Derc

ANNUAL REPORT : 2007-08
I. INTRODUCTION
The year 2007-08 has been a momentous year for DERC in as much as some of the landmark regulations which mark a new era in power sector regulation in Delhi, i.e. Delhi Electricity Supply Code and Performance Standards Regulations, 2007; the Multi Year Tariff (MYT) Regulations, 2007 for generation, transmission and distribution utilities; and the Open Access Regulations, 2007 being the more significant ones, were issued during the year. The Commission also issued its first tariff order under the MYT regime for the Control period 2007-11. Infraline, a well known magazine covering issues relating to infrastructure sector, instituted awards for excellence. Various organizations working in the sector sent feedback as regards their role and achievements. Such organizations included Electricity Regulatory Commissions among others. A jury was constituted by the organizers, for selecting the best performer, headed by Sh. B.K. Chaturvedi, Member Planning Commission. DERC was selected by the jury and conferred the Power Market Enabler Award for Excellence in Development of Power Sector. The award function was organized on the 12th October, 2007, at Hotel Inter Continental, New Delhi. The award included a trophy and a certificate. The role of DERC in actively promoting interest of Delhi Electricity Consumers, involving them in the Commissions activities continually and for a host of pioneering regulatory reforms carried out by the Commission, such as move towards Multi Year Tariff etc. came in for special mention. The jury also noted the efforts of DERC in formulating rules for bringing grid discipline, guidelines and standards to be followed by stakeholders in the State
DELHI ELECTRICITY REGULATORY COMMISSION
Transmission System (STS) to develop, maintain and operate the system efficiently. The DERCs role in scrutinizing the investment claims made by companies was appreciated while noting, in particular, the efforts of DERC in reducing costs by closely scrutinizing the expenditure proposals made by Discoms, making scheme by scheme scrutiny of investment proposals, including undertaking site visits for actual verification of investments made. The year also assumes special significance as it was the first year after the policy directions, issued by Government of National Capital Territory of Delhi (GNCTD) post privatization, came to an end. The year also saw the Discoms performing well in the matter of reduction of Aggregate Technical & Commercial (AT&C) losses. In fact, BSES-Yamuna Power Limited (BYPL) which had the highest loss levels at the time of privatization, did exceedingly well to reduce its loss levels to under 30% by achieving about 10% loss reduction during 200708. This, incidentally, happens to be one of the highest loss reductions achieved in one year by a Discom in Delhi. Through the first MYT order, the Commission asked the Discoms to achieve 1% of their total power purchase from renewable sources for promoting use of clean fuel and mitigating pollution. In pursuance of the National Electricity Policy which envisages setting up of Solid Waste Based Energy Projects in urban areas to recover energy from domestic/ industrial waste, the Commission accorded approval to the tariff fixation in respect of an integrated waste management complex plant to be set up at Okhla, Delhi. The plant with 16 MW generation capacity
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will have a combined capacity of processing about 2000 tonnes of Municipal Solid Waste (MSW) per day to prepare Refuse Derived Fuel (RDF) while the bio-methanation plant is expected to process about 200 tonnes of green waste per day. The plant is a welcome proposition to Delhi as it helps promote a cleaner Delhi by converting refuse to valuable power at a competitive levelised tariff of Rs.2.83/kWh. In discharge of its statutory obligation under Electricity Act, 2003 the Commission constituted the State Advisory Committee (SAC) which represents the interests of commerce, industry, transport, agriculture, labour, consumers, non governmental organizations, academic and research bodies in electricity sector. The objects set out in the Electricity Act, 2003 for the committee are to advise the Commission on major questions of policy; matters relating to quality and continuity of electricity supply and extent of service provided by the licensees; compliance by licensees with the conditions and requirements of their license; protection of consumer interest; and electricity supply and overall standards of performance of utilities. For providing adequate representation to the consumers before various fora like DERC, the Appellate Tribunal for Electricity (ATE) and other
courts of the land, the GNCTD, at the instance of DERC, set up the Electricity Consumers Advocacy Committee (ECAC). The Committee is headed by a retired High Court Judge. The Commission has also been laying strong emphasis on strengthening the in-house grievances redressal mechanism within the Discoms. The Commission has been monitoring the performance of the call centers set up by the Discoms by ascertaining the quality of service being afforded to consumers. The year also saw the Consumer Grievances Redressal Forums (CGRFs) and the institution of the Electricity Ombudsman successfully complete their first term of three years after these were set-up in August, 2004. Over 80% of the cases decided by CGRFs and more than 60% of the appeals disposed off by the Electricity Ombudsman, during the first 3 years term of these statutory institutions, have gone in favour of the complainants i.e. the consumers. During the year, third party meter testing mechanism was also put in place with the Commission authorizing the Electronic Regional Test Laboratory (North) for carrying out third party testing of meters in their laboratory situated at Okhla in Delhi.
2. CONSUMER WELFARE
Good practices adopted and followed by DERC on Consumer Welfare matters 2.1. Delhi Electricity Supply Code & Performance Standards, Regulations, 2007
These Regulations were issued superceding the DERC (Performance Standard - Metering and Billing) Regulations, 2002 for ensuring that consumers get high quality services from utilities over a range of parameters and for bringing in operational efficiency, the regulations provide for standards of performance specifying therein the type of supply failure and the maximum time limit within which the supply shall be restored by utilities. Nature of supply failures listed in the regulations are quite comprehensive such as fuse blown out or MCB tripped; service line broken or snapped from the pole; fault in distribution line/system; distribution transformer failed/burnt; High Tension mains failed; problem in grid (33kV or 66kV) sub station; failure of power transformer; burnt meter; and street light failures etc. These standards envisage to bring about greater operational efficiency in Discom functioning. Efficiencies shall also be secured through some of the other provisions of the regulations also, which prescribe: (i) (ii) Standards in terms of quality of supply such as tolerance limits for low and high voltage. Time limit for rectifying voltage related problems, the time limit for testing accuracy of meter against application made for the (iii) purpose by consumer and time limit for replacement of defective / stuck meter and burnt meter; Overall Standards of Performance (SoP), such as, fuse blown off complaints are to be rectified within the time limit prescribed in the regulations in not less than 99% of the cases. Similarly, the line breakdown, distribution transformer failure and scheduled outages need to be rectified within the prescribed time limit in not less than 95% of the cases. Reliability indices such as System Average Interruption Frequency Index (SAIFI), System Average Interruption Duration Index (SAIDI) and Momentary Average Interruption Frequency Index (MAIFI). The utilities are required to indicate their quality of service targets along these indices. NDPL while filing their MYT ARR petition for the control period 2007-11 indicated their targets whereas, the BSES Discoms have not so far furnished the same. Amounts of compensation payable to the aggrieved consumers on account of utility failing to adhere to the prescribed SoP.
(iv)
(v)
In order to remove any ambiguity and arbitrariness in functioning of Discoms and to bring about uniformity of approach and also to increase operational efficiency on various aspects of consumer utility interaction, the regulations include standard formats for inspection report and meter testing report as also for each of the following types of applications made by consumers to the utility: for a new connection;
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for temporary connection; for change of registered consumer; for transfer of ownership to legal heir; for load enhancement or reduction; for change of category; for advance payment; for disconnection etc. Such standard forms and practices add to the efficiency of the overall system while bringing about transparency and uniformity to utility functioning and add to consumer welfare.
iv)
Overall Satisfaction level of consumers.
The Survey reported load shedding as the main consumer concern followed by Metering and Billing related problems. Over 60% consumers expressed problems as regards load shedding, 20-30% expressed problems relating to Metering and 1520% reported billing related problems. The consumers were not much aware about the grievances handling mechanism which have been put in place in form of Discom-wise Consumer Grievances Redressal Forums (CGRFs) and the Appellate Institution of the Electricity Ombudsman. The awareness about DERC among consumers was also not much. However, the Survey found that the consumers preferred the services rendered by the Discoms over those of the erstwhile DESU/DVB.
2.2. Consumer Satisfaction Survey

In 2007, DERC got a Consumer Satisfaction Survey conducted across the distribution areas served by the three private distribution companies, viz. BSES Rajdhani Power Ltd. (BRPL), BSES Yamuna Power Ltd.(BYPL) and North Delhi Power Ltd. (NDPL). The Survey was carried out to get a first hand assessment of the level of satisfaction among consumers vis--vis the services provided by the Discoms. In the process, 10391 domestic consumers were surveyed across all the three Discoms. The consumers were divided into three load categories: 0-2 kW; 2-5 kW; and above 10 kW, for the purpose of the survey. The questionnaire approved by the Commission consisted of 21 questions broadly covering the following 4 areas:i) ii) iii) The main consumer concerns; Metering and billing problems faced by consumers; Awareness among consumers about the Grievances Redressal Mechanisms and DERC; and
2.3. Meter Testing Drives

The Commission has been alive to the public apprehensions about fast running of electronic meters. In order to assess for itself whether the popular perception was indeed based on reality at ground level, the Commission undertook various initiatives as under:i) In the year 2003, DERC tested about 375 meters picked-up randomly from various godowns of the Discoms. The tests revealed that more than 91% of the meters recorded consumption levels within the limits prescribed in the Indian Electricity Rules. About 2% of the meters were found to be slow and 0.5% were faster than the prescribed limit. About 5% of the meters, however, were found to be defective, seemingly due to
design features. In addition to the above, the Commission issued guidelines to the Discoms regarding meter testing. On the basis of these guidelines a fresh drive was initiated by the Discoms during July/August, 2004. The Discoms tested over 6000 meters of which 46, 58 and 303 meters were found fast, slow and defective, respectively. Subsequently, the Distribution Companies associated the Central Power Research Institute (CPRI), Bangalore, an autonomous institution under Ministry of Power, Govt. of India, as an independent third party for testing of meters. In this exercise 1314 meters were tested, out of which 1 meter was found fast and 2 were slow. The Government of NCT of Delhi (GNCTD) also undertook a Meter Testing Drive under the supervision of Sub-Divisional Magistrates on four successive Saturdays starting from 17.9.2005. The exercise was carried out along with representatives of Resident Welfare Associations, Consumer Coordination Council, Faculty Members from the Department of Training and Technical Education, GNCTD and Discoms. ii) The DERC conducted a Meter Testing Drive from 1st October, 2005 to 10th of January 2006 in association with the Bureau of Indian Standards (BIS) and the CPRI, where representatives from both the organizations were present when the meters were tested on site. In this Meter Testing Drive, 536 meters were tested and only 4 (four) were
found to be fast. Discom-wise test results are as follows: DERC : Meter testing Drive TABLE : 2.1
Though only 4 meters were found to be fast out of the 536 meters tested, 96 meters were found to have a neutral problem, which actually relates to the loop connection or faulty wiring in the premises of the consumers. Wherever such cases were noticed, neutral was separately provided or the consumers were advised to get their wiring checked. The problems arising due to earth leakage and neutral mixing were taken up seriously and education campaign was launched by the Discoms cautioning consumers about the problem of neutral wires by inserting public notices in newspapers including notifying lists of Discom trained electricians to deal with such issues. The meter-readers were also directed to inform the consumers wherever such problems were noticed. (iii) To assess and ascertain the quality and accuracy of energy meters purchased by Discoms for installation at consumer premises, 14 energy meters each were drawn from the stores of the 3 Discoms viz BSES Rajdhani Power Ltd. (BRPL), BSES Yamuna Power Ltd. (BYPL) and North Delhi Power Ltd. (NDPL) at random to constitute a sample of 42 meters which were sent to NABL approved laboratory for testing of
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accuracy requirements. Out of the 14 meters picked from each Discom, 10 were single phase meters and 4 were 3 phase meters. Subsequently, the results were analysed and all the thirty samples of single phase energy meters were found within the permissible limits of accuracy as per the latest Indian Standard applicable to such meters. Two samples each of BRPL and NDPL, of the three phase whole current meters, were found marginally slower than the permissible limits. None of the meters was found fast. The results were intimated to the respective Discoms for necessary action at their end. Such random and independent testing drives have helped in instilling confidence among the consumers about the accuracy of energy meters being installed at their premises by the Discoms.
area that emerged was the issue of street lights which appeared to be more in case of a particular Discom. This issue was separately taken up by the concerned Grievance Redressal Officer (GRO) of the Commission with the concerned Discom and the problems seem to be sorted out to a large extent.
2.5. Grievance Redressal Officer Hearings

Discom-wise Grievance Redressal officers (GROs) have been appointed by the Commission from amongst its officers. GROs identify the serious consumer complaints and call the Discom representatives and the consumer concerned for a personal interaction. The matters taken up are sorted out across the table during the hearing. It is observed that once such a hearing notice is issued, the Discoms get in touch with the aggrieved consumer and in most cases solve the problem. The satisfaction letter issued by the consumer is produced by the Discom during the hearing. Of course, the consumer avoids the trouble of personal appearance in such cases. The end objective of bringing relief to the consumer is achieved.
2.4. Discoms monthly meeting with Residents Welfare Associations (RWAs)

