain peak/off-peak ratio for avoiding payment of peak surcharge in terms of Hon’ble Commission’s order dated 8.11.2002. In the interest of the CESC’s consumers it will be rational not to expect CESC to bear an off-peak cost of energy higher than its cost of generation. The objector has also pointed out that in WBSEB’s tariff petition the entire consumption during off-peak hours has not been shown under rate G(d) and part of the off-peak consumption has been taken under G(c). This is incorrect appreciation of the Commission’s tariff order. On the point of Delayed Payment Surcharge CESC has stated that the rate of DPSC should not be enhanced from the present level of 1.25%. 8.27.2 In reply, WBSEB states that traditionally tariff applicable to the Licencee has been made lower than what is chargeable to standard consumers of the Board taking supply at 132 KV. This philosophy has also been upheld by the Hon’ble Commission in its tariff order passed in favour of WBSEB for the year 2001-02. In the tariff petition for 2003-04 also WBSEB has followed the same principle and it has proposed lower tariff to CESC compared to other 132 KV consumers. In regard to tariff for off-peak power WBSEB is of the opinion that while fixing the rate for off-peak power the marginal cost of WBSEB should also be taken into consideration and cannot be completely ignored. Fixing of off-peak tariff to CESC at a very low level which does not cover the marginal cost of power purchase of the supplier will be an additional burden on the consumers of the Board. Marginal cost of power purchase of WBSEB whether from KTPS or from Bakreswar or from DPL or from NTPC is much higher than 120 Paise/Kwh i.e., the off-peak rate now in vogue for the year 2001-02. WBSEB’s arguments in favour of rising the DPSC follows from its experience. In the past CESC defaulted in payment of monthly energy bills of WBSEB leading to accumulation of huge outstanding dues. Fixing of DPSC at a low level may give indulgence to CESC for making further default as per opinion of WBSEB. CESC draws substantial power from WBSEB as such timely payment of such bills is an absolute necessity for the Board for keeping its commitment to pay the power purchase bill through LC and avail substantial rebate in power purchase bills in the interest of the consumers of WBSEB. 8.28.1 Objections filed by South Eastern Railways. The objector has opposed to the 40% hike in demand charge proposed by WBSEB in its tariff petition for 2003-04. It has also opposed to WBSEB’s proposal for hike in energy charge for power supply to Railway. Proposed hike has been considered by the Railway as unreasonable and unjustified and the interest of the Railway has been overlooked. While WBSEB is purchasing power from NTPC at a rate of 178.36 paise/unit it has asked for a tariff applicable to the Railway to the tune of 181% higher. It has appealed to WBERC not to give effect to the proposal of WBSEB for tariff hike and rather consider downward revision of traction tariff considering Railway as a public utility service. The Railway traction load is fluctuating in nature for variety of reasons on most of which Railway has no control and as such the objector has requested the WBERC to consider the withdrawal of penal provision on account of overdrawal. The Railway has also opposed to the WBSEB’s high T&D loss in fixation of traction tariff. High T&D loss is a reflection of inefficiency of WBSEB. WBSEB’s proposal for enhancement of billing demand charge is also not reasonable and just as per the opinion of the Railway. WBSEB’s proposal for withdrawal of rebate for timely payment has also been objected to by the Railway. It has also complained against WBSEB’s levy of standing charge on the capital cost of providing traction power supply to the Railway, as WBSEB is not claiming such charges from any other consumer. So it is a discrimination between Railways and other consumers. Integration period for recording maximum demand in WBSEB’s system is 15 minutes. This should be increased to 30 minutes according to the Railway. Railway is receiving power supply from WBSEB at different locations. WBSEB is charging maximum demand for individual supply point as per the present system. This methodology according to the Railway is not proper. The Railway as a moving load registers its demand at all the sub-stations through which it passes and as such it is unjustified on the part of WBSEB to charge maximum demand recorded at individual traction sub-station. According to the Railway the maximum demand should be charged for traction power on the basis of simultaneous maximum demand recorded at the contiguous sub-stations of WBSEB. Railway has also requested the WBERC to consider adoption of single part tariff on the energy consumption only for the traction supply. It has further complained that in case of supply failure on WBSEB’s account supply from adjacent feeding posts is being extended by the Railway for maintaining traction supply. But then low voltage is experienced in the system requiring controlling of train for which the Railway is adversely affected. Railway has requested WBERC to keep provision to compensate the Railway for the loss incurred because of WBSEB. 8.28.2 WBSEB in reply has stated that in accordance with the recommendation made by the Public Accounts Committee the tariff for Railway traction is fixed in a way that it does not exceed the tariff for High Tension Industrial consumers. In the tariff proposal of WBSEB tariff for traction power supply both at 25 KV and 132 KV have been made exactly identical to the tariff proposed for industrial consumers receiving supply at those voltages. On the issue of cross-subsidy and hike in demand charge WBSEB has given similar replies as in the earlier paras. On the allegation by South Eastern Railway that the tariff for traction power supply has been increased to higher extent, WBSEB says that the proposed tariff of WBSEB is in conformity with the tariff approved by the different State Commissions in respect of traction power supply. On the issue of penal charges for excess drawal of power WBSEB says that the actual demand exceeding the contract demand disturbs the utility’s transmission/distribution network and therefore penal charges for excess drawal is fully justified. In case of Railway, of course, if drawal of power at any point increases due to extension of feed to other adjoining Zone no penal charge is levied on the additional demand recorded at the assisting Sub-station. On the issue of high T&D loss and method of billing maximum demand WBSEB has given similar replies as in earlier paras. It is not correct that WBSEB has proposed for withdrawal of rebate for timely payment as mentioned by South Eastern Railway. On the allegation of realization of standing charge WBSEB states that standing charge is realized from the Railways in connection with traction power supply on the installation which has been developed exclusively for traction supply. According to WBSEB it is not ethical to claim fixed charge in respect of installations developed exclusively for traction power supply from other group of consumers. Regarding integration period of 15 minutes for recording maximum demand in respect of traction supply WBSEB says that the same has been approved by the State Government. On the South Eastern Railway’s proposal to the Hon’ble Commission for fixing of single part tariff in respect of traction power supply or alternatively for recovery of demand charge on the basis of simultaneous maximum demand WBSEB comments that two part tariff is more scientific than single part tariff and it is being practised throughout the world. WBSEB further points out that traction supply is given to the railway at 25 KV/ 132 KV at different points against certain contract demand declared by the Railways at the respective points. WBSEB developed individual step-down Sub-stations to meet the demand of the South Eastern Railway at the individual point of supply. There is no scope for measurement of simultaneous maximum demand of South Eastern Railway taking power at different points. Each point is a separate entity and bulk supply agreement has also been executed for individual point. In this situation bills are preferred separately to the Railways on the basis of parameters recorded by the meters at respective point of supply. WBSEB also supplies power to CESC and ECL at different points and raises individual bills for different points of supply. On the low voltage problem faced by railway during period of feed extension from one sub-station to another WBSEB suggests that under such eventuality South Eastern Railway may take another point of supply between the two adjoining points. 8.29.1 Objections filed by Eastern India Textile Mills’ Association. The objector has demanded compensation for production loss due to poor quality of power and interruption in supply. The objector has also proposed high load factor rebate from existing 24 paise to 50 paise for achieving load factor above 85%. It has also observed that industry should not bear the burden of cross-subsidy. The energy rate should be worked out according to the cost of supply at a particular voltage. Actual transmission and distribution loss applicable to a particular voltage need to be considered in calculating energy rate for that voltage according to the claim of the objector. The T&D loss of WBSEB in fixing the tariff for 2003-04 should be considered at 22.5% as per norms of the Commission. It has also commented that the gas power stations and Teesta Hydel Project be closed down being a burden on the consumers. 8.29.2 WBSEB has given similar replies as in earlier paras on the different points raised by the objector. 8.30.1
Objections filed by Shri Manotosh Sarkar, Alipurduar, Paschim Midnapore
District Chamber of Commerce and Industry, Shri Shankar Pal (along
with 21 objectors), Siliguri, Shri Kamal Debnath on behalf of Powerloom
Owners’ Association of Bengal, Ranaghat, South 24 Parganas
District Zilla Byabasai Samannay Samity, Cottage & Small Scale
Industries Association, South 24 Parganas, Rajpur Bazar Byabasai
Samity, Shri Rabindra Saha, Nadia, Ranaghat Chamber of Commerce,
Transport & Industries, Baltikuri Manufacturers & Traders
Association (along with 764 objectors), Shri Sanatan Panja, Baltikuri,
All Bengal Electricity Consumers’ Association, Dist. Committee
24 Parganas(S), Baruipur Byabasai Samity, Coochbehar Wholesale Grocery
Merchants’ Association, Ghughumari Byabasayee Samity, Coochbehar,
Bengal Chemist and Druggists Association, Coochbehar, Shri Ansar
Seikh, South 24 Parganas Zilla Parisad, Cooch Behar Netaji Sangha,
All Bengal Electricity Consumers’ Association, North 24 Parganas
Dist. Committee, Pundibari Byabasai Samity, Coochbehar, Jagrata
Sangha, Coochbehar, Secondary Teachers & Employees Association,
Coochbehar, Shri Prabodh Purokait, Jaynagar Majilpur Municipality,
CoochBehar Zilla Motor Karigari Malik Samity, Jaynagar 2 No. Panchayet
Samity. 8.30.2
In reply, WBSEB admits some discrepancy in the area of meter reading,
recovery of outstanding dues, replacement of defective meters and
provision of meters at the premises of agricultural consumers. However,
WBSEB states that it has already initiated steps for vigorously
monitoring activities of the Electricity Supply Offices like regular
meter readings, replacement of defective meters, collection of dues
and as a result the situation is gradually improving. WBSEB is also
collecting arrear outstanding dues of M/s CESC Ltd. as per schedule
finalized by GOWB. Steps have also been taken to provide meters
at the premises of agricultural consumers. On the issue of cross-subsidy
WBSEB states that the philosophy of cross-subsidy has been retained
in its tariff proposal for 2003-04. CHAPTER – 9 : HEARING FOR 2003-04. 9.1 Dr. G. D. Gautam, IAS, Chairman, WBSEB highlighted the point of adverse Thermo-Hydel ratio in the power supply of West Bengal and explained the difficulties being faced by the Board in providing quality power supply and actions being taken to overcome these to ensure better quality of supply. He also mentioned various steps being taken by the Board to reduce progressively the quantum of Transmission & Distribution (T & D) losses. He also mentioned the efforts of the Board in achieving 100% metering. He briefly indicated the position of financial viability, introduction of ABT, grant under APDPR and need of consumer oriented working. 9.2 Shri M. K. Roy, Chief Engineer (Commercial) of WBSEB, presented the basic premise in framing the Tariff proposal of the Board and highlighted the following points. (i) WBSEB supplies power mostly in rural and remote areas and is traditionally deprived of highly concentrated loads of areas like Kolkata, Howrah etc. This fact needs to be kept in view in comparing serving cost per unit with that of other Boards and utilities. (ii) Around 74% of the power purchase need of WBSEB is met by the supply from WBPDCL and hence the power Tariff of WBPDCL will have substantial impact on the power purchase cost of WBSEB. (iii) On introduction of Availability Based Tariff (ABT), WBSEB would draw its entire allocation of energy and the energy drawn from NTPC’s power stations in excess of actual requirement has been proposed to be sold to the neighbouring regions through Power Trading Corporation. (iv) The surplus claimed by WBSEB in their petition is in accordance with the provision of Section 59 of the Electricity (Supply) Act 1948. (v) WBSEB has not considered receipt of any subsidy from the State Government for the year 2003-04. (vi) Power purchase programme from different sources and its justifications were narrated. (vii) Existing level of T & D loss, 2% loss reduction target, problems relating to unmetered consumers and defective meters, vigilance activities in reducing T & D loss etc. were the other points mentioned by him. (viii) WBSEB also justified high financing costs, depreciation provision, bad debt and the projected other income. (ix) The Tariff structure proposed by WBSEB in their petition is based on the following principles. (a)
The method of cross subsidy has been retained with further rationalization. (x) WBSEB requested for waiver for non-submission of some of the required information in the manner required by the Commission. (xi)
The tariff proposal of WBSEB does not contain any provision for
payment of Income Tax and requested for allowing the same to be
charged through tariff if assessed payable on a later date. 9.4 In their presentation, the Hooghly Chamber of Commerce & Industry highlighted their points of objections as under : (a) WBSEB should compensate the industries for loss of production due to poor quality / interruption of power and the load factor should be adjusted accordingly. (b) The levy of electricity duty on maximum demand charges is illogical and unjustified. (c) In view of recent Hon’ble Supreme Court order in the matter of CESC, no class of consumers should put to penalization due to cross subsidy and the State Government is to bear the burden of cross subsidy. (d) The actual transmission and distribution loss applicable to a particular voltage should be loaded while fixing tariff for that voltage. According to them estimated loss is very low, say 2% in case of EHV and about 9% in case of HV consumers. (e) The Commission should adhere to its earlier direction of 22.5% T & D loss while fixing tariff of WBSEB for 2003-04. (f) They suggested closure of Gas Power Stations and maintained that no cost of those should be allowed in the Revenue Requirement as these stations are not put to operation. (g) They pointed out to low generation from Teesta Hydel Project and prayed for not allowing very high cost of generation for this project. (h)
To make the industries competitive in the international market,
the power cost should be brought down substantially by disallowing
the cost of inefficiency on the part of utilities in terms of the
order dated 3.10.2002 of the Hon’ble Supreme Court of India. (i) The Cold Storage Industry is seasonal in nature having operating period distinctly divided into loading, holding, unloading and lean period. The loading months require maximum power and the requirements drop appreciably during subsequent periods. (ii) The ultimate beneficiaries of Cold Storages, mostly located at far-flung underdeveloped rural areas, are small farmers. (iii) On the ground of above status, they requested for a special scale of charges in the line with existing tariff of Board under Rate S(f). (iv) Retrospective operation of tariff with regard to the Cold Storages is practically impossible as the farmers can not be asked to pay the arrear charges after their products are released from the store and the storage rates are fixed in advance after considering the prevalent power charges. They further pointed out that about 80% of their cost is towards power. (v) In regard to T & D loss, they stated that the proposal of the Board for re-fixation of the T & D loss level for the year 2003-04 may not be acceded to and additional T & D loss cannot be charged to the consumers. (vi) The proposal of WBSEB seeking to levy the escalated demand charge on Cold Storages, having well-defined pattern of demand of power, will require cold storages to pay Rs. 20/- per unit during off-peak months. (vii) They prayed for allowing load factor rebate to Cold Storage consumers in the same line as allowable to high / extra high voltage consumers. (viii) Views had been expressed by them in favour of continuance of power factor rebate / penalty and rationalization of demand charges. 9.6 Bengal National Chamber of Commerce & Industry was represented in the hearing by Shri Ranjit Lodh. The submissions of Shri Lodh were on the following points :- (a) WBSEB was supposed to take cost control measures instead of asking for increase in tariff. Every penny to be spent in power industry must be cost effective as the survival and growth of other industries depend largely on the cost cutting measure of power industries. (b) In the absence of 100% metering, as admitted by WBSEB, the measurement of sales and T & D loss were bound to be arbitrary and not reliable. The Energy Audit was suggested at zonal level areawise to identify technical and commercial losses. The employees were to be made responsible and answerable for commercial loss. A point was raised that why the honest consumers should pay for the inefficiency of the Board. Action taken by Board to reduce T & D loss was grossly inadequate. Also attention was drawn on Section 39 of the IE Act. (c) The reasonability of importing high cost DVC power in view of the fact of exporting cheap power of WBPDCL out of the State had been questioned. (d) Abnormally low Hydro-capacity utilization by the Board and resultant increase in the need of purchasing more costly power from other sources had also been pointed out. (e) The power purchase programme of WBSEB should be decided based on higher PLF for Kolaghat, Bakreswar and other plants now with the WBPDCL. Also points were raised on steps which could be taken to reduce the load curve fluctuations. (f) The projected 15.5% hike in O & M expenses without mention of the requirement of any special maintenance of Plant & Machinery was called unjustified. (g) Commenting on the projected high employees’ cost, the reasonability of demanding high rate of D.A. increase, welfare expenses and terminal benefits etc. without providing proper justifications the same had been questioned. In view of excess manpower with the Board, the bar on further recruitment in any category and allowing employees in essential cases compensatory leave in lieu of overtime allowances had been suggested. (h) Higher demand for administrative and related expenses was also objected to in view of Government’s circular and guidelines regarding austerity measures to be adopted and suggested that no increase in legal as well as on vehicle expenses be allowed. (i) The allowances of interest and financial charges should also be regulated in view of progressive downward trend in the interest rate in recent time. It was viewed that much of the interest burden could be avoided through better financial planning. (j) Non-testing of meters for its accuracy etc. as per the Act had also been mentioned. (k) The retaining of cross-subsidy was also questioned. 