ORDER

ORDER

OF THE

WEST BENGAL ELECTRICITY REGULATORY COMMISSION
IN

CASE NO: TP - 20/05 - 06

IN RE THE TARIFF PETITION OF WEST BENGAL STATE ELECTRICITY BOARD UNDER SECTION 64(3)(a) READ WITH SECTION 62(1) AND SECTION 62(3) OF THE ELECTRICITY ACT, 2003 FOR THE YEAR 2005 - 2006.

CHAPTER - 1

INTRODUCTION

1.1 The West Bengal State Electricity Regulatory Commission (Referred to as the Commission hereafter) was constituted by the State Government of West Bengal in 1999 in pursuance of the Provisions of Section 17 of the Electricity Regulatory Commissions Act, 1998. The latter, along with the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948 was repealed by dint of Section 185 of the Electricity Act, 2003, which came into force with effect from 10th June 2003. The first proviso of Section 82(1) of the Electricity Act, 2003 has ensured continuity of the Commission – along with that of all other State Electricity Commissions – by laying down that the State Electricity Regulatory Commissions established by a State Government under Section 17 of the Electricity Regulatory Commission Act, 1998 (and a few other State enactments), and functioning as such immediately before the appointed date, shall be the State Commissions for the purposes of the Electricity Act, 2003.

1.2 The functions of a State Commission have been specified in Section 86 of the Electricity Act, 2003. One of the main functions of a State Commission relates to determination of tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, as the case may be, within a State. Further, Section 62 (1) of the Act also requires the appropriate Commission to determine the tariff in accordance with the provisions of the Act, for supply of electricity by a generating company to a distribution Licensee, for transmission, for wheeling as also for retail sale of electricity.

1.3 The Commission has, therefore, all the powers and authority under the Electricity Act, 2003 to determine the tariff, as laid down in the Act, and these powers and authority are in continuation of similar powers and authority that were enjoyed by the Commission under Section 29 of the Electricity Regulatory Commission Act, 1998.

1.4 The West Bengal State Electricity Board (hereinafter referred to as WBSEB or the Board), is a State Electricity Board constituted under Section 5 of the Electricity (Supply) Act, 1948. It has now become a Licensee in terms of the second proviso to Section 14 of the Electricity Act, 2003. It is engaged in the business of generation, transmission and distribution of electricity and its area of operation covers the whole State of West Bengal excepting those areas of operation that are covered by other Licensees. In terms of Section 172 of the Act, the Board acted as the deemed State Transmission Utility and Licensee under the provisions of the Act for a period of one year from 10th June 2003, the appointed date. Thereafter, the State Government, by two successive notifications, authorised the Board, as mutually decided by the Central Government and the State Government, to continue to function in the same capacities in terms of the proviso to Section 172(a) of the Act, for two successive years with effect from the appointed date.

1.5 The Commission has already determined tariff in favour of the WBSEB for 5 (five) consecutive years starting from 2000 – 2001. The WBSEB has now submitted another petition to the Commission seeking revision of the existing tariff and asking for a set of fresh tariffs applicable to 2005 – 2006. The petition has been submitted in accordance with Regulations 38(1) and 40(1) of the West Bengal Electricity Regulatory Commission (Conduct of Business) Regulations, 2003 and the Electricity Act, 2003.

1.6 The Tariff Petition, in question, was admitted by the Commission and was marked as No. T.P.-20/05-06. After admission of the same, the WBSEB was directed to publish a gist of the tariff petition, as approved by the Commission, in 4 (four) leading dailies, of which 2 (two) would be English dailies and the rest 2 (two) would be Bengali dailies. Accordingly the WBSEB published the gist in the Statesman and The Telegraph (both in English) and Bartaman and Ananda Bazar Patrika (both in Bengali) on 24th December 2004. However, after the publication of the gist in the aforesaid dailies on 24th December 2004 it was noted that there was a typographical mistake in it. Also, the full address, telephone number, etc. of the office of the Commission were missing. Hence, the WBSEB was directed to publish a corrigendum on the very next day in the very same dailies. The corrigendum was duly published on 25th December 2004 in the same newspapers.

1.7 While supplying the gist of the tariff petition, the insertions in the newspapers called upon all stakeholders / interested parties / members of the public to file objections or make comments on the petition. They were also afforded opportunities for inspection of the petition and take copies of the same in terms of the relevant provisions of the WBERC (Conduct of Business) Regulations, 2003.

1.8 22 objections / comments to / on the tariff petition, in question, were received by the Commission within the stipulated period of 30 days from the date of publication of the gist of the tariff petition. These objections, etc. have been described in short in Chapter – 3.

1.9 It is noted that the WBSEB has been late in submission of the instant tariff petition. It has been stipulated in clause 3.2 of the WBERC (Tariff) Regulations, 2003 that a Licensee should submit its tariff petition to the Commission at least 4 (four) months prior to the date from which the tariff is proposed to be varied. The WBSEB, as a distribution Licensee was to have submitted its tariff petition for 2005 – 2006 within 30th November 2004 since it wanted the revised tariff to take effect from 1st April 2005. But the WBSEB has submitted the tariff petition, in question, only on 14th December 2004. The WBSEB has stated that it made every endeavour to submit the same by 30th November 2004. But it has taken the Licensee a number of extra days to collect the detailed information that have been required to be submitted along with actual figures up to September 2004, as the requisite information had to be collected from different site offices scattered all over the State. The WBSEB also prayed that the delay might be condoned. The Commission has taken notice of the delay but has proceeded to admit the tariff petition. However, the Commission takes this opportunity to advise the Licensee to submit its tariff petitions in future punctually.

1.10 On the issue of the modalities of dealing with the instant tariff petition with specific reference to hearing, it is to be noted that while issuing tariff orders under Section 64(3)(a) of the Electricity Act, 2003 read with other relevant Sections ibid in 2004 – 2005, the Commission did not give any hearing to either the licensees / generating companies, or to the members of the public, or to the objectors. This was challenged before the Hon’ble High Court at Calcutta. By an order and judgement dated 4th October 2004 in W.P. No. 16166 (W) of 2004 (Rohit Ferro Tech. Pvt. Ltd. & Ors. – vs – West Bengal Electricity Regulatory Commission & Ors.), Hon’ble Justice Mr. P. C. Ghosh held that no hearing was to be given while determining tariff under the Electricity Act, 2003. Subsequently, this order and judgement have been affirmed by the Division Bench of the Hon’ble High Court at Calcutta, comprising of Hon’ble Justice Mr. Aloke Chakrabarti and Hon’ble Justice Mr. S. P. Talukdar in an order dated 25th February 2005 in appeal case no. AST 2295 of 2004 (Rohit Ferro Tech. Pvt. Ltd. & Ors. –vs- West Bengal Electricity Regulatory Commission & Ors.). Therefore, in accordance with the provisions of law and in compliance with the above spoken orders of the Hon’ble High Court at Calcutta, no oral hearing has been given by the Commission to the tariff petitioner, or anyone else while issuing this instant tariff order for West Bengal State Electricity Board for the year 2005 – 2006.

CHAPTER - 2
THE CASE OF THE WBSEB, 2005 - 2006

2.1 The WBSEB has claimed that it is the need of an upward revision in its tariff. Though an increase in tariff had been allowed in favour of the WBSEB from April 2003, the tariff order issued by the Commission for 2004 – 2005 had not given any “benefit” of increase in the rate of tariff applicable to the WBSEB. But costs have in the meantime increased. The WBSEB, in its tariff prayer has sought to recover a portion of such increased costs through an increased tariff.

2.2 The Board has considered a rate of return of 3% on the net fixed assets less consumers’ contribution at the beginning of the year in its tariff petition in terms of Section 59 of the Electricity (Supply) Act, 1948, as the rate of return admissible in terms of the Electricity Act, 2003 was not known to it. Accordingly, its tariff petition has suggested that an amount of Rs. 78.68 crores should be taken as the surplus in the year 2005 – 2006.

2.3 The WBSEB has claimed that it has attempted to reduce the cross subsidies and rationalize the tariff for the various classes of consumers in accordance with the provisions of Section 61(g) of the Act and clause 4.1(g) of the West Bengal Electricity Regulatory Commission (Tariff) Regulations, 2003.