On the Ist Saturday of every calendar month, Discoms hold meetings with RWAs, Traders/ Industrialists Associations at some of their offices. Nominated DERC representative attends such meetings as observer. These meetings are conducted in a structured manner where Minutes are drawn up and Action Taken Report(ATR) in respect of the previous meetings is considered before taking up the Agenda. A copy of Minutes of such meeting is also endorsed to DERC by the Discom. These meetings are indicative of first hand impressions about the quality of service being rendered by the Discoms to their consumers. The important problem
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2.6. Call Centre Monitoring

Call Centres have added a new dimension to consumer comfort in so far as registration of complaints is concerned thereby obviating the need for the consumer to personally visit the Discom office for lodging his complaint. Two types of Call Centres have been set-up by the Discoms, the Technical Call Centre and the Commercial Call Centre. The type of complaints being handled by these Call Centres are as follows:-
Discom Call Centres : Types of complaints handled TABLE : 2.2
During FY 2007-08, the Discom-wise details of the consumers, who availed the benefit of services of the Call Centres, are as follows:Discom Call Centres : Number of complaints handled TABLE : 2.3
From the table it is obvious that footfalls at the Discom offices to the extent of 5,69,239 consumers have been avoided leading to not only an orderly functioning but also adding to the efficiency of the Discom. In addition to the above, the GROs have also been making random calls to the respective Call Centre numbers for assessing the quality of response an ordinary consumer would get by calling at these numbers.
2.7. Electricity Consumers Advocacy Committee (ECAC)

It was observed that of late, substantial litigation affecting consumer interest has emerged at all levels, from the Regulatory Commissions upto the Supreme Court. Some of the issues in these
litigations are concerning tariff, depreciation, cross subsidy, replacement of electronic meters, electricity supply to unauthorized areas, status of single point delivery contractors etc. Whereas other parties to these disputes like the Discoms are represented by top legal experts, there is no institutional mechanism ensuring effective representation of the consumer interest. Almost invariably, the consumers are not adequately represented. In the long term, it would have serious repercussions for the consumers and it was felt that this situation needs to be remedied early. The Commission had an occasion to have interaction with the representatives of Regulatory Commissions from the States of Pennsylvania and Ohio, USA. During the interaction, it was learnt that in USA, most State Governments have set up an office of the
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Consumer Advocate (OCA), which is legally required/ authorized to represent the consumers before the Regulatory Commission/ Appellate Courts etc. This institution is stated to be an important functionary in the Governmental set up of a State and is quite effective in protecting the interests of consumers. Considering the success of this institution in USA, the Commission wrote to the GNCTD to consider setting up an institution like the office of the Consumer Advocate which shall be legally responsible for representing the consumers in electricity related litigation including filing appeals on behalf of the consumers. The GNCTD accepted the suggestion and have appointed the ECAC for representing consumers before DERC, the Appellate Tribunal for Electricity, the Delhi High Court and the Supreme Court in the matters involving public interest.
energy meters in their own laboratory at Okhla, Delhi. Existence of an independent testing mechanism for energy meters is expected to mitigate consumer grievances about the accuracy of energy meters installed by Discoms.
2.9. Hearings Under Section 142 of Electricity Act, 2003

For violation of any of the provisions contained in Electricity Act, 2003, the regulations notified by DERC etc., the consumers move a petition before DERC for imposition of penalty against the concerned Discom. The DERC, after following the procedure prescribed under the law, hears such cases. The detail of penalty imposed, case-wise and Discom-wise is given in table 5.2 of chapter-5 of this report. The quantum of compensation/ penalty awarded/imposed in each case is also mentioned therein.
2.8. Third Party Meter Testing

Making arrangements for third party meter testing for testing of energy meters is a statutory obligation cast upon SERCs under the Electricity Act, 2003 and the relevant Regulations made thereunder. A detailed exercise was carried out by the Commission and a number of laboratories, testing houses, meter manufacturers, distribution companies and Regulatory Commissions were contacted to collect information on meter testing laboratories available, their testing fee structure, their status as regards NABL Accreditation etc. As a result, ERTL Okhla, Delhi an NABL accredited laboratory under the Govt. of India, was appointed by the Commission as the Independent third party testing agency to carryout the testing of samples of
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2.10. Consumer Grievances Redressal Forums (CGRFs) and Ombudsman

The Discom-wise CGRFs and the Appellate Institution of the Electricity Ombudsman were set up in August, 2004 in pursuance to the provisions of Electricity Act, 2003. These institutions have now been in existence for almost 4 years. During these years, the details of number of complaints/appeals dealt with by these institutions including the Discomwise number of complaints / received, disposed and pending alongwith the number of cases decided in favour of Consumer/Discom are given in the following tabulation:-
Discom CGRFs : Details of complaints received TABLE : 2.4

(from 2nd Aug, 2004 to 31st March, 2008)
* Includes 111 applications which could not be admitted due to technical reason like the matter being pending before other Courts/ Forums etc.
Discom CGRFs : Details of complaints disposed of TABLE : 2.5

Ombudsman : Details of Appeals Disposed of TABLE : 2.6
* Includes appeals rejected for non-compliance of statutory requirements as prescribed in the DERC Regulations.
2.11. Public Grievances Cell

One issue which was repeatedly raised by consumer groups in 2006-07, was the dissatisfaction of some of the consumers with the Grievance Handling of the Discoms. The aggrieved consumers felt that they must have some alternative remedy. Some of the consumers perceive even the Consumer Grievances Redressal Forum (CGRF), set-up in accordance with the provision of Section 42(5) of the Electricity Act, 2003, to be a part of the utility as the salaries etc. of the CGRF Chairman and Members are paid by the Discoms, notwithstanding the fact that over 80% of the cases decided till date, since the inception of the CGRFs at Delhi, in August, 2004, have gone the consumer way. The subsequent amendment to the Rule 7 of the Electricity Rules, 2005 has only strengthened this perception. The amended Rule stipulates that the appropriate Commission shall nominate one independent member on CGRF, who is familiar with consumer affairs while the other members shall be the officers of the licensee. In 2006-07, the Commission had the occasion to have detailed interaction with the Chairman/ Members/Officers of Regulatory Commissions from the States of Pennsylvania and Ohio, USA. During the interaction, it came out that in USA also, they had faced this problem and the same was resolved by the government by setting up a group independent of the Discoms, which is funded by the state and supervised by the Regulatory Commission. The group receives complaints from consumers and resolves these by taking up the matter with the concerned utility. The serious ones are put up to the Regulatory Commission for initiating formal proceedings. This group is said to be very successful and has lent substantial credibility to the system and has raised the satisfaction level of the consumers. Most states in USA are said to be having such a system.
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Considering the success of this Institution in USA, DERC wrote to Government of NCT of Delhi requesting it to set up a similar Institution at Delhi. It was suggested to the Government that the mandate of this group would be to take up with the Discoms, the unresolved grievances and in cases where the Discoms are seen to have not acted properly, the issue can be recommended to the CGRF / DERC for further action depending upon the nature of the fault. This group was meant to provide an alternative to those not satisfied with the Grievance Handling of the Discoms. Being independent of the Discoms, it would have greater credibility. The Govt. of NCT of Delhi, set up the Public Grievances Cell (PGC) in January 2007 headed by a retired judge of Delhi High Court and assisted by a retired Chief Engineer as the other Member. It is in addition to the grievance redressal systems of the Discoms. By the end of 2007-08, the PGC received about 20,000 consumer grievances, out of which more than 90% stood resolved as on 31.03.2008. Where the consumer is not satisfied with the accuracy of his meter, the PGC also gets such meters tested in association with the officers of the Central Power Research Institute (CPRI), a Bangalore based autonomous organization of the Government of India, Ministry of Power. Testing of meters is carried out on subsidized charges of Rs.50/- for a single phase meter and Rs.100 for a 3 phase meter, payable by the consumers. The PGC has got tested 866 meters on site, out of which 34 meters were found to be beyond the permissible tolerance limit of 2.5%. These meters were quickly replaced by the concerned Discom and necessary billing related corrections carried out. The PGC is accessible to consumers through web enabled consumer friendly software for registering their grievances. This unique experiment conducted at Delhi is proving beneficial for the consumers as also for the sector generally.
3. DELHI POWER SECTOR : DEVELOPMENT OF INFRASTRUCTURE, SERVICES AND SOME ASSOCIATED KEY ISSUES
Initiatives for Improvement of Infrastructure and Services 3.1. Power Availability in Delhi
There has been a noticeable improvement in the availability of power at Delhi in recent years. Load Shedding in Delhi has reduced from 558 million units (MU) or 3.0% of total energy consumption in 200102 to 136 MU in 2007-08 which is about 0.6% of the total energy consumption. Till 31.03.2007, the function of bulk power supply was vested with the Delhi Transco Limited (DTL), the State Transmission Utility, which is a wholly owned utility of the Govt. of NCT of Delhi. Subsequently, the Power Purchase Agreements (PPAs) have been reassigned to the distribution licensees w.e.f 01.04.2007 as per Order dated 31.03.2007 issued by the Commission. The bulk power procurement thereafter is effected by the Discoms from the generating stations located in Delhi, Central Sector Stations as per the share allocated by Ministry of Power, Govt. of India and the bilateral contracts entered into with other utilities. It is a fact that Northern Region has been facing an overall power shortage and therefore, occasionally, load shedding had to be resorted to for maintaining grid frequency and ensuring integrated operation, under the instructions of Northern Regional Load Dispatch Centre (NRLDC). Under these conditions of shortage, the distribution licensees were advised to make efforts for buying whatever power that could be available even at a relatively higher cost so as to minimize load shedding. The improved power availability to consumers is evident from the fact that load shedding has substantially reduced despite
significant growth in power demand.
3.2. Capital Expenditure and Improved Infrastructure

The Distribution Companies have been pursuing an aggressive Capital Expenditure (CAPEX) programme since the infrastructure inherited from the erstwhile Delhi Vidyut Board (DVB) was old and therefore, prone to frequent faults. Expenditure on CAPEX has helped in reducing both, technical and commercial losses. The following Table gives an idea of the magnitude of year-wise CAPEX incurred since 1st July, 2002 to 31st March, 2008, by all the three Distribution Companies (Discoms) and the Transmission Licensee Delhi Transco Limited (DTL) : Capital Investment by Discoms and Transco TABLE : 3.1
There has been significant addition to the infrastructure such as Power transformers, EHV cables, installation of distribution transformers, installation of 11kV feeders, installation of shunt capacitors, etc. by the Distribution Companies and corresponding augmentation of Grid & Grid stations has been undertaken by DTL.
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3.3. Reduction in Aggregate Technical & Commercial (AT&C) Losses

The Distribution Companies in Delhi have been able to reduce their AT&C Losses through a combination of several measures such as: (i) (ii) (iii) Installation of meters for all consumers; Replacement of electro-mechanical meters with electronic meters; Implementation of CAPEX Schemes. Technical losses have come down through replacement of Distribution transformers, cables and lines etc. ; Having an aggressive anti-theft drive wherein enforcement raids are conducted regularly. Introduction of schemes, such as, LowTension - Aerial Bunched Cables (LT-ABC), High Voltage Distribution Schemes (HVDS) have also helped in bringing down commercial losses; and Improvements brought about in Collection Efficiency, which also includes managerial improvements by way of better billing methods and collection of past DVB arrears from private and public sector consumers.
3.4. Improvement in Plant Load Factor of Generating Units in Delhi

3.4.1. The Commission has been taking proactive steps towards enabling Indraprastha Power Generation Company Ltd. (IPGCL) to achieve better performance, including higher Plant Load Factor (PLF) and better Station Heat Rate. The efforts made to this end and the outcomes there of is outlined here under. 3.4.2. IPGCL had cited the problem in evacuation of power of GT Power station as the dedicated feeders to NDMC area and DMRC drew very little power during night time and the existing 100 MVA transformers got loaded to its full capacity. Hence, the entire power which could be generated at GT station was not getting evacuated and it eventually resulted in backing down of the generation. The Commission directed the Delhi Transco Limited (DTL) to install 160 MVA capacity Power Transformers in place of 100 MVA Transformers to overcome this problem and the said works are under execution. 3.4.3. During the year 2005-06, Rajghat Power House of IPGCL could not recover full Fixed Cost due to certain technical reasons which required shutdown of generating units at Rajghat for attending to major repairs. To incentivise the expected better performance of the generating units after these repairs, the Commission relaxed the norms for recovery of full Fixed Cost for Rajghat Power House and the Target Availability for the year 200506 and 2006-07 were clubbed together at
(iv)
(v)
Other measures which have helped/will help in further reduction of losses are: (i) Deployment of CISF personnel in Distribution Companies to help them in conduct of enforcement raids for detecting and stopping power thefts ; Setting up of six Special Courts in the NCT of Delhi exclusively for trial of electricity related offences. Making theft a cognizable offence in the Electricity Act, 2003.
(ii)
(iii)
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60%. In view of the allowance so provided to facilitate the repair works and additional expenditure for rectification works, the PLF of Rajghat Power House has gone up significantly from 53.69% in FY 2006-07 to 75.71% in FY 2007-08. 3.4.4. In view of the gas shortage affecting the generation at Gas Turbine (GT) station of IPGCL, the Commission held discussions with all the concerned utilities with regard to providing facilities for Liquid Fuel firing apart from the gas firing, for ensuring availability of additional generation in Delhi system to meet the summer load of 2008. The distribution licensees expressed their agreement for bearing the additional charges arising on account of conversion for operation of two(2) Gas Turbines of GT station on liquid fuel. Accordingly, IPGCL took appropriate action for conversion of the two (2) Gas Turbines to facilitate liquid fuel firing as an alternative to gas firing. 3.4.5. The Plant Load Factor (PLF) and generation from the generating units in Delhi over the years is as follows: PLF : Generating Units in Delhi TABLE : 3.2
(All figures in %)
Generating Units in Delhi : Overall Generation and PLF TABLE : 3.3
The above cited generation and overall PLF level is despite the significant adverse impact on the generation at the gas based stations of Delhi owing to shortage of gas at different points of time.
3.5. Sale / Banking of Surplus Power