9.7. Bharat Chamber of Commerce was represented in the hearing by Shri Amiya Kumar Ghosh. The gist of the points of objections brought out by the representative of the Chamber was as under : (i) As WBSEB had already been put on notice in earlier tariff order of the Commission, the T & D loss can at best be allowed 22.5% in the year 2003-04 excluding bulk supply. As per records of limited energy audit conducted by WBSEB which was not adequate, the L.T. commercial losses found varying between 9.10% and 45.62% and such a condition is entirely due to management inefficiency and hence the burden of the same should be absorbed by the Board as per decision of the Hon’ble Supreme Court. Bench marking of T & D loss should be separate for various voltages. T & D loss norms for Tech. Loss as fixed by CEA between 8.25% to 15% was also pointed out. Steps taken to reduce T & D loss was contended to be inadequate. The Commission should not reward the Board for inefficiency by considering higher T & D loss. (ii) The effect of abnormal increase in the completion cost of Teesta Canal Project, specially in view of its abnormally low level of capacity utilization should not be allowed in the tariff. (iii) The cost of maintaining idle Gas Turbine Stations should not be allowed. The transfer of these generating sets to WBPDCL’s Stations had been suggested for putting those to operation during emergency conditions. (iv) The power purchase plan had not been designed in scientific and economic way ensuring drawal of power from Kolaghat and Bakreswar Plants of WBPDCL at 68.5% PLF level, and minimizing / avoiding drawal of costliest power from DVC and others. Consumers should not be burdened for inefficiency. WBSEB should also gear up their Load Management machinery to avoid paying the cost of deemed generation. WBSEB should minimize the power purchase cost by a Concrete Procurement Plan and avoid unnecessary cost on this account. Export of power vis-a-vis import of power and additional cost of it was highlighted. (v) The expected revenue from export of off-peak power from NTPC was under stated by adopting lower unit rate for such export. (vi) The increase in Employees cost from Rs. 427.75 crores allowed by the Commission for 2000-01 to Rs. 522.38 crores claimed for the year 2003-04 was objected to. The increased claim under different sub-heads like D.A., Employees’ Welfare expenses, Terminal Benefits etc. are not supported by proper estimations and justifications. (vii) Despite transfer of old Bandel and Santaldhi Power Stations to WBPDCL the O & M expenditure had been projected 46.39% higher than the expenditure allowed under this head over 2001-02. Projected O & M expenses on newly commissioned transmission project / SATCOM project and project on 100% metering was not justified as those were supposed to be under suppliers’ warranty in the initial years. (viii) The Administration and Establishment expenses had been projected 16% higher than the estimated expenditure of Rs. 56.27 crores in 2002-03. This is not justified in view of Govt. directives to reduce such expenses by 20%. (ix) The outstanding dues of WBSEB comes around equivalent to 10 months’ sales revenue. It is extremely high and should be brought down to 3 months level. The provision for Bad and Doubtful Debts should, at best, be allowed Rs. 2.13 crores as against Rs. 21.37 crores as sought for and WBSEB should increase its collection inefficiency. (x) The projected claims for interest and finance charges were not based on justifiable reasons. Rate of interest on fresh borrowing of Rs. 936 crores from the State Government was very much on the higher side and the detailed break-up of Rs. 28 crores claimed towards finance charge had not been provided. (xi) The capitalization of interest should be linked to opening and closing value of capital works-in-progress and capital investment without adequate justification was also objected. (xii) Depreciation on value of assets not in use should not be allowed and the same should also not be allowed in full on the unjustified capital expenditure of Teesta Canal Project along with Return on such amount. (xiii) Load factor and power factor rebate should remain at par with the Commission’s earlier orders. (xiv) The proposal for enhancing the fixed and demand charge on the ground of likely payment of higher level of demand charge to NTPC in accordance with requirement of ABT was considered not justifiable as NTPC power would be hardly 19% of the power purchase of WBSEB. It was also pointed out that equity demands compensation for bad quality of supply if demand / fixed charges is being asked. (xv) The proposal of WBSEB to drop the existing provision of refund of Demand charge to the H.T. consumers on account of total load shedding / interruption of supply for the fault of the utility should not be agreed to. (xvi) The utility should compensate the consumers for loss of product and damage of the assets caused by bad quality supply and deterioration in quality of supply was also raised along with non-timely action to attend the complaints. (xvii) The tariff structure suggested by WBSEB on the basis of cross subsidization is against the judgement of the Hon’ble Supreme Court and AMGR to be abolished. (xviii) The request of WBSEB for interim tariff order should not be agreed to. 9.8. Multi-Serve Rolls Ltd. was represented by Shri Sandeep Poddar, Director of the company. The highlights of his representations are follows :- (a) Waiver of pro-rata demand charges is very much insignificant in comparison to the high loss of production due to frequent power failure. The provision for heavier penalty should, therefore, be there in Tariff Order. (b) The proposal for retaining cross subsidy should not be agreed to. (c) The reasonable T & D loss applicable to a particular voltage should only be loaded while working out tariff applicable for consumers in that voltage. (d) The system of provisional billing should be abolished. In un-avoidable cases, the reasons for such provisional billing should be advanced and the provision should be cleared within next two months time. (e) The request for increasing the quantum of T & D loss should not be considered and unless Commission be strict, T & D loss of Board would not come down. 9.9 Shri Sanjoy Chakraborty, a member of WBSEB Workmen’s Union and a consumer of WBSEB, raised the following points before the Commission. (i) WBSEB proposed higher structure of tariff for the lower category of domestic consumers. The same should be agreed to, but cross subsidy should not be abolished and the existing system of domestic consumers consuming below 25 units per month should be increased suitably. (ii) WBSEB proposed to withdraw 5% concession in energy charges being given to Industrial consumers of backward districts. It is felt that the referred concession may be retained subject to realization of the same as re-imbursement equally from the State and Union Government. (iii) Similarly, concession to new, sick and closed industries on energy charges should be retained subject to realization of the same as reimbursement equally from State and Union Government. (iv) As CESC is the main beneficiary of adverse lean peak situation, a suitable percentage of this benefit may be passed on to WBPDCL through WBSEB. A portion of T & D loss be shared by Generating Company out of its profit. (v) Temporary connection charges should be fixed at Rs. 400/- per KW per day instead of Rs. 100/- per KW per day suggested by WBSEB. (vi) Rate of Return should be allowed to WBSEB at par with the Licencees. (vii) Performance efficiency parameters be laid down for various jobs. (viii) Cost control measures be introduced (their suggestion in this regard not accepted by the Board). 9.10 Shri Vasavi Industries Ltd., a newly set up Company manufacturing ferro alloys at Bishnupur, Bankura, was represented in the hearing by Shri K. P. Ray who highlighted the following points. (i) Referring to Section 29(2)(e) of ERC Act 1998, it was pointed out that the concept of average cost is related to the voltage of supply to a consumer as the charges upto EHV level is much less and progressively increases for HV, MV and LV supplies. It would not be proper to fix tariff based on overall average cost as that would tantamount to cross subsidy. (ii) Various clauses in the conditions of supply were stated to be one sided and contrary to the interest of the consumers and prayed for detail examination by the Commission (iii) Consumers’ Security Deposits should be linked to billing cycle. The industrial consumers under one month billing cycle should not be made to pay security deposits for 3 months’ billing amount. The system of security deposit could reasonably be replaced by letter of credit system in the same line as applicable for supply from Central Sector Generating Companies. (iv) Penalty for a huge amount had been imposed by WBSEB in case of delay in payment and the amount of penalty was not worked out in accordance with the Tariff Order of the Commission. (v) It was prayed for defining the Billing Demand in line with the provisions contained in E.S. Act 1948 and Indian Electricity Act 1910 and also for making it binding for all parties to consider Maximum Demand on the basis of meter reading only as long as the meter remained in working condition. (vi) It was prayed not to consider incremental consumption as the basis for load factor rebate suggested by WBSEB and not to differentiate among consumer in allowing such rebate. (vii) It was suggested to make Ferro Alloys industries a separate class of consumers. (viii) In regard to sale of off-peak power from NTPC outside the State, the suggestion was to allocate that power to 132 KV industries in the State. (ix) Besides above specific points, the objector also raised the issues relating to expenditure projected under different heads, non-disclosure of the values of non-performing assets, unjustified T & D loss and non-proper exhibition of load curves and judgement of Hon’ble Supreme Court dated 3.10.2002 under which what expenses can be passed on to the consumers had been decided. (x) The T & D loss should be as per orders of the Commission as no adequate steps were taken to contain the loss and the data of vigilance activities was inadequate even which shows only 1.5% consumers involved in theft. Honesty should not be punished. 9.11 On completion of the deliberation by the Consultant of Shri Vasavi Industries Ltd., Member (F & A) wanted to know - (a) whether the Circular 9 issued by WBSEB in regard to Security Deposits were in variance with the directives given by the Commission and if so, to specify the points of variances. (b) what were the Government directives in regard to allowing concessions to Shri Vasavi Industries Ltd. Shri Ray committed to examine those points raised by the Hon’ble Member and to reply later on. 9.12 Socialist Unity Centre of India (SUCI) was represented as consumer body of WBSEB through Shri Amal Maity. Shri Maity referred to the various points of written objections against WBSEB’s tariff proposal submitted to the Commission. The points specifically highlighted by him were as under :- (i) The transfer of Bandel and Santaldhi power Stations to WBPDCL led the consumers to pay 16% return to WBPDCL in place of 3% returns earlier being charged by WBSEB. Thus an extra burden had been put on the consumers without any benefit to them and the same is not in the interest of consumers and the Commission is bound to protect the interest of consumer under Section 29 of ERC Act. (ii) T & D loss allowable to WBSEB was 15.5% as referred in the CAG reports on the Accounts of WBSEB for the year 1999-2000 and any inefficiency of WBSEB cannot be passed to other honest consumers. (iii) The detection of power theft, through correct and proper step, should be cost effective. Unjustified claims of expenses on this account should not be allowed. Fixed charges and minimum charges was unreasonable and against the law. (iv) Un-metered supply should have been stopped much earlier and the agricultural consumers should be metered to avoid unjustified wrongly assessed demand from them (v) The reasons behind not disconnecting the supply to CESC for default in paying power charges in time needed to be explained. (vi) The disconnection of supply to household consumers in case of one month’s default in power charges was not justified specially when the billing cycle of them was 3 months. (vii) Non-payment of interest on Security Deposits from consumers and collection of additional security deposits (stated to be as per directive of the Commission) had been objected to. The judgement of the Hon’ble Supreme Court on S.D. was also quoted. (viii) The consumers should have been permitted to install own meters as provided in Act and the meter rent should be based on purchase cost of meters. (ix) No amount needed to be allowed as provision for Bad Debts in view of Security Deposits with the WBSEB and the course of actions available in case of default as per provision of Acts. (x) The power purchase cost not properly worked out. (xi) The prayer for waiver of data requirement be rejected. (xii) Tariff be differentiated under 29(3) of ERC Act and then subsidy be asked from GOWB. (xiii) Problems of quality of power supplied, load shedding etc. was raised. (xiv) Points were also raised on power purchase costs, administrative expenses, high interest cost and bad debts. (xv) Delayed Payment Surcharge should be reduced, rebate for timely payment be increased, bills be raised monthly, collection of dues is to be increased, bills be raised only based on meter reading as per Provisions of the Act. (xvi) Additional rebate was prayed for Educational Institutions, backward areas, Powerloom industry, small scale industry and tariff for Agriculturist and Irrigation rationalized. 9.13. Eastern India Textile Mills’ Association was represented in the hearing by its President, Shri A. N. Choudhury. Shri Choudhury also represented the case of M/s. Jaya Shree Textiles, a unit of Indian Rayon and Industries Ltd. The gist of points raised by him were as follows :- (A) Eastern India Textile Mills Association (i) The power Tariff should be prospective and should not be retrospective as additional cost cannot be recovered from their customers. (ii) T & D loss should be allowed as per the directives given by the Commission in its earlier Tariff Order as inefficiency of the utility cannot be passed on to the consumers. (iii) The Tariff should be fixed voltagewise. T & D loss for 132 KV consumer varies from 2 to 4% only. In case average T & D loss was considered for fixing tariff, it would be a case of subsidizing other consumers by the 132 KV consumers. (iv) TOD Tariff incentives for power factor and load factor needed to be made more financially attractive to industries so that off-peak power at night could be used and efficiency in power generation encouraged. Need to have better demand management had also been highlighted. (v) Cross subsidy should be totally abolished in the line of judgement given by Hon’ble Supreme Court. (vi) The other points raised by him were the need for encouragement for improving load factor, idle gas power stations, abnormal increase in the Teesta Hydel Project, high cost of power which is putting industry in disadvantageous position in global competition. (B) Jaya Shree Textile Mills (i) The tariff should be fixed based on voltagewise supply in view of Section 29(2)(e) and 29(3) of ERC Act based on different T & D loss. The loss in EHV was stated to be 2% whereas in L.T. supply it was more than 50%. The Supreme Court order of 3.10.2002 was also quoted in support. (ii) The consumer interest should be protected while fixing the tariff as per Provisions of ERC Act. (iii) Interest claimed is Rs. 935 crores which is almost 3 times of Rs. 345 crores allowed in 2001-02 and the projected claims are without any justification. (iv) Interest is being paid to Government but no interest charged and taken credit for substantial amount of subsidy to be received from Government. (v) More emphasis should be given on demand side management by way of allowing adequate incentives which will reduce the necessity of costly power purchases during peak. 9.14 The next representation was from All Bengal Electricity Consumers’ Association. The Association was represented by Shri Subhas Chandra Banerjee and Shri Sanjit Biswas, the General Secretary. The set of written objections submitted by the Association against the Tariff Petition of WBSEB had been referred to. The points highlighted by them during the hearing are as under :- (i) The petition of WBSEB should have been rejected for non-providing required data in formats prescribed by the Commission as the same is repeated again and again since 2000-01. (ii) Tariff should not be increased over the existing level except for the variation in the purchase cost, if any. There is no justification in tariff hike for LV consumers which has been proposed between 52% to 177%. (iii) T & D loss should in no case exceed 15.5% as per norm of CEA and as reported by CAG. Norms set by CEA in February 2001 was read from CEA’s publication to indicate that T & D loss normally ranges between 8.25% to 15.5%. Honest consumers are not to pay more for Board’s inefficiency. Hon’ble Supreme Court’s order dated 3.10.2002 was also quoted. (iv) Costly purchase from Sikkim and DVC could have been avoided. The necessary infrastructure should have been developed earlier. (v) Sale of power to CESC and SHCSL below the average cost, as reported by CAG, was against the interest of the consumers of WBSEB. It was also pointed out that written replies and oral submissions are contradictory for which due note should be taken. (vi) Cross subsidy should be maintained and in necessary cases recovered from the Government. Interpretation of undue preference and differentiation as per ERC Act 1998 and E.S. Act 1948 explained. (vii) Monthly Billing Cycle should be there and the security deposit should be only for one month. (viii) The recovery of dues from defaulting consumers should have been as per rules to avoid over charges by way of Bad Debt and interest charges from honest consumers. (ix) Interest cost in the proposed Revenue Requirement was 64 paise per kwh as against average purchase cost of 174 paise per kwh. (x) Agricultural consumers needed to be metered. No utility should be permitted to recover charges without installation of meters. (xi) Bad debts were to be allowed only if the concerned consumers were found un-traceable, or the bill amount was disallowed by the court of law. (xii) Billing on the basis of connected load should not be allowed and should be only on the basis of meter reading as per provision of 1910 Act. (xiii) Consumers should be allowed to install their own meters and collection of meter rent in that case should be disallowed. (xiv) The projected expenditures towards Administration and General Charges were supposed to come down from 2000-01 level due to transfer of Bandel and Santaldhi power stations. The unjustified claims under this head of accounts should be disallowed. (xv) The consumption of tea garden labours should be charged at domestic rate. (xvi) Handloom owners are to be charged as per domestic consumers’ rate. (xvii) WBSEB should pay / adjust with bill amount the interest on security deposit of customers. (xviii) The periodical inspection and testing of meters were not being done as per provision of Rule 57 of Indian Electricity Rules 1956. (xvix)
Disconnection and reconnection charges are very high and should
be brought down. (xxi) CAG’s report for the period ending March 2001 was quoted on the points relating to extra expenditure on purchase of meters, improper use of resources, inefficiency etc. (xxii) WBSEB should not be allowed more time for reply when no such extension is given to consumers. (xxiii) It was contended that the levy of fixed charges and minimum charges cannot be justified on past practice but has to be valid on legal grounds. The legal Provisions say billing based on meter reading was quoted. (xxiv)
The points were also raised on power purchase cost, collection efficiency,
compensation for low voltage, inadequate efforts to reduce T &
D loss, rebate for timely payments, bad debts, meter rent, difference
between purchase cost and selling rate. (i) The quantum of power supply to tea gardens meant for supply to labour lines required to be billed at the same rate as applicable to rural consumers. (ii) Alternatively, the maintenance of supply, billing at applicable rates as well as collection of billed amounts from labour lines be shifted to WBSEB from the management of the gardens. (iii) Tariff for Tea Gardens to be fixed without any element of cross subsidy and cost of supply to be based on voltage. (iv) Billing demand should be based on actual recorded maximum demand as registered in the meter. (v) There should not be any change in the condition of supply unless concurred by the Commission. (vi) T & D loss be allowed as already fixed by the Commission. (vii)
Proprietary of expenditure to be seen. 9.17 North 24 pgs. Vidyut Chalito Agavir Nalkup Samity was represented in hearing by Shri D. K. Chakraborty. He referred to the various points raised by the Samity in their written objections filed with the Commission. The points specifically highlighted by him during the hearing were as under : (a) There had been a total hike of 353% since 1991 upto 2001-02 in the flat rate of tariff (annual charges) in Agri-Irri unmetered category and if the proposed hike in the rate asked by WBSEB for the year 2003-04 were agreed to the same would be 807% over the rate prevailed in 1991. (b) Installation of meters and the collection of charges in accordance with the quantum of consumption were being avoided by WBSEB intentionally to have the benefits of realizing high ad-hoc charges due to which agriculturists are contemplating to shift from production of Rice and Khariff crop will suffer badly. (c) The farmers were being compelled to use pumps during peak period due to bad quality of supply or no supply during off-peak period. Points were raised regarding disconnection of supply even after payments in time as lines are disconnected from transformers for non-payment by other consumer. (d) The facilities of TOD tariff could be extended to the agriculture sector and that would have solved part of the problems relating to off-peak power. (e) The earlier directions of the Commission was also referred for which hardly any action has been taken by the Board. 9.18 In reply to queries made by Hon’ble Chairperson, Shri Chakraborty stated that the total members of the Samity, he represented, would be around 1100 and the ideal time for use of pumps by the farmers would be 10 P.M. to 2 to 3 A.M. on the next day. Power supply was hardly available in the morning off-peak period. The Commission desired the representatives of the Samity to discuss their problems with Shri D. Mukherjee, Jt. Director (Tariff-Engg.) who, in turn would collect further information from WBSEB for understanding in depth the problems of the objectors. 9.19 All India Krishak-O-Khetmajur Sangathan, West Bengal State Committee was represented by Shri Gopal Biswas. The points raised by him were similar to those raised by North 24 pgs. Vidyut Chalito Agavir Nalkup Samity. He pointed out that WBSEB was inclined to retain flat rate of Tariff in Agriculture as that was advantageous to them and had not started taking meter readings even from STWS having meters in working conditions. 9.20 Shri Badrinarain Alloys & Steels Ltd. was represented in the hearing through Shri Avinash Gupta. The Company, being a sick industrial unit and being under BIFR, started its revival plan after obtaining confirmation from WBSEB regarding their eligibility of the subsidy and its continuance for next three years in terms of the incentive scheme. Now the withdrawal of committed incentive would be very harsh for the unit and not proper. He also objected to the system of giving retrospective effect of tariff. The inter-region difference in power tariff due to presence of different power utilities within the State had also been pointed out by him. Once set in a particular region, the industries have hardly any option to shift to a cheaper region. He also raised the point of heavy investment made by the Company and power being given to them from a feeder which is at a distance of nearly 8 k.m. 9.21 Indian Aluminium Company, having its production unit at Belur, is not a consumer of WBSEB. Its representative Shri Debasish Ghosh prayed for highlighting their views in regard to the existing captive power policy of the State wherein WBSEB’s clearance is involved. He pointed out the necessity of some amendments in the existing captive power policy and prayed for allowing and determining charges for inter-state and intra-state wheeling of power from plants with capacities above 3 MW and generated from conventional sources. 9.22 Shri Anukul Chandra Bhadra, ABECA, North 24 parganas prayed for similar points as was raised at Sl.No. 16 and also raised points of S.D. on estimated consumption instead of actual consumption and high connection and reconnection charges proposed by the Board. 9.23 Shri Ashoke Taru Pradhan, an individual consumer from Tamluk, Midnapore, expressed his grievance that WBSEB demanded Rs. 9000/- as additional security deposit as against average monthly consumption bill for around Rs. 700/- only. He also, pointed out that no interest on the consumers’ security deposits was allowed by WBSEB. 9.24 Shri Tulshi Chakraborty, an individual domestic consumer, in his deliberation before the Commission expressed the following additional views : (i) Enhancement of electricity charges with retrospective effect was in contravention of the provision of Section 6(b) and 6(e) of the Consumer Protection Act 1986. (ii) Any outstanding dues accumulated by a previous consumer should not be recovered from the next consumer. (iii) The T & D losses other than on reasonable technical ground should not be imposed upon the consumers. (iv) The other points on billing on average basis, purchase of meter under Section 26 of IE Act 1910 were also raised. 9.25 Eastern Consumer Association Mr. Sapan Mukhopadhaya spoke on billing based on average readings for the past period. 9.26 Calcutta Chamber of Commerce was represented by Shri Shuvankar Nag, Advocate. Besides objecting on projected expenditures under different heads in the Statement of Revenue Requirements, he maintained that the Tariff Petition of WBSEB was liable for rejection as they failed to provide necessary data in the formats prescribed by the Commission and no waiver in this regard should have been allowed. He also objected on non-submission of audited accounts by WBSEB. It had also been pointed out that WBSEB did not consider any subsidy from the Government even though it was evident that the receipt of Govt. subsidy had been a regular feature for them. He also raised the point of Rs. 1251 crores to be recovered by the Board from GOWB. 9.27 Member (F & A) pointed out that the Commission has got the right to grant waiver for not conforming to the prescribed data format and to ask for submission of any further information by the utility. 9.28 The Officers of WBERC, raised some points on technical and financial aspects. The points raised by them are at Annexure A & B respectively. The Commission directed WBSEB to submit their written replies to the observations of the Joint Directors within 15 working days from the date of conclusion of the hearing if it cannot be clarified in the hearing. 9.29 Summing up the objections raised in the hearing by different objectors, Dr. S. C. Bhattacharjee, Dy. Chief Engineer, WBSEB, came forward to put up the replies. The gist of the replies given by him were as under. (i)
