BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR

Transcription

1 BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR CASE NO. Filing of Petition for True Up of & Determination of Tariff for FY Under GERC MYT Regulations 2016 and Section 62 of the Electricity Act, Filed by:- Gujarat Energy Transmission Corporation Limited Regd. Office: Vidyut Bhavan, Race Course Circle, Vadodara

2 BEFORE THE GUJARAT ELECTRICITY REGULATORY COMMISSION GANDHINAGAR Filing No: Case No: IN THE MATTER OF AND Filing of Petition for True Up of and Determination of Tariff for FY for GETCO under GERC MYT Regulations 2016 and Section 62 of the Electricity Act, IN THE MATTER OF Gujarat Energy Transmission Corporation Limited, Sardar Patel Vidyut Bhavan, Race Course, Vadodara PETITIONER THE PETITIONER ABOVE NAMED RESPECTFULLY SUBMITS Gujarat Energy Transmission Corporation Limited Page 2

3 TABLE OF CONTENTS SECTION 1. INTRODUCTION PREAMBLE INTRODUCTION MULTI-YEAR TARIFF REGULATIONS:... 7 SECTION 2. EXECUTIVE SUMMARY PREAMBLE TRUE UP FOR NET RECOVERY TRANSMISSION TARIFF FOR FY SECTION 3. TRUE UP OF PREAMBLE PRINCIPLES FOR TRUE UP FOR EXISTING CAPACITY OF GETCO IN CAPITAL EXPENDITURE FOR FUNDING OF CAPEX ADDITION TO TRANSMISSION LINES AND SUBSTATIONS AVAILABILITY OF TRANSMISSION SYSTEM TRANSMISSION LOSSES NETWORK OUTAGES & FAULTS LOADING OF TRANSMISSION SYSTEM ANNUAL FIXED COST FOR CATEGORIZATION OF HEADS OF EXPENSES OPERATION & MAINTENANCE EXPENDITURE FOR DEPRECIATION FOR INTEREST & FINANCE CHARGES FOR RETURN ON EQUITY FOR INTEREST ON WORKING CAPITAL FOR INCOME TAX FOR CONTRIBUTION TO CONTINGENCY RESERVE FOR INCENTIVE ON TRANSMISSION AVAILABILITY REVENUE FROM OTHER INCOME AGGREGATE REVENUE REQUIREMENT FOR SHARING OF GAINS & LOSSES REVENUE GAP FOR DETERMINATION OF TRANSMISSION TARIFF FOR FY REACTIVE ENERGY CHARGES FOR SOLAR ENERGY PROJECTS SECTION 4. COMPLIANCE OF DIRECTIVES PREAMBLE COMPLIANCE OF DIRECTIVES SECTION 5. PRAYER ANNEXURE A: REPORT ON TRANSMISSION PLANNING TO AVOID TRANSMISSION CONSTRAINTS IN GETCO SYSTEM ANNEXURE B: 2ND QUARTER (FY ) REPORT ON LOADING OF SUBSTATION. 51 TARIFF FILING FORMATS Gujarat Energy Transmission Corporation Limited Page 3

4 LIST OF TABLES Table 1 : True up for... 8 Table 2 : Summary of Controllable & Uncontrollable factors... 9 Table 3 : Net Recovery for Table 4: ARR for FY Table 5 : Transmission tariff for FY Table 6 : Existing Capacity of GETCO in Table 7 : Capital expenditure during Table 8 : Funding of CAPEX Table 9 : Network addition of GETCO during Table 10 : Transmission losses of GETCO for Table 11 : Network outages & faults for GETCO for Table 12 : Summary of loading of transmission system for Table 13 : Transmission lines & No. of bays for Table 14 : O&M cost (Normative / Actuals) for Table 15 : Net O&M cost (As per audited accounts) for Table 16 : Gains/ (losses) from O&M expenses Table 17 : Depreciation for Table 18 : Gain/ (losses) from Depreciation Table 19 : Interest & Finance charges for Table 20 : Gains/ (losses) from Interest & finance charges Table 21 : Return on Equity for Table 22 : Gains/ (losses) from Return on Equity Table 23 : Interest on working capital for Table 24 : Gains/ (losses) on Interest on working capital Table 25 : Gains/ (losses) on Income Tax Table 26 : Gains/ (losses) from Contingency Reserves Table 27 : Incentive for higher availability Table 28 : Gains/ (losses) on Incentive Table 29 : Revenue from other income Table 30 : Other income for Table 31 : Aggregate revenue requirement for Table 32 : Net gains/ (losses) for Table 33 : Revenue gap for Table 34: ARR for FY Table 35: Projected loading in MW for FY Table 36 : Transmission tariff for FY Gujarat Energy Transmission Corporation Limited Page 4

5 ABBREVIATIONS 1. A&G Administrative & General 2. AC Alternate Current 3. ARR Aggregate Revenue Requirement 4. CAPEX Capital Expenditure 5. Ckt. km Circuit Kilometer 6. FY Financial Year 7. GEB Gujarat Electricity Board 8. GERC Gujarat Electricity Regulatory Commission 9. GETCO Gujarat Energy Transmission Corporation Limited 10. GoG Government of Gujarat 11. GSECL Gujarat State Electricity Corporation Limited 12. GUVNL Gujarat Urja Vikas Nigam Limited 13. HVDC High Voltage Direct Current 14. KV Kilo Volt 15. MVA Mega Volt Ampere 16. MW Mega Watt 17. MYT Multi Year Tariff 18. O&M Operation & Maintenance 19. R&M Renovation & Modernization 20. S/s Sub Station Gujarat Energy Transmission Corporation Limited Page 5