3.5.1. The allocation of the existing Power Purchase Agreements (PPAs) among Discoms as per Commissions Order dated 31st March, 2007 was based on certain principles which, inter-alia, included the conditions for the transactions of sale/banking of surplus power. Subsequently, the Commission in its Order dated 12th June,2007 laid down the following parameters/policies within which the Sale of surplus power will take place : (i) Any transaction for sale shall be resorted to only if surplus power is available after meeting the requirements of all the Licensees of Delhi and no load-shedding shall be resorted to on account of such transactions by any of the Licensees. All the three Distribution Licensees in Delhi, namely, BRPL, BYPL and NDPL and the two deemed Licensees, namely, NDMC and MES, along with the SLDC are associated
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(ii)
in the meetings of the Delhi Power Procurement Group (DPPG) while working out the likely surplus that would be available for sale. The SLDC is also responsible for the apportionment of the surplus among the participating Distribution Companies, including the deemed Licensees in case they require it for their own use. (iii) The first option for sale would be banking arrangement with any other State Utility followed by direct sales to Utilities with appropriate Payment Security Mechanism. Sale to traders should be the next option and the last resort would be transactions through the UI mechanism due to uncertainty in receipt of the receivable amount. The pricing formula for transactions amongst the Licensees in Delhi, including the Deemed Licensees, at the proposed full cost of Badarpur Thermal Power Station, shall be discussed and approved separately. The DPPG is free to nominate the Nodal Agency for each transaction for sale and that particular Nodal Agency will be responsible for tying up adequate Payment Security Mechanism in order to ensure that the interest of consumers of Delhi is not jeopardized. Alternatively, if the sale quantum is decided in advance, the transactions could be undertaken directly by the Distribution Companies / Agencies with the buyer.
matter of PTC India Ltd. versus Gajendra Haldea & Others and Appeal (Civil) No. 275 of 2007 in matter of West Bengal Electricity Regulatory Commission (WBERC) versus Gajendra Haldea & Others.
3.6. Rates for Inter-Discom Trading within Delhi

3.6.1 In view of the surplus capacity available with some of the Discoms in certain time slots, the Commission vide Order dated 14.08.2007 directed the following procedure and settlement mechanism for Inter-Discom Power Transfers: (i) For the purpose of Inter-Discom Power Transfer, the base allocation done by the Commission shall be the criteria and any decision on the use of 15% unallocated quota can be taken only by Govt. of NCT of Delhi. A utility, may surrender surplus capacity within the base allocation, in advance, to other utilities and in case the demand of other utilities is more than the surrendered capacity, the allocation shall take place in accordance with the ratio adopted in the Commissions Order dated 31.03.2007, subject to mutual agreement between the parties. Alternatively, the Discoms and other licensees shall requisition their actual requirement during scheduling on a daily basis. Large deviations between Schedule & actual will be treated as gaming. Other distribution licensees of Delhi shall then be offered such un-requisitioned capacity by the SLDC and the single rate settlement between the utilities should be linked to
(iv)
(ii)
(v)
3.5.2. The said Order of the Commission is an interim procedure subject to the Orders of the Honble Supreme Court of India, when received, in Appeal (Civil) 68 of 2007 in
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(iii)
Badarpur Thermal Power Station, due to the fact that this load centre power station met the entire allocation for NDMC and MES, which were likely to have surplus capacity. With the current fixed charge for BTPS then being Rs. 0.53 per kWh , the variable charge Rs. 2.11 per kWh as of 30.06.2007 and adding 10 paise per kWh for all other adjustments such as, towards income tax and any other item which was unforeseen at that stage, the single settlement rate between the Discoms for such transactions was fixed at Rs. 2.75 per kWh. Any fuel price adjustment to Rs. 2.11 per kWh beyond 30.06.2007 was to be added at actuals to the prescribed rate of 2.75 kWh. (iv) All the Discoms/deemed licensees were to position their representatives in the SLDC at the pre-designated time, as decided by the GM, SLDC, on a daily basis so that the schedules are finalized through an interactive process within the SLDC itself. Any underdrawal by a utility leading to surrendering its capacity by more than 10 per cent of the scheduled energy in each of the 15 minutes time block, shall be treated as gaming and the SLDC shall report such conduct of the utility to the Commission for further action. As regards the utilities, which are requisitioning such un-requisitioned surplus, any under-drawal leading to recovery of UI charges from the regional grid, shall be reported by the SLDC to DERC for further action in accordance with the provisions of the Act.
3.7. Reassignment of Power Purchase Agreements (PPAs) to Distribution Licensees and Deemed Licensees
3.7.1. In exercise of the powers conferred under Section 60 read with Sections 15 & 16 of the of the Delhi Electricity Reform Act (DERA), 2000, the Government of NCT of Delhi (GNCTD) notified the Transfer Scheme on 20th November, 2001 (as amended on 26th June, 2002 and brought into effect from 1st July, 2002), whereby the various functions of the erstwhile Delhi Vidyut Board (DVB) were unbundled and the business of procurement, transmission and bulk supply of electricity was assigned to the Transmission Company i.e. Delhi Transco Limited (DTL) which was also designated as the State Transmission Utility. The said Policy Directions issued by the Govt. of NCT of Delhi were valid for the period July, 2002 to 31st Mar, 2007 and stood saved by Section 185 (2) of the subsequently enacted the Electricity Act, 2003. Accordingly, the responsibility for arranging power for supply in the NCT of Delhi was to be vested with the Distribution Companies w.e.f. 01.04.2007 in accordance with the provisions of the Electricity Act, 2003 and National Electricity Policy. From 01.04.2007, DTL was, thus, to engage only in the activity of wheeling of power and operating the State Load Dispatch Centre. This necessitated the reassignment of the then existing PPAs to the various Distribution Licensees in Delhi. 3.7.2 Under Policy directions of GNCTD communicated on 30.03.2007, the
15
(v)
(vi)
Commission proceeded to issue the Order on 31st March, 2007, whereby the PPAs were reassigned to the Distribution Licensees including the deemed licensees in the NCT of Delhi w.e.f. 01st April, 2007. In the said Order, the NDMC and MES were allocated a capacity of 350 MW and 50 MW respectively from the Badarpur TPS. All existing PPAs (with the exception of Badarpur TPS, NCR Dadri TPS, IPGCL and PPCL both existing and future capacities) were to be allocated amongst the three Distribution Companies, namely, the NDPL, BRPL and BYPL in the proportion of 29.18%, 43.58% and 27.24%, respectively, which was in accordance with the energy drawn by them from the date of unbundling to February,2007. For the NCR Dadri TPS, IPGCL and PPCL only 85% of the capacities were allocated amongst the three Discoms on the same principle. In respect of Badarpur TPS, only 85% of the capacity left after allocating to NDMC & MES was allocated among the three Discoms, again on similar lines. 15% of the capacity of NCR Dadri TPS, IPGCL and PPCL and the balance of Badarpur TPS after allocating to the NDMC & MES was treated as unallocated share analogous to the Central sector in respect of Central Sector Power Units. This unallocated share of 15% was kept at the disposal of the Government of NCT of Delhi for allocation to the Distribution Company(ies) whose consumers are likely to face a relatively higher tariff in any year. The cost of power from these plants is regulated and is lower than the cost
16
at which power could be procured through bilateral arrangements and also through Unscheduled Interchange (UI). The Government may also use this unallocated share to meet any contingency or force majeure condition that may arise in any particular geographical area in the NCT of Delhi. In case the allocation results in any excess capacity in the hands of any of the Distribution Companies/Agency at any time, such excess capacity would be offered to other Distribution Utilities in Delhi at the first instance and only if such spare capacity cannot be absorbed within Delhi, it shall be offered to others. 3.7.3 The NDMC filed a Petition seeking modification of the Commissions Order dated 31.03.2007 allocating 350 MW power to NDMC from the Badarpur TPS, praying that the order be suitably amended and power to NDMC be reallocated in terms of directions of the Government of India contained in letter dated 18.12.2007, in the following manner: NDMC : Proposed Reallocation of Power TABLE : 3.4
The Commission felt that the concern of NDMC to secure reliable power is genuine considering the sensitivity of the area of its supply where many strategically important buildings and offices are located. However, it was also equally important for
the Commission to ensure that the interests of the consumers living in other areas of Delhi are not jeopardised because of review of the reassignment order and giving supply to NDMC from three different plants as proposed by it. The Commission considered the facts that tariff from BTPS is relatively higher than the tariff from Dadri and Pragati Power Stations and the other Discoms will not be able to get extra power ranging from 20 to 30 MW due to transfer of gas from IPGCL to PPCL for which they had given their consent. Also, it is a fact that PLF in the case of Dadri TPS is 97% as compared to BTPS where PLF is 87% which will facilitate NDMC to get higher quantum of energy. The Commission felt that the Review Petition of NDMC cannot be considered or decided in isolation as the Commission was under statutory obligation to watch the interests of the consumers as well as the electricity sector as a whole in NCT of Delhi. While considering the request for review of the Reassignment Order, the Commission had to ensure that such review does not lead to discrimination or disadvantage and is not detrimental or cause any prejudice to the millions of other consumers residing in the area of other Discoms. Therefore, it was of the considered view that NDMC should not be given preferential treatment at the cost of other consumers. Considering all the factors, the actual consumption pattern of NDMC and the overall interest of the consumers as well as the electricity sector as a whole in NCT of Delhi, the Commission allowed the Petition of NDMC with a rider, and reallocated power as proposed by the utility. The allocation was made subject to the condition that 15% of this allocated power would be treated as unallocated share, analogous to what was done
by the Commission in its Order dated 31.03.2007 in respect of other Discoms and also akin to the practice adopted by the Central Govt. in this regard. This unallocated share of 15% would be at the disposal of the Government of NCT of Delhi. It was clarified that by carving out 15% unallocated share from the allocation of NDMC, the total allocation is not reduced and as and when the NDMC needs more power, the same would be available to it but the only difference would be that NDMC would have to approach the Govt. of NCT of Delhi for allocation of power out of the unallocated share of 15%. Further, NDMC would also be eligible to get allocation from 299MW of unallocated capacity carved out in the Commissions Order dated 31.03.2007, if required. The Commission clarified that the Government of NCT of Delhi may also use the total unallocated share of (299MW + 53MW) to meet any contingency or force majeure condition that may arise in any particular geographical area in the NCT of Delhi. This Order of the Commission for revised allocation of capacity has come into effect from 01st April, 2008. However, there has been no change in other terms and conditions contained in the previous Order of the Commission dated 31st March, 2007 and the same will continue to apply in the NCT of Delhi hithertofore.
3.8. Procurement of Power on Short/ Medium Term