2.4 The Board has also stated that it has taken steps to reduce the margin of error in determination of loss and to that effect, has completed metering up to 11 KV feeders in June 2004. It has claimed that metering and the related steps will reduce the overall T&D loss in 2005 – 2006.

2.5 The Board has gone on to add that though it has prepared the energy balance in its 2005 – 2006 tariff petition considering ATC loss at the level of 36%, it has computed the average cost of power considering 25% T&D loss as approved by the Commission in the tariff order for 2004 – 2005.

2.6 The WBSEB has submitted calculations to show that it will be required to earn an annual additional revenue amounting to Rs. 331.11 crores during 2005 – 2006 so as to meet its total revenue requirement. Keeping in view this requirement, the average cost of supply for 2005 – 2006, according to the WBSEB, would work out to Rs. 349.36 paise / Kwh.

2.7 It has been proposed by the tariff petitioner that out of the additional revenue requirement of Rs. 331.11 crores, a sum of Rs. 157.73 crores should come through revised tariff, while the balance of Rs. 173.38 crores should be kept as regulatory asset and the latter should be released subsequently from 2007 – 2008 onwards in instalments.

2.8 In determining the energy balance, it has first forecast the energy requirement (in M.U.) for its own consumers in 2005 – 2006. The WBSEB has forecast that the consumers in L & MV categories would need 5936 MU, while its HV and EHV consumers will need 4015 MU, thereby yielding a total of 9951 MU of demand. That apart, the forecast of the requirement of energy for trading and export to outside region is stated to be 3734 MU. The grand total of energy requirement thus has been projected to be of the order of 13685 MU in 2005 – 2006.

2.9 The WBSEB has prayed that the T&D loss as had been allowed in 2004 – 2005 should be continued for 2005 – 2006 also, and has given detailed reasoning why this should be so. However, for the purpose of working out its revenue requirement, it has considered an ATC loss of 36%.

2.10 The Board has reported completion of 100% metering at substation up to 11 KV. It is also stated to have strengthened its Security and Loss Prevention Wing and the same has also been decentralized up to circle level. Besides, the Corporate Wing, 17 (seventeen) units at circle level have been created.

2.11 The WBSEB has stated that it has introduced a High Voltage Distribution Supply system mainly for supplying power to irrigation / agriculture consumers directly from distribution substation through drawal of L.T. PVC Cable. For this purpose, distribution substations of the capacity of 10 KVA or 11/0.4 KV for every 2 (two) STW consumers have been considered.

2.12 The WBSEB has claimed to have taken up Geographical Information System in 63 Group Electric Supply areas towards facilitation of energy audit, mapping and documentation of the power network. It has also claimed that once this network documentation is complete, energy loss will be computable through application software CYMDIST.

2.13 The tariff petitioner has given a projection of its own power generation from its Hydel generating stations of Jaldhaka, Rammam, Teesta and other as also from its diesel station at Rudranagar at Sagar Island. It has submitted that it will keep its gas station at Kasba as a stand by generating station to be used if there is a failure of the regional grid or if there is a simultaneous outage of a number of Thermal units.

2.14 For generation of (sent out) power of 578 MU, the petitioner, as per its own projection, will incur a cost of Rs. 0.45 crore.

2.15 It has also given a projection of purchase of (net) energy amounting to 18758 MU from different generation and supply agencies. It has estimated that it will have to spend a sum of Rs. 3397.39 crores in 2005 – 2006 for purchasing the same. The WBSEB has furnished the statistics in Annexure – 1, Form 3.1(B) in Volume – II of the tariff petition.

2.16 The WBSEB has also given a picture of export of power to outside region.

2.17 It has further given a projection of transmission charges payable to different agencies, including to WBPDCL for using the Bakreswar Transmission line.

2.18 The Board has indicated that it will have to pay the ERLDC a charge of Rs. 140.98 lakhs annually.

2.19 The WBSEB has submitted that a grid loss of 3.5% as considered by the ERLDC will have to be taken into consideration for the scheduled drawal from the Central Sector generating stations.

2.20 Under the ABT regime, there will be unscheduled interchanges (UI). The UI charges, which will vary depending upon the system frequency at the relevant time block, may either be payable or receivable. The WBSEB has assumed that in 2005 – 2006, it will have a net UI receivable of Rs. 97.12 crores.

2.21 The WBSEB will also be required to pay wheeling charges to CESC Ltd. for wheeling of the WBSEB power to certain areas by using CESC infrastructures.

2.22 The tariff petitioner has put the total number of its employees at 27988 and has projected an employees’ cost of Rs. 515.84 crores in 2005 – 2006. It has also given the details of redeployment of surplus employees from one stream to another.

2.23 The Board has estimated that it will require Rs. 117.64 crores in 2005 – 2006 to meet its repair and maintenance expenses and has furnished justification for the same.

2.24 The tariff petition of the Board also contains a projection of administration and general expenses of Rs. 72.55 crores in 2005 – 2006.

2.25 The WBSEB has projected that it would need a sum of Rs. 30.23 crores as the provision for bad and doubtful debts. It has given a detailed justification for the same, and has drawn the attention to the fact that it has since constituted an empowered committee to settle the dues that have remained unrealized for a long period due to disputes / litigation etc. It has been indicated that so far the amount settled by the Committee is Rs. 3.78 crores and the amount waived is Rs. 7.09 crores. The Board has also mentioned that during 2004 – 2005, it has realized Rs. 50.00 crores from Assam SEB.

2.26 Capitalisation of expenses other than interest has been estimated at Rs. 81.39 crores, while capitalisation of interest has been put at Rs. 344.86 crores for 2005 – 2006.

2.27 The Board has claimed a sum of Rs. 394.14 crores by way of depreciation in 2005 – 2006.

2.28 The WBSEB has furnished its calculations and has claimed a sum of Rs. 683.89 crores on account of interest and finance charges, including a sum of Rs. 157.30 crores on account of interest on fund under securitisation scheme.

2.29 While asking for admissible return, the Board has calculated a sum of Rs. 78.68 Crores, which is 3% of its net fixed asset base of Rs. 2622.64 crores on the ground that the admissible return of the Board as per the Electricity Act, 2003 is not known to the Board.

2.30 According to the Board, its non-tariff income will be of the order of Rs. 111.30 crores in 2005 – 2006.

2.31 The Board has not shown any amount as subsidy receivable from the State Government.

2.32 Thus the Board has arrived at its projected total expenditure of Rs. 4864.58 crores and at the revenue requirement from sale of power to its own consumers, which has come to Rs. 3476.51 crores in 2005 – 2006. Since at the existing rate of tariff, the Board can earn Rs. 3145.40 crores, the Board has sought to obtain an additional revenue of Rs. 331.11 crores. It has suggested that a sum of Rs. 157.73 crores be realized by a hike in the tariff rate. It has also submitted that the rest, i.e. Rs. 173.38 crores may be kept as a regulatory asset in order to avoid any tariff shock to its consumers and that the same may be released in suitable instalments in future.

2.33 The Board has also given its tariff philosophy, its views on advance payment for irrigation un-metered supply, its suggestion on rates for temporary supply, interruption benefit in demand charge, load factor rebate / surcharge and power factor rebate / penalty.

2.34 The Board has also submitted a proposed revised tariff structure.

CHAPTER - 3
OBJECTIONS

Objections against the Tariff Petition of West Bengal
State Electricity Board (2005 - 2006)

3.1 A notification dated 24th December 2004 and a corrigendum thereon dated 25th December 2004 were issued by West Bengal State Electricity Board., (i.e. WBSEB) as per direction of the Commission, providing a gist of the tariff petition of the Board and seeking objections etc. from all interested parties within a given time. The notifications as also its corrigendum were published in 4 (four) leading dailies of Kolkata simultaneously. In response to the notifications, the Commission received written objections to and comments on the Tariff petition of WBSEB from the following objectors within the stipulated period.

i) Shri Mani Mohan Ghosh.

ii) M/s M. L. Dalmia & Co. Ltd.

iii) M/s Gontermann Peipers Ltd.

iv) South Eastern Railway

v) M/s Pacific Cotspin

vi) Indian Tea Association

vii) CESC Limited

viii) Hooghly Chamber of Commerce & Industry.

ix) W. B. Cold storage Association.

x) Bharat Chamber of Commerce.

xi) Sri Vasavi Industries Limited

xii) All Bengal Electricity Consumers Association

xiii) Extrusions (1985) Pvt. Ltd.

xiv) Panagarh Bazar United Industrial Electricity Consumers Welfare Association.

xv) Indian Rayon & Industries Ltd. – Unit: Jaya Shree Textiles.

xvi) Eastern Indian Textiles Mills Association.

xvii) All Bengal Electricity Consumers Association (North 24 Parganas District Committee).

xviii) All India Krishak-O-Khetmajur Sanghatan.

xix) Uttar Chabbish Pargana Zilla Vidyut Chalita Agavir Nalkup Samity.

xx) Sukhdev Sadhu Khan along with 285 other objectors.

xxi) Pratap Chandra Ghosh along with 909 other objectors.

xxii) Industrial Estate Development Association.