6 SECTION 1. INTRODUCTION 1.1. PREAMBLE This section presents the background and reasons for filing of this Petition INTRODUCTION The Government of Gujarat (hereinafter referred to as GoG ) notified the Gujarat Electricity Industry (Reorganization and Regulation) Act 2003 (hereinafter called as Act ) in May 2003 for the reorganization of the entire power sector in the State of Gujarat Pursuant to the above, erstwhile GEB was divided into seven different entities where in all its transmission related assets were transferred to the newly created entity Gujarat Energy Transmission Corporation Ltd (hereinafter referred as GETCO ) As per Government of Gujarat s notification no GHU GEB K, GETCO has been notified as the State Transmission Utility with effect from 1 st June The Gujarat Electricity Regulatory Commission (hereinafter referred to as GERC or the Commission ), is an independent statutory body constituted under the provisions of the Electricity Regulatory Commissions (ERC) Act, 1998 and is currently under purview of the Electricity Act, GERC is vested with the authority of regulating the power sector in the State inter alia including determination of Tariff for electricity consumers Hon ble Commission notified the Gujarat Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2011 ( GERC MYT Regulations, 2011 ). Based on the petition filed by GETCO, the Hon ble Commission issued MYT order on 31 st March, 2011 for determining the ARR for the Second Control Period i.e. FY to FY in line with provisions outlined in the GERC (MYT) Regulations, Further, the Hon ble Commission issued order for mid-term review of Business plan dated 29 th April, 2014 for modification of the ARR for the remaining year of the control period for GETCO i.e. for FY to FY GERC order dated 02 nd December, 2015 on the Suo-Motu Petition No. 1534/2015 states the following: We decide that the approved ARR of FY of the licensees / generating companies concerned be considered as provisional ARR of the licensees / generating companies for. We also decide that the licensees / generating companies shall file the ARR for FY based on the MYT Regulations for to FY and the true up for the same shall also be governed as per the new MYT Regulations Hon ble Commission notified the Gujarat Electricity Regulatory Commission (Multi- Year Tariff) Regulations, 2016 ( GERC MYT Regulations, 2016 ) on 29 th March 2016 and shall be applicable for determination of tariff in all cases covered under the Gujarat Energy Transmission Corporation Limited Page 6

7 regulations from 1 st April, 2016 onwards. Based on these Regulations, the Commission issued the Multi-Year Tariff Order dated 31 st March, 2017 in Petition No of 2016 wherein Truing up of ARR for FY and determination of final ARR of and approval of Multi-Year ARR for the Third Control Period to FY was carried out MULTI-YEAR TARIFF REGULATIONS: The key provisions of the Multi-Year Tariff Regulations, 2016 is reproduced below: Section 3.1 of the GERC MYT Regulations, 2016: 3.1: The Commission shall determine tariff within the Multi-Year Tariff framework, for all matters for which the Commission has jurisdiction under the Act, including in the following cases: i. Supply of electricity by a Generating Company to a Distribution Licensee.. ii. Intra-State transmission of electricity; iii. SLDC Fees and Charges; iv. Intra-State Wheeling of electricity; v. Retail supply of electricity Section 17 of the GERC MYT Regulations, 2016: 17.2 The filing for the Control Period under these Regulations shall be as under: b) From the second year of the Control Period and onwards, the Petition shall comprise of: i. Truing Up for and onwards to be carried out under Gujarat Electricity Regulatory Commission (Multi-Year Tariff) Regulations, 2016; ii. Revenue from the sale of power at existing tariffs and charges for the ensuing year (viz. FY ); iii. Revenue gap or revenue surplus for the ensuing year (viz. FY ) calculated based on Aggregate Revenue Requirement approved in the MYT Order and truing up for the previous year; iv. Application for determination of tariff for the ensuing year (viz. FY ) Under section 62 of the Electricity Act, 2003 and GERC MYT Regulations, 2016, GETCO is filing its Petition for True Up for and Determination of Tariff for FY to the Hon ble Commission for approval. Gujarat Energy Transmission Corporation Limited Page 7

8 SECTION 2. EXECUTIVE SUMMARY 2.1. PREAMBLE This section highlights the summary of Petition for True Up for and Determination of Tariff for FY TRUE UP FOR GETCO has worked out its Aggregate Revenue Requirement (ARR) for as a part of the True Up for. GETCO has presented the actual cost components based on audited annual accounts for The detailed comparison of various cost components with the values approved by Sr. No. the Hon ble Commission has been presented in Chapter of True up of. A summary of the proposed ARR for Truing-up of compared with the approved Final ARR for in Multi-Year Tariff Order dated 31 st March, 2017 is presented in the table given below. Table 1 : True up for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 Operation & Maintenance Expenses 1, , (14.04) 2 Depreciation (20.88) 3 Interest & Finance Charges Interest on Working Capital (0.07) 5 Return on Equity (3.64) 6 Contingency Reserve Total Fixed Costs 3, , Less: Expenses Capitalised (15.62) 8 Add: Income Tax Total Transmission Charges 3, , Less: Other Income Aggregate Revenue Requirement 3, , Add: Incentive for target availability (27.43) 13 Total Aggregate Revenue Requirement 3, , In line with the provisions of the GERC MYT Regulations, 2016, GETCO has computed the gains and losses on account of controllable and uncontrollable parameters and its proposed sharing mechanism. Summary of the deviation allocation to Controllable & Uncontrollable factors is outlined as per the table below: Gujarat Energy Transmission Corporation Limited Page 8