3.8.1. North Delhi Power Limited (NDPL) on its behalf as well as on behalf of the BSES Rajdhani Power Limited (BRPL) and BSES Yamuna Power Limited (BYPL), made an application for procurement of power on short/medium term basis through competitive
17
bidding process. Section 63 of the Electricity Act, 2003 envisages that the appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding, in accordance with the guidelines issued by the Government of India. The Government of India, Ministry of Power, has issued the guidelines contemplated under Section 63 of the Act, titled Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees vide Resolution No. 23/11/2004R&R Vol. II dated 19.1.2005. 3.8.2. BRPL and BYPL authorised NDPL to act on their behalf for short/medium term power procurement from various sources in order to meet the future short/medium term power requirement. The NDPL/Joint Power Procurement Committee constituted by the Licensees of Delhi forwarded the draft bid documents, Request for Proposal (RFP), Power Purchase Agreement (PPA) and the same were accorded in principle approval by the Commission on 22.8.2006. Subsequently, NDPL forwarded to the Commission the revised bid documents for Procurement of Power. The Commission perused the major changes/modifications proposed in the various sections of the revised document and the considered views of the Commission were communicated to the NDPL/procurer to take a final decision with respect to short/medium Power Procurement vide letter dated 23.3.2007. The NDPL on behalf of all the three Discoms in NCT of Delhi invited bids for short/medium
18
power procurement from various sources. 3.8.3. With only one of the seven bidders qualifying for consideration, it was suggested by the Commission that NDPL/procurer may consider taking up the bid process afresh, giving wider publicity to seek competitive offers from utilities all over the country in view of the fact that this bid is for the medium term and not confining the same to the seven numbers bidders short listed earlier. In accordance with the directions of the Commission, fresh tenders for short/medium Power Procurement were issued in September, 2007. Two offers were received from M/s. Jindal Power Limited and M/s. Maithon Power Limited and the bids were opened in presence of representatives of bidders, NDPL and BRPL. NDPL informed the Commission that M/s. Maithon Power Limited (MPL) is a joint venture between the Tata Power Company and the Damodar Valley Corporation, (DVC). The Tata Power Company holds 76% equity shares in the project and the remaining 24% equity stake being held by the DVC. It was considered that the bid from M/s. MPL being from an affiliate company or companies of the procurer i.e. NDPL which attracts clause 5.7 of the Guidelines and requires specific consent of the appropriate Commission for the entire bidding process. 3.8.4. On perusal of the application alongwith other documents, the Commission observed that the bidding process adopted by the NDPL/ procurer from the initial stage till the evaluation of financial bid by the Evaluation
Committee was in accordance with the guidelines issued by the Central Government and the modifications proposed by the Commission in the revised bid document. The bid of the M/s. MPL was lowest @ Rs.3.48 per KWh at NDPL/BRPL periphery and appeared to be reasonable in the present scenario of the power supply position in the NCT of Delhi. The Commission was of the view that the procurement of power under medium term power procurement @ Rs.3.48 per kWh seems to be in public interest duly taking into account the commissioning schedule of various generating stations for which long term PPAs have been signed by the distribution utilities of Delhi. Further, the entire bidding process was transparent in accordance with the guidelines issued by the Central Government and as per Section 63 of the Electricity Act, which provides for determination of tariff by bidding process. 3.8.5. In the interest of the consumers of the NCT of Delhi, the Commission vide its Order dated 28.03.2008 accorded its consent to the bidding process adopted by the NDPL/ procurer. NDPL was advised that the letter of intent (LOI) may be issued to M/s. MPL according to the terms and conditions provided in the bid documents and proceed further in the matter of signing of PPA, etc,. The Commission also directed the NDPL/ procurer to provide certificate of conformity of the bidding process according to Clause 6.2 of the guidelines issued by the Central Government. Further, the procurer has to
make public, the bid documents indicating all the components of the tariff quoted by all the bidders after signing of the PPA or the PPA becoming effective whichever is later. The Commission will adopt the tariff in terms of Section 63 of the Act after receiving the signed PPA alongwith the certificate by the Evaluation Committee.
3.9. Co-ordination Forum

3.9.1. The Commission approached the GNCTD on 1 April, 2005 to constitute a Coordination Forum consisting of the Chairperson of the State Commission and the Members thereof, representatives of the generating companies, transmission licensees, and distribution licensees engaged in generation, transmission and distribution, in accordance with Section 166(4) of the Electricity Act, 2003. 3.9.2. The GNCTD vide Notification No. F.11/36/ 2005/Power/1789 dated 16 June 2005 constituted the Coordination Forum, comprising of Chairperson and Members of DERC, Chairman & Managing Director of DTL, Managing Director of IPGCL/PPCL, CEOs of NDPL, BYPL and BRPL with Secretary, DERC as the Member Secretary. Since the Committee constituted did not include NDMC and MES, who also distribute power in Delhi, the Commission decided to invite them for all the meetings. The Commission has since conducted 16 meetings of the forum. 3.9.3. In these meetings, issues relating to arranging power to meet the demand of Delhi
19
till FY 2010-11 as well as other issues of common interest to ensure overall development of the power sector in Delhi were discussed. The Commission has, through the Coordination Forum, facilitated signing of long term PPAs for capacity of over 3660 MW which would provide power
to Delhi with gradual commissioning of generating units commencing henceforth upto FY10. The details in this regard are furnished below: Arrangement of Power for Delhi on Long
Term Basis TABLE : 3.5
20
3.9.4. All the above projects are being developed by various Central Power Sector Utilities (CPSUs)/ State Power Utilities (SPUs) and accordingly, the tariff would be regulated by the Central Electricity Regulatory Commission (CERC) in regard to the CPSUs. Further, Delhi has been allocated 200 MW power from Tala HEP. Besides these projects, from which power has been tied up, the Coordination Forum also discussed projects like Combined Cycle Gas Project in Tripura, setting up of 2000 MW plant by Delhi in Chattisgarh etc. but no final decision could be arrived at in view of the projects being at the conceptual stage. 3.9.5. Further, a share of 750 MW from the 1500 MW joint venture project being set up at Jhajjar (Haryana) by M/s. Aravali Power Co. with Haryana, Delhi & NTPC as partners, has been agreed to in the Coordination Forum meetings. Apart from this, the Coordination Forum authorised TRANSCO to enter into long term agreement with DVC for procurement of 100 MW power from December 2006 to September 2007 and gradually going upto 2500 MW on round the clock basis from DVC for a period of 25 years from the commissioning of the respective new generating units. Apart from this, PPAs have been signed for various upcoming projects of NHPC as well. Delhi is allocated about 500 MW of power from one of the Ultra Mega projects. The total tie up of additional power aggregates to about 7600 MW. This tie-up of additional capacity together with system augmentation/up-gradation would
significantly improve the power availability in Delhi in future. 3.9.6. The Commission has also worked through the Coordination Forum to remove bottlenecks in the execution of various major schemes such as setting up of two 220 kV GIS sub-stations at Electric Lane and Trauma Centre/AIIMS in NDMC area and up gradation of Ridge Valley Sub-station to 220 KV GIS type. The issue of execution of dedicated transmission system for evacuation of power to Delhi from the upcoming projects at Dadri (NTPC) and Jhajjar (Aravali Power Co.) has been discussed in the Coordination Forum meeting held on 23 November, 2007. Considering the criticality of the power from these Projects for meeting the power demand of Delhi specifically at the time of Commonwealth Games scheduled for October 2010, the Commission had taken up the matter with GNCTD as well as Central Government/Ministry of Power for necessary intervention in the matter. It is understood that the issue is now resolved and the associated transmission lines for Dadri NCRTPP extension and Jhajjar TPS would be built by NTPC. 3.9.7. The Coordination Forum in its meeting held on 25 October, 2005 decided that Discoms will jointly move a common proposal for seeking bids for procurement of power on short-term as well as long term basis. The document for short/medium term power procurement was received in the Commission by the end of March 2006, and
21
was subsequently discussed in various Coordination Forum meetings. After detailed deliberations on various issues involved in the procurement process and approval of the Commission to the bid document, the Discoms were authorized in August, 2006 to invite bids. This exercise is in compliance with the National Electricity Policy and Tariff Policy which mandate the distribution companies to procure power through competitive bidding.
3.10.2.Open Access Charges in Distribution System

In accordance with the Open Access Regulations, the Open Access to the Distribution System in the State is available for delivery of electricity for use by the Consumers with the connected load of three MW and above with effect from 01.10.08. The Nodal agency for arranging Long term and Short term Open Access is the SLDC.
3.10.3. Applicable Charges

In accordance with Regulations 6.7 and 6.8 of the DERC (Terms and Conditions for determination of Transmission Tariff) Regulations, 2007, the Commission has prescribed the Aggregate Revenue Requirements (ARR) in respect of the Transmission business in the MYT Order of Delhi Transco Limited (State Transmission Utility), issued on 20 December 2007. The Commission has also prescribed the Wheeling and Retail Supply Charges separately in its MYT Order of the Distribution Companies, issued on 23 February 2008. As regards Surcharge and Additional Surcharge etc. the Commission is in the process of finalizing the issue with the Stakeholders and Utilities.
3.10. Status of Open Access

In pursuance of the provisions of the Electricity Act, 2003, the Commission notified the Open Access Regulations on 3rd January, 2006, which inter-alia also contain provisions in respect of Intra-state Open Access in Transmission, Open Access in distribution System in a phased manner and Applicable Charges viz. Transmission Charges/Wheeling Charges, Surcharge, Additional Surcharge, Scheduling Charges, Unscheduled Interchange Charge, Reactive Energy Charge and any other charges, which the Commission may determine from time to time.
3.10.1. Open Access in Transmission System

Intra-State Open Access is already available in the Transmission System. The Nodal agency for arranging Long term Open Access is State Transmission Utility (STU) and for the purpose of Short term Open Access it is the State Load Dispatch Centre (SLDC).
3.11. Special Voluntary Retirement Scheme

Special Voluntary Retirement Scheme (SVRS) was implemented by the Discoms during the FY 200304 and the SVRS expenses form part of the Employee expenses. The Commission, in its Tariff Order for FY 2004-05 had opined that the expenditure on the SVRS, the borrowing cost and the retirement dues of the employees who have
22
availed of SVRS shall be met from the savings in the employee cost over the future years on account of reduction in the employees.
3.11.1. One Time Initial Outgo

Accordingly, the one time initial outgo of the Discoms was completely amortised by the Commission by the FY 2007-08 along with carrying cost. In addition to the one time outgo, the Discoms have also claimed for the payment of Pension/Medical /LTA to SVRS retirees.
3.11.2. Highlights of the High Court Order

The matter of aforesaid additional liabilities was argued before the Honble Delhi High Court which has pronounced its judgement on the issues of payment of terminal benefits including pension, gratuity, earned leave, etc. to the VSS optees. The High Court observed that the optees do not fall within the description of those voluntarily retiring as per conditions of service existing as on 1 July, 2002. They were induced to contractually depart from employment. The Pension Trust is not geared to bear this sudden and substantial, unilaterally created burden; the GNCTD, too is not liable in terms of the Act or Rule 6(9), to fund the payment of terminal benefits of such VRS/SVSS optees. The severance being achieved through contract between the Discoms and the employees, the liability for payment of terminal benefits, as well as commutation of pension and monthly residual pension, is that of the Discoms. The Honble High Court in its Order dated 2 July, 2007 directed as follows: (i) The Pension Trust and GNCTD are not liable to make payment towards terminal benefits
and residual pension arising to those who opted VRS/VSS, formulated by the Discoms. The employees of the Discoms who opted for VRS/VSS and were relieved from employment are entitled to payment of terminal dues (which expression would include all accrued benefits such as gratuity, provident fund, leave travel concession, leave encashment, payment towards medical facilities, commutation of pension and residual pension and such other payments as they are entitled to in terms of the protected terms and conditions of service under the Act and Rules) from the date of their respective severance from employment. (ii) It is open to the Discoms to adopt the IPGCL Model of paying pension, gratuity, leave encashment and other liabilities to the optees, in terms of the letter of the GNCTD dated 11 November, 2004. The Discoms shall indicate to the Pension Trust, in writing within two weeks from the date of this judgement whether they are willing to accept IPGCL Model or not. In the event of the Discoms not accepting the IPGCL Model, they shall be liable to pay additional contributions to the Pension Trust (second option). For the purpose of deciding the additional contribution to the pension trust on account of all the terminal benefits and liabilities due to such optees, the matter shall be referred to the actuarial tribunal. The actuarial tribunal shall complete its proceedings and publish its award within six months from the date of
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(iii)
(iv)
(v)
its constitution. (vi) The liability to pay residual pension i.e. monthly pension from the date of this judgement in the event the Discoms exercise the second option i.e. of going in for actuarial calculation; shall be borne by the Discoms concerned, for the period till the award is published by the Tribunal and payment made to the pension trust on the basis of such award, by the concerned Discom. The payments made by the DISCOMs to the optees shall also be subject to suitable adjustment/reckoning for the actuarial exercise adjudication by the Tribunal. The liability of the Trust to make payments to the VRS/VSS optees shall arise after the Petitioner deposit the amounts determined as additional contributions with the pension trust. The VRS optees are entitled to interest on terminal benefits, arrears of pension etc @ 8% p.a. from the date of entitlement to payment. This shall be paid by the Discoms.
(vii)
the Tribunal. The Tribunal will be deciding the lump sum amount which the Petitioner will be required to pay for transfering all pension and terminal benefit liabilities to the Pension Trust. This lump sum amount will be for the additional pension requirement for the period before the actual superannuation of the VSS optees and for shifting terminal benefits of the VSS optees from the superannuation date to an early date. The monthly pension payments being made to VSS optees shall be appropriately taken up before the proceedings of the Tribunal by the Discoms. The Commission allowed monthly pension provisionally subject to the outcome of the Tribunal award with the condition that any refund/relief provided on this account to the Discoms by the Trust will be available for adjustment in the future employee expenses. The Discoms are paying monthly pension to the SVRS optees from FY05 onwards. The Commission approved the monthly pension payment to SVRS optees in the truing up of FY07. The Commission had considered carrying cost of 8% per annum for the arrears of pension payment in FY05 and FY06 which is equal to carrying cost proposed by the Petitioner for amortization of SVRS expenses. The Commission also provisionally approved the SVRS Pension expenses proposed by the Discoms for the FY 2007-08.
(viii)
(ix)
3.11.3. Option Exercised by Discoms