3.2 Shri Mani Mohan Ghosh of Hospital Road, Magra, Hooghly has objected to the Tariff proposal of WBSEB on the following grounds:

(a) The T&D loss should not be allowed above 20%.

(b) The expenditures projected under different heads are not justified.

(c) Abolition of cross subsidy has been objected to as cross subsidy has not been defined in 2003 Act.

(d) WBSEB is violating the norms of consumers’ services.

(e) Minimum charges for ordinary consumers have been opposed to.

(f) The proposal for recovery of fixed charges from small scale Industries has been opposed to.

(g) Tea Garden labours are to be supplied meters and to be considered as house hold consumers.

(h) The objector also raised various other points including demand for monthly billing system with rebates.

3.3 M/s M. L. Dalmiya & Co. Ltd. who have undertaken the development of the integrated leather complex at Bantala in South 24 Parganas submitted a proposal to introduce a new tariff code for common service providers in Industrial Estate developed, operated and maintained by Government and private parties and the rate of this proposed code be identical to the code now being enjoyed by the Municipalities, where the consumption charges are simply based on flat KWH consumption and not linked with demand charges / load factors / minimum charges, etc.

3.4 M/s Gontermann – Peipers (India) Ltd., in their submission, objected to WBSEB’s proposal of maximum demand recording, removal of the existing provisions of refund of Demand charge of the HT consumers on account of interruption of supply, extent of T&D loss, etc., and suggested as under:

(a) Opposes the move to discontinue the existing system of refund of demand charge of HT consumers on account of interruptions of supply.

(b) Demand recording for charging in the month be made on actual demand reached between 6 AM to 10 PM or 75% of average maximum demand of preceding 12 months, whichever is higher.

(c) Excess Demand limit for off-peak period be raised to 140% of contract demand without penalty. Excess charges on demand be made on pro-rata basis.

(d) Penalty on excess energy drawal during off-peak hours be withdrawn.

(e) For HT industrial consumers rebate on energy charge be raised to 8% for 33 KV consumers.

(f) For calculation of excess energy drawal load factor of that period be considered.

3.5 South Eastern Railway represented for consideration in regard to following points:

(a) Suitable reduction in the proposed Demand and Energy charges.

(b) Granting voltage rebate at par with the Industrial consumers for Railways 25 KV & 132 KV traction tariff.

(c) Withdrawal of penal provision from Railway traction tariff on energy charge for exceeding contract demand.

(d) Issuance of directive for implementation of integration of 30 mts.

(e) Consideration of adoption of recording of simultaneous maximum demand for traction sub-stations.

3.6 M/s Pacific Cotspin maintains as under:

(a) Cross subsidy must be abolished in case of 100% EOUs & SEZs and separate tariff must be determined for such organisations to provide level playing field to compete globally.

(b) Tariff of 33 KV & 110 KV to be equalized by tariff of 33 KV at par with that of 110 KV.

(c) Tariff to be reduced by 10% in view of withdrawal of all concessions.

(d) WBSEB’s tariff to be equalized to DVC rate.

(e) Open access to be allowed in terms of the 2003 Act to 100% EOUs & SEZs set up in the State.

3.7 Indian Tea Association, Tea Association of India, Indian Tea Planters’ Association, Terai Indian Planters’ Association, Consultative Committee of Plantation Associations, Goodricke Group Limited and Gillanders Arbuthnot & Company Limited submitted their objections / comments on the tariff proposal of WBSEB jointly through Shri Monojit Das Gupta, Secretary General of the Indian Tea Association. Presenting detailed comments on different items of WBSEB’s tariff proposal and citing reference to their earlier objections summerised their points as under:

(a) To consider Tea Industry as a seasonal industry and levy demand charges on the basis of recorded demand on a month-to-month basis.

(b) To consider separate rate towards demand charge as the maximum demand of the tea industry is reflected during off-peak hours.

(c) To consider power supply through dedicated HT line for irrigation to tea gardens at par with water pumping for irrigation under category C and also water supply for labour lines in line with water supply in non-municipal rural area.

(d) To clearly define the availability of supply and issue required directive for billing on the basis of availability recorded in the TOD meter installed in consumer premises.

(e) To clearly define the procedure and fees required to be paid by the consumers in order to get the scope for application for the purpose of Review of the order and also such fees may be made affordable by the consumers.

(f) To redefine cross subsidy.

(g) To consider the requirement of hearing essential for the purpose of determination of tariff.

(h) To consider determination of tariff on the basis of realistic cost on the basis of voltage of supply related to the consumers.

(i) To consider projection of consumption on a reasonable and reliable basis instead of accepting unreliable data furnished by the petitioner.

(j) To rectify the misconception about unaccounted power.

3.8 CESC Limited, in their submission, pointed out that supply of power by WBSEB to them is a trading transaction and prayed for fixing tariff for the same accordingly and should not exceed the prevailing rate of such supply.

3.9 Hooghly Chamber of Commerce & Industry, in their submission, put up the under noted suggestions:

(a) WBSEB is to attach a statement to the monthly electricity bills showing the date wise details of interruption of supply in hours.

(b) WBSEB to allow refund for restrictions of supply.

(c) WBSEB is to make some reasonable alteration in regard to (i) Notice period for increase in contract demand, (ii) Notice period for decrease in contract demand, (iii) Frequency of revision in contract demand.

(d) The Chamber also suggested the following directives to be issued to WBSEB.

(i) To desist from imposing any loss factor for maximum demand on HV consumers metered at LV.

(ii) To abolish imposition of additional charges on EHV/HV consumers for both demand and energy in respect of any drawal during off-peak period in excess of the contract demand.

(iii) To abolish Load Factor penalty.

(iv) To restructure the load factor rebate.

(v) To make the determination of load factor in monthly electricity bills fair one equator to the consumers.

(vi) To abolish and waive the claims for Annual Minimum Guaranteed Revenue.

(e) The Chamber has also made comments on:

(j) Hike in the Electricity Duty.

(ii) Merit order of power purchase and un-economic purchase from DVC;

(iii) Extent of Transmission & Distribution losses;

(iv) Reasonableness of expenditures projected under different items;

(v) Burden of cross subsidy; etc.

(f) The Chamber has also raised certain legal points and maintained that the tariff petition of Board should not be admitted.

3.10 West Bengal Cold Storage Association highlighted the operating features of cold storage, in the context of the pattern of electricity usage, their location at far-flung rural areas, seasonal natures of activities. The association maintains as under:

(a) The demand charge be based on the actual power drawal from the supply in consideration of seasonality in operation of cold storage.

(b) The extent of T&D loss as projected by WBSEB is un-reasonable.

(c) The incremental load factor rebate facility be allowed to cold storage consumers.

(d) The continuance of power factor rebate should be there to encourage better system operation.

(e) The issue of supply pressure below the stipulated one be put in as a compensating clause similar to interruption of supply in consideration of coherency of the situation with regard to usage of energy.

(f) The benefit of compensatory rebate for supply interruption be extended on the basis of availability of supply at the consumer end and not on the basis of interruption at respective sub-station catering the installation.

(g) Little justification is there seeking upward revision of energy charge by 10% in respect of high voltage cold storage consumers.

(h) It is fact that the proposal of WBSEB to levy on captive generating set operating continuously is against promotion of co-generation.

3.11 Bharat Chamber of Commerce, in their detailed submission, highlighted on the following points:

(a) The sale projection has not been made based on realistic figures.
(b) Projection of the extent of T&D loss is not justified and should be allowed 22.5% only.
(c) Hydel generation is very poor and un-economic.
(d) Gas turbine stations are to be closed down.
(e) The projected figure of system demand is high and unrealistic.