9 Sr. No. Petition for True Up for and Determination of Tariff for FY Table 2 : Summary of Controllable & Uncontrollable factors Particulars (Approved) (Normative/ Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Operation & Maintenance Expenses 1, , (4.76) (9.28) 2 Depreciation (20.88) 3 Interest & Finance Charges Interest on Working Capital (0.07) 5 Return on Equity (3.64) 6 Contingency Reserve ARR (1 to 6) 3, , (4.76) Less : Expense Capitalised (15.62) 9 Less : Other Income Add: incentive for target availibility (27.43) 11 Add: Income Tax Total ARR ( ) 3, , (4.76) Net Gains / Losses on account of Controllable/ Uncontrollable factor (4.76) Gain/ (Loss) on account of Controllable factor to be passed on to Consumer (1/3 x Sr. No. 13) (1.59) 15 Gain/(Loss) on account of Uncontrollable factor to be passed on to Consumer The net revenue gap recoverable from the Open Access Beneficiaries has been computed and the same would be recovered through the annual transmission charges in the FY NET RECOVERY It is submitted that GETCO has recovered the provisional ARR for approved vide Order dated 31 st March, 2016 in Petition No of 2016 (which was same as the ARR of FY approved by the Commission). Subsequently, the Commission approved the final ARR for GETCO for vide Order dated 31 st March, 2017 in Petition No of Due to this, there is shortfall in the recovery of approved ARR for which is computed in this Petition and sought to be recovered through revised ARR for FY Net recovery of GETCO for the is as per the table given below. The net recovery will be adjusted in the tariff determination for FY ; Gujarat Energy Transmission Corporation Limited Page 9

10 Table 3 : Net Recovery for Rs. Crores Sr. No. Particulars Amount 1 Provisional approved ARR for vide Order dated 31st March, 2016 in 2, Petition No of A 2 Final approved ARR of in MYT Order dated 31st March, 2017 in Petition No. 3, of B 3 Under-recovery of ARR for (A-B) (285.59) 4 Add: Impact of consequential order passed by Commission on and pursuant to APTEL Judgment in Appeal No. 201 of Gain / (Loss) on account of Uncontrollable factor to be passed on to Beneficiaries for FY Gain / (Loss) on account of Controllable factor to be passed on to Beneficiaries (1/3rd of Total Gain / (Loss) for 7 Total Gain/ (Loss) of the true up to be addresesd in the determination of tariff for FY ( ) (10.99) (1.59) (264.90) GETCO requests the Hon ble Commission to approve the True-up for and allow it to pass on the (gap)/surplus on the approved tariff for FY TRANSMISSION TARIFF FOR FY In accordance with provisions of the GERC MYT Regulations, 2016, ARR for FY as determined in Tariff Order dated 31 st March, 2017 is as follows: Table 4: Approved ARR for FY Rs. Crores Sr. No. Particulars FY (Approved) 1 Operation & Maintenance Expenses 1, Depreciation 1, Interest & Finance Charges Interest on Working Capital Return on Equity Contingency Reserve - 7 Total Fixed Costs Add: Provision for Tax Less: Expenses Capitalised Total Transmission Charges 4, Less: Other Income Add: Incentive for target availability - 13 Aggregate Revenue Requirement 3, GETCO has calculated the Transmission tariff for FY by adding net recovery for in the approved ARR for FY as mentioned above. Further, the MW allocation has been taken based on the projected loading of the transmission system for the FY The Transmission tariff of GETCO for FY after applying the gap of is as follows; Gujarat Energy Transmission Corporation Limited Page 10

11 Table 5 : Transmission tariff for FY Rs. Crores Sr. No. Particulars FY Aggregate Revenue Requirement approved in Tariff Order for FY , Add revenue Gap / (Surplus) for for FY computed in this petition ARR after considering Gaps of true-up for FY (1+2) 4, Total MW allocation 25,728 5 Transmission tariff Rs/ MW/ day 4, Recovery of Short-term Transmission Charges: As per sharing of inter-state transmission charges and losses Regulations 2010 and its amendments notified by the Hon ble CERC, for all types of short-term transaction, transmission charges are payable on per kwh basis i.e. transmission charges are applied on transaction through power exchange/ collective or bilateral. However, Hon ble Commission in the Order dated 31 st March, 2017 has allowed recovery of transmission charges on per kwh basis for power exchange/ collective short-term transaction and per MW/day basis for bilateral short-term transaction. This is leading to different treatment for two transactions done under short-term open access. To make the recovery of short-term transaction charges in line with CERC Regulations, it is proposed to allow recovery of transmission charges on per kwh basis for all types of short-term transactions irrespective of whether short-term transaction is done through power exchange or under bilateral arrangement GETCO has calculated the revised ARR for FY as Rs. 4, Crore. In MYT Order dated 31 st March, 2017, The Hon ble Commission has decided the methodology for working of short-term transmission charges on per kwh basis and worked out short-term charges for FY Considering the same methodology as adopted by the Hon ble Commission in the MYT Order dated 31 st March, 2017, GETCO has considered the Energy input of 89,632 MUs of Transmission System as per energy accounting of SLDC corresponding to Transmission Capacity of 21,547 MW during. Based on the actuals of the total estimated wheeled units during FY works out as 107,023 MUs on proportionate basis considering the Transmission Loading Capacity of 25,728 MW during FY As per the above methodology, transmission charges payable in the case of all types of short-term transactions works out to; TC (Rs/kWh) = Rs. 4, Crore/ 107,023 Mus = Ps./ kwh Gujarat Energy Transmission Corporation Limited Page 11