In consequence of the Honble High Court order, the Discoms opted for the second option of actuarial valuation of the liabilities. The nomination for the arbitral tribunal to be formed pursuant to the directions of the High Court is under progress.
3.11.5. Payments of Terminal Benefits

On the issue of payment of the terminal benefits by the Discoms, the actual liability of the Petitioner towards the pension trust shall be determined by the tribunal at a future date. The Discoms were uncertain about the time of constitution of the Tribunal. The
3.11.4. Monthly Pension/LTA/Medical Payments to SVRS Optees

The Commission based on its understanding of the issue, believes that the Discoms will be required to pay monthly pension till the outcome of the award of
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Commission recognised that delay in constitution of the tribunal is getting translated into more intervening monthly pension payments by the Discoms and is increasing the burden on the tariff. The Commission, therefore directed the Discoms to expedite the constitution of the Tribunal; and also, seek clarification on the refund of the intervening monthly pension payments. The Commission also directed the Discoms to inform the Commission of any interim/final Order on the aforesaid issue. The Commision will, accordingly allow the payment to be made on account of terminal benefits by the Petitioner to the pension trust, based on the outcome of the proceeding of the actuarial tribunal, in the future truing up.
Electricity Commission shall fix a minimum percentage for purchase of energy from such sources taking into account availability of such resources in the region and its impact on retail tariff. 3.12.4. In pursuance of the above mentioned provisions and policy guidelines, the DERC, in its first MYT order for the control period 2007-11, has asked the Discoms to achieve 1% of their total power purchase from renewable sources for encouraging use of clean fuel and mitigating pollution. Initially a low percentage i.e. 1% has been prescribed considering that there is not much scope in Delhi for such generation. 3.12.5. Acting on a petition from IL&FS, a proposal for setting up a Municipal Solid Waste based power project at Okhla and Timarpur in Delhi was processed by the Commission by way of scrutiny of the bid documents, analysis of deviations from the Standard bidding guidelines and various related aspects raised by other stake holders like MCD, NDMC, DPCL, Delhi Government and the special purpose vehicle. After a series of meetings, the bid documents were finalized and approved by the Commission for subsequent processing by IL&FS. Tariff based Bidding process has since been completed and the project has been awarded to M/s Jindal Urban Infrastructure Limited at a levelised electricity tariff of Rs 2.83 per kWh. This would help mitigate the pollution problem apart from handling the disposal of municipal solid waste being generated in Delhi.
3.12. Municipal Solid Waste Projects

3.12.1. National Electricity Policy envisages setting up of municipal solid waste based energy projects in urban areas with a view to reducing environmental pollution apart from generating additional energy. 3.12.2. One of the functions of the State Electricity Commission mentioned in Section 86 (1) (e) of the Electricity Act, 2003 is to promote cogeneration and generation of electricity from renewable sources of energy by providing suitable measures for connectivity with the grid and sale of electricity to any person, and also to specify, for purchase of electricity from such sources, a percentage of the total consumption of electricity in the areas of a distribution licensee. 3.12.3. National Tariff Policy 2006 further provides that pursuant to provisions of Section 86 (1) (e) of the Electricity Act, 2003 the State
25
3.12.6. Municipal Solid Waste (MSW) based power project at Okhla and Timarpur in Delhi comprises of a Power Plant of 16 MW capacity at Okhla. The facility will have a combined capability of processing about 2000 tonnes of MSW per day to prepare Refuse Derived Fuel (RDF) which will be transported from Timarpur to Okhla. The Biomethanation Plant at Okhla is expected to process about 200 tonnes green waste per day. The plant is being constructed by the Timarpur Okhla Waste Management Co. Pvt. Ltd. (TOWMCL). 3.12.7. Non-availability of land for use as landfill site in Delhi and adjoining areas makes the project all the more desirable. 3.12.8. The project is expected to offer a unique and integrated solution for management of solid waste in the city of Delhi. The implementation of this environment friendly project would help in reducing pollution, minimize the landfill and help generating green electricity in the city of Delhi. 3.12.9. Another similar MSW project of 8 MW capacity to be set up at Ghazipur in Delhi is being processed by the Commission, which would help in the disposal of 1300 MT of garbage and MSW being generated in eastern part of Delhi.
the Electricity Act, 2003. It has also been stated that giving direct subsidy is a better way to support the poorer categories of consumers than the mechanism of cross-subsidizing through tariff. It has also been mentioned in the NTP that subsidies should be targeted effectively and in a transparent manner. Consequent upon the request of Govt. of NCT of Delhi to frame a subsidy scheme for the low end domestic consumers of electricity of Delhi, as per broad guidelines given by the govt, a subsidy scheme was drafted by the Commission and approved by the Delhi Government, for implementation by the Discoms. The subsidy scheme will be operational for a period of one year from 1st March, 2008 to 28th Feb, 2009. The salient features of the subsidy scheme are : (i) Subsidy @ Re One per unit will be available for all domestic consumers consuming upto 150/200 units of power per month Monthly consumption limit for peak months : 200 units/calendar month with a variation upto 10 units per billing cycle Monthly consumption limit for non-peak months : 150 units/calendar month with a variation upto 10 units per billing cycle Peak months of summer are May, June, July and August Peak months of Winter are December and January Non peak months are February , March, April, September, October and November
(ii)
(iii)
(iv) (v) (vi)
3.13. Govt. of NCT of Delhi Targetted Subsidy Scheme

Para 8.3 of the National Tariff Policy (NTP) provides that the State Governments can provide subsidy to any class of consumers to the extent considered appropriate, as per the provisions of Section 65 of
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In addition to helping the poorer sections of the society, the new subsidy scheme would encourage these consumers of Delhi to conserve energy so as to become eligible for the subsidy. This, in turn,
would result in reduction in overall energy requirement of Delhi. This new subsidy would be in addition to the other subsidy announced by GNCTD for domestic consumers and agricultural consumers to neutralize the tariff hike beyond the tariff level of 2004-05. The Discoms are to keep an account of the subsidy
amount claimed from GNCTD and submit the accounts at the end of each quarter so as to determine the actual level of subsidy disbursed. This subsidy would be released by GNCTD in advance for each quarter at the beginning of that quarter in accordance with the provisions of Section 65 of the Electricity Act, 2003.
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4. TARIFF
4.1. Tariff Filing
The Electricity Act, 2003 mandates the State Electricity Regulatory Commissions, including the Delhi Electricity Regulatory Commission (DERC), to take measures conducive to the development and management of the electricity industry in an efficient, economic and competitive manner. The National Electricity Policy, the National Tariff Policy and the Delhi Electricity Reform Act, 2000 (DERA) also guide the Commission in the tariff determination process and issuance of tariff orders. In order to provide a Multi Year Tariff (MYT) frame work, as required in terms of Section 61(f) of the Electricity Act, 2003 and para 8.1 of the NTP, which could bring about regulatory certainty to investors and incentivise efficiency in performance, the first MYT Regulations were framed and notified by DERC for determination of generation, transmission and distribution tariffs, on 30th May, 2007. Important issues like AT&C loss reduction targets, cross subsidy reduction, profit sharing rules, tariff control and quality improvement etc. have been addressed in the MYT Regulations. The Regulations specify the AT&C loss reduction targets required to be achieved by the distribution companies at the end of the control period. BRPL and NDPL have to achieve AT&C loss reduction target of 17% and BYPL 22% at the end of the control period i.e. FY 201011. In pursuance to these regulations all the licensees viz. Generating Companies (Gencos), Delhi Transco Ltd. (DTL) and the Distribution companies (Discoms) filed their respective Multi Year Tariff Petitions before the Commission for the control period FY 08 to FY 11 as
28
per the provisions of the Electricity Act and the DERC MYT Regulations, 2007. After a preliminary analysis of the petitions and the necessary directions given by the Commission to comply with the MYT Regulations, all petitions were admitted by the Commission. The petitions of the licensees were hosted on the website of the Commission and that of the respective licensee. Public notices by both, the Commission and the licensees were issued in National dailies publicizing filing of the Petitions by licensees and mentioning availability of copy of the Petition for sale at the respective offices of the licensees. Copies of the petitions were also made available for inspection at the office of the Commission to the general public along with advisory services by the staff of the Commission for the general public to understand the petitions. Objections and suggestions were invited on the petitions from the public and various stakeholders. The comments of the stakeholders generally placed emphasis on consumer grievances, quality of supply, loss levels of Discoms, cross subsidy, billing and metering, transparency in accounts of Discoms, fuel expenses, capital expenditure etc. to name a few. Subsequently, public hearings were held on the petitions of the licensees where various stakeholders appeared in person and submitted their views. The utilitiywise details of date of filing, date of admission, last date for filing objections, number of Stakeholders who gave their comments against the petition, date of public hearing and the date of release of Tariff Orders are given in the following table:
MYT Filing : Utility - wise details TABLE : 4.1
The Commission also held many validation sessions with the petitioners to seek additional clarifications on the information submitted by the petitioners. Key issues such as capital expenditure plans, power purchase arrangements, Operations & Maintenance (O&M) expenses which include Employee expenses, Administration & General expenses, Repair & Maintenance (R&M) expenses etc., AT&C loss reduction trajectory and other expenditure were deliberated upon. The steps taken by the Commission for processing the tariff petitions are summarised as under : i) Scrutiny of petitions for data / information deficiencies, preparation of deficiency memoranda thereon for the petitioners to
take note and remove the same; ii) iii) Technical sessions with the petitioners for seeking additional information/ clarifications; Approving the newspaper advertisements of the licensees giving salient features of the tariff petitions, calling for public comments; Appointment of officers of the Commission for helping the general public understand the MYT Petitions of the licensees; Examining the public responses and replies of the Discoms and ensuring that proper replies are sent by the licensees to all individual public responses; Conducting public hearings on the petitions.
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iv)
v)
vi)
In all, there were eight sessions of day each over a period of 4 days from 8th to 11th Jan, 2008 for the three Discoms. In addition to these, a day of public hearing each was also assigned to Gencos, DTL and NDMC on 24.09.2007, 03.10.2007 and 05.02.2008, respectively. vii) Analysis of the ARR petitions and various components of Annual Revenue Requirement such as power purchase, Operations & Maintenance (O&M) expenses which include employee expenses, Administration & General (A&G) expenses, Repair & Maintenance (R&M) expenses etc. AT&C Losses, energy sales, energy balance, true up of past period expenses, various expenses etc. using the computer software based model in MS-Excel; and Designing the Retail Supply Tariff, supply margin, wheeling tariff etc. The supply margin and wheeling tariff were computed for the first time and reflected in the tariff orders of distribution licensees.
4.2. Stakeholders Comments Generating Companies (GENCOs)