WBSEB agrees with the necessity to bring down the T & D loss
progressively, but it could not achieve the target fixed by the
Hon’ble Commission. WBSEB reduced T & D loss by 4% during
the last 2 years and expected to reduce the same by another 2% during
2003-04. 32% T & D loss projected by WBSEB was reasonably comparable
with the T & D loss allowed by other State Electricity Regulatory
Commissions. (iii) In regard to various observations on projected power purchase, it was stated that power purchase plan had been drawn in such a manner so as to make purchase cost optimum keeping the necessity of maintaining its full share from NTPC power stations to meet up peak demand and the compulsive purchase from DVC under DVC Act. The associated off-peak power from NTPC had been planned to be sold outside the region. WBSEB required directions which they had sought from the Commission in regard to purchase from DVC. (iv) Regarding employees’ cost it was pointed out that WBSEB had traditionally been deprived of the concentrated load of cities like Kolkata and Howrah and also of the industrial load in Durgapur and Asansol area which are being served by other power utilities. It serves mostly in remote rural areas of the State requiring more employees strength. In spite of that employees’ cost per kwh in respect of WBSEB is lower than that of national average. (v) The realization of demand charge on certain percentage of contract demand or actual maximum demand recorded during the month whichever is higher is in vogue since long time past and had been upheld by many SERCs. (vi) Abolition of Annual Minimum Guaranteed Revenue, abolition of Load Factor Penalty and abolition of Power Factor Rebate, as proposed by WBSEB in their petition were stated to be subject to fixation of Demand Charges rate and the basis of its realization as per their proposal. In this regard, the rejoinders submitted by WBSEB on the objections raised by the objectors had been referred to. (vii) In regard to proposed upward revision in the rate of Late Payment Surcharge (LPSC) it was maintained that the same was comparable with Bank’s interest rate. It should be stringent enough to allure the consumer to pay the bill in time and that would ultimately benefit the maximum number of consumers. (viii) It was stated that realization of monthly meter rent had been a sort of the recovery of fixed charges and that had been a well accepted practice since long time. The recovery of meter rent ultimately got adjusted in the Revenue Requirement and in no way affect the financial interest of the consumers. (ix) Transfer of Bandel and Santaldhi power stations to the WBPDCL were as per the policy decisions of State Government and WBSEB was not to offer any comments on that. (x) It was confirmed that CESC had been in default in clearing their dues for certain months. (xi) In regard to installation of meters at the premises of unmetered shallow tubewell, it was stated that 100% metering at substation and feeders upto 11 KV had been completed by 31st March 2003 and WBSEB would complete 100% metering of tubewells in phased manner. The proposed tariff for shallow tubewells was still below 50% of the average cost of supply. (xii) In regard to objections raised by the Association of Cold Storages, it was stated that Cold Storages had been enjoying a special tariff traditionally which was much lower than the standard industrial tariff. In their proposed tariff structure WBSEB considered to bring progressively all the consumers taking supply at a particular voltage under identical tariff including demand charges. (xiii) Referring to the issue of giving retrospective effect of tariff revision, as objected to by some of the objectors, it was stated that it had been a well accepted practice since long. 9.30 The Member (F & A) sought the following clarifications / additional information. (i) How WBSEB would justify the comparison of T & D loss of different states in view of the fact that power consumption and distribution pattern was different in different states and particularly agriculture consumption is very low in the State and that too consumers / consumer organizations dispute the projected consumption figures shown for Agriculturist. (ii) Power purchase cost constitute around 53% of the total cost claimed by WBSEB and hence the projection of the same should had been done by providing complete and more details and elaborating the likely effect of introduction of ABT. Hon’ble Chairperson also desired that purchase projections from different sources of supply needed to be presented with detailed clarification if the purchase were to be done under the situation of ABT and in the absence of ABT. Member (F & A) also wanted the Board to give reasons and justify taking maximum availability from WBPDCL between 1675 MW to 1750 MW against their installed capacity of 2900 MW and similar for adopting low maximum availability of their own generation. (iii) The reason for proposing to export cheaper Farakka power from NTPC and absorption of costly power in the State system were asked for. Hon’ble Member (Technical) also desired to know how the Board would identify that the proposed power to be exported would be from a particular power station of NTPC. (iv) The case of power purchase from DVC could be referred to Commission as Miscellaneous Petition if earlier directions given by the Commission were considered insufficient to act upon. (v) How the Board would like to make 100% recovery of fixed charges conditional to reliable and quality power supply ? (vi) In regard to giving retrospective effect of tariff they should get the issue examined from legal point of view with reference to the provisions of Consumers’ Protection Act. (vii) The Board needed to provide a copy of the MOU signed by the Govt. of West Bengal and Govt. of India in regard to time bound schedule for reduction of T & D losses as referred by the Board in its Tariff Petition. A copy of the Memorandum of Agreement (MOA) signed by the Board with the Govt. of India should also be provided as stated during hearing. (viii) The applicability of fixed charge and minimum charges be justified legally and not based on past practice along with legal interpretation of objections raised relating to Section 26 of IE Act 1910. (ix) The detail justification for taking costly power both in peak and off-peak period from other sources while cheaper power of WBPDCL is exported outside the region mainly during peak hours on the plea that WBSEB is not able to take this power. Also WBPDCL has to back down their generation due to non-availability of demand mainly in off-peak. (x) The basis of taking less R.E. subsidy in the tariff petition for earlier years than the figures taken in the accounts of the Board. How the figures in the accounts and the petition can be so different ? (xi) The vigilance activities does not commensurate the T & D loss in the system of the Board. This may be suitably explained and justified. (xii) Why metering plan so slow that for even about 1 lakh meters to Agriculture consumers will take 4/5 years but at the same time consumer is being denied the right to purchase meter with appropriate restrictions ? The total meters to be provided to unmetered / defective meters consumers are substantial. What is the realistic plan for 100% metering ? If the Board is not able to provide meters in a reasonable period, is it not better to have meters by / through consumers ? (xiii) Amount receivable as grant under APDPR due to reduction of loss etc. in 2002-03 and 2003-04. 9.31 Shri Dipak Kr. Ganguly, Member, WBSEB, supplemented the replies given by Dr. S. C. Bhattacharjee. He highlighted the efforts of the Board to contain the commercial T & D loss and to improve the quality of supply. He also mentioned the necessity of incurring certain essential expenditure towards special maintenance for improving the quality of supply and consumer services. 9.32 Member (F & A) and Hon’ble Chairperson desired that WBSEB should submit a detail note highlighting the actions taken by the Board to bring down the level of T & D loss and also a fair cost estimate of the special maintenance needed to improve quality of supply and consumer services. 9.33
The Chairperson directed that the reply of all the points raised
on behalf of Commission be given within 15 working days. CHAPTER
– 10 : FURTHER REPLIES OF WBSEB ON POINTS RAISED ON BEHALF 10.1 The WBSEB submitted clarification on certain points as detailed hereunder and on other points they agreed to submit the same shortly, but for which no clarification had been received. 10.2 As regards non-completion of TCF project and low generation, the Board stated that they were getting less water due to non-completion of downstream canal system and poor condition of the upstream canal. The Board had taken meetings time to time with I&WD to increase the discharge to achieve optimum generation, but due to land acquisition problems and other associated issues the downstream outfall system could not be taken up by I & WD. They did not give any indication when 330 cusec of flow shall be available for TCF project. The Board also gave the reasons for higher projected generation from Hydel. 10.3 The Board gave load curves in MW for specified dates but could not give it for M.U. 10.4 The Board also gave the reasons for the maximum projection of drawal at 1775 MW throughout against their capacity of about 2910 MW. The Board also gave reasons of adopting only 75 MW as maximum drawal from DPL. The Board also gave some information on monthwise drawal from various sources and stated that purchase planning is based on ABT. They also gave base dates of purchase rates adopted. 10.5 The Board again conceded that 100% metering of sub-stations and feeders have not yet completed and their inability to provide complete data of loss in the manner required by Commission. 10.6 On export of power, the Board intimated that they had agreed for export of power only during off peak period. As NTPC Farakka Station power was likely to be cheaper has been taken in Revenue Requirement. The Board also indicated that they have to pay transmission charge to PGIL on such export of power which may be 15 p / kwh. 10.7 The Board further informed that WBSEB would draw its entire allocation under ABT system and energy drawn from NTPC power station in excess of actual requirement of power to meet the demand of its ultimate consumers will be sold to the neighbouring regions. The Board also gave some reasons to say that full allocation is required to meet peak demand and also gave impact of it. 10.8 The Board gave one sheet of calculation of financial benefits for the JBIC funded transmission project and gave some details of advantages of Satcom Project along with cost of the project and projected loss reduction of 196.93 MU / Year whereas against in case of T & D loss, the loss reduction is only ½%. 10.9 The Board gave copy of MOU signed between GOI and GOWB. 10.10 The Board gave details of achievement in metering during 2002-03 and justifications of not withdrawing the cost of replaced meters. They also gave the reasons for making metered supply to Shallow Tubewell consumers and basis of unmetered rate to them. 10.11 The Board gave its view on retrospective adjustment of tariff, demand charge, fixed charge, quality power supply. 10.12 The Board gave details regarding O & M expenses of plant and machinery, administrative expenses and transmission cost sheets of generation from August’02 to January’03 etc. They stated that it is not feasible to give actual cost on employees for last year (02-03). However they gave some details of welfare expenses and terminal benefits. 10.13 The Board gave details about amount received / receivable under APDRP for 2001-02 to 2003-04. 10.14 The Board justified the high rate of payment of interest, financing charges, additional charges on securitasion. 10.15 On R.E. subsidy the Board stated that R.E. subsidy as per CEA norm is 10% of the total sale, but since Government has not approved even Rs. 100 crores as R.E. subsidy for the year 2002-03 the nil figure has been projected for the financial year 2003-04. 10.16 The Board intimated that they are taking various steps to reduce Debtors. 10.17 The Board intimated the broad details and calculation of depreciation on Assets to be capitalized during 2002-03. 10.18 The Board gave their assessment for the steps taken to reduce projected T & D loss and contended that the T & D loss showed a downward trend but is higher than the target fixed by the Commission. The Board justified the high T & D loss due to disproportionate higher sale to medium and low voltage section and inadequate infrastructure and strategy followed to reduce ATC loss as per MOU. The Board further contended that the data of vigilance raids was only from the period 15th July, 2002 to 31st March, 2003 and Board was increasing the raids gradually. 10.19 The Board also gave information / details relating to the points on Badrinarain Alloys & Steel, security deposit, general terms and condition, legal opinion of DVC, outstanding dues against CESC, policy relating to recovery of arrears from earlier consumers, payment to NTPC on account of Income Tax & Miscellaneous charges, set out cost of Rammam Stage II, book value of Gas stations and capitalization of interest, power consumption pattern of other utilities vis-à-vis T & D loss, realization of full fixed charge at 80% availability of system.
11.2 It was stated that WBSEB is a State Electricity Board constituted under Section 5 of the Electricity (Supply) Act, 1948 and is in the business of generation, transmission and distribution of electricity in the state of West Bengal. The area of the WBSEB is extended to whole of the West Bengal except for the part of the areas covered by licencees and the sanction holders. 11.3 It was further stated that the Board has determined the cost, revenue and tariff in accordance with the directions given by the Hon’ble Commission in its tariff order dated 7th December, 2001 against WBSEB’s tariff petition for the year 2000-01 and 2001-02 in the absence of separate tariff regulations. The Board has requested a rate of return of 3% on net fixed asset less consumers’ contribution at the beginning of the year after accounting for all expenses properly chargeable to revenue in accordance with the Section 59 of the Electricity (Supply) Act 1948. 11.3.1 Accordingly, the Board has attempted to reduce cross subsidies and rationalize the tariff for various classes of consumers in line with Section 61(g) of the Electricity Act 2003 and Section 42(b) of the CBR. 11.4 According to the Board, they recognize the need to measure the losses accurately and are taking steps to reduce the margin of error in loss determination and to reduce the overall T & D loss by 2% to 30.20%. 11.5 The Board has presumed no subsidy support from the Government of West Bengal. 11.6 According to the Board their total expenditure including surplus required for the year 2003-04 is Rs. 4428.28 crores and Rs. 4335.22 crores net from sale of power. The Board further indicated that the revenue from the existing tariff is Rs. 3319.16 crores and after accounting for subsidy of Rs. Nil and export of power Rs. 530.40 crores the net shortfall is Rs. 485.66 crores which they proposed to recover from the increase in tariff and increase in meter rent and other charges. 11.7 The Board further stated that as the Board is in the process of strengthening its management information system and is making considerable efforts to meter all consumers the Commission may grant a waiver for not conforming to prescribed data formats. 11.8 The Board further indicated that the cost estimate for power purchase are based on existing tariff of the utilities supplying power to WBSEB and if their tariff is revised upward then the revised power purchase price may be taken while revising tariff of WBSEB. 11.9 T & D loss 11.9.1 The Board indicated that the T & D loss at 30% for the year 2000-01 excluding the energy supply to bulk licencee inflated the existing revenue by Rs. 325 crores. They also find that exclusion of transmission loss associated with supply of power to licencees is not correct as in EHV network the loss of transmission of power is 4 to 5% as per report of the Committee of Experts on sub-transmission and distribution system constituted by the Ministry of Power, Govt. of India and including the sale of energy to bulk licencees the net T & D loss allowed by the Commission works out to 27.6% for 2000-01. On similar basis the T & D loss allowed for 2001-02 works out to 25.2%. 11.9.2 The Board further indicated that while the Board fully appreciates the necessity of reduction of T & D loss gradually, reduction of T & D loss to the level fixed by the Commission with further bench-mark to reduce the T & D loss progressively by 2.5% each year is absolutely difficult to achieve. The Board is making all out efforts to reduce such losses and has also committed itself to time bound schedule for reduction of these losses in terms of MOU signed by the Government of West Bengal and Government of India. The Board also gave details of T & D loss allowed by some other Commissions for different years. 11.9.3 The Board further informed that it would take some time to implement the observation of the Committee of experts on sub-transmission and distribution system constituted by the Government of India. 11.9.4 The Board further informed based on their sample study the system loss for 1999-2000 to be 39.2% of the energy input and the Board has started taking steps to facilitate accurate estimation of technical and commercial losses. Simultaneously, action has been initiated to ensure billing of the consumers, stoppage of theft of energy etc. and Board felt that T & D loss could only be reduced to 30.2% in the year 2004-05. Board further informed that they have been deprived of concentrated load and mainly operating in rural areas. 11.9.5 On energy balance, the Board worked out the consumption based on T & D loss of 30.20% and gave various details of their power purchase including source of purchase from various utilities. 11.9.6 The Board indicated that power purchase planning has been done keeping in view the estimated system demand based on average load growth, maximum generation that may be available from the Board’s power stations, Board’s commitment to supply peak demand of the system, to maintain peak-off-peak ratio in respect of drawal of power from power suppliers required as per prudent utility practice and optimization of power purchase cost. 11.9.7 The Board further gave detailed information relating to peak demand, system demand and some details in regard to purchase of power. 11.9.8(a) On the question of purchase of power from DVC, it was informed that they purchase power outside valley area at 33 kv at Belmuri as Board is yet to develop the infrastructure for its consumers and they purchase power at 7 locations in the valley area at 33 kv. They further informed that to reduce the purchase of power from DVC they have started construction of a EHT sub-station at Asansol and also one station at Borjora (132/33 kv). They also justified the purchase from DVC till such development of infrastructure. 11.9.8(b) On purchase of power from NTPC, the Board indicated that based on 70% PLF, the Board is entitled to draw 3488 MU of power annually against its requirement of 590 MU annually. The Board felt that if the balance power is not drawn then it will put tremendous burden on account of fixed charges on it consumers. The Board also stated that this power is required to meet its peak demand. The Board is therefore had to search for aggressive trading of surplus power to the outside region. The Board has to also purchase entire generation of WBPDCL w.e.f. 1.4.2003 as per the decision of GOWB and sale outside the region will be done by the Board. The Board also gave details of trading arrangements made by it for sale of some of the power from October 2003 and projections for 2004-05. The Board subsequently clarified that they propose to export about 175 MU during peak and balance in other than peak. 11.9.9 The Board projected the net purchase of 17247 MU at a cost of Rs. 3032.87 crores and with transmission charges the total power purchase cost works out to Rs. 3100.22 crores at per unit cost of Rs. 179.75 per unit. This will be subject to increase based on tariff increase sanctioned for the utilities. The above purchases include purchase for export outside the region. 11.10 As regards own generation and cost of power generation the Board gave the details of own generation from various stations including hydel stations, gas stations and diesel stations. 11.10.1 The Board also gave justification for low PLF of the Teesta Canal Fall Hydel Project (TCF). It was stated by the Board that during project formulation it was anticipated that Teesta Barrage Project of Irrigation Department consisting of several barrages and canal systems will be completed much before the hydel power project on Mahananda Main Canal. Although the power station has been commissioned during ’97-’99, the downstream canal systems are yet to be completed. As a result there is no outlet for designed peak discharge of 330 cusec to any other river. The irrigation department in view of the above reasons has restricted water flow to maximum of 110-130 cusec even during monsoon. During non-monsoon (December to May) the project is getting adequate water. 11.10.2 The Board further intimated that constant interaction is being made with the Irrigation Department for availability of designed peak water by completing the balance work, providing additional escape and increasing the capacity of Dauk Barrage discharge to downstream so that optimum generation can be achieved during monsoon. 11.10.3 The Board gave the figures of gross energy expected from their hydel generation at 550 M.U. The total energy expected to be at Busbar is 546.51 MU. 11.10.4 As regards generation from gas stations, the Board gave details of their 100 MW gas turbine stations at Kasba, Haldia and Siliguri which was stated to have been built in late 70’s when there was severe power crisis. 11.10.5 The Board further indicated that the operation of gas turbine stations were required during peak hours or shortages. 11.10.6 The Board further informed that the operation of gas turbine was not required due to comfortable availability of power in WBSEB system and they contended that possibility of running all gas turbine sets could not be completely ruled out either due to failure of regional grid or due to reduced level of availability of power due to simultaneous outage of number of thermal units. However, they indicated the generation of energy from gas station during 2004-05 at 0.13 M.U. from Haldia G.T.S.. 11.10.7 For diesel station the Board gave detail of diesel generation plant at Rudranagar in Sagar Island and they had assumed a generation of 0.37 MU of electricity in 2004-05.