12 SECTION 3. TRUE UP OF 3.1. PREAMBLE This section outlines performance of GETCO for. In line with the provisions of the GERC MYT Regulations, 2016, GETCO hereby submits the True up Petition comparing the actual performance of GETCO during with the forecast approved by the Hon ble Commission vide Multi-Year Tariff Order dated 31 st March, PRINCIPLES FOR TRUE UP FOR As per GERC MYT Regulations, 2016, the Hon ble Commission shall undertake the True Up of the licensee for the past financial year i.e. based on the actual performance of the licensee in that year with the approved forecast for such year In line with the provisions under GERC MYT Regulations, 2016, GETCO is furnishing the information in the form of present petition to the Hon ble Commission, together with the audited accounts for and other details as the Hon ble Commission may require to assess the reasons for variation in financial performance from the approved forecast of Aggregate Revenue Requirement for FY Accordingly, actual data for revenue and gap for are given in the following sections of this chapter For the purpose of True Up, all the expense heads have been categorized into Controllable and Uncontrollable factors as shown in the subsequent sections. Head wise comparison of the expenses has been made between the values approved by the Hon ble Commission vide MYT Order dated 31 st March, 2017 under Aggregate Revenue Requirement for and the actual figures for various expenditures for EXISTING CAPACITY OF GETCO IN The capacity of GETCO network as on 31 st March 2017 was 101,259 MVA which is 10.61% higher than the capacity (91,544 MVA) as on 31 st March GETCO has shown capacity addition of ( 9,715 MVA) during the in comparison to the FY (11,431 MVA). In addition, GETCO is undertaking rapid augmentation of transmission network to cater to the power requirement across the State The table below summarizes the voltage level wise capacity of GETCO system i.e. as on 31 st March, Gujarat Energy Transmission Corporation Limited Page 12

13 Table 6 : Existing Capacity of GETCO in Voltage class (Capacity in MVA) Sr.No. Name of Circle 400 KV (MVA) (MVA) 132 KV (MVA) 66 KV (MVA) TOTAL (MVA) 1 Amreli 945 2, ,090 7,628 2 Anjar 945 1, ,851 5,736 3 Bharuch 1,445 2, ,488 6,853 4 Gondal 2,390 2,960 1,025 4,578 10,953 5 Himatnagar 1,500 1, ,229 6,929 6 Jambuva 1,815 2,750 1,940 4,247 10,752 7 Jamnagar - 1, ,525 4,373 8 Junagadh - 2, ,680 6,330 9 Mehsana 1,260 2, ,758 6, Nadiad 945 2,820 1,495 4,225 9, Navsari - 3, ,208 9, Surendranagar 1,575 3, ,670 8, Palanpur 2,130 2, ,913 7,835 Total 14,950 31,010 8,838 46, , CAPITAL EXPENDITURE FOR In order to ensure unrestricted power flow across the State of Gujarat and maintain an efficient transmission system, GETCO had spent significant amount of capital expenditure for construction of transmission lines and substations during FY GETCO had projected a total capital expenditure of Rs. 2,530 Crores in the MYT Order dated 31 st March, 2017 and incurred an actual expenditure of Rs. 2, Crores during. GETCO has incurred this expenditure in construction of new substation and transmission lines required for strengthening of the transmission network of GETCO. The comparison of CAPEX approved by the Commission and actually incurred during are shown below: Table 7 : Capital expenditure during Rs. Crores Particulars Approved Actual 765 KV Lines KV Substations KV Lines Substation Lines KV Substation KV Lines KV Substation KV Lines Bus Reactor & SVC 40 - Capacitor Banks Total of New Projects 1,707 1, R&M Renovation and Modernization Augmentation of Sub-station/ Lines City Development Plan and ASSIDE Scheme Total R&M RTU Total 2, , Gujarat Energy Transmission Corporation Limited Page 13

14 3.5. FUNDING OF CAPEX Petition for True Up for and Determination of Tariff for FY The capital expenditure has been funded through grants, equity and the remaining expenditure incurred during has been funded through debt. The breakup of funding of capital expenditure during is mentioned below. Table 8 : Funding of CAPEX Rs in Crores Sr. No. Particulars (Actual) A CAPEX for the Year 2, B Capitalization 2, C Grants D Net Capitalization (B-C) 1, E Debt (70% of D) 1, F Equity (30% of D) ADDITION TO TRANSMISSION LINES AND SUBSTATIONS The details of Ckt. Km addition of transmission lines and substations during FY are as follows: Table 9 : Network addition of GETCO during Voltage Class 3.7. AVAILABILITY OF TRANSMISSION SYSTEM Substations (No.) Transmission Lines (Ckt. Km.) 400 KV KV KV 98 1,264 Total 100 3, In, GETCO has maintained its entire transmission system at exceptionally high level and achieved system availability of the tune of 99.40% (More than the benchmark specified in the Regulations for recovery of full transmission charges i.e. 98%) TRANSMISSION LOSSES The actual transmission losses for are as shown in the following table: Table 10 : Transmission losses of GETCO for Particulars (Actual - as per SLDC) (Actual - as per GETCO) Transmission Losses 3.88% 3.85% 3.9. NETWORK OUTAGES & FAULTS For any transmission system, network outages & faults are the true performance indicators of the power system condition. In order to have an efficient transmission system, GETCO is taking up planned shut downs for periodic maintenance of its transmission lines and substations. Gujarat Energy Transmission Corporation Limited Page 14