4.2.1Indrasprastha Power Generation Company Ltd. (IPGCL)
4.2.1.1. Norms of Operation Stakeholder Objection - The Discoms expressed, that the Petitioner has not met the norms of operation as per the MYT Regulations, even though the three stations were given relaxed norms. The Commission was requested to take into consideration only the norms as per the MYT Regulations to arrive at the Tariff for the Petitioner as any relaxation in the norms will lead to inefficiencies being passed on to the consumers. The Discoms also maintained that the Petitioner should take sufficient steps to improve the performance of all the stations. Petitioners response - The Petitioner put forth the argument that all stations of IPGCL were in a bad state from the time they were taken over after unbundling of DVB. However, substantial efforts have been made to improve the performance of these stations, but the plans put forth for renovation and modernization, were not sanctioned by Govt. of NCT of Delhi (GNCTD) and Ministry of Environment and Forests (MoEF). The IP Station did not have any major renovation and modernization activity in the past as it was due for closure by 2010. Hence, only necessary Repair & Maintenance (R&M) is being carried out. The other stations also faced constant technical problems which were being addressed in consultation with BHEL. Therefore, the Petitioner requested the Commission for approval of relaxed norms.
viii)
Subsequently, after prudence checks and verification of data etc. MYT orders were issued for generation companies i.e. IGPCL and PPCL, for transmission licensee i.e. DTL and distribution licensees i.e BRPL, BYPL, NDPL and NDMC. The orders were issued within the stipulated time provided in the Electricity Act i.e. 120 days from the date of admission of the tariff / ARR petitions.
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PUBLIC HEARING: MYT 2007-11
31
PUBLIC HEARING: MYT 2007-11
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Commissions View - The Commission, after analysis of the submissions concluded that any kind of inefficiencies and poor performance due to technical problems or fuel supply constraints has to be mitigated by the Petitioner and could not be passed on to the consumers, except in force majuere events. The norms of operation as specified in the MYT Regulations were determined after considering vintage of the plants, their technical performances etc. Further, performance improvements are expected with the proposed capital investment during the Control period. 4.2.1.2. Specific Coal Consumption Stakeholder Objection - BYPL and BRPL submitted that the specific coal consumption for the Control Period for IP Station and RPH are significantly higher than the All India average level. Petitioners response - The Petitioner clarified that the specific coal consumption was higher since the All India average level also included data for units of 210 MW & 500 MW capacity which cannot be compared to IP Station and RPH. Commissions View - The Commission clarified that norms as stated in the MYT regulations have considered the vintage and size of plants. Therefore, the specific coal consumption would be considered based on the approved SHR and the gross generation of each plant. 4.2.1.3. Specific Oil Consumption Stakeholder Objection - BYPL and BRPL claimed that that the specific oil consumption for the Control Period for IP station and RPH were well beyond the norms which was causing a rise in the variable cost. Petitioners response - The Petitioner clarified that
specific oil consumption was high due to frequent oil firing at the time of start ups as was required due to frequent trippings as caused by grid disturbances and outages due to age and inadequate R&M of the plants. Commissions View - The Commission stated that the vintage and size of plants were considered while arriving at the norms for stating the specific oil consumption in the plants in the MYT Regulations which has to be, accordingly, considered for determinations of tariffs. 4.2.1.4. Gas Supply Arrangement Stakeholder Objection - NDPL submitted that the Petitioner should plan for ensuring continuous supply of fuel and in case of non-supply of fuel, the burden on account of alternative arrangements of fuel purchase should be compensated by the original supplier and the same should not be passed on to the consumers. Petitioners response - The Petitioner clarified that it has inked an agreement with GAIL for continuous supply of fuel. However, on occasions of short supply of fuel from GAIL and only when all other alternatives of fall back arrangements fail, it resorts to purchase of fuel from the spot market. Commissions View - The Commission stated that fuel risks had to be borne by the Petitioner and that consumers cannot be made to bear the burden of increased fuel cost which may arise due to purchase of expensive fuel. The Commission also observed that the Petitioner did not comply with the directives of the Commission regarding submission of steps taken on efficient fuel procurement. The Petitioner was advised to prudently handle its fuel supply for
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consuming cheaper gas first. 4.2.1.5. Advance Against Depreciation Stakeholder Objection - BRPL and BYPL objected to the Petitioner claiming Advance Against Depreciation (AAD) without proposing any capital investment. Petitioners response - The Petitioner clarified that it had claimed AAD in view of new essential capital expenditure planned for RPH and GTPS to meet the stipulations of the requirement of environmental authorities, hence, the Commission was requested to consider the AAD. Commissions View - The Commission stated that any requirement of AAD would be appropriately considered on account of capital expenditure approved by the Commission, while determining the tariffs. 4.2.1.6. Coal Transit Loss Stakeholder Objection - BRPL and BYPL opined that the coal transit loss of 3.80% as proposed by the Petitioner could be reduced as the causes attributable to the loss were controllable and should be curtailed by the Petitioner. Petitioners response - The Petitioner clarified that washed coal was being used as per specifications given in the directives of the Honble Supreme Court. Therefore, the percentage of loss was higher than that specified by CERC. Hence, the Petitioner requested the Commission for approval of the projected transit loss due to the requirement of washed coal for its plants. Commissions View - The Commission analyzed the reasons submitted by the Petitioner for using washed coal and the causes of higher transit loss.
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The Petitioner was advised to improve its coal stock management and also monitor the transit losses regularly. Keeping in line with the transit loss as specified by CERC, the Commission also maintained the coal transit loss at 0.8% as per the norms specified in the MYT Regulations. 4.2.1.7. Operation & Maintenance Expenses Stakeholder Objection - BRPL and BYPL expressed concern that the O&M costs for the IP Station were almost 30% above the CERC norms for coal-based generation plants. The Commission was requested to disallow such high costs especially because of the low PLF of the plant. Petitioners response - The Petitioner explained there were a number of factors such as vintage of the plants, high cost of associated manpower, increased taxes and inflation factors which contributed to the high O & M costs and steps were being taken to reduce the expenses. Commissions View - The Commission was of the opinion that CERC norms for coal-based stations were not applicable to IP Station or RPH due to vintage and size of the plants. Therefore, the O&M expenses of each station were approved considering the vintage and size of generating units, the recommendations of the CEA and the expected performance levels of the plant.
4.2.2. Pragati Power Corporation Limited (PPCL)

4.2.2.1. Norms of Operation Stakeholder Objection - The Discoms expressed concern over the contentions of the Petitioner that the norms of operation as specified in the MYT Regulations could not be adhered to. The Discoms
were of the opinion that Pragati as a new plant should not have such constraints. Hence, they requested the Commission not to relax any norms both for open cycle and combined cycle operations. Petitioners response - PPCL clarified that they were unable to achieve the targets for Station Heat Rate (SHR) as against the same specified by the manufacturer. The other contributory factors were the frequent grid trippings which caused an increase in the Heat Rate. However, the Petitioner was making constant efforts to reduce the auxiliary consumption for which an energy audit had been conducted by the PCRA. Commissions View - The Commission stated that it had fixed the norms for SHR in the MYT Regulations considering the operating conditions of the plant along with the norms set by CERC. The Commission did not accept the claim of the Petitioner and maintained that norms specified in the MYT Regulations will be adhered to while determining the tariffs for the Control period. 4.2.2.2. Gas Availability Stakeholder Objection - The Discoms stated that PPCL should make efforts to ensure that the supply of fuel is continuous so that the Petitioner is not required to resort to purchase of expensive fuel and burden the consumers. It was submitted that the Petitioner should make suitable arrangements to ensure continuous supply of fuel and in case of fuel shortfall, the extra burden on account of alternative arrangements of fuel purchase should be compensated by the original supplier and should not be recovered from consumers. Petitioners response - The Petitioner clarified that they had inked a long term agreement with GAIL for
supply of gas. However, there had been times when supply of gas was reduced and purchase of gas from the spot market had to be resorted to. It was explained that this step of purchase from the spot market would be resorted to only when other fall back arrangements with GAIL have been exhausted. Commissions View - The Commission observed that PPCL had not complied with the directives of the Commission for submitting information on the arrangements made by them to purchase additional gas and also restructuring of the existing contracts for optimal usage of available fuel. 4.2.2.3. Operation and Maintenance Expenses Stakeholder Objection - BRPL and BYPL claimed that the Petitioner should treat the expenses on DLN burners as capital expenditure and not as part of O&M Expenses. Petitioners response - The Petitioner clarified that the expenses on DLN burners were a routine expenditure, hence, they were treated as O & M expenditure. This was also in accordance with the accepted accounting practices. Commissions View - The Commission agreed with the explanations given by the Petitioner and considered these expenses as special R&M and not as part of the normal O&M Expenses. 4.2.2.4. Return on Equity Stakeholder Objection - NDPL asked for details on the increase in equity during FY 2006-07 and details of capital expenditure during the year. Petitioners response - The Petitioner clarified that the increase in equity was for expenses incurred for the Pragati II Power Station, which would be transferred to the new plant at the time of commissioning.
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Commissions View - The Commission differed on the explanation given by PPCL and stated that they could not increase equity on account of expenses incurred for setting up another power station and accordingly, the increase in equity would not be approved. 4.2.2.5. Interest Expenses Stakeholder Objection - BRPL and BYPL wanted the Petitioner to refinance their expensive loans so as to reduce interest costs. They also contested the issue of including the rebate on timely payment in the interest expenses. Petitioners response - The Petitioner clarified they had already restructured the PFC loans at lower interest rates. As regards rebate on timely payment, the Petitioner maintained that as the working capital permitted by the Commission was not sufficient to recover the rebate given by PPCL for timely payments, they have accounted for this in the interest expenses. Commissions View - The Commission maintained the same stand as taken by it in the previous tariff orders wherein it had opined that the rebate offered was a commercial arrangement so as to expedite receipt of payment. As the Commission had considered receivables of 2 months for estimating the working capital requirement and the interest was allowed accordingly, the rebate on timely payment would, therefore, become a trade-off with the interest on 2 months receivables considered in working capital requirement, therefore the rebate on timely payment was disallowed in determination of tariff.
4.2.2.6. Fixed Fuel Expenses Stakeholder Objection - BRPL and BYPL were not in agreement with the Petitioner for including the fixed fuel cost as a part of the Fixed cost and maintained that it should be a part of the Variable cost. Petitioners response - The Petitioner clarified that fixed fuel costs correspond to a fixed component, not associated with the quantum of gas purchased. Hence, the cost cannot be considered as variable in nature. Commissions View - The Commission reiterated its stand as taken in the Tariff order issued on September 22, 2006 wherein it considered the fixed fuel expenses as part of Fixed cost since such costs had to be paid irrespective of the quantum of gas purchased. Therefore, such expenses are to be reimbursed to PPCL, notwithstanding the categorization.
4.2.3. Stakeholders Comments : Delhi Transco Ltd. (DTL)