(f) Considering the magnitude of saving from replacement of DVC power in 133 KV & 33 KV with low cost power from other sources, the time frame should be set for development of WBSEB’s own system.

(g) The amount shown as Revenue from export to other regions has been much on the lower side.

(h) The provision for D.A. in the estimation of Employee cost should be maintained at the prevailing rate as announced by the State Government and any subsequent increase should be offset by the reduction in employees’ strength.

(i) Increase in O&M cost should not be allowed.

(j) There is enough scopes for curtailment of expenses under different heads of Administrative & General Expenses.

(k) The claim for Bad Debts is too high and the authority given by the Utility to Empowered Committee for waiving of dues upto Rs. 20.00 lakhs needs to be withdrawn.

(l) The Chamber also made observations on WBSEB’s projection of capitalisation of expenses, interest and finance charges, capitalisation of interest, capital addition, depreciation and non-tariff income and suggested to reduce the projected surplus of Rs. 78.68 crores on account of Teesta Canal Project and unjustified capital expenditure.

(m) The Chamber also has put forward its comments and suggestions in regard to T.O.D. tariff, load factor rebate / penalty, power factor rebate / penalty, realisation of demand charges, reliability of power supply, quality of power, etc.

3.12 Sri Vasavi Industries Ltd., after highlighting the different provisions of Electricity Act, 2003 and detailed comments of tariff proposal of WBSEB, summerised their submission as under:

(a) To consider Ferroalloys plant which is power intensive on separate footing and accordingly to fix up appropriate flat tariff instead of two part tariff.

(b) To consider annual revenue requirement of WBSEB on the basis of prudent expenses keeping in view the various points raised by them.

(c) To reconsider the issue of cross subsidy and unaccounted power by defining cross subsidy as difference between the tariff for the consumer and the actual cost of supply to the consumer.

(d) To consider allowing hearing on the tariff petition.

(e) To take into the account a high dose of electricity duty in determining the tariff for the consumers who are affected by such duty.

(f) To disallow any interim increase in tariff.

3.13 All Bengal Electricity Consumers’ Association, 27A Dhiren Dhar Sarani, Kolkata 700 012 and its North 24 Parganas District Committee at Barasat also have submitted their objections to the tariff proposal of WBSEB on the following points:

(a) As stated by WBSEB, it is a Licensee under the provision of Electricity Act, 2003 and at the same time claimed Return @ 3% on the value of net fixed assets as per Section 59 of the Electricity (Supply) Act, 1948. These contentions of WBSEB are self-contradictory.

(b) WBSEB has failed to follow the regulations framed by the Commission under the provision of Section 181 of the Act in regard to providing better consumers’ services.

(c) WBSEB has not done energy audit and has not completed the metering system, without which the proposal for enhancement of tariff should not be agreed to.

(d) The Electricity Act, 2003 has not defined the term cross-subsidy and as such the proposal of WBSEB in regard to reducing the same is questionable.

(e) WBSEB’s claim as a Licensee is not justified and valid.

(f) The proposal to keep Rs. 173.38 crores as Regulatory Assets and the release of the same subsequently from 2007 – 2008 onwards in instalment has been objected to.

(g) The transfer of WBSEB Thermal Power Stations to WBPDCL and purchase of power from them at high cost has been objected to.

(h) T&D loss should not be allowed in excess of 22.5%.

(i) The Association also objected to claims of increased expenditures under R&M, Administrative affairs, Depreciation, Bad Debts, Overtime, employees’ cost, etc.

(j) The proposal for enhancement of charges recoverable from unmetered agricultural consumers has been opposed to.

(k) The proposal for increase in the tariff of LT commercial consumers and withdrawal of minimum charges for HT consumers are found not justified.

(l) Export of power to be drawn from DVC, DPL, DPSCL and Central Sector Utilities to outside regions at cheaper rate has been objected to. The claims of the WBSEB that the consumers are benefited by such export have not been admitted.

(m) Doubt has been expressed on the correctness of the amounts of expenses proposed to be capitalized.

(n) Hike in the energy charges for light etc, has been objected to.

3.14 M/s Extrusions (1985) Private Ltd. – advocated for abolition of Annual Minimum Guaranteed Revenue (AMGR) and for waiver of earlier claims in this regard.

3.15 Panagarh Bazar United Industrial Electricity Consumers Welfare Association maintains that the petition filed by WBSEB is not in accordance of Regulation 3.2 and hence should be rejected. The Association also objected to high percentage of T&D loss of WBSEB and the proposal for changing the existing method of fixed charges from the LT consumers.

3.16 Indian Rayon and Industries Ltd., Unit: Jaya Shree Textiles, made their observations on the followings:

(a) Revision of notice period for alteration of contract demand.
(b) Restructuring of load factor rebate.
(c) Determination of Average Demand for computation of load factor.
(d) Hike in electricity duty and unjustified imposition of duty on demand charge.
(e) Merit order of power purchase – especially for un-economic purchase from the DVC.
(f) Extent of T&D loss.
(g) Burden of cross-subsidy on EHV Industries.
(h) Quality of power supply by the Board.
(i) Open Access Policy.

The objectors also raised certain legal issues involved in the tariff petition of WBSEB.

3.17 Eastern Indian Textile Mills Association raised the issues almost identical with the issues raised by M/s Indian Rayon and Industries Ltd.

3.18 All Indian Krishak-O-Khetmajur Sangathan, West Bengal State Committee has advanced their detailed comments on the various proposals of the WBSEB in its tariff petition and summerised their submission as under:

(a) To reject the tariff petition of WBSEB for not furnishing adequate facts and information.

(b) To withhold the release of the sum of Rs. 37298 lakhs deducted from the Revenue Requirements for 2004 – 2005.

(c) To impose similar penal measures for 2005 – 2006.

(d) To direct WBSEB to retain difference in tariff for standard consumers as per provision of Section 62(3) of Electricity Act, 2003.

(e) To direct WBSEB to take adequate measures for reduction in T&D loss.

(f) To direct WBSEB to give meters to the STWs/submersibles within a specific time frame.

(g) To direct WBSEB to realize annual charge at an amount not exceeding Rs. 4737 for STWs of small and marginal farmers so long metering is not completed.

(h) To fix unit charge @ 50 paise from metered supply to agri-irrigation.

(i) To direct WBSEB to give 5% rebate for monthly payment and 10% rebate for quarterly advance payment for STWs.

(j) To direct WBSEB not to issue any bill or realize any amount as due from Agri-consumers for the period the lines remain disconnected.

(k) To direct WBSEB to realize the actual amount due on the basis of actual consumption from Agri-consumers before their STWs were disconnected.

(l) To direct WBSEB to activate Grievance Cell created at different tiers to undertake disposal of grievances as per provision of Regulations.

(m) To direct WBSEB to stop harassing consumers and to act as per provisions of Regulations.

3.19 Uttar Chabbish Pargana Zilla Vidyut Chalita Agavir Nalkup Samity’s objections and comments are identical with the objection at para 3.18 above.

3.20 Shri Sukhdeb Sadhukhan and Shri Pratap Chandra Ghosh with other 1194 objectors also submitted their objections of the tariff petition of WBSEB and those are identical with the objections raised by Shri Mani Mohan Ghosh as referred in para 3.2.

3.21 The Industrial Estate Development Association feels that WBSEB has sought for such modifications in the Tariff proposal, which tend to prejudice the interest of power consuming industrial community. The Association put forward its comments and observations on the following:

(a) T&D loss.
(b) Load factor rebate / penalty.
(c) Power factor rebate / penalty.
(d) Supply interruption benefit on demand charge.
(e) Having a captive generation set operating continuously.
(f) Rebate on energy charge.
(g) Penal levy on over drawal of power, etc.

3.22 The Commission has taken careful note of the objections, comments and suggestions received from the respondents and have proceeded to consider the same while recording its analyses and its conclusions of different components of the tariff proposal in the chapters that follow. Besides, the Commission has also given certain directions to the licensee in a separate chapter, taking cues from a number of critical remarks made by some of the respondents and also from some of the requirements of the law and the National Electricity Policy.