15 The following table indicates the network outages and faults in the GETCO system for the. It may be worth noting that GETCO has been able to perform well in maintaining the system to its best level. Table 11 : Network outages & faults for GETCO for Network Component Type of Fault Unit Monthly average for the PSD Hrs/100km KV TT Nos/100km SF Nos/100km ESD Nos/100km PSD Hrs/100km KV TT Nos/100km SF Nos/100km ESD Nos/100km PSD Hrs/100km KV TT Nos/100km SF Nos/100km ESD Nos/100km PSD Hrs/100km KV TT Nos/100km SF Nos/100km ESD Nos/100km Wherein PSD: Planned shutdown TT: Transient tripping SF: Sustained fault ESD: Emergency shut down LOADING OF TRANSMISSION SYSTEM The actual loading of transmission system of GETCO for is given in the table below. Gujarat Energy Transmission Corporation Limited Page 15

16 Table 12 : Loading of transmission system for Sr. No. Station Rated Capacity Aux Cons (%) Gujarat Share Transmission Losses (%) Total MW on GETCO System A GSECL Plants 1 Ukai TPS Unit 1 to Ukai TPS Unit Ukai Hydro PS Gandhinagar TPS Unit 3 to Gandhinagar TPS Unit Wanakbori TPS Unit 1 to 6 1, ,260 1,147 7 Wanakbori TPS Unit Sikka TPS Unit No.1 & Sikka TPS Unit No.3 & Kutch Lignite TPS Kadana Hydro Utran CCPP Extension Dhuvaran Gas Based - Stage-I Dhuvaran Gas Based - Stage-II Dhuvaran Extension CCPP Total GSECL Plants 5,996 5,559 B IPPs 1 GIPCL Stage-I GPEC (CLP) GIPCL-SLPP GIPCL-SLPP Extension GSEG GPPC Pipavav GMDC - Akrimota Adani, Mundra - Bid-01 (Unit-1 to 4) 1,320 1,000 1,000 9 Adani, Mundra - Bid-02 (Unit - 5 & 6) 1,320 1,000 1, Essar, Vadinar (Salaya) 1,200 1,000 1, ACB Limited Siddhivinayak Glass Industries, Hazira OPGS Power, Bhadreshwar GSEG Extension Hazira BECL, Padva, Bhavnagar (Unit - 1 & 2) Total IPPs Plant 6,777 6,555 C Share from Central Sector 1 NPC - Tarapur 1& NPC - Kakrapar 1& NPC - Tarapur 3&4 1, NTPC - Korba 2, NTPC - Korba Unit NTPC - Vindhyachal-I 1, NTPC - Vindhyachal-II 1, NTPC - Vindhyachal-III 1, NTPC - Vindhyachal-IV 1, NTPC - Vindhyachal-V NTPC - Kawas NTPC - Jhanor NTPC - Kahalgaon 1, NTPC - SIPAT-I 1, NTPC - SIPAT-II 1, CGPL, Mundra (TATA UMPP) 4,150 1, , SSNNL - Hydro 1, NTPC Mauda STPP Stage - 1 1, NTPC Mauda STPP Stage - 2 (Unit 1) Total Central Sector Share 5,885 5,347 TOTAL 18,659 17,460 CPP Wheeling Wind Power capacity 5,318 5,318 Solar Power capacity 1,230 1,230 Bio-Mass Power capacity Mini Hydro 9 9 Total (MW) 25,484 24, ANNUAL FIXED COST FOR As per the GERC MYT Regulations, 2016, the fixed cost has been computed under following heads: Operation and Maintenance Expenses Depreciation Gujarat Energy Transmission Corporation Limited Page 16

17 Interest and Finance Charges Return on Equity Interest on Working Capital Contribution to Contingency Reserve Net Aggregate Revenue Requirement has been computed with addition of actual tax paid and incentive for achieving target availability and after deduction of Other Income & Expenses capitalized of GETCO For the purpose of True Up, all the heads mentioned above has been categorized into Controllable or Uncontrollable factors in line with provisions of GERC MYT Regulations, 2016, as discussed in subsequent sections of the petition. A head wise comparison has been made between the values approved by the Hon ble Commission and actuals to arrive at the revenue gap/surplus for the CATEGORIZATION OF HEADS OF EXPENSES As per provision of section 22 of GERC MYT Regulations, 2016, expenses have been categorized into 2 factors viz. (1) Controllable (Under the control of the petitioner) & (2) Uncontrollable (Not under control of petitioner). The Hon ble Commission vide section 23 and 24 of its GERC MYT Regulations, 2016 has defined the mechanism for sharing of gain/ losses arising on account of uncontrollable & controllable factors respectively The details of the expenses categorized into the above factors have been covered in the subsequent sections Based on the existing practice for allocation & as approved by the Commission in previous years true-ups, all the items of expenditure for have been classified as either controllable or uncontrollable. Accordingly, the gains/ losses attributed to such controllable & uncontrollable factors have been determined in the subsequent sections GETCO has worked out its Aggregate Revenue Requirement (ARR) for as a part of the True Up for. GETCO has presented the actual cost components based on audited annual accounts for OPERATION & MAINTENANCE EXPENDITURE FOR As per GERC MYT Regulations, 2016, O&M Expenses shall be computed based on the norms provided in clause of the Regulations. As per the norms, the O&M expenses shall be computed based on the no. of bays and transmission line length (in Ckt.km). Accordingly, the normative O&M expense for the is given as below: Gujarat Energy Transmission Corporation Limited Page 17