4.2.3.1 Capital Expenditure Stakeholder Objection - The Discoms expressed their apprehensions on the very high cost of capital investment proposed by DTL for the control period at Rs 2800 Cr by drawing comparisons to the average capital investment by DTL for the previous 5 years which stood at Rs 82.41 Cr. They also brought to the notice of the Commission the difference in capacity/line addition and values of investment as proposed by DTL in their MYT petition and in their Business Plan. The mismatch between the increase in capacity proposed at grid stations and the increase in projected load was also brought
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out. It was also submitted that DTL had not envisaged any projects / schemes which was to inter connect new generation capacities in the Delhi system in the Control period. One of the Discoms also pointed out to the lack of space for switchyard expansion / augmentation of DTL grid sub stations. Petitioners response - The petitioner clarified that it has considered the recommendations of the 17th Electric Power Survey, conducted by CEA and the planning criteria of CEA to plan its Capex. They also informed that the costs for various schemes have been estimated at current market prices and the total investment is higher due to factors such as installation of GIS sub-stations, installation of underground cables instead of overhead lines. These investments are expected to be raised from GNCTD / borrowings from the market. DTL also submitted that the Discoms had not signed any PPAs with the Central Generating stations, Transmission Service agreements with DTL and Bulk Power transmission agreement with PGCIL. DTL also confirmed about developing switchyards, installing new substations and power transformers to improve the existing infrastructure. Regarding lack of space for switchyard expansion, it was clarified by DTL that they would provide for grid stations at alternative locations . Commissions View - The Commission expressed the opinion that capital investment should be based on future plans and requirements and not on the past performance as the high investment as sought by DTL will have an impact on the Transmission Service charges. However, the plans as proposed by DTL were in sync with that projected in the 11th Plan System Studies by the CEA. Discoms were expected to propose their investments in line with
what was proposed by DTL. The Commission was also in receipt of a communication from GNCTD confirming granting debt to DTL to the tune of Rs 1250 Cr (including Rs 25 Cr for SLDC) at 11.5% interest. GNCTD also confirmed providing 100% funding (if required) for the Capex of DTL. As regards signing of various agreements by Discoms, they were advised to do so at the earliest. The Commission also assured the stakeholders that appropriate capital investment for DTL will be approved after prudence check and scrutiny. Lastly, the Commission advised the Discoms and DTL to work in co-ordination for executing various plans so as to ensure that there is no mismatch. 4.2.3.2. Transmission Losses Stakeholder Objection - The stakeholders raised objections against the projection of high loss levels of 0.8% - 1.2% for the Control Period which they attributed to the high Capex projected by DTL. The Discoms also requested the Commission to specify performance standard norms for DTL. Petitioners response - DTL clarified that out of the total power purchase of 24629 MUs, the total loss was 1036 MU and necessary documents were submitted to support the losses as claimed by DTL. Improper line loading by Discoms was attributed to be the main reason for such high losses and relevant statistics were submitted by DTL to support their claim. Commissions View - The Commission examined various documents submitted by DTL in support of its claims and determined the loss levels based on existing losses as confirmed by SLDC because DTL did not have any control over its losses in the PGCIL network. As regards the Discoms contributing to high losses for DTL, the Commission noted the lack of
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co-ordination between the Discoms and DTL and advised both to co-ordinate for effectively improving the system. 4.2.3.3. Incentives from Central Power Sector Units Stakeholder Objection - The Commission should call for details of incentives received by DTL from the Central Power Sector Units (CPSUs) and find out whether it was linked to any future liabilities. Petitioners response - DTL submitted that they had received Rs 667.81 Cr (for the period FY 02 FY 05) as incentive for the one time settlement scheme from CPSUs. Commissions View - The Commission maintained that as the incentive received by DTL was on account of power purchase, it would be considered as an adjustment of the power purchase cost of DTL. The Commission also directed DTL to submit complete details of this amount and the manner of utilisation of this incentive and clarified that interest earned on this amount would be considered appropriately during true up.
Petitioners response - The Discoms stated that the decision on grant of concessional tariff is to be taken by the Commission in the overall interests of all consumers. Commissions View - The Commission clarified that it would not be practical to offer concessional tariff to senior citizens due to difficulties in ensuring that the connections are used by senior citizens only. However, Discoms were advised to extend courteous and prompt service to senior citizens. As regard requests from certain categories of the consumers for concessional tariff, the Commission cited Clause 8.3 of National Tariff Policy which stated that direct subsidy is a better way to support the poorer categories of the consumers than the mechanism of cross subsidizing the tariff across the board. Clause 9.1 of the Commissions Distribution Tariff Regulations also states that any consumer desirous of getting subsidized tariff, should approach the State Government which may consider giving subsidy to that class of consumers. In line with the National Tariff Policy and the Regulations, the Commission opined that extending fresh concessional tariff to any class of consumers will only increase the cross subsidy element which would not be in the interest of other consumers. The Commission felt that it was ideal to fix electricity tariff for all consumers on cost to serve basis and any subsidy based on socio-economic factors or otherwise should be extended by the State Govt. Rightly, it is the State Govt. which should bear this responsibility and the same should not be thrust on other sections of consumers.
4.2.4. Stakeholders Comments : Distribution Companies (Discoms) BSES Rajdhani Power Ltd. (BRPL); BSES Yamuna Power Ltd. (BYPL); and North Delhi Power Ltd. (NDPL).
4.2.4.1. Concessional Tariff Stakeholder Objection - While some of the consumers sought concessional tariff for senior citizens, places of worship, educational institutions, charitable institutions etc. run by NGOs on land given by DDA/MCD/GNCTD at concessional rate, others were not in favour of such concessions.
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4.2.4.2. Cross Subsidy Stakeholder Objection - The consumers expressed that uniform tariff should be levied on all consumer categories, doing away with the cross subsidy element in the tariff. However, the economically weaker categories of consumers along with the agricultural consumers may be charged subsidized tariff for some more time. Petitioners response - The petitioners cited Sections 61and 65 of the Electricity Act, 2003 for the SERCs to ensure that tariffs should reflect the cost of supply of electricity and that any further subsidy / concession to any class of consumers should be in the form of direct subsidy by the state government. The petitioners also cited the National Electricity Policy and National the Tariff Policy for reduction in cross subsidy and expected the Commission to reduce cross subsidy gradually as stated in these policies. Commissions View - The Commission also reiterated the provisions of the Tariff Policy for stating that any consumer requesting for concessional tariff may approach the State Government as the responsibility of supporting the weaker sections of society lies with the state government and not with other consumers of electricity. The Commissions endeavour is to fix tariffs on the basis of cost to serve. However, as cross subsidies do exist in the tariffs historically, efforts are being made by the Commission to reduce such cross subsidies over a period of time. 4.2.4.3. Aggregate Technical and Commercial (AT&C) Loss Reduction Stakeholder Objection - The consumers offered a number of comments on AT & C losses, such as
follows: i) It was desired that AT & C losses should also include commercial losses and unpaid bills of consumers and information was sought on major defaulters and action taken thereon by the Discoms. Some of the consumers expressed apprehension on the evaluation of energy losses by the Discoms because the Discoms had neither carried out audit of energy supplied by distribution transformers nor on the corresponding connected consumers. In fact, they questioned that as AT & C losses are due to inefficient management of business, the consumers cannot be made to pay for such inefficiencies. They also requested that those areas where the AT & C losses were below 20% should be spared of power cuts. Some of the consumers observed that the Discoms did not comply with the targets set forth for AT & C loss reduction in the MYT Regulations and that the Commission should ensure compliance to the Regulations by Discoms in this respect .
ii)
iii)
Petitioners response - The Discoms listed out their achievements post privatisation, some of which are as follows: i) ii) iii) Improving the distribution system reliability index . Reduction of AT & C losses. Targeting high theft prone areas for reducing the losses by taking assistance of CISF, citizens, RWAs, NGOs and the Govt .
The Discoms also expressed the following difficulties

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in achieving the desired AT & C loss reduction: i) ii) iii) iv) v) Effect of socio-political environment and public resistance in certain areas. Presence of a large number of unauthorised colonies and JJ clusters. Level of theft in unauthorised areas is high due to limited infrastructure. Use of domestic connections for industrial purposes. High costs incurred for using technical solutions in rural areas, thus rendering the whole exercise cost ineffective. Non electrification of unauthorised areas even though residents are willing to pay for electricity, thus, leading residents to use power from neighbouring networks. Public resistance to the replacement of electro-mechanical meters with electronic meters.
v) vi) vii)
Invoking the provisions of the Electricity Act, 2003 for higher penalties for theft of electricity. Setting up of Special Courts for booking and resolving such cases. Taking assistance of local police forces and special task forces like CISF while booking theft. Rewarding performers within organisation for loss reduction. the
viii)
vi)
Commissions View - The Commission has specified the AT & C loss reduction targets in the MYT Regulations, 2007 which were fixed after considering various factors such as : i) ii) iii) iv) v) past loss reduction achievement capital expenditure programmes consumer mix pattern metering status drawing comparisons with the loss levels of similar Discoms in urban areas such as Ahmedabad, Mumbai etc.
vii)
The Discoms listed out various measures taken to reduce the losses, such as follows: i) Conducting Energy Audit for monitoring flow and accounting across the distribution network by installing energy meters with remote reading facility on all feeders and distribution transformers. Tagging consumers to distribution transformers to detect theft of energy. Improving and introducing the latest technical infrastructure in high theft prone areas. Implementing LVDS / HVDS in electrification schemes which would bring down the number of unauthorised consumers.
The Commission also advised the Discoms to take the following steps: i) Submit monthly statement of AT & C loss with all relevant details within 15 days after the end of each month. Promote conservation of energy and efficient use of energy through consumer awareness programmes. Carry out Energy Audit.
ii) iii) iv)
ii)
iii)
In addition, the Commission has also advised the GNCTD to constitute district committees in accordance with sub-section 5 of Section 166 to further streamline various activities as envisaged in the Act.
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4.2.4.4. Transparency In Discoms Accounts Stakeholder Objection - The consumers alleged that the BSES Discoms have made purchases from their sister concerns by paying Rs 1250 Cr for equipments worth Rs 800 Cr, thus, manipulating their accounts and misleading the general public. Accordingly, it was demanded that the accounts of Discoms be audited by Comptroller and Auditor General (C&AG) of India. They also demanded that Discoms should be brought under the purview of the RTI Act as the state government holds 49% stake in these companies. Petitioners response - The petitioners clarified that all purchases have been made by following established practices for procurement of equipment at competitive market rates. There is also no scope for any manipulation of accounts as the accounts are audited by internal and external statutory auditors besides the audit of Electricity tax by MCD, scrutiny of accounts by the Commission before approving the ARR and audit of the billing software by the Commission through the STQC Directorate under the Ministry of Information Technology. However, as the Discoms are private business entities and not a government company, they do not come under the purview of the RTI Act and their accounts cannot be audited by the C & AG. Commissions View - The Commission maintained that the Discoms are public utilities, hence, should comply with the provisions of the RTI Act. This was also upheld by the Central Information Commission in its Order dt 30 November 2006. However, this Order was challenged in the High Delhi Court by the Discoms and a stay order threon had been obtained by the Discoms. The Commission filed a separate writ petition before the High Court for declaration of
the Discoms as Public Authority under the RTI Act, 2005. The matter is sub- judice. Regarding purchases from sister concerns by BSES, the Commission held the view that the submissions made by the Petitioners are subjected to prudence check during the analysis of their ARR petitions and only the rational and justified expenses and purchases are allowed in the approved ARR. 4.2.4.5. Power Purchase from Renewable Sources Stakeholder Objection - The consumers wanted the Discoms to source some minimum power purchase from renewable sources of energy such as wind, solar and bio-mass. The government may encourage such sources with higher subsidy, though care should be taken that it does not result in hike in consumer tariff. Petitioners response - The petitioners welcomed and agreed to the suggestions given by the consumers and stated that the Commission may fix a minimum percentage of purchase from nonconventional sources of energy keeping in view the cost factor and its availability in Delhi. Commissions View - The Commission, in its role of encouraging sourcing of power from nonconventional and renewable sources of energy stipulated that Discoms should try to achieve 1% of the total power purchase from renewable sources. However, as the scope of sourcing of such energy in Delhi is minimal, it was necessary for states like Delhi to look for procurement from renewables from other states. The Commission also requested the Central and the State Governments for evolving an appropriate methodology for trading in renewables by way of renewable energy certificates which would protect
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the interests of both the buyers and sellers of such certificates. 4.2.4.6. Time of Day Metering Stakeholder Objection - There were mixed reactions to the Time of Day Metering scheme. While some of the stakeholders wanted more clarity on the scheme, some others wanted the proposal to be made optional and voluntary. Some stakeholders were opposed to the scheme as they felt that other categories may have to pay higher charges under this scheme. Petitioners response - Discoms clarified that this scheme was optional and would benefit consumers when there would be a shift of consumption from peak periods to off peak periods. Commissions View - The Commission clarified that it intends to introduce this scheme on a voluntary and pilot basis to test its effectiveness. 4.2.4.7. Rationalization of Fixed Charges Stakeholder Objection - Some of the consumers requested for doing away with the fixed charges as their contention was that even other public utilities such as Railways / Airlines do not levy fixed charges. Instead, they suggested adjusting the fixed charges in the energy charges as was the practice followed earlier. They also referred to the case of NDMC for not levying any fixed charges. Petitioners response - The petitioners clarified that the concept of levying fixed and energy charges was explained in the previous tariff orders of the Commission. However, the petitioners once again clarified the concept of fixed charges and its necessity to be a part of the tariff. Moreover, the Electricity Act (EA), 2003 also permits a two part
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tariff. The petitioners expressed their ignorance on fixed charges not being levied by NDMC. Commissions View - The Commission explained the reasons for introduction of two part tariff and for abolishing of the monthly minimum charges. In the wake of receiving objections and suggestions from various stakeholders on this issue, the Commission once again studied the options of levy of fixed charges with reference to provisions of the Electricity Act, 2003, stand taken in the previous tariff orders of the Commission and judgements of the ATE. It was of the opinion that if fixed charges are abolished, the energy charges would increase. Such fixed charges at Delhi are rather nominal considering the fixed costs of the licensees. This being an established practice in the electricity industry, it was concluded that the Commission will continue with the existing methodology of levying fixed charges. In the latest order of NDMC, the Commission has introduced fixed charges , although, notionally. 4.2.4.8. Uniform / Differential Tariff across Discoms Stakeholder Objection - There were mixed reactions on this issue. While some of the consumers were agreeable for a differential tariff as the EA, 2003 also permits the same, some of the stakeholders wanted a uniform tariff for different consumer categories across all Discoms. Some of them also approved of the energy charges to be based on Cost of Supply so as to eliminate cross subsidy. Petitioners response - The petitioners submitted that fixation of tariff is the prerogative of the Commission. Commissions View - In line with the stand taken by the Commission in the previous Tariff Orders and as specified in the Tariff Policy, the Commission
maintained that for the time being uniform tariff will be applicable for different consumer categories across all Discoms in Delhi 4.2.4.9. Uniform Tariff for Delhi Government Offices Stakeholder Objection - The consumers supported the initiative of the GNCTD for introduction of prepaid meters in Govt offices. They also called for conduct of energy audits by GNCTD in government schools and offices. Such measures should also be extended to MCD run offices and schools. The consumers also stressed that there should be no categorization such as Govt / Public usage and tariff for the same should not be concessional. Petitioners response - The Petitioners submitted that the concept of uniform tariff for Government Consumers is being explored in the backdrop of installation of Prepaid Metering as proposed by Delhi Govt. They also appreciated the flagging of this issue by the Commission and trusted that the tariff as and when determined by the Commission will be cost reflective keeping in view the objective of reduction in cross subsidy across categories in line with the NEP and the NTP. The Petitioners clarified that they are already charging non-domestic tariff to all Delhi Govt. offices. Commissions View - The Commission examined the matter in view of the request from Govt. of Delhi to facilitate the installation of pre-paid meters in the offices of Delhi. It is of the view that a uniform tariff for all Govt. offices of Delhi would ensure easy implementation of pre-paid metering. The Govt. of Delhi offices are currently being charged under NDLT category, where pre-paid metering can be easily implemented. The Commission has, therefore, not created any new consumer category in tariff
schedule for Govt. of Delhi offices and continued with the existing practice.
4.2.5. Stakeholders Comments : New Delhi Municipal Council (NDMC)