11.11.1 The Board also justified payment towards overtime, terminal benefit and other employees cost. 11.11.2 The Board also gave details and justification for claiming the increase in operation and maintenance expenses, administration and establishment charges, bad debts, interest and financing charges, etc. 11.12 On the question of capitalization of expenses the Board gave detail of expenses capitalized by them and contended that the expenses had been capitalized as per the norms prescribed by the Electricity (Supply) (Annual Accounts) Rules 1985 and also justified for the capitalization of interest accordingly. 11.13
The Board also gave suggestion for increase / rationalization in
meter rent and other income and segmentwise tariff for various categories
of consumers, fixed charges, rationalization of monthly demand charge,
late payment surcharge, tariff for supply of power to labourlines
in tea gardens and withdrawal of certain rebates and incentives
including concessions to new industries, expanding industries and
sick and closed industries, high voltage supply etc.. CHAPTER
– 12: OBJECTION AGAINST TARIFF PETITION FILED BY WBSEB
12.2 Sri P. Chakrabarti made suggestions relating to improvement in the quality of the meters used for LT Consumers so that the energy consumed by them is properly recorded as improper recording of consumption results into huge loss, which is to be borne by other consumers. The objector also suggested that there should be different tariff for rural and urban consumers keeping in view the quality of services provided to them. It was also suggested that there should be provision for making advance payment against the future bills to help the residents who have to stay away from their houses for long duration. 12.3 M/s Edcons (MKS) Castings Pvt. Ltd. stated in their objections that the increase proposed by WBSEB is abnormal and unjustified. They felt that the tariff of WBSEB should be reduced and they gave some reasons in support of the same relating to reduction in customs duty, etc. The objectors also objected for withdrawal of concessional energy charge. The objectors also gave some suggestions regarding load factor rebate, load factor penalty, power factor rebate, calculation of monthly demand charge, enhancement of rate for LPSC, etc. The objectors also quoted certain observations of Hon’ble Supreme Court of India relating to the case of IIM. 12.4 M/s Asha Ispat (P) Ltd. objected on the revised basis of maximum demand charges and also gave their own suggestions that how monthly demand charges should be calculated. 12.5 Electric Consumers of Purba Midnapur District gave their objections relating to T&D Loss, which they felt was mainly because of the theft and also gave certain cases relating to the theft for which WBSEB is not taking any action. They also brought out that energy charges are not being collected from the defaulting consumers and also quoted an advertisement of the Board in the Ananda Bazar Patrika in this regard. 12.6 Phaskowa Tea Plantations Limited raised objections on non-calculation of demand charges on interruption of power supply correctly, incorrect calculation of security deposit, calculation of minimum demand charges based on 50 KV, removal of load factor penalty and introduction to a suitable grievance redressal mechanism. 12.7 Mrinal Chandra Das suggested for concessional tariff for senior citizens. 12.8 Aparna Gupta, Sabhadhipati, North 24-Parganas Zilla Parishad raised points relating to the effect of increase in tariff on farmers and requested that the farmers should continue to get benefit of cheaper power and suggested introduction of time at the day tariff for agriculture and adequate feeders to ensure uninterrupted power supply for 8 hours daily. 12.9 M/s North Valley Ispat Udyog (P) Ltd. raised observations relating to high level of T&D Loss and quoted the earlier order of the Commission in which directions were issued to reduce the T&D loss and also questioned the justification of the energy audit of 1999 – 2000 to justify the T&D loss. The objectors also raised observations relating to non-installation of meters, non-determination of energy loss based on actual recording of meters, etc. The objectors also quoted the reference of section 61(g) relating to the cross subsidy and dues elimination within a time limit and concluded that even after 5 years, there is no improvement in that respect. The objectors also quoted section 62(3) of Act, 2003 relating to rationalization of tariff forconsumers and also objected to proposal to enhance demand charge and basis of calculation of demand charges. The objectors also gave suggestions / views on load factor rebate and withdrawal of load factor penalty, power factor rebate and enhancement of peak tariff. 12.10 Indian Aluminium requested for introduction of open access and fixation of billing charges and other charges for transfer of power through WBSEB network. 12.11 Singur Haripal Rural Electric Co-operative Society Limited gave suggestion on tariff to be charged to the society and its charge to its own consumers at par with WBSEB, etc. 12.12 All India Krishak Sabha requested improvement of the electric system and supply position in their area, which pre-dominantly consists of farmers. 12.13 Sri A.B.A. Ghani Khan Chowdhury, M.P. suggested to provide a dedicated feeder to supply better power to peasants and cultivators particularly in night. 12.14 Cooch Behar Kreta Suraksha – O – Sahayak Samity objected to increase in tariff, increase of LPSC, meter rent, fixed charges, minimum charges, other miscellaneous charges, agricultural tariff, etc. The objectors also objected to high manpower cost, increase of bad debt, increase in administration and general expenses, increase in depreciation cost and high T&D Loss. The objectors also suggested certain measures to reduce the proposed increase including recovery from Government Departments, control of theft, continuation of subsidy, sale of electricity to co-operative societies at an appropriate rate, stoppage of purchase of power from DVC, NTPC, etc. and by increasing the generating capacity. 12.15 Eastern Railway gave a brief history of the position and their status and objected to increase in demand charges, dropping of power factor rebate, increase in LPSC, demand charge penalty, maximum demand integration period, calculation of maximum demand by clubbing individual supply points, quality of supply, etc. 12.16 Indian Tea Association filed their objections and before the objections they gave a background of their members and the general history of them. The objectors were also of the view that they were mainly consuming the electricity, which is available during monsoon period and their demand during other period is very minimum being seasonal industry and requested the industries to be considered as seasonal industries. The objector also gave some suggestion on load factor penalty, demand integration period, supply of meter, classification for determination of tariff and suggested that no demand charge to be applicable on tea industries. The objectors also pointed out about the billing for labour colonies and also quoted the section 2 and section 14 of the Electricity Act 2003 with the request to regularize the supply of power to the Railway Lines of the Tea Gardens by isolating the activity from the responsibility of tea gardens to the responsibility of the WBSEB, keeping in view of the provisions of the Act. The objectors also quoted the relevant order of the Hon’ble Supreme Court of India on fixation of tariff based on average cost of supply and without cross subsidy. The objectors also quoted the order of the Commission dated 7th December 2001 relating to T&D Loss and brought in to the notice the requirement in keeping in view the interest of the consumers and the performance of the Board. The objectors also raised objection on excess expenditure, maintenance of redundant stations, inflated expenditure towards power charges, low generation from Teesta Canal, reduction of power drawn from Kolaghat, high expenses of employees cost, operation and maintenance, administrative and general expenses, depreciation, interest and financing charge and capitalisation of expenses. The objectors also objected on the enhancement of demand charge, particularly with reference to export of power outside the region and demand charge penalty for non-supply. The objectors also gave their suggestions on TOD charge. 12.17 Supreme Paper Mills Limited objected on the increased tariff, dropping of power factor rebate, increase in demand charge, increase in peak hour rate, availability of power, revised basis of contract demand and also brought out the matter relating to quality of supply including voltage variation and voltage dipping etc. 12.18 Sri Debaprasad Nandi raised objections on fixing the tariff at par without considering the ability to pay, geographical area, economical hinterland, etc. and increase in tariff for ordinary consumers. The objector also raised objections against increase in meter rent and security deposit. 12.19 The objection of Sri Jaymohan Pal was similar to the objection of Sri Debaprasad Nandi and hence not repeated to avoid repetition except his comments on outstanding dues to be recovered by Board from CESC, heavy administrative cost, excess T&D loss on account of theft, wastage of material and improvement in service to consumers. 12.20 The observations of he West Bengal Cold Storage Association are partly similar to the observations at serial no. 12.9 above and hence not repeated. Their specific additional objections relate to the tariff for cold storage consumers which they felt is not in the rational and beneficial of the interest of business of cold storage and discriminatory in percentage of tariff proposed. The objector gave a brief status of the cold storage operating in the State and also quoted section 29(3) to state that Board has not acted in consonance with the stipulations of the same as well as the new Act. The objectors also objected the implementation of tariff with retrospective effect and also pointed out that the rate which the cold storage has to charge from its consumers is decided by a body formed by the State Government and they will not be in a position to recover the enhanced tariff if it is approved from retrospective date. 12.21 Bengal National Chamber of Commerce and Industry objected to high T&D loss in the assumption and also pointed out that WBSEB has not given the relevant figures of loss on EHV and HV side and feeder lines where the metering remains incomplete along with non-achievement of targets under APDRP. The objectors also pointed out that the Board has not given the actual percentage of losses for 2000 – 01 and 2001 – 02 as a result the technical loss which actually incurred cannot be assessed and the steps taken to control such loss as well. The objectors also pointed out from the data relating to raids to show that the persons who were caught for misappropriation of energy, shows only 4 to 5% energy as a whole, if the same ratio is taken overall. The objector also quoted the direction of the Commission for reduction in T&D loss and also quoted for T&D Loss of A.P. Transco. The objectors also objected on low generation and high cost of generation at Jaldhakha & Raman Hydro & Gas Thermal Stations and Teesta Canal Fall (TCF) Power Station. The objectors also pointed out low generation from gas station and also pointed out the high cost of power charges from DVC at different voltage level and insufficient justification for purchase from DVC. The objectors also gave an analysis of the employees cost and were of the opinion that the employees’ cost per unit sold is increasing and also high cost of salary and wages and overall expenses. The objectors also objected to high interest and financing charges and questioned the high rate of interest on certain loans in context of present low interest rate and no action to restructure the same. The objectors also made a study of performance of WBSEB (the annexure stated to have been enclosed was not enclosed). The objectors also gave certain objections on the proposed tariff hike. 12.22
Panagar Bazar United Industrial Electricity Consumers Welfare Association
filed their objections against the proposed increase in tariff by
the Board. The objectors have objected to non-furnishing the relevant
information and data, etc. relating to the calculation of surplus.
The objectors also raised observations on the high T&D loss
and felt that the high T & D loss is mainly due to theft and
even the technical losses are high. The objectors also objected
the basis of calculation of T&D Loss and also did not rule out
the reasons attributable to WBSEB for such huge T&D loss and
also quoted with data of the raid, etc. gave by the WBSEB and also
felt that the main reason for such T&D loss is attributable
to WBSEB. The objectors also objected on the low generation from
Hydel Station, problems of Teesta Canal, high administrating and
generation expenses. The objectors also objected on non-disclosure
of information relating to depreciation and also felt that the consumers’
interest is not being safeguarded and requested the Commission to
follow provision of section 61 of the Electricity Act, 2003. The
objector also objected on enhancement of fixed charges, demand charges,
meter rent and other charges, etc. 12.23
South Eastern Railway filed their objections giving background and
their status as consumer, objected to enhancement in demand and
energy charges, safeguarding the interest of the consumers and payment
of electric charges in a reasonable manner and requested for downward
revision of the tariff. The objector also gave certain suggestions
on withdrawal of penal charges, calculation of billing demand, integration
period, reliability of power supply, etc. 12.24 Shri Badrinarain Alloys and Steels Limited gave their brief background along with their present case relating to relief and concession as a sick industry. The objector suggested for a better incentive for off-peak hour. The objector also pointed out non-utilisation of gas power station, high cost of Teesta Project. The objector also pointed out about the high T&D loss in the systems and quoted some points from the tariff petitions to state that WBSEB is not metering properly even at their sub stations and about 20% of the consumers is getting un-metered supply and their T&D loss is only numerical manipulation. The objectors also objected on high employees cost and gave some suggestions on energy cost for HP supply (33 KV) and also for the company who are before BIFR. 12.25
Rohit Ferro Tech Private Limited gave their observations and before
giving observations they explained in brief their own problems and
their status. The objector objected to the classification of the
consumption inside the State in the absence of adequate details
and justifications to arrive at correct assumption of the same.
The objector pointed out about the high T&D loss and quoted
the order of the Commission dated 7th December 2001. The objector
also pointed out low generation from Hydel Station at unreasonable
high cost and in particular Teesta Canal. The objector also raised
observations on purchase projections and less purchase from Kolaghat.
The objector also objected high employees cost, operation and maintenance
expenses, interest and financing charges, depreciation, bad debt,
capitalisation of expenses, etc. The objector also gave their observations
on export of power from State and the rate at which it is being
sold. The objector also objected on the variation of the various
charges proposed by the Board relating to demand charges and felt
that the additional demand charges due to trading of power should
not be loaded to the consumers. The objector also gave their objections
on modification of LPSC, billing demand, rebate on load factor,
power factor rebate, concession announced by the Government, interpretation
of cross subsidy, terms and conditions of supply, etc. 12.26
Bharat Chamber of Commerce raised objections on projection of sales
without any basis of assumption, scientific approach and lack of
reliable data or metered supplied to various category of consumers.
The objector also pointed out the direction of the Commission to
complete metering of all consumers upto 11 KV by 31st March 2003
and the failure of the Board to complete the same even after the
commitment. The objector also felt that the consumption shown against
agricultural consumers is highly exaggerated and also pointed out
that un-metered supply is being given not only to lakhs of Kutir
Jyoti, domestic consumers and agricultural services but also HT
services and even 10% of HT services are getting supply through
defective meters. The objector also pointed out high T&D loss
and felt that bench marking of the Commission of T&D loss excluding
EHV supply is more rational as an overall T&D loss in EHV supply
is 0.5% and also stated that the WBSEB statement on T&D loss
of 4% for EHV is not correct. The objector also quoted the background
of the T&D loss relating to earlier years and felt that the
T&D loss for the year under review should not exceed 23.5% excluding
EHV Bulk supply and it will be unnecessary burden on consumers and
no serious visible efforts have been made by the Board to reduce
the abnormal T&D loss. The objector also projected energy requirement
and quoted low generation from Hydel Stations and in particular
Teesta Canal Fall, Gas Turbine, etc. The objector also objected
that the average maximum demand of the Board is unrealistic and
required downward revision and also quoted its views on merit of
the purchase keeping in view the ABT regime and also raised certain
points for the purchase planning. The objector also pointed out
that unless the Board is alert in its purchase planning, then Board
can not avoid huge loss by way of payment of unscheduled interchange
charges. The objector also commented adversely on purchase of costly
power from DVC inspite of the Commission’s directions and
found that the reply of the Board is mere a written statement. The
objector also objected that the figure shown on account of revenue
from export of power is on lower side. The objector also gave their
comments and reasons on high employees cost, even after transfer
of BTPS and STPS, high operation and maintenance expenses, high
administrative and general expenses, high provision of doubtful
bad debt, high interest and financing charges and capitalisation
of expenses. The objector also objected on non-providing of proper
justification of the cost benefit analysis for Purulia Pump storage
and other capital addition along with justification thereon. The
objector also raised issues relating to determination of surplus,
provision of less non-tariff income, particularly relating to recovery
of DPSC. The objectors also raised points relating to TOD Tariff,
load factor rebate / penalty, power factor rebate / penalty, rationalization
of billing demand, non-availability of quality of power and reliability
of power supply. 12.27
Hooghly Chamber of Commerce & Industry objected on increase
in demand charge, change in the method of billing demand, enforcement
of compulsory metering on EHV and HV consumers and prayed for grant
of rebate in TOD tariff during off-peak period, increase in load
factor rebate and also objected on certain other issues relating
to enhancement of LPSC, power factor rebate, etc. The objector also
objected on high T&D loss and quoted the earlier orders of the
Commission and felt that the Board itself does not know the real
T&D loss and assumptions made to assess it as they have failed
to provide required information. The objector also pointed out non-metering
of 11 KV Feeders and the comparison by the Board with the other
SEBs without comparing the distribution network, geographical area,
rural electricity consumer mix, etc. The objector also objected
on the energy balance calculation of the Board and also suggested
format for tariff determination and gave their own assumptions of
reasonable revenue requirements for the Board. The objector, while
assessing the reasonable revenue requirement of the Board, gave
reasons of basis of purchase of power, generation charges, O&M
cost, employees’ cost, administrative and general charges,
other items of expenses, etc. and also pointed out certain deficiencies
in the calculation of the Board. The objector also worked out the
burden of cross subsidy and prayed for withdrawal of interim relief
and gave various reasons and justifications for the same. The objector
also gave their suggestions on open assess policy. 12.28
Sri Vasavi Industries Limited filed their observations and before
that they gave their background in which it was established and
operating at present in the State. The objector objected on the
cross subsidy and referred the decision of the Hon’ble Supreme
Court in CA No. 4037 of 2002. The objector also pointed out that
the cost in supply to EHV consumers is less than LV consumers and
no cross subsidy is possible between LV, HV and EHV consumers. The
objector also referred to section 62(3) of the Electricity Act,
2003. The objector also raised objections on the energy balance
and in particular the basis of calculation of consumptions within
the State and was of the opinion that the Board has not given adequate
information as it felt that the over statement inside the State
shall lead to additional T&D loss, etc. The objector also wanted
that the sale outside the State should be reasonably ascertained.
The objector raised objections to T&D loss proposed by the Board
and referred to the earlier direction of the Commission in this
regard. The objector also objected on the high cost of generation
of Teesta Canal and high cost of redundant gas stations and other
stations. The objector also raised objection on purchase of power
and felt that various details regarding power purchase is not available
and quoted particularly less generation projected from Kolaghat
Power Station and also objected selling power on a cheaper rate
outside the State. The objector also objected and gave reasons for
their objections on high cost of employees, operation and maintenance
expenses, administrative and general expenses, depreciation, interest
and financing charges, bad debts and capitalisation of expenses.
The objector also objected on change in terms and conditions relating
to fixed charge / demand charge and pointed out the additional fixed
cost for purchasing power from NTPC due to trading activity. The
objectors also objected to integration of demand charges and supply
of energy through incorrect meter and gave suggestion of change
in the billing demand, demand charge / penalty, delayed payment
surcharge, load factor rebate / penalty, power factor rebate / penalty,
withdrawal of concessional energy charge, TOD tariff, terms and
conditions of supply, etc. 12.29
West Bengal Power Development Corporation Limited suggested that
it will be in a position to supply power from Bakreswar at PLF of
72.8% provided the incentive of 0.7% of Paid Up Equity Capital for
each percentage point in case of PLF above 68.5% per year is allowed.
12.30
CESC Limited raised observations on the tariff of the Board stating
that CESC is not a consumer of WBSEB as has been assumed by the
WBSEB and CESC is a distribution licensee for the purpose of redistribution.
CESC also raised point that as per the Electricity Act, 2003, WBSEB’s
role is of a trader and the Commission may fix a trading margin
in terms of section 86(1)(j) of the Act and objected to the 18%
tariff increase in case of CESC in view of this position. CESC also
raised observations on the basis of modification of maximum demand
charge of peak tariff and also commented on certain factual matters
in the petition relating to CESC. 12.31
Sri Asoktaru Pradhan raised objections relating to minimum charge,
fixed charge, security deposit, meter rent, late payment surcharge,
increase in tariff, etc. 12.32
Marutiya Bazar Committee has addressed the letter to Zonal Manager,
Barhampur, WBSEB and is not taken as observations raised. However,
most of the points are already covered in the observations raised
by other objectors. 12.33
West Bengal State Electricity Board Workmen’s Union gave background
of the union and felt that there is scope for reduction of cost
of operation and maintenance, administrative and financial aspects,
and quoted few instances in the petition. The objector felt that
the Board faces adverse peak and off-peak ratio. The objectors suggested
that the Board indicated huge transmission loss due to wheeling
of energy to remote corners of the State and certain levy should
be imposed on the generating companies / licensees in the State
and similarly they suggested sharing of profit with WBSEB by other
generating companies / licensees. The objector also objected to
negligence of the Board towards repairs and maintenance and pointed
out that transformer burning is very high. The objector also suggested
reductions in cost of repairs and maintenance. Similarly they suggested
for reduction in interest and financing charges and restructuring
and sorting higher rates of bond with low rate of bonds / loans.
The objector also objected on high amount paid on rents, around
50% of the pensionary benefits to be charged as a social cause,
reduction in design and engineering cost and also they gave more
suggestions on reduction of T&D loss and certain other suggestions.