3.23 Since a few respondents have raised a question about maintainability of the instant tariff petition, it is necessary to make it clear that the Commission, after giving a careful consideration to the points raised in this behalf, has come to the conclusion that instant petition does not suffer from any inherent shortcoming, which can make it non-maintainable. Hence the Commission proceeds to examine various components of the petition in the subsequent chapters.

3.24 Some of the respondents have given their views and suggestions on matters like open access, cross subsidy, etc. These requirements of law are being met by Regulations, Judicial Pronouncements and National Policies and therefore, are not discussed in the tariff order.

CHAPTER – 4
SCHEDULE OF PURCHASE

4.1 WBSEB is a Transmission-cum-Distribution Licensee and meets its power requirements mainly by way of purchase of power from the State Power Utilities and from the Central Sector Utilities. The total purchase projected by WBSEB for the year 2005 – 2006 from different sources is 19475.04 Million Units. The purchase planning is said to have been done keeping in view the following aspects:

(a) Estimated system demand based on the average load growth.
(b) Generation (not of auxiliary consumption) that may be available in own power stations.
(c) Commitment to supply peak system demand.
(d) Optimization of the power purchase cost with an eye on merit order purchase as far as practicable.
(e) Commitment and potential for export of power to outside region.

As we observe from the projection of WBSEB, out of total projected purchase requirements of 19475.04 MU, 6595.04 MU are to be taken from the Central Sector Power Stations including 2160 MU from the DVC. The sourcing of power from the State Utilities has been projected as under:

Considering UI and Grid Loss on the Energy import from Central Sector Generating Stations the net intake of power has been considered 18758.04 MU.

4.2 So far the power intake from the State Utilities are concerned, the Commission has assessed the position and ordered for supply of power to WBSEB by the DPL, DPSC Limited and WBPDCL as under:

4.3 Some of the objectors have objected to the proposal of purchase of more costly power from DVC at 132 KV and 33 KV. But, it is noted that these supplies are in the radial mode due to lack of appropriate infrastructures owned by WBSEB and that it will take some time to develop the same. Therefore, for the present, we are allowing projected power intake from DVC at 132 KV and at 33 KV. But, we are reducing the projected power intake from the same source round the clock by the extent of excess cheaper power supply from the State Utilities as per our Order.

4.4 A statement showing the power purchase proposal put up by WBSEB and the power purchase programme that is being approved by us has been given at the end of this chapter of our Order. The statement also exhibits the source wise cost of power purchase as well as the total financial implication of projected and admitted power purchase plan.

4.5 It is to be taken note of that the power purchase from the Central Sector Utilities is based on power allocation and commitments, which are highly influenced by peak period requirements. Non-drawal of committed supply from the Central Sector Utilities involve payment of demand charges inspite of non-drawal and therefore, ultimately the unit cost of supply becomes higher. Drawal of the committed power supply and exporting the quantity in excess of own requirement to outside region is beneficial to consumers provided price of such export is reasonably higher than the import cost. We underscore these facts keeping in view the objections raised by some of the objectors. Another important point is that while arriving at the total power purchase cost, WBSEB has proposed to make an adjustment of Rs. 9712.00 lakhs towards estimated Unscheduled Interchange (UI) charges. In true sense, such receivables cannot be considered as a deduction from the power purchase cost. It is a sort of incentive for helping in better grid management. The Commission has classified these estimated receipts of WBSEB as other ‘receipts’ and has considered to adjust the same with Gross Revenue Requirement for this year. The Commission will consider in due course how this approach can be systematized, so that the generating stations of the State feel the urge of helping the better grid management.

4.6 It is also to be pointed out here that, in the referred statement at the Annexure, the average rates of power from different Central Sector Utilities and from the DVC have been taken as per the rates prevailed in 2004 – 2005. But for the State Utilities the rates have been taken as assessed and admitted by the Commission for DPL, DPSCL and WBPDCL.
We have taken note of the increase in the notified ex-pit head price of coal with effect from June 2004 and the hike in the price of oil. Hence, the arrangement of power purchase schedule in merit order, as commented by some of the objectors, will not be justifiable at this stage. We, however, give a directive in this regard to WBSEB for optimum sourcing of cheaper power as far as practicable.

4.7 We have also observed that power intake of WBSEB from the Renewable Sources of Energy is negligible in comparison to its total power intake requirement. We, therefore, direct WBSEB to maximize the utilization of the allocation of Hydel power available to it. It may be noted that the rate of proposed power intake from WBREDA has been admitted by us 225 paise / Kwh as against 170 paise / Kwh proposed by WBSEB. If WBREDA is in a position to increase its power supply, WBSEB should also be ready to accommodate the same at the rate allowed by us.

4.8 WBSEB has suggested that HT & EHT consumers running their captive plants on continuous basis and having an agreement executed with the existing licensee for back up / stand by / emergency power should be levied demand charge and energy charge at a higher rate. The Commission has carefully examined the issue. The Commission appreciates that sudden rise in demand in such consumers may adversely affect the licensee in terms of unscheduled interchange. However, in view implementation of ABT in State level in near future and in the Regulations and Orders on pending applications for open access for captive generators this aspect will be adequately taken care of.

SCHEDULE OF PURCHASE

CHAPTER – 5
OWN GENERATION OF ENERGY BALANCE

5.1 In this part of our order, we are to view the generation of power by WBSEB from its own sources and to draw an Energy Balance with reference to the purchase requirement as discussed in earlier part, export of energy outside the region, supply of power to other state utilities and admissible transmission & distribution loss.

5.2 Part of the total requirement of power is met out of WBSEB’s Hydel Generation. Besides Hydel, WBSEB has Gas Generating Stations at Kasba, Haldia and Siliguri with total 100 MW capacities and also a Diesel Generating Station at Rudranagar in Sagar Island. The Gas Stations are not being put on generation as fuel cost for those comes very high and further the power situation in the State has improved a lot and WBSEB has also not claimed any operational expenses in this regard. The employees from these stations have been deployed in other department. We have also noted that the fixed assets in these stations are fully depreciated over the years and now there is very little implication of keeping these stations out of operation in the revenue requirements of WBSEB. The load in Sagar Island is partly met out of Non-Conventional Energy Source (Solar Power) from WBREDA and partly from Diesel Station. Total generation (net of auxiliary consumption) from Hydel Stations has been estimated to be 577.50 MU and Diesel Generation is 0.50 MU. We accept these projections. Thus, total own net generation of WBSEB has been estimated to be 578.00 MU.

5.3 The estimated Hydel generation during 2005 – 2006 has been shown as under:

It has been stated by the tariff petitioner that the main Hydel stations, namely, at Rammam and Jaldhaka are working at reasonably high PLF. Bus, the generation from Teesta Hydel station has not reached the designed rate due to constraint towards release of adequate water as per DPR for non-completion of Dauk-Nagar Main Canel. As instructed by the Commission in its earlier order, WBSEB has submitted a detailed status report in this regard along with their tariff petition. Commission’s view in this regard will be recorded elsewhere in this order. As mentioned in the earlier chapter, purchase of power from renewable sources to meet WBSEB’s power requirement is negligible. WBSEB needs to examine the possibility of increasing PLF in their other Hydel power stations. Commission directs WBSEB to submit a status report in this regard to the Commission. For the present, we are agreeing to the projected net generation from Hydel power stations during 2005 – 2006.

5.4 After examining the aspects of power purchase and power availability from own generation, we are to examine the Energy Balance projected by WBSEB is as under:

5.5 It has been stated that from the study of the energy input vis-à-vis energy realized in different Distribution Divisions for the period from September 2003 to March 2004, overall Aggregated Technical and Commercial loss (ATC) was found to be 44.42%. In some of the remote Divisions having predominantly unmetered agriculture consumers have recorded ATC loss higher than the average. Certain Divisions having substantial Industrial Consumers also recorded higher ATC loss. It has also been stated that all out efforts are being made to reduce such loss and WBSEB is committed to a strict time-bound schedule in terms of MOU between the Govt. of West Bengal and Govt. of India.
As stated, the measures taken to contain such high rate of ATC are as under:

i) 100% metering scheme has been taken up and completed metering at such station upto 11 KV feeder.

ii) The activities of Security and Loss Prevention Wing (S&LP) have been strengthened and decentralized upto circle level.

iii) High voltage Distribution Supply (H.V.D.S.) system primarily for power supply to irrigation / agriculture consumers directly from distribution sub-station through drawal of L.T. P.V.C. cable has since been introduced. For this purpose distribution sub-stations are being considered of capacity 10 KVA, 11/0.4 KV for every two STW consumers.

iv) To facilitate energy audit, mapping and documentation of entire power net works with reference to geographical location including attributes of the attached equipment in the power network, Geographical Information System (G.I.S.) has been taken up. Once this network documentation is completed the energy loss will be computed through application software CYMDIST.
With all such measures, WBSEB is hopeful that technical as well as commercial loss will be substantially reduced.