18 Table 13 : Transmission lines & No. of bays for Sr. No. Particulars Reference Approved in MYT Order Normative Actual 1 Based on no. of Bays - Opening no. of Bays No. 11,811 11,811 - Addition during the year No Average no. of bays during the year No. 12,095 12,203 2 Based on no. of Transmission lines - Opening Balance ckt km 54,605 54,605 - Addition during the year ckt km 2,080 2,424 - Average lines' length during the year ckt km 55,645 55,817 Sr. No. Table 14 : O&M cost (Normative / Actuals) for Particulars Reference (Approved) Rs. Crores (Normative/ Actual) 1 Based on no. of Bays - Average no. of bays during the year No. 12, , O&M exp norm per Bay Rs.lacs Total O&M Expenses based on no. of bays Rs. crores Based on no. of Transmission lines - Average lines' length during the year No. 55, , O&M exp norm per ckt km Rs.lacs Total O&M Expenses based on no. of ckt km Rs. crores Total O&M Expenses (as per norms) Rs. crores 1, , GETCO has computed O&M expenses by considering the actual employee costs, R&M expenses & A&G expenses for the for working of gain/ (loss). The O&M expenses as per audited annual accounts are as shown in the table below: Table 15 : O&M cost (As per audited accounts) for Rs. Crores Sr. No. Particulars Actual 1 Employee Costs R&M Expenses A&G Expenses Operation & Maintenance Expenses 1, O&M expenses are controllable in nature, under Regulation 22 of GERC MYT Regulations, However, as per the methodology adopted by the Hon ble Commission, the variance in the O&M expenses as approved in MYT Order and the normative O&M expense as per actual performance during the year is considered as uncontrollable and variation in the normative O&M expenses and actual as per audited accounts is considered as controllable. The O&M expenses and gains / (losses) considered in the Truing up for are summarized in Table below: Gujarat Energy Transmission Corporation Limited Page 18

19 Sr. No. Petition for True Up for and Determination of Tariff for FY Particulars Table 16 : Gains/ (losses) from O&M expenses (Approved) (Normative Actual) (As per audited accounts) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor (2-3) (1-2) 1 O&M Cost 1, , , (4.76) (9.28) DEPRECIATION FOR The actual depreciation for works out to be Rs Crores. The Weighted Average Rate of Depreciation works out to be 4.96% which is higher as compared to 4.87%, the rate approved by the Commission for The depreciation to be allowed for the year should be based on the value of the gross fixed assets as stated in clause 39 of MYT Regulation, The depreciation for the has been taken from the Profit & Loss statement The variation in the amount of depreciation as per the actual cost incurred by Sr. No. GETCO in against the amount approved by the Hon ble Commission is Rs Crores. This can be considered as gain/ (loss) on account of uncontrollable factor and has been appropriately treated as indicated in below tables. Table 17 : Depreciation for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 Gross Block in Beginning of the year 18, , Additions during the Year (Net) 2, , Depreciation for the Year (20.88) 4 Average Rate of Depreciation 4.87% 4.96% 5 Total Depreciation claimed for (20.88) Sr. No. Table 18 : Gain/ (losses) from Depreciation Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Depreciation (20.88) INTEREST & FINANCE CHARGES FOR The opening loan balance for has been considered as the revised closing loan balance for FY approved by the Hon ble Commission vide consequential order dated 6 th October, 2017 issued pursuant to the APTEL Judgment in Appeal No. 201 of The actual interest & finance charges incurred during are Rs Crores as against Rs Crores approved by the Hon ble Commission The weighted average interest rate on the loan portfolio during the year FY , computed in accordance with Regulation 38.5 (first proviso) is 8.79%. Gujarat Energy Transmission Corporation Limited Page 19

20 The value of interest and finance charges approved by the Hon ble Commission and Sr. No. those actually incurred by GETCO for is shown as per the table below. The variation on account of Interest & Finance charges is considered as Uncontrollable factor and accordingly, GETCO has compared actual expenses vis-àvis the approved expenses and worked out deviation on account of uncontrollable factor. The same has been outlined in the tables given below: Table 19 : Interest & Finance charges for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 Opening Loans 5, , Loan Additions during the Year 1, , Repayment during the Year Closing Loans 5, , Average Loans 5, , Interest on Loan Guarantee Charges Total Interest & Financial Charges Weighted Average Rate of Interest on Loan 10.11% 8.79% Sr. No. Table 20 : Gains/ (losses) from Interest & finance charges Particulars (Approved) (Normative/ Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Interest & Finance Charges RETURN ON EQUITY FOR The return on equity for GETCO has been computed based on a rate of return of Sr. No. Sr. No. 14% as provided in the GERC MYT Regulations, The comparison between the values of return on equity for with the value approved by the Hon ble Commission in MYT Order dated 31 st March, 2017 is shown as per the table below. The deviation from return on equity is considered as Uncontrollable factor. Table 21 : Return on Equity for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 Opening Equity Capital 4, , Equity Additions during the Year Closing Equity 5, , Average Equity 4, , Rate of Return on the Equity 14% 14% 6 Return on Equity (3.64) Table 22 : Gains/ (losses) from Return on Equity Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Return on Equity (3.64) Gujarat Energy Transmission Corporation Limited Page 20