12.34
M/s Ranjit Kumar Das and Priya Shankar Banerjee gave similar objections
and accordingly dealt in simultaneously. The objectors mainly objected
on increase in miscellaneous charges, LPSC, supply of cheaper power
to Singur Haripal Rural Electric Co-operative Society Limited and
some other suggestions which are already covered earlier. 12.35
All Bengal Electricity Consumers’ Association and its allies,
Socialist Unity Centre of India, Cottage & Small Scale Industries
Association, Rajpur Byabasayee Samity, Kamal Krishna Mallick, Moni
Mohan Ghosh, Moinuddin Molla, Premji Pattel, Sitangshu Ranjan Tapadar,
All India Krishak – O – Khetmajur Sangathan, North 24
Parganas Vidyot Chalito Agavir Nalkup Samity. 12.36
The objections of Indian Rayon and Industries Limited (Unit Jayshree
Textiles) and Eastern India Textile Mills’ Association are
similar to the objections raised by Hooghly Chamber of Commerce
& Industry (Sl. No. 12.27) and therefore not repeated to avoid
unnecessary repetition. 12.37
Tijiya Steel Pvt. Ltd. objected increase in tariff on account of
T&D loss. The objector quoted the earlier orders of the Commission
and pointed out that the Board’s appeal in this respect is
not acceptable as there is no progressive improvement but resorting
to higher tariff to compensate their own short falls. The objector
also pointed out background of earlier T&D loss and why the
present proposal should not be accepted. The other observations
of Tijiya Steel Pvt. Ltd. is similar to the observations given earlier
by North Valley Ispat Udyog Pvt. Ltd. and other objectors and hence
not repeated to avoid mere repetition. 12.38
B. T. College Area Byabasayee Samity, Naba Barrackpore Puratan Bazar
Byabasayee Samity, Satin Sen Nagar Byabasayee Samity, Naba Barrackpore
Kendriya Byabasayee Samity, Naba Barrackpore Station Purbanchal
Byabasayee Samity and New Barrackpur Group Electricity Consumer
Association. CHAPTER – 13 : REVENUE REQUIREMENT FOR THE FINANCIAL YEAR 2002-03. 13.1 GENERATION AND AUXILIARY CONSUMPTION FOR THE YEAR 2002-03. 13.1.1 WBSEB meets the requirement of its consumers by partly generating power and purchasing the balance power from different sources. 13.1.2
WBSEB generates power from hydel stations, gas stations and diesel
stations. The capacity of these stations as per projection of WBSEB
is as follows: Gross
Generation (MU) 13.1.3 For the concerned year, the WBSEB has projected a gross generation of 479.5 M.U. indicating the plant load factor of the individual power stations and gave some reasons for such low PLF. The number of objectors have raised observation on the low PLF particularly for Teesta Canal (Hydel Stations and Gas Stations of WBSEB) as may be seen from the above table the projected generation against the capability is quite low for hydel, gas and diesel stations. The main reason for low generation from Teesta Canal, as admitted by WBSEB, is non-completion of downstream channel of the Teesta Canal due to which the generation from the canal is quite low. WBSEB could not fully explain for substantial increase in cost from Rs. 80.70 crores to Rs. 755.84 crores along with inordinate delay and cost of overrun, impact of defective supply and mismatches particularly when they are able to generate only against maximum availability of water of 110 cusecs against requirement of 330 cusecs in monsoon period. The Board should have planned sufficiently well for completing the project within the reasonable cost and time. Similarly, justification for poor condition of upstream canal is not convincing. These are not in the interest either of the licensee or of the consumer. The Commission, however, agrees for the present with the generation figures given by WBSEB in view of the above circumstances, but cautions WBSEB that such cost cannot be passed on to the consumers unless full facts on the time and cost overrun are placed to the Commission and the Commission takes a considered view on the matter. This point along with the penalty / cost reduction has been dealt subsequently in the order. 13.1.4 The Commission is also not satisfied with the reasons for the low use of gas stations. Generation from the gas stations of 100 MW has been shown as nil, and actually negative to the time of 0.04 MU when auxiliary consumption is taken into consideration. 13.1.5 As regards diesel generation the Board has not projected any generation from its diesel generating station. 13.1.6 The Commission has adopted the figures as projected by WBSEB for generation for the purpose of energy balance subject to its observation. The generation figures as adopted by the Commission are as under: Hydel
Gross generation : 479.50
MU (including 0.50 MU from others) 13.2 ENERGY BALANCE AND SALE OF POWER FOR THE YEAR 2002-03. 13.2.1 In this chapter, Sales, T&D loss and Energy Balance and purchases to be made by WBSEB are being examined after taking into consideration the net generation of the stations. 13.2.2 For the year under consideration, the petitioner while determining the energy requirement has kept in view the actual consumption figure for first 6 months for HV and EHV consumers and for L & MV consumers as admitted the figures based on sample energy built data and extrapolated at historic annual growth rate of consumption. WBSEB has projected the energy requirement and sale of 9859 MU against 9333 MU for the last year. The requirement has been worked out at 34% T & D loss against projected 36% T & D loss for the last year. The total energy requirement based on T & D loss and auxiliary consumption works out to 14951.73 MU. 13.2.3
The categorywise consumption / sale as projected for the year 2001-02
and projected for the year 2002-03 is given as under :
13.2.4 As indicated in the last year order also, the WBSEB estimated the energy sale for the year at 9839 MU and assess the category by sales even though, as objected to by some respondents, there is large quantity of unmetered supply and supply through defective meters. We, however, did not find the basis upon which the above estimation has been made by WBSEB. We find that there are more than a lakh of kutir-jyoti domestic consumer and about another one lakh of agricultural services, which are unmetered. Further, some high tension and low tension services are also unmetered. It is also seen that above 10% of the meters in LT services are reported to be defective which need replacement. With these deficiencies the estimation of T & D loss is also not fully reliable. There had been an energy audit on a few feeders in some areas and WBSEB has reassessed the T & D loss on that basis. But, how the T & D loss has been assessed has not been explained. In the absence of reliable data we can not comment on the accuracy of the estimated sales for 2002-03, and there is no alternative to acceptance of the assessment as submitted by the WBSEB in their tariff petition for the present year also. However, the Commission directs WBSEB to immediately install the meters on various feeder upto11 KV and above so that some reliable data is available for future years. WBSEB is already committed to install such meter by 31st March 2003 and the Commission directs that there should not be any slippage of installation of meter in this regard. 13.2.5 WBSEB has kept its T & D loss projection at the level of 34% for the year 2002-03, though the Commission had fixed the same at 30% for the year 2000-2001 (excluding bulk supply to licensees) with a direction to reduce the same by 2.5% every year for the next 4 years. That means that for the year 2001-02 (excluding bulk supply to licensees), the loss level is 27.5%. WBSEB has submitted that this target of loss reduction is absolutely difficult to achieve. The Board has also submitted that it assessed the system loss level for 1999-2000 to be of the order of 39.2% of the energy input on the basis of an in-house energy audit. The Board also furnished examples of how different SERCs had approved T & D losses at high levels. WBSEB also quoted the view of a Committee of Experts on Subtransmission and Distribution System constituted by the Ministry of Power, Govt. of India to the effect that a large amount of commercial loss could be reduced only gradually by putting into action a separate plan comprising of legislative changes, strict vigilance, enforcement of punitive measures, enhanced accountability at the field level etc. WBSEB has argued that substantial reduction of T & D loss cannot be achieved overnight. It has also suggested that deprived of the concentrated and remunerative load of Kolkata and Howrah cities as also of bulk industrial load of Asansole-Durgapur area, the Board has to operate predominantly in rural areas where proper infrastructure could not be developed in the past as required under prudent utility practice. Long 33 KV lines, 11 KV lines and LT lines, overloading of transformers and equipments and theft of electricity are, according to the Board, mainly responsible for huge line losses. However the Board has assured that it has started installing meters wherever necessary, intensified drives to ensure timely billing of all consumers and has taken steps to stop theft of energy. With all this, the Board has stated that it has started to take steps in the right direction and has pleaded for accepting a T & D loss level of 36% in 2001-02 and 34% in 2002-03. 13.2.6 All this was considered by the Commission while dealing with T & D loss in its tariff order for 2001-02 and as observed therein, such a high T & D loss admittedly cannot be either justified or passed on fully to the consumers. Such a view has also emerges from the observations of the Hon’ble Supreme Court in the judgement and order dt. 03.10.2002 in the case of WBERC Vs. CESC. We simply follow the directions indicated by the Hon’ble Supreme Court and take the view that the utility has to share a portion of T & D loss. While the technical part of the T & D loss is very difficult to eliminate, and while reduction in the same is usually a matter of high to very high investments, it is the commercial part of the T & D loss that should receive immediate and urgent attention, for this part is capable of being reduced significantly though admittedly over a period of time, and it is this part of the loss that should not be passed on to the consumer in full. 13.2.7 Although, quite a few of the claims of the Board in this behalf are not wholly tenable (e.g. the Board, inspite of not having the industries of Kolkata, Howrah, Asansole and Durgapur within its operational area, still has many urban areas to serve, the agricultural load is about 9% while industrial load including Railways is about 48% of the total load etc.), the fact remains that the Board has simply not been able to contain its T & D loss, and the reasons for the same are not fully within the Board’s control. It is understandable that monolithic organization that has been required to serve the entrie length and breadth of the State for nearly past 50 years has not been able to gear itself up sufficiently within the period. 13.2.8 It is also important to note that the Board has cited the view of the Committee of Experts on Subtransmission and Distribution System constituted by the Ministry of Power, Govt. of India on the issue of exclusion of the energy supplied to bulk licensees from the computation of T & D losses. This Committee of Experts has observed that the loss in EHV network is about 4% - 5% which has been disputed by consumers and Board is not able to give actual figures of loss on bulk supply at high voltage. WBSEB has submitted that if sale of energy to bulk licensees is not to be taken into account for the purpose of computation of overall T & D loss as stipulated in the tariff orders for 2000-01 and 2001-02, then this loss, overall, would work out to 27.5% in 2000-01 itself (and not 30%). And that would also indicate that the real overall T & D loss in 2002-03, by the same token, would be around 23%. 13.2.9 After a very careful consideration of the matter, the Commission is of the opinion that it would be correct and appropriate to take a realistic view of it and stipulates that in 2002-03, WBSEB should register an overall T & D loss of 27.5% as prevalent last year (which includes T & D loss actually incurred on bulk supply) which will be retained for next year and thereafter it will be reduced by 2.5% for 2004-05. The target thereafter will be fixed based on action taken by the Board to control the theft and reduce T & D loss. In case satisfactory actions have not been taken, the target for reduction will be 2.5% for 2005-06 also. 13.2.10 Based on the analysis as given in earlier we draw supply plan for 2002-03 as under: Own
generation 479.5
MU 13.2.11 The Commission also has considered the purchase to be effective from various sources keeping in view the requirement of merit order purchase, radial load requirement, system load requirement and impact of additional charges on deemed generation of captive stations. Also the Commission has noted that some of the objectors have questioned the merit order purchase of WBSEB. The Commission has also noted the reply given by WBSEB in this regard particularly with reference to the purchase from WBPDCL. The cost of power purchase from WBPDCL is not only low, but WBPDCL is practically captive power for WBSEB. The Commission also noted from the CAG’s comment on the accounts of 2000-2001 (the last audited account made available to the Commission) regarding inadequacy of data relating to system demand, generation capacity available at the time of maximum demand, load connected in the system and maximum demand recorded there against. The Commission earlier noted that in the absence of an adequate policy, cheaper power is being allowed to be exported from the West Bengal system. It is also noteworthy that there is much differences between the power projected to be sold by WBPDCL to WBSEB and the power proposed to be taken by WBSEB from WBPDCL. The justification given by WBSEB that they have considered the actual ability of supply of power by WBPDCL to WBSEB does not explain the situation as WBPDCL has stated that WBSEB is not able to take the power generated by its project and they have demanded deemed fixed cost for low PLF which in earlier times was actually paid by WBSEB to WBPDCL. Even now WBSEB has agreed to bear the cost of deemed generation. It was also noted by the Commission that WBSEB wanted to purchase the power from NTPC as per its allocation and excess of actual requirement was proposed to be sold to neighbouring regions, since non-drawal after allocation would invite additional charges under ABT system. For the purpose of supplying power to the consumers within the State, WBSEB however should go for cheaper power, i.e., merit order purchase subject to radial load and system load requirement. Purchasing comparatively costly NTPC power beyond the quantity indicated in the merit order purchase would depend on the financial implications of such additional drawal from NTPC and how essential it is to take the full share of West Bengal from NTPC. These are important issues and will have to be given more serious thought and planning than being given now. It will not be correct to ask the consumer to pay more because of incomplete planning / inefficiency on the part of management. The Commission would strongly urge WBSEB to carefully consider these issues and take views in the interest of all concerned including itself and the consumers in the State.
In the tariff order for Bakreswar Station, the sale assumed is 3421.242 M.U. and WBPDCL may also export power. Accordingly the amount against Bakreswar station also includes estimated amount towards deemed generation costs. The above power purchase requirement may be modified keeping in view the system load and radial load requirement. The WBSEB has not given separately, figures for radial load requirement and additional requirement for system load and given the detail planning done by them to arrive at the revised projection of purchase of power from different agencies. The Commission has, therefore, adopted some adhoc figures and while examining the FPPCA claim, WBSEB shall submit the detail power purchase planning and actual power drawn giving separately the requirement for radial load and system load requirement above the normal generation available the sources within Bengal and allocation for central generating circle which is vis-à-vis the merit order purchase. In case merit order availability has been forgone the same will be duly justified. The Commission finds, that prima facie, it will not be in the interest of the consumers to purchase of power by WBSEB from NTPC and some of the neighbouring States when surplus power is available from WBPDCL, unless WBSEB justifies the same in more detailed and clear terms with additional financial implication on consumers. In case any loss is incurred by WBSEB then the same will not be passed to the consumers as WBSEB has not drawn a realistic power purchase planning keeping in view the merit order purchase. 13.3 FIXED COST. 13.3.1 Under this chapter the Commission is to look to other aspects to determine the fixed cost and the different components of the same are taken up one by one. 13.3.2
Employees Cost The Commission in its order dated 7.12.2001 had already pointed out that WBSEB had engaged more employees per one thousand consumers in comparison to other Boards and if employees strength is properly utilized / redeployed, the employees cost / kwh would come down. Some of the objectors also had critical remarks to make about the high employees’ cost and the number of employees in the Board. The Board has however contended that employees cost per kwh in WBSEB is lower than the all India average, and further pointed out that WBSEB supplies power mostly in rural and remote areas and therefore, it has to have certain minimum level of employees to serve its consumers. They have further contended that they are already in shortage of technical manpower numbering 5811 and non-technical manpower numbering 4844. The Board has further informed that the total sanctioned strength of the Board is 46146. Board has also justified its overtime payments caused by the need to attend emergency break downs beyond normal hours, particularly during rainy and festive seasons, and shortage of manpower. The Commission is however of the view that the number of employees per one thousand consumers as also the number of employees per M.kwh are still very high in WBSEB and the justification given by the Board is not very convincing. The manpower of Board is more than the total as pointed out in last year in comparison to certain other utilities and it should not be compared with all India average. The Commission finds that neither the employees’ cost as a whole nor the expenses on account of overtime is decreasing inspite of the fact that the thermal power stations at Bandel and Santaldih, along with the employees attached to them have been transferred from WBSEB to WBPDCL. The Commission allowed a sum of Rs.42038 lakhs in 2000-01, and a sum of Rs.44560 lakhs in 2001-02 on this count to WBSEB. Now the latter has claimed a sum of Rs.47149 lakhs in 2002-03. In the tariff petition, WBSEB has stated that adjustments have been made for reduction in employees cost on account of transfer of some employees to WBPDCL, and further that the effect on employees cost of net decrease in the number of employees has also been factored. But WBSEB has not explained how the reduction in employment cost has been calculated. Therefore, we are not in a position to check the calculations. However, a feeling persists that some reduction on this count should be noticeable. At the same time however the Commission, after examining the contentions of WBSEB in this behalf, agrees that expenses on account of allowances including D.A, Medical etc., various staff welfare expenses, expenses on account of terminal benefits etc. of the existing employees may well increase. The Commission also keeps in mind the fact that almost all items in employees cost are in the nature of contractual obligations and cannot be cut or reduced unnecessarily.
Considering all aspects of the matter and in the absence of the
details of the calculations already referred to, the Commission
decides, on ad hoc basis, to effect an increase to the tune of 5%
of the admitted cost of employment in the last tariff order pertaining
to 2001-02. Thus, the admitted cost of employment in 2002-03 comes
to Rs.46788 lakhs. The projected cost under this head is Rs. 8021.22 lakhs against estimated expenditure of Rs. 7518.00 lakhs in the previous year as shown in the petition. O & M expenses allowed by the Commission for the year 2001-02 was Rs. 9908 lakhs which included expenses pertaining to STPS and BTPS. However, keeping the better service requirement of WBSEB in view and to provide them with funds for proper maintenance of their Transmission and Distribution lines etc. the Commission allows Rs. 8021.22 lakhs under the O & M as claimed by WBSEB in the hope that with this provision of funds the services of WBSEB will improve. 13.3.4 Administrative and General Expenses The claim in this regard for the year 2002-03 is Rs. 5626.89 lakhs which includes expenditure of a number of miscellaneous items such as rent, rates and taxes, insurance, security, postage and telegraph, traveling, printing and stationery etc. Though the Commission feels that there is some necessity to control the expenditure and accordingly Commission directs WBSEB to exercise some control to minimize the expenditures under these heads, particularly on freight for inter-depot transfer of materials. The Commission allows the administration and general expenses of Rs. 5626.89 lakhs as claimed in the petition. 13.3.5 Provision for Doubtful Debts The provision for doubtful debts has been claimed for Rs. 822 lakhs. It has been noted that the actual bad debt written off during 2000-01 is only Rs. 18 lakhs against the provision for Rs. 274 lakhs allowed by the Commission for the year 2000-01 and the Commission has also noted that the bad debt allowed in its tariff order for 2001-02 was Rs. 934 lakhs. The Commission, while passing order for the tariff fixation of the Board for last year felt that the Board should look into its process of billing and collection of bills including arrears so that the requirement of the provision can be avoided to the extent possible. The Board has justified the higher bad debt as the sale is on credit basis. But the Board either has got already or should have obtained sufficient security deposit for supply on credit. With the improvement of the billing and collection system the amount of recovery should be quick with less chances of bad debt. The Commission also has reviewed the list of defaulters owing more than Rs. 1 lakh for a period more than 6 months and has noted that the number of consumers against whom such amounts are shown to be outstanding is quite high. The Commission also notes that the Board has not indicated the actions if any taken by the Board for recovery of such huge amount against various agencies including individuals, Government Departments, industries, associations and various other consumers. In the absence of any indication of the steps taken for the recovery of such debts the Commission finds the position unsatisfactory, to say the least. Non-recovery of dues in time not only increases the requirement of the provision for bad debts, but also the requirement of the working capital and loan, the interest of which is to be borne by other honest consumers. The Commission, therefore, likes to direct WBSEB to take immediate effective steps for recovery of its dues and give a list of the consumer in default along with the action taken report for recovering dues. It is also noted by the Commission that the list submitted does not contain necessary details of the consumers in certain cases. The Commission directs Board to forward a list of defaulters and the amount recoverable from them pertaining to the State Government Departments should immediately be sent to the State Government with a request to impress the defaulters for early settlement of dues. The action taken report in this regard along with action taken against other defaulters should be filed with the Commission before 31st March, 2003. In view of the above position and also keeping in view that the Board has only written off Rs. 18 lakhs in the accounts of 2000-01, the Commission is allowing a sum of Rs.100 lakhs provisionally for the year 2002-03 and the balance requirement, if any, will be considered subsequently after the bad debts are written off and the collection of old dues progresses adequately. 13.3.6 Capitalization of Expenses The Board has projected a capitalization of expenses of Rs. 8351.24 lakhs and stated that the same has been done as per the norms prescribed in the Electricity (Supply) (Annual Accounts) Rules 1985, but no detail workings in this regard to confirm that the provision of clause 2.4 read with clause 2.8, 2.9, 2.10 & 2.11 of the said Rules have been kept in view while ascertaining the amount of expenses to be capitalized.
The Commission has seen the statement of assets to be capitalized
as given by the Board and has noted that the total amount proposed
to be capitalized during the year 2002-03 is Rs. 95138 lakhs and
the proposed capitalization of expenses comes to 8.78% of the total
cost of assets to be capitalized. The Commission has in its earlier
Tariff Order, held that the capitalization of expenses has a bearing
on the capital expenditure incurred during a particular year and
it has no sole relation with the work-in-progress at the beginning
of the year or the value of the work capitalized during the year
or earlier years or on historical basis. The Commission had also
worked out the total value of capital work done by the WBSEB in
the last 5 years and noted that the average expenses capitalized
were in the range of 13.14% to 15.61% of the value of the capital
work done during the year. The expenses capitalized were 13.17%
of the value of capital works done during 2000-01 as per the audited
accounts, made available with the Commission. Applying the same
percentage, the capitalization of expenses comes out as under for
the year 2002-03.
Rs.
in crores The
WBSEB has not given any justification / reasons for reworking of
low capitalization of the work and based on the statement of the
capital works to be done during 2002-03, it is noted that the proposed
expenditure includes renovation and modernization, construction
of transmission lines, 100% metering under APDP, accommodation of
load dispatch system etc.