5.6 It has been pointed out by the Utility that T&D loss allowed by the Commission in the previous year was 25% excluding the energy supplied to all bulk Licensees. It has been observed in the report of Committee of Experts on sub-transmission and distribution system constituted by the Ministry of Power, Govt. of India that loss in the EHV network is about 4% to 5%.

5.7 In the instant tariff petition, the revenue requirement for the year 2005 – 2006, has however, been computed by WBSEB considering ATC loss of 36%, but the average cost of supply has been worked out considering T&D loss of 25% as approved by the Commission for the year 2004 – 2005. By this way, WBSEB worked out unaccounted energy to the extent of 2289 MU and proposed to deduct an amount of Rs. 445.60 crores from their Revenue Requirement towards cost of such unaccounted power.

5.8 The Commission has received observations of different objectors on the issue of allowable T&D loss. Almost everyone who has responded to the tariff proposal of WBSEB for 2005 – 2006 has been highly critical of the projected T&D loss. Some have tried to give specific figures of what should be the T&D loss, while some others have suggested how WBSEB should improve its performance on this front. It may be recalled that in the tariff order for the years 2002 – 2003, 2003 – 2004 and 2004 – 2005, we stated that the target for reduction of T&D loss would be fixed for 2005 – 2006 on the basis of actions taken by the Board to reduce T&D loss. The Commission has carefully considered all the criticisms and suggestions. The Commission has also considered the actions already taken by the Board as also the actions proposed to be taken, as reported by WBSEB in the instant tariff petition. After due consideration of the same the Commission is of the view that a reasonable T&D loss has to be allowed to WBSEB. However, as upgradation of the network and metering are essential for achieving appreciable reduction in T&D loss, the Commission would urge WBSEB to attend these requirements with topmost urgency. Certain instructions in this behalf have been given in a subsequent chapter. For the present, the Commission has arrived at the following decisions:

i) While assessing the power purchase requirement of WBSEB for bulk supply to CESC Limited and Singur – Haripal Rural Electric Co-operative Limited, the Transmission loss @ 4% and 8% respectively will be considered.

ii) T&D loss on power requirement for WBSEB’s own consumers as well as for in-house consumption will be kept at present @ 24%.

iii) No T&D loss will be considered on export quantity.

iv) The balance power, available after adjustment of export, bulk supply, T&D loss as well as in-house consumption, will be treated as normative sale.

v) The average cost of supply will be worked out on the basis of such normative sales and hence no adjustment from the Revenue Requirement will be needed towards unaccounted power.

5.9 Based on the analysis done in the preceding paragraphs and decisions recorded hereabove, we draw the following Energy Balance for WBSEB for the year 2005 – 2006.

5.10 If the abnormal power loss can be plugged through the measures taken / proposed to be taken by WBSEB, the target of normative sale should be fully achievable. We want to point out that from 10th June 2005 onwards no power supply can be done to the consumers only through meters.

5.11 The power purchase cost as allowed by us is subject to periodical adjustment in terms of the formula for Fuel & Power Purchase Cost Adjustment (FPPCA) as specified in Schedule – 4 to West Bengal Electricity Regulatory Commission (Tariff) Regulation, 2003.

CHAPTER – 6
FIXED CHARGES

6.1 The total fixed cost claimed by WBSEB is Rs. 146674.00 lakhs. This amount is net of capitalisation of the part of cost for on-going capital works. Non-tariff income of the WBSEB has been estimated to be Rs. 11130.00 lakhs. Hence net claims of WBSEB towards fixed charges are Rs. 135544.00 lakhs. In this part of our order, we are to make prudent analysis of the expenditures projected under different heads with reference to reasonableness as well as trend of such expenses incurred in earlier years. We are taking up all the heads one by one under which fixed charges have been claimed. We shall also record the extent of such claims admitted by us.

6.2.1 Employees’ Cost:

The total amount of employees’ cost projected by WBSEB for the year 2005 – 2006 is Rs. 51584 lakhs out of which Rs. 7741 lakhs have been proposed for capitalisation and the balance Rs. 43843 lakhs to be charged in the revenue account. The existing staff strength of WBSEB has been stated to be 29956, which is to reduce to 27988 by the end of 2005 – 2006 on account of normal and voluntary separation. It has been clarified that the number of employees in the organisation has been reduced by 20% during last 5 years while the average annual growth in number of consumers had been 6%. The projected expenditure under this head includes an amount of Rs. 1502 lakhs towards overtime payment, which is allowed only to technical staff who are engaged to attend emergency breakdown beyond normal hours particularly during the rainy and festive seasons to minimize the period of interruption and to maintain the quality of supply. The terminal benefits payable to the outgoing employees during the concerned year have been estimated to be Rs. 9436 lakhs.

6.2.2 A number of objectors have questioned the projected increase in the employees’ cost. In general, they appear to have opined that the projected expenditure on this account is unreasonably high. The Commission has duly considered such objections and has examined the projected amount with reference to actual expenditure stated to have been incurred during 2003 – 2004 and estimated amount of expenditure to be incurred during 2004 – 2005. As per our analysis the admissible amount of Employee cost chargeable to Revenue Account comes to Rs. 42571.00 lakhs, after taking into account the facts that nearly 2000 employees who will retire shortly, will have to be given their terminal benefits, and that there will be a normal inflationary impact on this item, which is a committed expenditure.

6.3 Repair and Maintenance Expenses:

6.3.1 The projected expenses towards Repairs & Maintenance (R&M) is for Rs. 11764.00 lakhs out of which, Rs. 37.00 lakhs have been proposed to be capitalized towards maintenance of ongoing capital construction works.

6.3.2 As stated, in order to deliver power at reasonable good quality parameters and to reduce instances of outage, WBSEB has taken up large transmission projects and APDRP Scheme. Since 2003 – 2004 WBSEB added amount of Rs. 1858.00 crores in cost of transmission and distribution assets.

6.3.3 Almost all the objectors to the tariff proposal of WBSEB commented critically on the poor quality of supply and there is no question about the need to improve the same urgently. We feel that to render better services with quality supply, only attending to breakdown calls are not enough. WBSEB needs to have a proper plan for preventive maintenance of its transmission and distribution installations scattered in the vast area and put the same in action in a time bound manner. We, therefore, allow the amount as projected by WBSEB but, stipulate simultaneously that WBSEB must show some positive improvement in respect of quality of power supplied by it. The Commission expects that with this admission of expenses towards R&M, the Utility will make significant improvements urgently in its quality of services to the consumers.

6.4 Administration and General Expenses:

6.4.1 Administration and General Expenses projected by WBSEB are as under:

The other Administration and General Expenses include Insurance, Security expenses, Telephones, Trunk Calls, Postage, Conveyance & Travelling, Printing & Stationery, Service charges for P&T employees and Freight related expenses. Out of the other administration expenses, total amount of Rs. 360.00 lakhs have been proposed to be allocated to ongoing capital works and the balance Rs. 5389 to be charged to Revenue Account.

6.4.2 Many of the objectors opined that the expenses claimed by WBSEB towards Administration and General charges are on the higher side and are not justified. We have carefully examined the points raised by such objectors as well as the clarifications provided by WBSEB in their tariff petition. It has been noted that WBSEB has increased its activity of consumers’ services, revenue monitoring, drive against theft of power and set up Loss Prevention Wing decentralizing its functions upto circle level. Such activities aim at reducing the extent of commercial loss of power resulting higher volume of power sale. The Commission would encourage activities of WBSEB towards prevention / minimization of loss – both technical and commercial. The expenditure towards Rent, Rates & Taxes and also on Audit fees is in the nature of committed expenses. All these, besides, do not appear to be unreasonably inflated. We, therefore, consider to allow the projected expenditures claimed under Administration and General Expenses.