21 3.17. INTEREST ON WORKING CAPITAL FOR Working Capital is computed based on the norms provided in GERC MYT Regulations, 2016 by considering O&M expenses and receivables for 1 month and maintenance spares as 1% of historical cost (i.e. GFA) As per GERC MYT Regulations, 2016, GETCO has considered weighted average of Sr. No. SBI Base Rate for plus 250 basis points i.e %. The comparison of actual value of interest on working capital based on above methodology and the value approved by the Hon ble Commission is shown as per the table below. This deviation has been considered as gain/ (loss) to GETCO on account of uncontrollable factor. Table 23 : Interest on working capital for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 O & M expenses (1 Month) Maintenance Spares (1% of Cost) Receivables (1 Month) Total Working Capital Rate of Interest on Working Capital 11.70% 11.79% 6 Interest on Working Capital (0.07) Sr. No. Table 24 : Gains/ (losses) on Interest on working capital Particulars (Approved) (Normative/ Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Interest on Working Capital (0.07) INCOME TAX FOR GETCO s actual tax worked out to be Rs Crores in as against Sr. No. approved tax of Rs Crores resulting into uncontrollable Gain of Rs Crores. The comparison of actual tax against the tax approved by the Commission is shown below: Table 25 : Gains/ (losses) on Income Tax Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Income Tax CONTRIBUTION TO CONTINGENCY RESERVE FOR Contribution to Contingency Reserve for is nil as per the audited annual accounts of GETCO which is the same as approved by the Commission in the MYT Order dated 31 st March, The table indicating the Gain/ (Loss) on account of Contingency Reserves is shown below; Gujarat Energy Transmission Corporation Limited Page 21

22 Sr. No. Petition for True Up for and Determination of Tariff for FY Table 26 : Gains/ (losses) from Contingency Reserves Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Contingency Reserve INCENTIVE ON TRANSMISSION AVAILABILITY GETCO has achieved an availability of 99.40% for its transmission network during FY certified by SLDC Regulation 67 of the GERC MYT Regulations, 2016 provides that the transmission licensee shall be entitled to an incentive for increase in annual availability beyond 98.5% GETCO has computed the incentive on higher availability based on the target availability for incentive purpose of 98.5% and the same is presented in the table given below. The incentive is calculated on Aggregate Revenue Requirement. Table 27 : Incentive for higher availability Rs. Crore Sr. No. Particulars 1 Target Availability as per MYT Regulations (%) 98.50% 2 Actual Availability (%) 99.40% 3 Aggregate Revenue Requirement 3, Incentive for Transmission System Availability Sr. No. Table 28 : Gains/ (losses) on Incentive Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Incentive for target availability (27.43) REVENUE FROM OTHER INCOME GETCO has earned Rs Crores as non-tariff revenue for the in comparison to the approved values of Rs Crores. The heads under which non-tariff income is computed as below; Sr. No. Table 29 : Revenue from other income Particulars Rs in Crores GETCO 1 Interest on Staff Loans and Advances. - 2 Income from Investments deposits Interest on Advances to Others. - 4 Interest from Banks (other than on Fixed Deposits). - 5 Income from Trading -Stores,Scrap etc Penalties received from suppliers and consumers Revenue subsidy & grant Miscellaneous Receipts Contribution and Grants towards cost of capital assets Gain on Foreign exchange fluctuation Misc. Charges from Consumers Parallel Operation Charges Net Other Income * Income from Scheduling charges of SLDC is substracted under the head Miscellaneous Receipts to determine net value for GETCO. Gujarat Energy Transmission Corporation Limited Page 22

23 Miscellaneous receipts includes other income like pro-rata charges, reactive energy charges, O&M charges for dedicated lines and supervision charges of deposit work as approved by Commission GETCO is also receiving grants/consumer contribution as deferred income during the year. The amount of deferred income received for the is Rs Crores as per the Annual Accounts The Net other income has been deducted from Transmission Charges to arrive at Sr. No. Aggregate Revenue Requirement for. Table 30 : Other income for Particulars (Approved) (Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Other Income AGGREGATE REVENUE REQUIREMENT FOR Based on above expenses, table below summarizes actual Aggregate Revenue Sr. No. Requirement for for GETCO in comparison with values approved by the Hon ble Commission. Table 31 : Aggregate revenue requirement for Particulars (Approved) (Normative/A ctual) Rs. Crores Deviation 1 Operation & Maintenance Expenses 1, , (14.04) 2 Depreciation (20.88) 3 Interest & Finance Charges Interest on Working Capital (0.07) 5 Return on Equity (3.64) 6 Contingency Reserve Total Fixed Costs 3, , Less: Expenses Capitalised (15.62) 8 Add: Income Tax Total Transmission Charges 3, , Less: Other Income Aggregate Revenue Requirement 3, , Add: Incentive for target availability (27.43) 13 Total Aggregate Revenue Requirement 3, , SHARING OF GAINS & LOSSES GERC MYT Regulations, 2016, specifies the mechanism for treatment of Gains and Losses on account of Uncontrollable and Controllable expenses. The methodology approved by the Hon ble Commission for sharing of such gains/ losses is as follows. 23. Mechanism for pass through of gains or losses on account of uncontrollable factors 23.1 The approved aggregate gain or loss to the Generating Company or Transmission Licensee or SLDC or Distribution Licensee on account of uncontrollable factors shall be passed through as an adjustment in the tariff of the Generating Company or Transmission Licensee or SLDC or Distribution Licensee over such period Gujarat Energy Transmission Corporation Limited Page 23