The total amount claimed by the Board towards depreciation chargeable for the year 2002-03 is Rs. 21472 lakhs on the total value of gross block of Rs. 374917 lakhs taking into account the transfer of assets relating to Bandel and Santaldih Thermal Power Stations to WBPDCL. The gist of their claims is as under :-
The
fixed assets in Hydro generation stations includes cost of Teesta
Canal Project which had witnessed an abnormal cost over run for
67.5 MW project. Moreover, the station is not made operational in
its designed capacity stated to be due to non-availability of requisite
water discharge facilities. The objectors to WBSEB’s tariff
petition pleaded that the entire cost of Teesta Canal Project may
not be conceded. Moreover, as desired by the Commission in its earlier
Tariff Order, the WBSEB has not advanced proper techno-economic
justifications for their capital additions and has also not identified
the assets which are not in use or useable and taken them out of
the fixed assets in service. The Board explained some reasons for
cost overrun in Teesta Canal but that is not convincing and could
not give any timeframe to complete the balance works. It is more
in the interest of consumers that by spending some more amount the
balance works are completed so that full benefits of the project
are derived and additional power can be generated at cheap rate.
The Commission therefore directs the WBSEB to get the balance work
completed within 30 months from the date of order otherwise the
part of the withheld amount released will be withdrawn from 2002-03
itself. The Commission, therefore, reduces the adhoc deduction to
50% of Rs.30000 lakhs i.e., a sum of Rs.15000 lakhs from the original
cost of fixed assets and disallow depreciation on the same at an
average rate of 5.73%. The depreciation allowed, therefore comes
to Rs. 20612.51 lakhs. The Board has claimed the interest on finance charges amounting to Rs. 77186 lakhs whereas the total interest paid and payable showed in Annexure-8 of the petition is Rs. 73971 lakhs. The balance Rs. 3215 lakhs has been claimed on account of finance charges for which no details has been given.
It was observed from the loan statement by the Commission that during
the year the Board projected to draw fresh loan of Rs. 68135 lakhs
from the Government of West Bengal at a rate of interest 14.5% which
the Commission feels is quite high for fresh loan particularly from
the Government in the present interest rate scenario. The Commission
would urge WBSEB very strongly to move the State Government for
reducing the rate of interest on Government loan realistically.
The amount of interest for capitalization has been projected for
Rs. 39944 lakhs. The projection is stated to be done as per the
norms prescribed in the Electricity (Supply) (Annual Accounts) Rules
1985. No supporting working in this regard has been made available
to the Commission. We agree with the projected figure and direct
WBSEB to submit detail calculation in their next Tariff Petition.
13.3.9 Capital Additions The Commission has looked into the proposed capital addition of Rs. 95138 lakhs including Rs. 20000 lakhs under 100% metering scheme. It has also been noted that the scheme would be completed in March 2004 as per earlier submission. The expenditure of Rs 50000 lakhs on transmission line including augmentation on load dispatch system with Rs. 152.21 lakhs. Though the Commission accepted expenditure on metering in view of the large number of unmetered and defective meter supply, but there is no detailed justification or detailed plan has been given for 100% metering. Similarly the Commission has noted that an economic analysis and justification for incurring the capital expenditure of transmission line amounting to Rs. 86140 has been given in this tariff petition after the major expenditure has been incurred (proposed expenditure for 2 years only). Even though the State Government did not delegate to the Commission the authority to approve such investments under the ERC Act, such a move from WBSEB would have left no room for any question in this behalf. The same holds good for the investment in Purulia Pump Storage Project. However, a lot depends upon this project for the power scenario in this State. Also, with the advent of the Electricity Act 2003, the Commission will be called upon to examine such investment proposals. The Commission, therefore, again directs the WBSEB to give detail economic analysis and justification for the Purulia Pump Storage so that the issue can be discussed and decided after inviting objections from the consumers and other stakeholders and holding the public hearing as per the provisions of the Act and the Rules. The objectors has earlier raised objection on the low generation of Teesta Canal Project, substantial time overrun and cost overrun which has been discussed in detail separately. The Commission also noted that in the last tariff order, the Commission has reduced certain expenses and charges from the revenue requirement of the Board in lieu of the detail cost overrun and / or due to low generation from the Teesta Canal. It is still noted that the position has not changed and the generation from Teesta Canal is very low as they are getting only 110 cusecs water against the requirement of 330 cusecs in monsoon period due to non-completion of downstream canal and problems in upstream canal. The Board is also not able to indicate any time period by which they will be able to complete the project as per its designed capacity and at what cost. The Commission also observed that the total expenses of Teesta Canal for 2002-03 as reported is about Rs. 11922 lakhs out of which Rs. 4501 lakhs is shown to be capitalized. No decision for justification of capitalization of expenses has been indicated particularly when no major construction work is going on on the project. As indicated earlier, the total amount of capitalization shown is only Rs. 8351 lakhs excluding interest. The figure of interest to be capitalized is already incorrect as indicated earlier. It is further noted by the Commission that even though the capitalization of expenses for Teesta Canal has been shown as Rs. 4501 lakhs, the expenditure to be capitalized on ongoing scheme pertaining to Teesta Canal has been shown as NIL. If the expenditure is nil, then how and where this capitalized expenditure of Rs. 4501 lakhs has been taken is not clear. It was also observed that the amount of interest capitalized is quite disproportionate to the base cost of work-in-progress and is quite high. In certain cases (Ref. Annx to Statement 7 of the Annual Statement of Accounts for 2000-2001) it is shown apparently at more than 100% of the base cost of CWIP including completed Assets. It was also noted by the Commission that the cost of generation at ex-bus has been worked out by Board as Rs. 4.35 per kwh. This is abnormally high and appears to have been worked out after reducing Rs. 4501 lakhs as expenditure to be capitalized. If this capitalization is not to be considered then the cost of generation of Teesta works out to Rs. 6.98 per kwh which is abnormally high and indicated inefficiency of the Board. In view of the above, the Commission disallows 50% of the total disallowed capital expenditure to the extent of Rs.15000 lakhs towards abnormal cost over run of Teesta Canal Project as well as for non-identification of unserviceable and discarded assets for the purpose of allowing returns. The Commission wishes to draw pointed attention of WBSEB to the anomalies and question marks in Teesta Canal Project as discussed here, and meet each and every point raised therein, if WBSEB wants to receive the benefit of the capital expenditures in question, in full. 13.3.10 Determination of surplus WBSEB has claimed Rs. 5022.38 lakhs towards surplus @ 3% on the net block of the assets at the beginning of the year reduced by consumer contribution. We admit the return with the following adjustment.
Surplus claimed : Rs.
5022.38 lakhs Rs. 4572.38 lakhs
The total non-tariff income projected by the Board is Rs. 8079 lakhs as against Rs. 17463 lakhs admitted by the Commission for the year 2001-02. The Board has stated that reduced income is due to reduction in delayed payment surcharge, payable by CESC as per the Government decision. The objectors has raised objection and the Commission also noted that the delayed payment surcharge of CESC can only be waived provided the CESC has fulfilled the condition stipulated by the Government of West Bengal. At the hearing, WBSEB stated that CESC had been fulfilling the conditions as stipulated by the State Government. However, as we find from the submission of CESC in this behalf, the latter is liable to pay a sum of Rs.1083 lakhs to WBSEB towards delayed payment surcharge in 2002-03. Accordingly the Commission fixes the non-tariff income at Rs.9162 lakhs for 2002-03. 13.4 REVENUE REQUIREMENT. 13.4.1
The total revenue requirement for the financial year 2002-03 as
claimed and as admitted by the Commission is given in the table
below :
13.5 RURAL ELECTRIFICATION SUBSIDY. 13.5.1 The Board has indicated that the Government has agreed to give a subsidy of Rs. 100 crores for the year 2001-02 and the same figure has been projected for 2002-03. However, as per unaudited accounts for 2001-02, the subsidy from the State Government for that year has been shown as Rs. 239.13 crores. Thus there is huge difference in both the figures. 13.5.2 The Government has not confirmed the rural electrification subsidy for 2002-03 though as per the CEA guidelines subsidy should be @ 10% of the revenue from the sale of power as contended by the Board. The Board has further informed that the balance rural electrification subsidy claimed less subsidy realized by cash or adjustment upto 2000-01 is Rs. 111211 lakhs and as per unaudited accounts for 2001-02 the amount shown is Rs. 125123 lakhs. The Commission is not admitting any sum at all as rural electrification subsidy as it will not be able to take the figures projected or based on the guidelines of the CEA keeping in view the huge shortfall of Rs. 125123 lakhs unless confirmation from GOWB is obtained. 13.5.3
Since the Commission has allowed interest on reasonable basis and
not as projected by the Board, the Commission is not taking a view
of the adjustment as indicated above in this tariff petition and
like to direct WBSEB to examine the possibility of adjusting the
subsidy from the loan and interest payable by the Board to GOWB
and work out the revenue requirement accordingly in future. CHAPTER – 14 : REVENUE REQUIREMENT FOR FINANCIAL YEAR 2003-04.
14.1.1 WBSEB meets the requirement of its consumers partly by generating power and balance by purchasing from other agencies. For the year 2003-04 WBSEB has projected a gross generation of 552.50 MU from its hydel stations and 1.50 MU from the gas turbine stations and diesel stations. WBSEB’s projection for gas turbine station is only 1 MU against the installed capacity of 100 MW. In spite of insignificant generation from the gas stations WBSEB has tried to justify retention of the gas turbines on the ground that eastern region is being served predominantly by thermal units. So the gas turbine stations may have to be operated during failure of Regional Grid or reduced level of availability of power during simultaneous outage of number of thermal units. The Commission earlier expressed its concern over maintenance of the gas turbines at a huge cost for such eventualities, as eastern region is now quite comfortable in the availability of power from State Generating Units as well as Central Units. The Commission, however, will not prevent WBSEB from keeping the Gas Stations functional, if WBSEB feels that these stations will still be required in the event of there being a total power failure in the regional grid. But the Commission will stipulate that WBSEB will keep generation from these stations at the minimal level so as to keep them functional, and will further stipulate that the cost of keeping them functional will not be a pass through in tariff. However, it appears that WBSEB is required to operate D.G Set at Sagar Island because of non-availability of grid supply in that area. So the Commission allows a generation of 0.5 MU from diesel stations as projected by the WBSEB. However, the Commission will advise WBSEB to try to provide power to Sagar Island by exploiting different non-conventional sources of energy as much as possible so that eventually either there is no need to use this station, or its use is brought down to the minimum. The generation as admitted by the Commission for the year 2003-04 is as below:
Hydel Generation : 552.50 MU 553.00 MU 14.1.2 In this tariff petition also WBSEB has given the same reasons for low generation at Teesta Canal Fall Hydel Project as indicated in the year 2002-03. The Commission in its earlier order expressed its displeasure at the high capital cost of the station and low generation. WBSEB explained that to operate the power station at designed energy, 330 cusecs of water is needed but the Irrigation Dept. of the Government of West Bengal is restricting the water supply as they are yet to complete all the down steam canal systems required for discharge of 330 cusecs of water to the river. WBSEB states that constant interaction is being made by them with the Irrigation Department for availability of 330 cusecs of water to achieve the optimum generation. But the fact remains the same constraint in the availability of water still continues. This point along with penalty / cost reduction has been dealt subsequently in the order. 14.2 ENERGY BALANCE AND SALE OF POWER 14.2.1 Under this chapter, Sales, T & D loss, Energy Balance and purchases to be made by WBSEB shall be considered after taking into consideration the net generation of WBSEB. 14.2.2 WBSEB has projected the energy sale of the various categories of HV and EHV consumers on the basis of actual billing data for six months ending September, 2002 and extrapolated the same to get the consumption figures for FY 2003 and FY 2004. Figures for L: & MV consumers have been estimated on sample energy bill data and extrapolated at the historic annual growth rate of consumption. This is not a very scientific method of estimating the sale, but in view of large number of unmetered supplies and defective meters in the system, the Commission has no choice, but to accept the category wise energy sales projected by WBSEB for want of reliable data. While on this issue, it is necessary to sound a note of warning to the effect that unless WBSEB makes a determined and sustained attempt to stop unmetered supply altogether and bring down supply through defective meters to the barest minimum – since some of the total number of installed meters will always be non-functional or dys-functional – the health of WBSEB will never improve really. It is also relevant to bear it in mind that Section 55 of the Electricity Act, 2003 makes it mandatory for a licensee to supply electricity only through installation of correct meters, after the expiry of two years from the appointed date. 14.2.3
The category wise consumption / sale as projected for the year 2002-03
and 2003-04 is given as under :
14.2.4 On the issue of T & D loss, the Commission has already discussed in detail on the present status of T & D loss in the WBSEB system and the method of fixing a reasonable T & D loss in its tariff order for 2002-03. There therefore is no need to repeat the same. The Commission only stipulates that the same rate of reduction in overall T & D loss will be applicable in 2003-04 also. Thus, the overall T & D loss for 2003-04 will be 24.5%.
14.2.6
Based on the above analysis we draw the supply for the year 2003-04
as under:
The cost of unaccounted energy amounting to Rs. 21364.98 lakhs (@ 195.65 P./kwh) has been reduced from Revenue Requirements. 14.2.7
The Commission has considered that purchase of power is to be effected
from various sources keeping in view the merit order principle,
radial load requirement, system constraints, system demand and future
growth etc. The Commission has also taken into consideration the
fact that cheap power of the State should not go outside the region.
After considering all these the Commission approves the following
power purchase plan for the year 2003-04. Any deviation from this
schedule has to be justified by WBSEB while submitting FPPCA claim.
The above power purchase requirement may be modified keeping in view the system load and radial load requirements. 14.2.8 While examining the requirement of purchase of power by WBSEB, it is found that the latter, while giving some details, has not furnished the information regarding the basis of determination of the system demand, the availability of power from its own generation, from WBPDCL, DPL and the relevant CPSUs (in MW and MU) vis-à-vis the Board’s requirements (in MW and MU) and also the power actually purchased by the Board from different sources. Some of the respondents have also raised various points on the Board’s purchase plan, including a point on non-availability of data in this behalf from the Board. The Commission also feels that the Board should make available suitable and sufficient details of its power purchase plan. Such data will help the Commission not only to determine the overall costs, but also the merit order and the economical costs in a realistic manner. Further, the Commission will not accept, on its face value, the assertion made by the Board to the effect that purchase of power for the purpose of trading will be beneficial to the consumers of the Board, too. WBSEB must substantiate this claim with requisite facts and figures yielding full details, data and information in its tariff petition for 2005-06. The Board must also obtain approval from the Commission on the Board’s power purchase agreements. If such lacunae persist, the Commission may not allow any additional cost towards A.B.T. 14.3. FIXED COST 14.3.1 In this part, the Commission is going to examine the relevan factors that determine the fixed cost. Different components of the same are now being analysed one by one. 14.3.2 Employees Cost 2003- 04: The projected total expenditure claimed by WBSEB for this year on this account is Rs. 52238 lakhs which includes totalling mistake of Rs. 1200 lakhs in the total break up of the amount claimed as shown at page 46 of Volume – I. The Net amount, therefore, works out to Rs. 51038 lakhs. To justify their projected expenditure, WBSEB was asked during public hearing to give actual expenditure incurred on employees’ remuneration and benefits during the first 10 months of financial year 2002-03 along the basis of estimation of payments towards terminal benefits and overtime allowances. In reply to above queries, WBSEB expressed their inability in providing figures of actual expenses incurred on account of employees cost as maintenance of their accounts are decentralized in 124 independent accounting units. A number of objectors also raised objections on an allegedly excess amount of expenses on employees cost including overtime allowance, and also pointed out the earlier directions of the Commission wherein the Commission asked WBSEB to control its employees cost including overtime payments. WBSEB justified its expenditure on the basis of their low cost per Kwh and supply mostly in rural and remote areas. Similarly WBSEB justified overtime payment due to emergency break-down beyond normal hours particularly during rainy and festival seasons. WBSEB justified overtime because of shortage of manpower and additional terminal benefits because of retirement of a large number of employees. To be precise, it has not been explained how the increasing number of retiring employees on the one hand and the costs of D.A. and that of terminal benefits on the other are affecting the total amount of employees’ cost on the whole. The details of computation of D.A. and that of cost of terminal benefits could have gone a long way in demystification of the matter under consideration. Be that as it may, the Commission is, after a careful consideration, allowing on adhoc basis, a further mark up of 5% over the sum allowed in this behalf in 2002-03. A 5% increase over the sum of Rs. 46788 lakh leads one to a figure of Rs. 49127 lakh. That is what is admitted on this count in 2003-04. The Commission would like to urge WBSEB strongly to provide detailed and relevant calculation of its requirements, keeping in view simultaneously that there should be some impact of the increasing number of retiring employees on the total pay and allowances of its total number of employees, in its tariff petition for 2005-06. 14.3.3 Operation and Maintenance Expenses: The amount claimed by WBSEB for Operation and Maintenance expenses for the year is Rs. 9405 lakhs of which Rs. 8303 lakhs is for Transmission and Distribution system and the balance amount for Generating station. Board has justified the increase due to reasons that they could not repair and maintain fully in the past due to fund constraints and the assets of Board are of old vintage. However, the objectors have raised points of high cost of repairs and maintenance. The Commission after going through the rival submissions agrees that WBSEB has to have proper maintenance of its generating stations, transmission and distribution system so that quality supply can be given to consumers and allow Rs. 9405 lakhs as claimed by WBSEB towards Operation and Maintenance. 14.3.4 Administration and General Expenses: WBSEB has claimed Rs. 6514 lakhs towards Administration and General Expenses which include expenses on the heads relating to rents, rates and taxes, insurance, security charges, telephone, legal, traveling, vehicle, printing, etc. The Board has justified the increase in expenses on vehicle running and vehicle hiring due to increase in consumer services along with monitoring drive against theft of power, etc. and inflation. Similarly, they have justified increase in legal expenses because of regulatory process. A number of objectors have raised objection against increase in Administration and General expenses and pointed out the sharp increase in the expenses.
14.3.5 Provision for Bad and Doubtful Debt: WBSEB has asked for a provision of Rs. 2137 lakhs towards bad and doubtful debt and the Board has justified the same because of earlier revenue management through manual system and large coverage of area. They also justified the bad debt with reference to total outstanding of sale amounting to Rs. 193300 lakhs as on 31.3.2002. The Board has also described in brief the action being taken by it for speedy collection of dues from the debtors. The outstanding dues as on 31st March 2003, as intimated by the Board in the public hearing, are Rs. 160036 lakhs. This naturally is subject to finalisation of the accounts. Some of the objectors have objected to such provision. The Commission has gone into the rival submissions and seen the position regarding the provision allowed by the Commission in the earlier orders and the provisions written off by the Board. The Commission also noted that the total outstanding amount of debtors is huge and some of it has been continuing from a very long time. The Commission directs the Board to carefully look into the position of debtors and take up immediate action for speedy recovery. The fact that there is no improvement in the situation on management of its outstanding dues, warrants that this inefficiency needs to be dealt with strictly. The Commission therefore once again, allows a sum of Rs.100 lakhs only this year also.
WBSEB has proposed to capitalize expenses (other than interest on borrowings) of Rs. 9215.00 lakhs during the year and has stated that the amount has been worked out as per the norms prescribed in the Electricity (Supply) Accounts Rules, 1985, but has not given any details for working, etc. in this regard to show that the capitalisation of expenses had been done in accordance with the guidelines provided in the Rules. It may be mentioned that the Commission had given certain directions in the earlier order and had pointed out that the capitalisation of the expenses has bearings with the volume of capital construction work as well as the capital expenses incurred during a particular year. Capitalization under discussion cannot be only with reference to the value of capitals of works in progress at the beginning of the year, or the value of work capitalized during the year. It was made clear that the guidelines provided in the Rules are also based on the general commercial principles and that expenses which are revenue in nature have to be identified. Also individual capital construction work are to be capitalized along with value of work and in case identification is not feasible, allocation of such expenses between capital and revenue accounts should be done on any rational basis. WBSEB has failed to follow this basic principle as it appears from the petition, and continuing to follow their earlier practices even when there is a clear direction from the Commission. In the absence of adequate information and proper details, etc., the options before the Commission are either to reject the petition or to assess the amount of expenses to be capitalized. The Commission chooses the second alternative. Now keeping in view the direction of the Commission given in the earlier order, the Commission finds that the expenses to be capitalized work out to Rs. 13300 lakhs which is 9.24% of Rs. 143934 lakhs i.e. the value of capital works projected to be executed during 2003-04.