6.5 Interest:

WBSEB’s claims of interest has attracted adverse comments and criticisms from a few objectors.

WBSEB claimed Rs. 26032.00 lakhs towards interest on borrowings chargeable to Revenue Account and provided the following details in this respect.

a. Outstanding balance at the beginning of the year.

b. Amount repayable during the year.

c. Anticipated fresh drawal of loans in 2005 – 2006

d. Chargeable interest for the year.

It has been noted that WBSEB is considering to send a proposal to the State Government for conversion of loan to equity to the extent of Rs. 376925.00 lakhs and no interest has been claimed on that amount which has been shown as repayment of Government Loan. But, no such proposal appears to have been sent till the date of filing of the petition and no confirmation in this regard was available from the State Government till the date of submission of the tariff petition. Hence, the Commission has decided to treat the above mentioned sum as loan only. Therefore, this sum will attract the usual interest. The rate of interest on State Govt. Loan has been considered by us @ 8.5%. It has been noted by the Commission that the State Government has considered to reduce the rate of interest on loans sanctioned to WBPDCL and DPL to reduce the burden of interest on the power tariff of those Utilities. On the same analogy, we feel that the similar treatment is to be given with WBSEB also. In regard to interest on Bonds issued to secure the outstanding debts to Central Sector Power Utilities, the Commission provisionally allowed 50% of the interest payable on such Bonds in the last year and directed WBSEB to submit a detailed report on the matter relating to issuance of Bonds for such securitisation of dues to Central Sector Power Utilities. WBSEB has submitted such report along with the Tariff petition for 2005 – 2006. On careful examination of the matter vis-à-vis the submitted report, the Commission has come to hold the view that interest on account of securitisation should not be fully allowed. There are two views on this issue. One view is that the consumers are not responsible for the outstanding dues of WBSEB to Central Sector power utilities. The other and opposite view is that there was some delay in previous years in issuing tariff orders due to certain unavoidable reasons and therefore there had been under recovery of revenues by WBSEB. In fact, such under recoveries due to non-determination of the year wise tariff in the pre-Commission days were common. Such accumulated unpaid dues constituted one of the main causes of financial deterioration of WBSEB. However, the Commission does not wish to go into that history. In the best judgement of the Commission, 50% of the interest claim on account of securitisation may be admitted and since that 50% has already been allowed in 2004 – 2005, no more interest on this account will be admitted by us, and the last year’s dispensation should be taken as one time full and final payment allowed on this score.

The chargeable interest in the revenue accounts, thus, has been worked out as under:

6.6 Interest on Consumers Security Deposits:

Estimated amount of Security Deposit from the consumers upto the end of 2004 – 2005 is Rs. 50097.00 lakhs and estimated fresh receipt of deposit during 2005 – 2006 is Rs. 10000.00 lakhs. Interest on such deposits @ 6% comes to Rs. 3306.00 lakhs and we allow the same.

6.7 Other Finance Charges:

WBSEB has not given the details of the “other finance charges”. It is therefore not possible to treat this item of expenditure in terms of the usual norms. However, as there is likely to be some involvement of Bank charges etc. on financial transactions, an amount of Rs. 500.00 lakhs has been considered as against Rs. 4566.00 lakhs claimed.

6.8 Depreciation:

Some of the objectors have voiced their reservations on depreciation as calculated by the Board. It appears that WBSEB could not work out chargeable depreciation following the rates as prescribed in the Companies Act, 1956. It has worked out chargeable depreciation following the provisions of Notification issued by the Central Government under the Provisions of Electricity (Supply) Act, 1948. However, as the Board does not have any Thermal Generation Assets now and as depreciation on newly capitalized assets is to start only with effect from the year following the year of capitalisation as per the referred Govt. Notification, and no pro-rata depreciation as per the provisions under Companies Act, has been claimed, we do not think there will be significant difference in the amount of claim if depreciation is worked out as per Companies Act, 1956. Provisionally the amount as asked for is agreed to which is subject to adjustment during next Tariff revision process. WBSEB is directed to submit detailed calculations in this behalf, as per provisions of the Companies Act, 1956, or any other norm / standard if set by the Commission, in its next tariff petition.

6.9 Other Debts:

The claims for other Debts are mainly on account of provision for Doubtful Debts in regard to Receivables against power supply bills. Provisions allowed by the Commission in earlier years and actual provisions taken by Board as per their Accounts are as under:

Accounts for 2004 – 2005 are yet to be finalized. Considering the short provision allowed by Commission in earlier years, a further amount of Rs. 1500.00 lakhs has been allowed for the year 2005 – 2006. It has been noted that huge amount of WBSEB’s dues remained unrealized for a long period on account of disputes / litigation with the consumers and an Empowered Committee has been constituted by it to resolve the matter and ensure realisation. As reported, the Empowered Committee has settled 48 such cases during first 6 months of 2004 – 2005 and in that course total amount of Rs. 7.09 crores of dues have been waived. We consider this step taken by the Utility appropriate and beneficial to the consumers. Settlement of the disputes / litigations by mutual negotiation and speedy recovery of outstanding dues will enable the Utility to avoid borrowings to some extent and also the burden of interest on tariff. The reasonableness of writing-of further debts as bad will be examined by us during the future Tariff fixation.

6.10 Reasonable Returns:

The Board has claimed Reasonable Return @ 3% on the total depreciated Book value assets in use. The Board has stated that it has calculated reasonable return on the above mentioned basis, because the admissible return to a Board as per the Electricity Act, 2003 is not known. This is a fallacy. After the Electricity Act, 2003 has come into force, matters like reasonable return would have to be guided by the relevant Regulations and the National Policies (if the latter state anything on this point). At the moment only the Tariff Regulations of this Commission are available and we have to guide ourselves by the provisions of that Regulation. As per the Tariff Regulation, 2003, the Board as a Licensee is to get Reasonable Return on its Equity Capital. As per the copy of accounts submitted along with the Tariff Petition, the Equity Capital of the Board is Rs. 135262.00 lakhs. Return @ 13.25% (SBI PLR + 3%) on Equity Capital comes to Rs. 17922.00 lakhs. We, therefore, allow a reasonable return of Rs. 17922.00 lakhs to WBSEB on this count.

6.11 Other Non-Tariff Incomes:

The estimations of other non-tariff incomes, which are required to be adjusted before arriving at the Net Revenue Requirement of the Utility, are as under:

Except for Rental of Meters and other Apparatus, the receipts are of contingent in nature and can only be estimated based on past experiences and trends. We admit the estimations made by WBSEB.

6.12 Other Adjustments:

(a) On Account of shortfall in Generation at Teesta Hydel Power Station:

Some of the objectors have objected to poor generation at Teesta Hydel Power Station and have opined that the entire expenditure projected to be incurred for generation in that power station should not be passed on to the consumers. The Commission also felt in the similar way and made some deductions in this regard from the Revenue Requirements of WBSEB in the past years. In its last Tariff Order, the Commission directed WBSEB to provide full facts and clarifications in regard to not achieving desired level of generation in the referred Hydel power station. In compliance, WBSEB brought out the facts and submitted a special note in this regard along with their Tariff Petition. On detailed examination of the facts brought out, we find that the consumers are indeed not receiving full benefits of the investments made in this project. Therefore, in our opinion, the costs should not be passed on in full to the consumers. We, thus, decide to disallow the projected fixed charges of the concerned power station in the ratio of rated annual generation as per DPR and projected generation for the year 2005 – 2006. The rated annual generation as per DPR is 319 MU as against which the generation has been projected to be 165 MU with total fixed charges of Rs. 4499.00 lakhs including depreciation. The amount to be disallowed in this regard on the above basis comes to Rs. 2172.00 lakhs.

(b) Unscheduled Interchanges recoverable:

As clarified in para 4.5, the amount projected to be recovered by WBSEB from Unscheduled Interchanges (U.I.) is Rs. 9712.00 lakhs. This amount is also considered to be adjusted with the gross amount of revenue required for WBSEB.

6.13 WBSEB has not mentioned any sum as subsidy receivable from the State Government. As such, the Commission is also not including any sum in the projected income of WBSEB for 2005 – 2006 on account of subsidy from State Government.