24 as may be specified in the Order of the Commission passed under these Regulations The Generating Company or Transmission Licensee or SLDC or Distribution Licensee shall submit such details of the variation between expenses incurred and revenue earned and the figures approved by the Commission, in the prescribed format to the Commission, along with the detailed computations and supporting documents as may be required for verification by the Commission Nothing contained in this Regulation 23shall apply in respect of any gain or loss arising out of variations in the price of fuel and power purchase, which shall be dealt with as specified by the Commission from time to time. 24 Mechanism for sharing of gains or losses on account of controllable factors: 24.1 The approved aggregate gain to the Generating Company or Transmission Licensee or SLDC or Distribution Licensee on account of controllable factors shall be dealt with in the following manner: (a) One-third of the amount of such gain shall be passed on as a rebate in tariffs over such period as may be stipulated in the Order of the Commission under Regulation 21.6; (b) The balance amount, which will amount to two-thirds of such gain, may be utilised at the discretion of the Generating Company or Transmission Licensee or SLDC or Distribution Licensee The approved aggregate loss to the Generating Company or Transmission Licensee or SLDC or Distribution Licensee on account of controllable factors shall be dealt with in the following manner: (a) One-third of the amount of such loss may be passed on as an additional charge in tariffs over such period as may be stipulated in the Order of the Commission under Regulation 21.6; and (b) The balance amount of loss, which will amount to two-thirds of such loss, shall be absorbed by the Generating Company or Transmission Licensee or SLDC or Distribution Licensee As indicated above, GETCO has identified various expenditure heads under controllable and uncontrollable categories. The gain/ losses arising as a result of True Up for for GETCO shall be suitably passed through the Tariff as per mechanism specified by the Hon ble Commission Table below summarizes total gain/ (loss) to GETCO during on account of controllable & uncontrollable factors. Gujarat Energy Transmission Corporation Limited Page 24

25 Sr. No. Petition for True Up for and Determination of Tariff for FY Table 32 : Net gains/ (losses) for Particulars (Approved) (Normative/ Actual) Gain/(Loss) due to Controllable Factor Rs. Crores Gain/(Loss) due to Uncontrollable Factor 1 Operation & Maintenance Expenses 1, , (4.76) (9.28) 2 Depreciation (20.88) 3 Interest & Finance Charges Interest on Working Capital (0.07) 5 Return on Equity (3.64) 6 Contingency Reserve ARR (1 to 6) 3, , (4.76) Less : Expense Capitalised (15.62) 9 Less : Other Income Add: incentive for target availibility (27.43) 11 Add: Income Tax Total ARR ( ) 3, , (4.76) Net Gains / Losses on account of Controllable/ Uncontrollable factor (4.76) Gain/ (Loss) on account of Controllable factor to be passed on to Consumer (1/3 x Sr. No. 13) (1.59) 15 Gain/(Loss) on account of Uncontrollable factor to be passed on to Consumer The above table summarizes the net gains/losses on account controllable/ uncontrollable factors. GETCO incurred a gain/ (loss) of Rs. (4.76) Crores on account of controllable factors and Rs Crores on account of Uncontrollable factors for As per mechanism specified in the GERC MYT Regulations 2016, GETCO proposes to pass on 1/3 rd of total gain/ (loss) on account of controllable factors i.e. Rs. (1.59) Crores and total gain/ (loss) on account of uncontrollable factor i.e. Rs Crores to the consumers REVENUE GAP FOR As stated in earlier section, GETCO has computed the head wise controllable/uncontrollable gains/ (losses) for. The revenue gap has been computed based on the above factors against the approved costs by the Commission for the Further, it is submitted that GETCO has recovered the provisional ARR for FY approved vide Order dated 31 st March, 2016 in Petition No of 2016 (which was same as the ARR of FY approved by the Commission). Subsequently, the Commission approved the final ARR for GETCO for vide Order dated 31 st March, 2017 in Petition No of Due to this, there is shortfall in the recovery of approved ARR for to the tune of Rs Crores. GETCO has included this gap while determining the total gap on true up of The Hon ble APTEL has passed Judgment on 7 th September, 2017 in GETCO s Appeal No. 201 of 2016 challenging the Commission s Order dated 31 st March, 2016 in Petition No of Pursuant to this Judgment, the Hon ble Commission has passed consequential orders dated 6 th October, 2017 and 25 th October, The net impact of both these orders works out to a net gap of Rs Crore. Gujarat Energy Transmission Corporation Limited Page 25

26 Further, the revenue (gap)/surplus for from True up of has been worked out to be Rs Crores on account of Uncontrollable factors and Rs. (1.59) Crores on account of Controllable factors (1/3rd of total gains/ (losses) Table below summarizes Revenue Gap obtained after treating gains and losses from controllable and uncontrollable factor for : Table 33 : Revenue gap for Rs. Crores Sr. No. Particulars Amount 1 Provisional approved ARR for vide Order dated 31st March, 2016 in 2, Petition No of A 2 Final approved ARR of in MYT Order dated 31st March, 2017 in Petition No. 3, of B 3 Under-recovery of ARR for (A-B) (285.59) 4 Add: Impact of consequential order passed by Commission on and pursuant to APTEL Judgment in Appeal No. 201 of Gain / (Loss) on account of Uncontrollable factor to be passed on to Beneficiaries for FY Gain / (Loss) on account of Controllable factor to be passed on to Beneficiaries (1/3rd of Total Gain / (Loss) for 7 Total Gain/ (Loss) of the true up to be addresesd in the determination of tariff for FY ( ) (10.99) (1.59) (264.90) It is requested to the Hon ble Commission to approve the above revised ARR and allow GETCO to pass on the Revenue Gap of Rs. (264.90) Crores obtained after treating gains/ (losses) for in Transmission tariff for FY DETERMINATION OF TRANSMISSION TARIFF FOR FY In accordance with provisions of the GERC MYT Regulations, 2016, tariff for FY is determined as follows: Table 34: Approved ARR for FY Rs. Crores Sr. No. Particulars FY (Approved) 1 Operation & Maintenance Expenses 1, Depreciation 1, Interest & Finance Charges Interest on Working Capital Return on Equity Contingency Reserve - 7 Total Fixed Costs Add: Provision for Tax Less: Expenses Capitalised Total Transmission Charges 4, Less: Other Income Add: Incentive for target availability - 13 Aggregate Revenue Requirement 3, Gujarat Energy Transmission Corporation Limited Page 26