WBSEB
claimed Rs. 99333 lakhs (net of capitalization) towards interest
and other financing charges with the following break-up:
14.3.8 The projected chargeable amount of interest and finance charges in the Revenue Account is much in excess of actual amount of Rs. 30104 lakhs in the year 2001-02. The incidence of such charges on per unit (Kwh) power sold came to 31.74 paise in that year. As per the projections made such incidence is coming 94.15 paise per unit of power projected to be sold during 2003-04. Such a proposed steep rise in power cost in this respect needs thorough examination before the amount allowable can be decided upon. The different components of the amount claimed are being viewed by us in the following paragraphs. 14.3.9
WBSEB claimed Rs. 89632 lakhs towards interest on outstanding borrowings
which has been estimated to be Rs. 621340 lakhs at the beginning
of the year and is to rise to Rs. 718095 lakhs at the end of the
year after taking into account proposed fresh borrowings of Rs.
105613 lakhs and repayment of Rs. 8858 lakhs. Of the fresh borrowings,
Rs. 93654 lakhs are to come from the State Government and Rs. 11941
lakhs from the PFC. The major part of the borrowings of WBSEB is
from the State Government with the rate of interest varying from
12.75% to 14.5%. The rates of interest on borrowings from other
sources are also mostly in the rate of 11.505 to 16%. Moreover,
the financial Institutions like HUDCO, PFC, REC and some banks have
kept provision for charging penal interest ranging between 2% to
2.75% in case of default in making timely payment of interest and
repayment of borrowings. Borrowings agreement also provides for
allowing some rebate for prompt servicings and that appears hardly
could be availed by WBSEB. As such, the effective rate of interest
on the borrowings of WBSEB is coming high even in this low rate
of interest era. The outstanding borrowings from REC was Rs. 12655
lakhs at the beginning of the year 2002 – 03 which rose to
Rs. 57676 lakhs on re-scheduling the dues from WBSEB by them. This
indicates the factual position of debt servicing by WBSEB. Commission
feels that time has come when WBSEB should make every effort to
pay off the costly borrowings including those from the State Government,
in possible cases, with cheaper rate of borrowing so as to minimize
the impact of interest burden on the cost of their services / power
supply. The Commission would like to be informed of the efforts
being made by them.
14.3.11
In regard to claim for Rs. 53419 lakhs towards interest on fund
for liquidation of dues to Central Public Sector Undertakings under
the securitisation scheme, the fact, as has been stated, is that
total outstanding dues of the Board as on 30.09.2001 to the tune
of Rs. 2513.86 crores has been proposed for issuance of Bonds by
Govt. of West Bengal under securitisation scheme as per recommendation
of an Expert Group for one time settlement of SEB’s due to
CPSUs. The Bonds are to bear interest @ 8.5% per annum. Accordingly
WBSEB claimed interest for the period from October 2001 to 31st
March 2004. 14.3.12
Whether such additional interest charges for non-payment or delayed
payment of the dues of the Central Power Sector Utilities should
be recovered through power tariff is an important issue for consideration.
On the one hand, it is possible to argue that the consumers have
already paid the power purchase costs through the respective years
tariffs in the past and therefore they should not be burdened with
such interest costs again. The Commission also took note that WBSEB
has neither given full details nor justified the reasons which led
to such abnormal situation. Perhaps WBSEB earlier thought that it
is interest free money and payments to supplier can be made at their
will subject of course of funds constraints. The Commission is not
able to understand that why WBSEB has not thought it proper to properly
justify this claim which involves substantial amount. It has been
taken too casual and Commission takes a serious note of the same.
The Commission thought of rejecting the claim in view of the above
reasons but the point is whether ultimately it will be in the interest
of consumers in long run. If entire huge cost, actually incurred,
is disallowed it will affect the financial viability of the Board
and ultimate its services to the consumers. This is a ground reality
and commercial / financial principles that no business should run
on loss. Of course management inefficiency may not be allowed but
it should be for inefficiency if any, committed now and not once
upon a time. 14.3.13 There is, simultaneously, another important aspect to consider from a macro point of view. The scheme of securitization is not something designed locally for WBSEB alone. It is an all India scheme prepared by the Central Government on the recommendations of an Expert Committee for bailing out all the SEBs of different States for reaching on one time settlement of all the dues of all the SEBs to various CPSUs. Putting the SEBs, or their successor bodies on relatively sound financial footing has been one of the prime considerations of the policy makers of the country. If this requirement is not met, the high hopes of eventual marketization and development of power sector – which is also one of the aims of the Electricity Act 2003- may well be affected. Creation of a situation where WBSEB would be forced to miss the bus would definitely not be conducive to the ultimate welfare of the consumers themselves. 14.3.14
Thus, there is a number of factors that favour consideration of
the claim. However, many details of the scheme as applicable to
WBSEB are not available. It is necessary, in order to take a firm
view of the matter, to get information on which are the CPUs the
accumulated dues of which are proposed to be tackled through this
scheme; qualification of the accumulated dues of each with precise
dates indicating the time from which WBSEB has been defaulting,
reasons for default, what have been the terms and conditions of
WBSEB receiving supplies from them; whether any of those terms and
conditions would be relaxed if WBSEB avails itself of the scheme;
if so, to what extent the terms and conditions would be relaxed
and the financial implications of each; what are the fresh terms
and conditions of this scheme as also what is/are the financial
implication(s) of those terms and conditions, and all other details
that are relevant for revealing the true nature of the scheme along
with its implications, including the calculations that explain the
qualifications submitted / to be submitted. The Commission directs
WBSEB to submit all these details along with its next tariff petition,
if necessary, by adding a separate and exclusive chapter in the
petition. 14.3.15 For the present, the Commission do not admit the claims made by WBSEB in this behalf, specially in view of the fact that WBSEB could not confirm the securitised principal amount i.e. Rs. 2513.86 crores as mentioned by them and bonds were not issued. If the Commission is satisfied about the genuineness of the claim in the next tariff petition, a firm view will be taken then. 14.3.16
Finally, the amount we consider for charging in the revenue account
towards interest and finance charges comes as under:
14.3.17 Depreciation: WBSEB has claimed depreciation amounting to Rs. 27927 lakhs and stated to have been worked out in terms of the notification issued by Government of India under the provision of the Electricity (Supply) Act 1948. Some of the objectors have raised observations for not providing adequate details on working out of depreciation and incurrence of capital expenditure. WBSEB has not given any techno-economic justification and other required details for incurrence of huge capital expenditure. The
Commission has observed that in the tariff petition for 2002-03
WBSEB has projected incurrence of capital expenditure of about Rs.
95300 lakhs whereas the capital expenditure on Fixed Assets stated
to have been incurred by them during 2002-03 in the tariff petition
for 2003-04 is only Rs. 53900 lakhs and there is a huge difference
of Rs. 41400 lakhs. In addition, the Board has not given any justification
for incurrence of such huge expenditure particularly when in the
tariff petition 2003-04 they have shown projected incurrence on
capital expenditure on Fixed Assets of about Rs. 102000 lakhs. The
incurrence of capital expenditure should have some basis with techno-economic
justification and the likely benefits not only to the utility but
to the consumers also and Board should have given details and proper
justifications. The incurrence of such huge expenditures affects
interest, depreciation, return, etc. and goes against the stand
of the WBSEB that they have not been able to control the T&D
loss because they could not spent sufficient capital expenses on
the transmission and distribution assets. As the generation capacity
is much limited and such major expenditure, therefore, goes towards
transmission and distribution. It is true that a part of the expenditure
may be there for new lines, but part of the expenditure is being
incurred for strengthening the system. The complete and full details
were not made available even when it was required. In the absence
of adequate details, techno-economic justification and approval
of the Commission for such huge expenditure, the Commission is not
able to express a definitive opinion on the reasonableness, necessity,
etc. on incurrence of such expenditure and whether the interest
of the consumer is safeguarded, etc. The Commission, therefore, enforces a disallowance in depreciation, and admits Rs.20000 lakhs as depreciationin in 2003-04. 14.3.18 Determination of Surplus: The Board has claimed surplus at the rate of 3% on net fixed assets in service at the beginning of the year as per provision of Electricity (Supply) 1948 Act. The Commission has noted the contention of the Board and admits the surplus at this stage at Rs. 6027 lakhs as claimed by the Board but will reduce the same by Rs.450 lakhs on account of capital cost disallowed as mentioned hereunder and finally admits the claim for Rs.5577 lakhs. 14.3.19 Disallowance of Capital Cost and Adjustment of Fixed Charges: In its earlier tariff order, the Commission has disallowed Rs15000 lakhs from the Capital cost towards abnormal cost overrun in the construction of Teesta Canal Project and non-identification of non-functional fixed assets. The completion cost of 67.5 MW Teesta Canal Fall Project, the original sanctioned cost of which was Rs. 8070 lakhs excluding IDC, has been claimed at an estimated cost of about Rs. 75584 lakhs and even now, the capacity utilization of the project is restricted due to non-completion of certain works as has been brought out in the earlier tariff order and earlier part of this order. There is no adequate justification for such abnormal increase in cost and there is, therefore, no need to review the earlier decision of the Commission. In other words, the disallowance of Rs.15000 lakh will continue. 14.3.20 Non-Tariff Income: The Board has projected Rs. 8000 lakhs towards income from metering, billing charges, miscellaneous charges, DPS, etc. They have also projected increase in the charges due to which, they have stated, they will earn Rs. 1500 lakhs. Some of the objectors have raised comments on the miscellaneous income including increase in the charges projected by the Board. The Commission has gone into the rival submissions and noted that the non-tariff income of Rs. 8000 lakhs estimated at existing rate includes a LPS of Rs. 1405 lakhs only. The Commission is not convinced with their low recovery of LPS in view of the huge outstandings against power supply bills that too for considerable time and particularly when Board has contended that they have taken adequate steps for speedy recovery of its dues. The Commission also noted that the outstanding debtors as on 31.03.2003 are Rs.160036 lakhs which is outstanding from various periods for a considerably long time. The Commission finds that the sum of Rs.1405 lakhs representing LPS which the Board proposes to reover is woefully small. It simply must increase. The Commission admits a total non-tariff incomeof Rs.10000 lakhs in 2003-04. 14.3.21 Subsidy: a)
Subsidy from Government: Some of the objectors have raised objection on non-taking of Subsidy into consideration. The Commission after looking into rival submission has noted that the Board has not adequately explained the reasons for not taking subsidy, particularly RE Subsidy as per policy, into account, which they are normally entitled as per the policy as has been stated by them earlier from time to time. The Commission also noted that as per accounts of the Board, the Board has to recover Rs. 125100 lakhs towards approved RE Subsidy of earlier years upto 31.03.2003. The Commission will also like to see the reasons that why this amount cannot be at least adjusted against other payments to the Government including interests, loan repayments and other payments instead of drawing further loans from the Govt. at high rates of interest? However, the Commission may not like to include any amount towards subsidy unless there is a commitment from the Government. b)
It was brought to the notice of the Commission that the Board is
getting some subsidy on account of Singur Haripal Society, as was
pointed out by them in the hearing held on 16th February 2004. It
was alleged by the Society that the said capital subsidy received
on their behalf is being retained by the Board and is not being
passed on to the society. The Board was directed to provide the
details of such subsidy. The Commission noted that no such details
have been provided by the Board nor the amount of subsidy received
by them has been disclosed in the tariff petition. 14.3.22 Trading / Export of Power: With the coming into force of the Electricity Act, 2003 from the 10th of June 2003, trading in power has assumed a new significance. Trading in electricity is now recognized as a distinct and legitimate activity w.e.f. 10th June, 2003. Section 51 of the Act allows distribution licensees to engage in other businesses for an optimum utilisation of its assets. It also appears that apart from export of power outside the region, sale of power to other licensees by the Board in bulk along with other activities caused under the Act as trading would be considered to be a trading activity. WBSEB has been selling power in bulk as per earlier Acts to Licensees and now has commenced trading in power through PTC / NVVN from April 2003. However since the Electricity Act, 2003 has come into force w.e.f. 10.6.2003 but tariff for bulk supply and sale for export outside the region is to be done w.e.f. 1.4.2003, the issue will be dealt in next year order. The Commission was earlier fixing the tariff for Bulk Supply under Tariff Schedule and no tariff has been fixed for export earlier. The Commission noted that the power required for export is included in power purchase but WBSEB has not sought approval of tariff for export which is not correct. The Commission is therefore considering the rates for export only in view of above. The Commission also noted that WBSEB has shown export under peak and off-peak only. Peak rates are considered for peak hours in the State of West Bengal whereas there are two peaks in most of the States and while negotiating the rates the same should be kept in view. Similarly, normal hours sale should not normally be equated with off-peak and correct figures shown. Pending this, as a special case due to the fact that year is already over, we are taking the average purchase rate i.e. 181 P./kwh plus 4 P./kwh to cover including FPPCA if arise in future and fix the rate at 185 P./kwh. The total amount therefore works out to Rs. 54741.50 lakhs and has been reduced from the Revenue Requirements for the year.
On
the basis of our analysis and admission of variable and fixed cost
in earlier chapters we now present the summerised Statement of Revenue
Requirement and average unit cost of power supply as under:
CHAPTER 15: REVENUE REQUIREMENT FOR FINANCIAL YEAR 2004-05 15.1 VARIABLE COST To arrive at the variable cost, i.e. the cost of generation and purchase for the year 2004-05. We proceed with the following analysis. I) Energy Sales for 2004-05 As per filings, the WBSEB estimated their energy sales for this year at 10589 MU with an average growth rate of 6% over that shown for 2003-04 even though there is still a large quantity of unmetered supply and supply through defective meters.
The category wise sales are given in the following table.
WBSEB has also projected export of power to outside region through Power Trading Corporation during 2004-05 to the tune of 2600 MU. In the absence of sufficient reliable data the energy sale data submitted by WBSEB is being relied upon. However, we have also assessed the energy available for sales. ii) T& D Loss WBSEB has projected 30.20 % T & D Loss for the year 2004-05.The issue of T&D Loss was examined in details by the Commission in its tariff orders during 2002-03 after looking into the various submissions made by WBSEB and objections raised by objectors. The Commission has looked into various rival submissions and is of the opinion that on the same logic and following similar arguments put forward in the earlier years, there is no necessity to change the T&D loss for 2004-05 as has been fixed by the Commission at 25%. iii) Generation and Fuel Cost WBSEB meets the requirement of its consumers partly by generating power and by purchasing the balance power from different sources. Own
generation: - The
generation as admitted by Commission for 2004-05 is as below: -
The
Commission has noted the reasons given for low generation from Teesta
Canal Fall Hydel Project. The Commission in its earlier tariff order
expressed displeasure at the high capital cost of the station and
low generation . The Irrigation Dept.Of GOWB is still restricting
the water supply as they are yet to complete all the downstream
canal system. This cannot continue for indefinite period. The estimated
project cost in the tariff should be proportionately reduced as
to its present generation capacity. The
Commission has considered that purchase of power is to be effected
from various sources keeping in view the merit order principle,
radial load requirement, system constraints and system demand. In
order to be able to meet consumers’ peak demand WBSEB will
have to draw power in full from all sources including those of NTPC.
WBSEB has projected a total peak demand of 2785 MW during 2004-05,
which they propose to meet by drawing power from different sources
as follows. WBSEB
(own generation) : 100 MW The projected demand as indicated above does not include the demand of WBSEB, which will be met through radial mode of purchase from DVC at 132/33 KV, DPL at 33/11 KV and DPSC at 11 KV. WBSEB has not given all the relevant details as has been indicated in earlier years order. WBSEB is directed to give all the relevant and full details and documents in the Tariff Petition failing which the petition will be rejected. The
purchase plan for 2004-05 will be as follows.