CHAPTER - 7
REVENUE REQUIREMENT &
AVERAGE COST OF SUPPLY

7.1 The foregoing analysis and admission of variable cost and Fixed Charges now leads us to draw the Statement of Revenue Requirements of WBSEB for the year 2005 – 2006 and also to work out the average cost of supply:

STATEMENT OF REVENUE REQUIREMENT

CHAPTER - 8
TARIFF ORDER

8.1 The tariff schedule as applicable to the consumers in the year 2005-06 is given at Annexure A. The Commission has also decided to give certain directives to WBSEB on various matters, particularly concerning metering and relating to tariff. These are to be found at Annexure B. The Commission has noted that the National Electricity Policy which has come to effect from 12.02.2005 enjoins that very poor consumers who consume electricity below a specified level, say 30 units per month, should receive special support which will be at least 50% of the average (overall) cost of supply. The tariff petitioners had already submitted their respective tariff petitions before 12th February 2005 and therefore had no opportunity to submit the necessary data in their tariff petitions accordingly. Obviously, the Commission also had no opportunity to prepare any regulation for this purpose and make the same applicable to the tariff petitions for 2005 – 2006. However, since there already is a group of consumers who consume 25 units of electricity per month, the Commission is of the considered opinion that this group can be treated for the present, as the targeted group for this purpose. An endeavour has been made to provide a reasonable tariff support to the member of this group.

8.2 The associated conditions to tariff are as follow: -

(a) There will be no change in the load factor rebate. Load factor surcharge will be levied on HT industrial and HT commercial consumers if the load factor falls below 25%. The surcharge amount will be 30 paise / kwh and will be applicable only for the amount of energy by which the consumption falls short of energy corresponding to a load factor of 25%.

(b) For the consumers under TOD metering, the peak period energy charge will be 50% more than the normal energy charge indicated in the tariff schedule at Annexure A for the respective category of consumers. The off-peak period energy charge will be less than normal energy charge by 31% of normal energy charge of such category of consumers as indicated in the tariff schedule.

(c) Demand charge on HT industrial category of consumers shall remain unchanged and shall be levied on the basis of maximum demand recorded during the month or 75% of the contracted demand whichever is higher subject to a minimum of 50 KVA. In case KW demand is recorded in place of KVA demand then the demand charge rate in KVA is to be determined by considering a power factor of 0.85.

(d) Penalty clause for maximum demand (For TOD consumers):

Drawal of power in excess of sanctioned contract demand will attract the following additional charges for excess demand. This additional charge shall be in addition to the demand charges calculated as per para above for the total amount of maximum demand recorded during the billing period.

In case the drawal of non-TOD consumers exceed the contracted demand in any month, the demand charge as specified in the tariff schedule shall be applied on recorded maximum demand for that month. In addition to this, additional demand charge in the case of non-TOD consumers shall be 50& extra on the quantum of demand by which the recorded maximum demand exceeds the contracted demand.

There will be no additional energy charge due to excess demand.

(e) The demand charge shall not be payable by any consumer for that period when load of the consumer is totally shed / interrupted because of any fault of WBSEB or its system or due to force majeure but such exemption from demand charge shall not be available if the interruption is caused by grid failure or automatic under frequency relay tripping. This is, however, without any prejudice to any other compensation if the consumer is entitled to such compensation because of applicability of any other law or the Electricity Act 2003 or Regulations made thereunder.

(f) Minimum charges excluding meter rent, taxes, levies etc. and arrears will be as follows: -

(g) For high voltage industrial supply rebates for 33 KV and 66 KV supply will remain unchanged at 4% of the energy charge and the rebate for 132 KV supply will remain unchanged at 8% of the energy charge.

(h) Rebate for Cold Storage plant meant exclusively for storing fish, sea food, potato and perishable vegetable will be 8% on the energy charge provided the payment is made within due date.

(i) Rebate for timely payment to all consumers excluding those covered by para 8.2(g) above will be 2% of the amount of the bills excluding taxes, duties, levies and arrears. In addition to this, a special supportive rebate of 2% will be permitted to such domestic consumers whose consumption of electricity is limited to 25 units per month, in line with the National Electricity Policy.

(j) Un-metered agricultural / irrigation consumers are to make monthly payment for which they will be entitled for 2% rebate for timely payment in line with consumers of other categories. In case, however, such agricultural / irrigation consumers opt for advance payment of the full annual amount the consumers will be allowed a rebate of 5% in addition to 2% rebate mentioned above.

(k) Delayed payment surcharge shall be 1.25% per month of the delay in payment or pro-rated for part thereof upto 3 months of delay, at 1.5% per month of delay or pro-rated for part thereof for any period beyond 3 months of delay but upto the next 3 months and at 2% per month of delay or pro-rated for part thereof beyond first 6 months of delay subject to the clause 5 for disconnection of supply under the regulation of Electricity Supply Code Regulation 2004 of WBERC. Delay in payment shall be counted from the due date of payment.

(l) The rate applicable for temporary supply will remain unchanged at 8% above the rate of supply applicable to the particular category of consumers to which the applicant seeking temporary supply belongs provided that the calculation will be based on the highest rate of such class of consumers. If there is no appropriate rate given in the tariff the rate for temporary supply will be @ Rs.4.75 / kwh. Method of calculation will be as per existing tariff.

(m) There will be no change in the power factor rebate / surcharge / meter rentals / testing / installation charges / disconnection and reconnection charges / fuse replacement etc.
(n) Fixed charge in respect of LT industrial consumers will be Rs.10/- per HP / month.

8.3 All statutory levies like electricity duty or any other taxes, duties etc. imposed by the State Govt. / Central Govt. or any other competent authority shall be extra and not a part of the tariff as being determined hereinafter.

8.4 This tariff shall be applicable from the billing month of / pertaining to April,2005 and onwards till 31st March, 2006 unless amended, or revoked or extended by the Commission from time to time, as the Commission may deem fit and proper, subject to and in terms of the provisions of the Act and the Regulations made thereunder.

8.5 In addition to the tariff already fixed, WBSEB would be further entitled to additional sums, if any, towards enhanced cost of fuel and power purchase, if any, after the date from which this tariff order takes effect. Formula for fuel and power purchase cost will be applicable as per the Schedule 4 of the Commission’s Tariff Regulation. It is to be noted that the formula is equally applicable if the cost of fuel and power purchase is reduced instead of enjoying an enhancement.

It is reiterated that the amount to be reimbursed in accordance with 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 stipulated that for reimbursement of any additional fuel cost, only the basic fuel cost plus applicable taxes and levies plus railway and transportation cost, wherever required, will be considered.

8.6 The State Govt. may require the grant of any subsidy to any consumer or any class of consumers in accordance with Section 65 of the Electricity Act 2003, in the tariff determined by the Commission in favour of WBSEB for the year 2005-06. If any such subsidy is at all granted by the State Govt. the latter shall clearly indicate the consumer(s) on the class(es) of consumers who is / are to be subsidized and also clearly spell out the amount of subsidy. These must be communicated to WBSEB and this Commission and the subsidy must be paid to WBSEB in advance whereupon the tariff of such a consumer / consumers or a class of consumers or classes of consumers shall be deemed to have been reduced accordingly as will have been indicated by the State Govt. However, such a direction of the latter shall not be operative if the payment is not made in accordance with the provisions of the Electricity Act 2003 and the Regulations made thereunder and in such a case, the tariff as determined by the Commission in this tariff order shall be applicable.

8.7 WBSEB will present to the Commission a gist of this order along with the names of at least three leading dailies (at least one of which will be in English and the rests in Bengali) within two working days from the date of receipt of this order for approval of the Commission and on receipt of the approval shall publish the approved gist in those newspapers within five days from the date of receipt of the approval of the Commission.

8.8 The Commission has determined the tariffs for WBSEB for the year 2005-06 in terms of the provisions of Sections 62(1), 62(3) and 64(3)(a) of the Electricity Act 2003, keeping in view simultaneously the provisions of Sections 61, 172, 173, 174 and 185 of the same, other relevant provisions of the Act, the National Policy (Policies) and the guidelines available from different Regulations applicable to determination of tariff.

Sd/-30.03.2005                                                                                        Sd/- 30.03.2005

PRITITOSH RAY                                                                                                               S. N. GHOSH
MEMBER (TECHNICAL)                                                                                                  CHAIRPERSON

DATE: 30.03.2005