The above power planning may be modified for radial load requirements and system load requirements of its own consumers. Note:
1. Power purchase shown at serial no. 12 and 13 are in the radial
mode. 15.2 Energy Supply Plan
Based on the above analysis we draw the supply plan for the year
2004-05 as under:
The cost of unaccounted energy amounted to Rs. 21998.19 lakhs @ 198.64 P./kwh has been deducted from the Revenue Requirements. 15.3 FIXED COST 15.3.1 EMPLOYEES’ COST The projected total expenditure claimed by WBSEB for 2004-05 is Rs. 51446 lakhs. This is against a sum of Rs 52238 lakhs initially claimed in 2003-04 (which included a totaling mistake of Rs. 1200 lakh). A number of respondents have objected to what in their opinion is an excessive amount of expenditure on this count, particularly after transfer of bandel and Santaldih stations to WBPDC from 01.04.2001 and an increasing number of employees retiring every year. They also have made critical comments above a huge amount of overtime payment to the employees. In the petition, WBSEB has sought to show how the number of its employees has gone down from 34975 in 2001-02 to 3314 in 2002-03, to 31625 in 2003-04 and further going to be reduced to 29956 in 2004-05. WBSEB has also tried to explain that overtime payments are allowed only to technical staff who are engaged to attend emergency breakdown beyond normal hours particularly during the rainy and festive seasons to minimize periods of interruption and in public interest alone, WBSEB has also submitted the details of employees’ cost for 2002-03 (pre-actuals), 2003-04 (estimated) and 2004-05 (projected). It is found that WBSEB’s projection for 2003-04 given in the tariff petition of that year, was quite wide off the mark. The Commission finds that even a mark up of 5% overall that was allowed in that year, thereby leading to a figure of Rs. 49127 lakh was a little the higher side. Therefore, the Commission decides to repeat that figure of Rs. 49127 lakh as employees’ cost for 2004-05 also. 15.3.2 OPERATION & MAINTENANCE EXPENSES WBSEB has claimed an amount of Rs. 9833 lakh in 2004-05 under this sub heading. It has submitted that it needs to spend more funds on operation and maintenance. This amount is based, as claimed by the Board on 2% of the estimated gross Fixed Assets at the beginning of the year 2004-05. Even though some of the respondents have questioned this projected expenditure for 2004-05, the Commission feels that the Board has really not done it fit on this front in the past and there is a lot of catching up to achieve. The Commission therefore admits the sum of Rs. 9833 lakhs on the item of operation and maintenance in 2004-05. 15.3.3 ADMINISTRATION & GENERAL EXPENSES The Board submitted that it will need a sum of Rs 6847 lakhs in 2004-05 to meet its administration and general expenses. Like in 2003-04, the Board feels that this fund will be necessary to sustain the increased activities on the front of consumer services, revenue monitoring, drive against theft of power etc. Once agin, we admit the sum asked for but would like to see in the next year what progress the Board achieves on these fronts. 15.3.4 PROVISION FOR BAD AND DOUBTFUL DEBTS Under this subhead, an amount of Rs. 816 lakhs has been forecast by the Board. The sundry debtors balance is Rs. 163700 lakh as on 31/03/2003. The Board agrues that only 0.5% of the latter has been conservatively estimated to be charged to revenue account. Many of the respondents have expressed their reservation on this claim and obviously the outstanding dues – notwithstanding the difference in figures between that noted in paragraph 14.3.5 and that being quoted now- are worrisome, to say the least. We reiterate our directions already given in paragraph 14.3.5. The Board must, must urgently take steps for speedy recovery of the outstanding dues, otherwise it will not be able to stake off extremely serious financial problems. The amount on this account is being presently admitted for Rs. 216.00 lakhs. 15.3.5 CAPITALISATION OF EXPENSES WBSEB proposed to capitalize expenses (other than interest on borrowings) of Rs.9158 lakhs. It has been stated that this has been worked out as per the norms prescribed in the Accounts Rules, 1985. But once again, the details of the calculations are not available. Capitalization of expenses has a bearing on the volume of capital construction work as well as capital expenses incurred during a particular year. Obviously the value of capital works at the beginning of a particular year is not the only factor involved. But the calculations not being made available, the Commission accepts the figure of Rs.9159 lakhs this year but directs the petitioner simultaneously that the figures must be furnished in future with necessary calculations supporting the final claim. 15.3.6 INTEREST & FINANCE CHARGES WBSEB
has claimed Rs. 59119 lakhs as interest and financing charges (gross)
out of which Rs. 35385 lakhs is proposed to be charged to the revenue
and balance to be capitalized. The broad breaking of the amount
has been projected as under:
It came to the notice of the Commission from the accounts submitted for 2002-03 (note no. 9 & 10 of the accounts) that the Government of West Bengal has reduced the rate of interest to the Board to 2% with effect from 2001-02. It was further noted that this order of the Government of West Bengal was issued on 9.10.2002. The Commission further noted that neither this letter has been filed by the Board with the Commission, nor brought out the same to the notice of Commission at any time while submitting the clarification or during the hearing and the Board has continued to justify the high rate of interest even during the hearing and some information submitted subsequently for the year 2003-04 which was subsequent to the date of issue of order. A reference was made to the Board to explain the position but again the Board has not been able to come up with any satisfactory reply as to why this material information was not brought to the notice of the Commission appropriately and substantial extra amount was claimed particularly in the petition for 2003-04, as well as excess amounts on this behalf claimed for earlier 2 (two) years. However, it may be placed on record that the Board, while submitting the tariff petition for 2004-05,has mentioned clearly that the rate of interest on Govt. loan upto 2001-02 would be 2% pa. Nevertheless the point remain that the Board has not mentioned any thing in the tariff petition for 2003-04 or while submitting the information for the tariff petition for the financial year 2003-04 at appropriate time. This came to the notice of the Commission from the notes to the accounts for 2002-03. Based on the information furnished by the Board with tariff petition for 2004-05, the total amount of interest chargeable to revenue for the financial year 2003-04 works out to Rs. 42194 lakhs against their earlier claim of Rs. 99333 lakhs. This does not include the impact on the capitalization of the assets, as a major part of interest and financing is capitalized. The Commission has also noted that adequate details have not been given by the WBSEB to judge the reasons of their borrowings, how the amounts borrowed have been utilized, purpose of borrowings, the reasons of non-repayment of loans on due dates, if any, the loss/penalty paid for delay and/or rebate earned for timely payment, etc. The purpose /utilization of loan has also not been shown properly to enable the Commission to assess the requirements of loan, the liability of the loan and the calculation of interest etc. The Commission also noted that though the fresh loans are being taken from the Government and others, this may perhaps be due to reasons that the Board is not able to repay the loan on the due dates and / or make the payment of interest which are further coming back by way of fresh loans. The Commission also noted that the Government has to pay substantial amount to the Board in the shape of Rural Subsidy for the year 2002-03 and subsequent years. Apart from this, the Board has to recover substantial amounts from Government towards supply of energy for which no details have been provided by the Board inspite of the fact that the same was desired by the Commission. The Commission is not able to understand and no reasons have been given by the Board explaining why the adjustment against this recovery has not been made against the interest/instalment of loans as well as other dues payable to the Government instead of drawl of fresh loans at very high rate of interest from the said debtor i.e. Government. The Commission has also noted that though Board has claimed interest on fund for liquidation of amount to Central Public Sector Undertakings under the securitisation scheme and the amount shown in the petition was Rs. 53419 lakhs which has been subsequently shown as Rs. 39326 lakhs while giving information for tariff petition for 2004-05. The Board has also not given any justification that why this amount of Rs. 185062 lakhs has been necessitated for securitisation and why the Board has not been able to pay CPSUs particularly when the due amounts as per tariff was to be collected from the consumers and tariff was revised periodically. The Commission appreciates that there may be some amount which may become due consequent upon tariff revision to be recovered from the consumer for 2002-03 due to delay in issuance of the tariff order, the amount of securitisation may relates to the periods much earlier than that. It
is, therefore, an important question how much of such additional
interest on non-payment and late payment for supply of power can
be allowed to be recovered through tariff. Commission’s view
in regard to the admissibility of interest on account of securitisation
of power supply dues have been recorded in earlier chapter. and
issued certain directives to the Board for coming up with the requisite
information before the final view can be taken in this regard while
fixing Tariff for 2005-06. In view of the state government order
reducing rate of interest to 2% with effect from the financial year
2001-02 and also due to stated re-scheduling of loans from other
sources, the Board submitted revised statements for 2002-03 and
2003-04 showing the impact of such reduction in rates of interest
and re-scheduling loan. From their submission, it comes out that
a total amount of Rs. 63795.51 lakhs that has been admitted by the
Commission is excess towards interest charges during 2001-02, 2002-03
and 2003-04. The total amount so worked out is as per statement
hereunder:
It
is this sum (say Rs. 63796 lakhs) is adjustable against Interest
in 2004-05.We, however, make it clear that the adjustable amount
worked out as above is provisional and subject to changes depending
on the review of Boards clarification to various points raised by
us. We direct the Board to come up with proper clarification while
submitting their Tariff Petition for the year 2005-06. Any positive
or negative adjustments in this regard will be carried out at that
time. We also point out here that changes in the interest burden
are definitely to effect the capitalized value of the Assets and
consequently the return allowable to the Board. This point will
also be considered while fixing the Board’s power tariff in
future.
15.3.7 DEPRECIATION WBSEB has claimed depreciation amounting to RS. 31102 lakhs in 2004-05 against a sum of Rs. 27927 in 2003-04 (the latter being put at Rs. 24659 lakh now). A number of respondents have objected to the proposed depreciation for not providing adequate details and for not giving sufficient justification for incurring the projected expenditure on capital works. The Commission finds that for two immediate past years, the actual capital expenditures have eventually fallen short of the projected ones by significant margins. For example in 2002-03, the projection was for Rs. 95300 lakhs while the actual turned out to be Rs. 53900 lakh. Again, in 2003-04, the projected figure was Rs. 10200 lakh. But in the current tariff petition,this figure has turned out to be Rs. 68000 lakh only. That apart, the incurrence of capital expenditures should be based on sound techno –economic justification and the likely benefits of such expenditures both to the utility and also to its consumers. But such justifications have not been furnished by WBSEB. Since the Board’s generation now is very limited, the major part should go to transmission and distribution and therefore there should be some noticeable improvements in the latter, not much of which have been in evidence. In the absence of these details and justifications, the Commission can only take a tentative view. At the moment, therefore the Commission a depreciation of Rs. 27467 lakhs which is in the same ratio as has the revised estimate for 2003-04.
The Board has claimed surplus at the rate of 3% on ent fixed assets in servie at the beginning of the year. This has amounted to Rs. 6470 lakh. The Commission has noted the submissions of the Board in this behalf and admits the surplus at this stage at Rs. 6470 lakh as claimed, but will reduce the same by Rs. 450 lakh on account of capital cost disallowed as mentioned hereunder and finally admitted for Rs. 6020 lakhs.
15.3.10 NON- TARIFF INCOME The Board has projected a sum of Rs 9300 l;akh towards income from metering, billing charges, mis. Charges DPS etc. The Board has also projected increase in the charges due to which it will earn Rs. 1500 lakh more.
These claims also have not gone unchallenged, the critics having
commented adversely on these projections. The Commission has considered
the rival submissions and on analyzing them, finds that the projected
non tariff income at existing rate includes a late payment surcharge
of Rs. 2500 l;akh. The latter was projected earlier for 2004-05
but is now shown as Rs. 2380 lakh in this tariff petition. The Commission
finds that such low recovery of LPS is not in the best interest
of WBSEB itself. The latter simply must exert itself more and more
to recover more and more of its outstanding dues, including LPS. 15.3.11
SUBSIDY FROM GOVERNMENT a)
No amount has been proposed by WBSEB towards subsidy from the Govt.
of WB.
15.3.12 TRADING /EXPORT OF POWER The Commission is also aware that no loss from trading activity can be passed to its own consumers whereas the profit from the same is to be shared as per the directions of the Commission. The Commission is also aware that fixing trading margin and wheeling charges is a complex issue as there is substantial surplus power during off-peak and sometime shortage in peak. Only export of power during off-peak throughout the year may not be practical and the Board has to compete with other parties which has such surplus power. The Commission is also aware that there is substantial variations between power requirements during peak and off-peak and within that period also. The Load Management is an important issue which has to be addressed also through tariff signals. However load management has its own limitations due to consumer mix etc. The Commission is also aware that it cannot fix very high rates for licensees and/or for export as either the licensees can go for purchase from alternative cheaper sources and in case of export the Board will not be able to compete. This may ultimately partly hurt the consumers as long terms contracts cannot be terminated immediately without looking into long term financial and power availability scenario. Similarly curtailing or closing of captive power stations will be more detrimental to all including consumers. In the considered opinion of the Commission, it is better to pay some premium so that power is continued to be available with increased demand in future as load is bound to grow. The Commission has already directed WBSEB to file full data, information, figures, documents etc. on its purchase planning etc. in the earlier part of the order and accordingly the issue will be examined in much more depth in the next Tariff Petition for 2005-06.
15.3.13 REVENUE REQUIREMENT AND AVERAGE COST OF SUPPLY FOR 2004-05.
* Amount of WBSEB relates to revenue from export of Power outside the region. ** Sales shown by WBSEB includes power to be exported and traded 15.3.14 The Commission observed that the Board has not been giving full documents, information, data and figures etc. as has been brought out in the earlier order and also quoted in various chapters. The Commission has thought of imposing suitable penalty etc. and / or to reject the petiton. However, it was felt that rejection of the petition will neither serve the consumers nor the Board at this stage. Imposition of minor penalty will not also help. The Commission therefore has decided that as an adhoc measure an amount equal to 10% of the gross total of fixed costs including return of the Revenue Requirement of 2004-05 shall be withheld which may be released at the sole discretion of the Commission in one or suitable installments after it is satisfied that the Board has started taking adequate steps in the right directions in this regard. The Commission therefore has withheld an amount of Rs. 37298 lakhs provisionally from the Revenue Requirement shortfall of the earlier years of 2002-03 and 2003-04.
15.3.15 The amounts to be recovered by WBSEB through the tariff
for 2004-05 including the amounts carried over from the earlier
two years and average cost of supply for 2004-05 shall be as under:
CHAPTER – 16 : TARIFF 16.1 In earlier part of this order, we have analysed various issues relevant to determination of revenue requirements for the years 2002-03, 2003-04 and 2004-05 for WBSEB. As per the tariff order applicable to WBSEB for the year 2001-02, WBSEB’s tariff was Rs.2.70 per Kwh. The Commission also passed an interim order in 2003-04 allowing in favour of WBSEB, an ad hoc increase of 52 paise in WBSEB’s tariff with effect from 01.04.2003. The Commission also passed an interim order on 31.03.2004 which allowed the status quo as was prevailing on 31.03.2004 to be maintained. 16.2.1 The Commission now retains and fixes the tariff for 2002-03 as was approved by the Commission for 2001-02 for all categories of consumers. The shortfall between the admissible revenue requirements for 2002-03 and the tariff realizable is carried over to 2004-05. 16.2.2 Similarly, the Commission retains and fixes the tariff for 2003-04 as was approved by the Commission for 2001-02 plus 52 paise/Kwh as was awarded by the Commission through the interim order for 2003-04 and made effective from 01.04.2004. The shortfall between the admissible revenue requiremens for that year and the tariff realizable is carried over to 2004-05. 16.2.3 There will be the need to give effect to certain refunds/recoveries to/from individual consumers. Since the arrears if any in this behalf have accumulated only for 3 months of the current financial year, it is expected that the quantum involved will not be of a high order. The refunds/recoveries may start from the month of August 2004 and the process should be concluded within a period of 12 months thereafter an should be effected in 12 equal monthly instalments. 16.2.4 If any refund is to be made to any consumer because of this tariff order, the refund is to be made after adjustment with any admissible outstanding arrear and in proportion to all persons entitled to refund/receipt from the sums realized from the arrears.
b) The payment for other irrigation unmetered supply shall be made in advance for every quarter for which a rebate of 5% shall be made.
(ii) There will be surcharges towards load factor on HT industrial and HT commercial consumers if the load factor is less than 25%. It shall be 30 paise/Kwh and applicable only on the shortfall of the consumption from 25% level. (iii) The peak period energy charge will be 36% more than the normal energy charge indicated in tariff schedule for HV supply while off peak rate will be less by 30% in the case of TOD tariff applicable to high voltage industrial consumers. WBSEB should also introduce TOD tariff for HT commercial consumers on optional basis within six months from the date of this order. The peak period will be between 5.00 P.M upto 10.00 P.M each day whereas off peak period will be 10.00 P.M upto 6.00 A.M and normal period will be 6.00 A.M to 5.00 P.M. WBSEB should introduce TOD tariff for HT public utility service on optional basis within six months from the date of this order. (iv) The demand charge on HT industrial shall remain unchanged. Demand charge for any month shall be based on maximum KVA demand recorded between 6.00 A.M and 10.00 P.M of the following day or 75% of the contract demand whichever is higher unless the demand itself has been brought/re-sanctioned downward. In such a case demand charge shall be levied with reference to revised demand. In case KVA demand cannot be determined but Kw demand is determined, then the demand charge rate in KVA is to be converted appropriately. The power factor to be taken will be 0.85. (v) The demand charge shall not be payable by the consumer for the period when the laod of the consumers is totally shed / interrupted for fault of WBSEB or its system. This will also not be applicable where force majeure applies. This is without prejudice to any other compensation if he is entitled to the same as per any Act or The Regulations made under the Electricity Act, 2003. (vi) The minium charges excluding meter rent, taxes/levies etc. and arreas will be as under:-
(vii)
For high voltage industrial supply, the rebate for 33 KV and 66
KV supply will be 4% of the energy charge mentioned above and rebate
for 132 KV and above supply will be 8%. 16.4.1 Delayed payment surcharge shall be 1.25% per month and / or prorated for part thereof for all consumers for delaying payment beyond due date. However, where the payments are delayed by more than 3 months from the due date of payment, delayed payment surcharge shall be increased to 1.5% per month for next 3 months of delay and thereafter shall be 2% per month. This is without prejudice to the other provisions of the Act and Regulations made thereunder. 16.4.2
The drawal of power more than the sanctioned contract demand will
attract the following additional charges as may be applicable where
meters record demand in KW/KVA for different periods and / or consumption
in different periods.
16.5 TEMPORARY SUPPLY The rate of temporary supply shall be 8% above the applicable rate of supply for the respective applicable category of supply (class of consumers), but on the basis of the highest rate of such class of consumers. In case there s no appropriate rate tariff, temporary supply shall be charged @ Rs.4.50 per Kwh. The basis of calculation for temporary supply shall be as per existing practice. 16.6 The statutory levies for electricity duty or any other taxes, duties etc. imposed by competent authorities shall be extra. The above rates shall be exclusive of fuel and power purchase cost adjustment. 16.7 This tariff shall be applicable from the billing month of / pertaining to April, 2004 and onwards till 31st March, 2005 or as amended / extended by the Commission from time to time as it may deem fit, subject to and in terms of the provisions of the Act and Regulations made thereunder. 16.8 In addition to the tariff already fixed, WBSEB would further be entitled to added sums towards the enhanced cost of fuel and power purchase after the date of effect of this tariff structure. A formula for fuel and power purchase cost is given at Annexure B. It is clarified that the amount to be reimbursed in terms of this formula shall not exceed in any case the additional amount proportionately incurred on fuel cost and power purchase cost based on various normative parameters and limits already laid down and within the direction of the Commission. It is also made clear that for reimbursement of any additional fuel cost, only the basic fuel cost plus applicable taxes and levies plus railway freight, transportation cost wherever it is required will be considered. 16.9 Any proposal for adjustment shall be subject to the approval of the Commission and once the proposal is approved, it should be reflected in the consumer’s bill in a separate entry for their information. At the end of each adjustment period, WBSEB shall calculate the FPPCA as per the formula given at Annexure B, and based on the approved parameters, cost and consumption. The complete details along with the cost data, quantitative details and relevant information / document duly certified for the subject matter revisions and duly audited for the whole year for the March revision should be submitted to the Commission for approval within four months of the close of the period or within two months from the date of order whichever is later. In case of any delay without adequate and justified reasons, the Commission may disallow wholly or partially the increase in FPPCA or in case of refund suitable compensation by way of interest to the consumers. 16.10 Recovery of Arrears/Refund – The Commission has tried to avoid the refund/recovery of arrears pertaining to the earlier years due to this order as the revised tariff shall be applicable from 1st April,2004. However, there may be some arrear/refund becoming due by or to certain consumers for implementation of the tariff for 2004-05 as WBSEB will take sometime to implement this order. The Commission feels that keeping in view the large number of consumers there should be a breathing time for the WBSEB to adjust its billing system and raise the bills based on this tariff order. The Commission, therefore, directs that the revised tariff based on the present order is to be made effective from the billing month of August, 2004. Till August, 2004, the existing manner of realization / refund is to continue and be spread over of 12 months in equated equal monthly instalments. It is further made clear that the refund in terms of this order for 2004-05 is to be made only after adjusting the previous arrears, if any, due from that consumer and be made proportionately to all persons entitled to refund/receipts from the sums realized from the arrears. The Commission further directs that no interest shall be paid to or by the WBSEB for any realization/refund/adjustment.
16.12 It is open to the State Government to grant any subsidy to any consumer or any class of consumer in the tariff determined by the Commission. If at all any such subsidy under the provisions of the Act is intimated to the WBSEB and to the Commission by the Govt. of W.B with clear indication of the consumer or class of consumers to be subsidized and the amount of the subsidy is paid in advance as has been specified, the tariff of such consumer and/or the class of consumers shall be deemed to have been reduced accordingly as has been indicated by the Government. However, such direction of the Government shall not be operative if the payment is not made in accordance with the provisions of the Act and Regulations made thereunder and the tariff as fixed by the Commission shall be applicable.
Annexure - A Tariff Schedule Low and Medium Voltage Consumers
Non-domestic/commercial
Industrial
HV and EHV bulk Consumer
FORMULA FOR FUEL AND POWER PURCHASE COST ADJUSTMENT (FPPCA) a) Fuel and power purchase cost adjustment charge per unit for energy sold during adjustment period shall be in terms of the following formula:
(FC
+ PPC) – CD ± A fc
+ ppc PPC (Rs.): Total cost incurred including the cost for fuel for power purchase from different sources for actual level of sales during the adjustment period. CD: Cost disallowed by the Commission as having been incurred in breach of its economic generation / purchase obligation, or of order / direction of the Commission, if any, or for any other reason during the adjustment period and adjusted corresponding to actual level of sales. A (Rs.): Adjustment, if any, to be made in the current period to account for any excess / shortfall in recovery of fuel and power purchase cost in the past adjustment period based on directions / orders of the Commission. Gown (KWH): Total energy sent out from utility’s generating stations during the adjustment period based on normative or actual auxiliary consumption whichever is less, corresponding to actual level of sales. Eimp (KWH): Total energy purchased at the sent out bus from different sources based on approved procurement plans during the adjustment period corresponding to actual level of sales. L (%): Normative T & D loss fixed by the Commission. Q (KWH): Quantity of temporary supply sold during the adjustment period. fc: Fuel cost of own generation as allowed by the Commission in the tariff order corresponding ot relevant adjustment period. ppc: Power purchase cost allowed by the Commission for the relevant adjustment period in the tariff order. gown: Sent out own generation as admitted in the tariff order by the Commission corresponding to the adjustment period. eimp: Power purchase at sent out bus as admitted by the Commission in the tariff order corresponding to the adjustment period
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