4.2.5.1. Power Purchase Stakeholder Objection - There is no transparency in the process of determining power purchase cost. The Commission should revisit the allocations made to NDMC so that the consumers residing in other areas of Delhi do not bear the burden of subsidising the consumers of NDMC area. Petitioners response - Transparency in proposing and determining power purchase expenses during the Control Period is ensured. The projections are based on the actual bills raised by NTPC. As regards earnings on account of UI transactions and sale of power, it is largely on paper and only a small part of it is realised. In fact, Bills even from the Delhi Discoms were pending payment. Commissions View - The Commission has taken due caution in projecting power purchase cost for the Control period. The Commission recognises the concerns of consumers of other Discoms, that there has been an adverse impact on power purchase cost of the Discoms due to possible excess allocation to NDMC. 4.2.5.2. Tariff Rationalization Stakeholder Objection - There should not be any increase in tariff during the Control period and there should be some degree of justification for the tariff charged from consumers. Petitioners response - There has been no tariff hike since 2001. However, in view of growing economy,
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and demand of electricity with time, capital expenditure and Commercial needs for running the business of distribution of electricity, the tariff hike has been proposed for consideration of the Commission. Commissions View - The Commission undertakes prudence checks in analyzing the ARR and introduces various tariff rationalization measures for different categories of consumers. 4.2.5.3. Aggregate Technical and Commercial Losses Stakeholder Objection - NDMC should strive for reduction in T&D losses, control theft and recover outstanding arrears rather than increasing tariff. Petitioners response - The Collection efficiency is in the range of 98-99%. However, Commercial losses are in the range 0.5%-1.5% of the total consumption due to certain defective meters in the system. Although there are practical constraints in further reducing the technical losses, however, in light of the capital expenditure proposed, a reduction in technical losses is proposed at 1%. Commissions View - The Commission followed the AT&C loss reduction targets as per the provisions of the MYT Regulations, 2007. 4.2.5.4. Inconsistency in the Petition Stakeholder Objection - There are gross anomalies in the MYT petition filed by the Petitioner and the petition be re-examined. Petitioners response - The ARR petition and tariff proposal is submitted to the Commission for scrutiny and prudence check. Commissions View - The Commission has examined the petition and analysed the ARR as
44
submitted by the Petitioner and sought clarifications and otherwise made reasonable assumptions for allowing the various expenses. 4.2.5.5. Cross Subsidy Stakeholder Objection - There should be uniform tariff for all categories of consumers. Details of certain classes of consumers, whom concessions are granted, be made public for scrutiny. Petitioners response - The determination of Tariff to be charged from various categories of consumers is the prerogative of the Commission. Commissions View - It would be ideal to fix tariff for all categories on cost to serve basis. However, as cross subsidies have been in-built in the system historically, it would take time to bring down cross subsidy. If providing concessional tariff to certain deserving consumer categories can be considered by the Government by way of subsidies, it would be easier to reduce cross subsidies. 4.2.5.6. Tariff for Delhi Metro Rail Corporation Stakeholder Objection - The Commission may continue with its previous principles for determining tariff and the tariff should be based on the input cost of the Petitioner. Petitioners response - No tariff hike was proposed for DMRC, which is not an existing customer of the NDMC. The Commission to take an independent view at the time when DMRC becomes their customer. Commissions View - The tariff for DMRC should be made applicable on Cost to Serve principle in line with the National Tariff Policy as any cross subsidization of DMRC tariff would only result in burdening other consumer categories.
4.2.5.7. Power Purchase from Renewable Sources Stakeholder Objection - Discoms should source some minimum power from renewable sources of energy such as wind, solar and bio-mass with due consideration to its impact on tariffs. Government may encourage such sources with higher subsidy Petitioners response - The suggestions were welcomed and agreed upon. The Commission to fix a minimum percentage of purchase from nonconventional sources of energy keeping in view the cost factor and its availability in Delhi. Commissions View - To start with, the Discoms should try to achieve 1% of the total power purchase from renewable sources. Even a higher cost would be allowed by the Commission. The procurement from renewables can be made from other states as the scope of sourcing of such energy in Delhi is minimal. The Central and the State Government were requested for evolving an appropriate methodology for trading in renewables by way of renewable energy certificates which would protect the interests of both the buyers and sellers of such certificates.
4.3. Truing-up and Analysis of ARR : Generating Companies (GENCOs)

4.3.1 While approving the ARR for FY 2007-08, the Commission trued up the various components of the ARR for FY 2006-07 with respect to the Tariff Order issued on September 22, 2006. Since the trued up values, were lower than the values approved by the Commission in the Tariff Order for FY 2006-07 issued on September 22, 2006, the Petitioners were directed to refund the excess amount recovered from beneficiaries in the future bills with carrying cost of 9% which was the allowed rate by the Honble ATE in Order of July 21, 2006. The Commission further directed that the refund of the cost of various beneficiaries shall be in the ratio of the capacity allocation to each beneficiary in FY 2006-07.
Overview of the MYT Petitions

A snap shot of the MYT Petitions submitted by the Generation companies is as follows:
Gencos : Overview of MYT Petitions TABLE : 4.2
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4.3.2. For the MYT Control Period FY 2007-08 to FY 2010-11, the Commission considered the parameters/ norms of operation as follows: Gencos : Plantwise norms of Operation TABLE : 4.3
4.3.3. Energy Charges

The Energy charges (Variable cost) of the plant depends on the operational parameters such as the Station Heat Rate, Auxiliary Consumption, Fuel Cost and the Gross Calorific Value of the fuel used. The Commission considered all these factors and the details of fuel supply for determination of fuel cost and hence, the Variable Cost for the respective plants.
vi)
Interest on Working Capital
4.3.4.1. Operation and Maintenance Expenses The Commission projected the total O&M expenses by considering base O&M which were calculated using the average of base O&M expenses in the last two years (FY 2005-06 & 2006-07). The average O&M expenses, thus, obtained were escalated by 4% annually to arrive at the base O&M expenses for the Control Period. These expenses were proportionally allocated to Employee expenses, Repair & Maintenance and Administrative & General expenses. 4.3.4.2. Depreciation The Commission proportionally modified the asset values as submitted by the Petitioners with the total values approved by the Commission as closing balance of Gross Fixed Assets (GFA) in FY 200607. The Commission considered addition in assets according to the revised capital expenditure plan
4.3.4. Fixed Cost

The Commission analysed all the components of the Fixed Cost submitted by the Petitioners. As per the MYT Regulations, the Fixed cost includes the following components: i) ii) iii) iv) v)
46
Operation and Maintenance Expenses Depreciation Advance against Depreciation Return on Equity Interest Expenses
submitted by the Petitioners. Depreciation was calculated on each asset category, using the depreciation rates as specified in the MYT Regulations. 4.3.4.3. Advance Against Depreciation The Commission calculated the Advance Against Depreciation (AAD) using the principles specified in the MYT Regulations and considered the details of actual accumulated debt repayment and accumulated depreciation claimed by the Petitioners. 4.3.4.4. Return on Equity The Commission calculated Return on Equity at 14% on the average equity for each year in line with the MYT Regulations. The Commission approved equity addition at 30% of the revised capital expenditure plan submitted by the Petitioners. 4.3.4.5. Interest Expenses The Commission determined the interest cost for each year of the Control Period by considering the opening balance of loans, the repayment schedule and by applying the actual rate of interest applicable to various component of the loans. The Commission also considered fresh loans from the GNCTD corresponding to 70% of the proposed capital expenditure with loan terms as proposed by the Petitioners. 4.3.4.6. Interest on Working Capital The Commission calculated Interest on Working Capital considering the approved values of the various components as specified in the MYT Regulations and considering an interest rate of 12.75% based on SBI Prime Lending Rate for shortDELHI ELECTRICITY REGULATORY COMMISSION
term loans as on April 09, 2007. This rate would be applicable from April 1, 2007 for calculation of interest on working capital in FY 2007-08. 4.3.5 Determination of Generation Tariff
The Generation Tariffs applicable to the three (3) generating stations of IPGCL and one(1) generating station of PPCL, as determined by the Commission after true-up of FY 2006-07 and approval of the Aggregate Revenue Requirement (fixed and variable costs ) for the FY 2007-08, are summarized as follow : Gencos: ARR approval TABLE : 4.4
4.3.6 Mechanism of Recovery of Generation Tariff

The recovery of approved Tariff was stipulated in the following manner : 4.3.6.1.The total Fixed Cost (Capacity Charges) shall be recovered at Target Availability specified by the Commission. The recovery of Fixed Cost below the level of Target Availability shall be on pro rata basis with no Fixed Cost payable at zero availability. For this purpose, the Availability of the Power Station shall be certified by the SLDC. Any adjustment of recovery of Annual Fixed Cost shall be based on the cumulative Availability as certified by the SLDC at the end of the
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year. The Fixed Cost shall be recovered in 12 equal monthly installments in proportion to allocated/contracted capacity. 4.3.6.2.Intra-state Availability Based Tariff (ABT) is in operation in Delhi since April 1, 2007. Consequent to this, the Variable Cost shall be billed to the beneficiaries based on the Scheduled generation during the month from the station as per the rates approved by the Commission. 4.3.6.3. Incentive shall be payable at a flat rate of 25 paise/kWh for the scheduled generation achieved beyond the level corresponding to Target PLF. However, the generating station shall comply with the SLDC instructions with respect to the backing down of the generation and such backing down shall not qualify for calculation of PLF for Incentive. Further, in case of non-compliance by generating stations to backing down instructions given by SLDC, generation
during backing down period as instructed by SLDC shall not be considered for Incentive purpose. The SLDC shall at the end of the year, certify the generation level of generating stations which qualifies for Incentive purpose as per the above guidelines. 4.3.6.4. Deviations from the Schedule are to be accounted for in accordance with the principles laid down in the order of the Commission regarding Intra-state ABT.
4.4. Truing-up and Analysis of ARR : Delhi Transco Ltd. (DTL)

4.4.1. True-up for FY 06 and FY 07
The Commission trued up the revenue requirement and revenue gap / surplus of DTL for FY 06 and FY 07 based on the audited accounts as the previous tariff order for FY 06 and FY 07 was based on provisional data submitted by DTL. The summary of the true-up is given in the Tables as follow:
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DTL : Revenue Requirement and Revenue Surplus/ Gap for FY06 TABLE : 4.5
(Rs in Crore)
Figures in bracket indicate sales and revenue realized from such sale. These figures may be read as negative.
DTL : Revenue Requirement and Revenue Surplus/ Gap for FY07 TABLE : 4.6
(Rs in Crore)
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4.4.1.1. Power Purchase In order to true up the power purchase costs for FY 07, the Commission obtained details of the actual power purchase costs from various generating stations. Refunds of income tax received, if any, from
the generating stations would be adjusted for DTL in the year in which it would be received. The summary of the power purchase - both quantum and cost-wise for FY 07 as follows:
DTL: Summary Of Power Purchase TABLE : 4.7
Total Cost (Rs. in Crore)
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4.4.1.2. Regional Load Despatch Centre (RLDC) and Unified Load Despatch Communication (ULDC) Charges Excess RLDC and ULDC charges of Rs 3.45 Cr (for the period July 2002 to March 2006) as allowed to DTL in the Tariff Order issued in Sept 2006 was adjusted based on actual payments made to RLDC and ULDC. These charges are in line with CERC Order of September 2, 2005. 4.4.1.3. Energy Sales and Revenue The Commission in its Tariff Order of September 22, 2006 approved 21367 MUs of energy sales to DTL. In the MYT petition, DTL submitted energy sales for FY 07 as 21769 MUs. The Commission verified the actual power purchased by various DISCOMS and accordingly, approved the energy sales of 21769 MUs to DTL. These sales excluded 1748 MUs as UI and sale to other states. In the FY 07 Tariff Order, the Commission had estimated revenues for DTL at Rs 4873 Cr. In the MYT petition, DTL has submitted Rs 4779 Cr as the actual revenue realised from sale of power to Discoms. DTL clarified the decrease in revenue due to the applicability of the new Bulk Supply Tariff (BST), only w.e.f October 1, 2006 while a different BST was charged from April to September 2006. The Commission also cross verified this revenue with the power purchase costs of the Discoms and approved the revenue realisation of Rs 4779 Cr for FY 07. 4.4.1.4. Transition Loan Support GNCTD provided DTL Rs 3452 Cr. as a transition loan support during the period FY 03-FY 07 in order to bridge the gap between its revenue requirement
and the bulk supply price received from the Discoms. The Commission had expressly mentioned in the previous tariff orders that the servicing of this loan should not be reflected in the ARR of DTL as it would lead to increasing the revenue gap, thus, translating into a tariff shock for the consumers. Hence, a statutory advice was given to GNCTD u/s 86(2) of the Electricity Act, 2003 to convert the loan into a grant. In response, GNCTD on July 4, 2007 conveyed the Delhi cabinets decision to convert the loan into equity. Accordingly, DTL submitted that it did not consider this equity capital as a part of the proposed capital structure and that it was not treated for the purpose of creation of future assets during the control period. In view of the submissions made by DTL, the Commission also did not consider any RoE or RoCE on Rs 3452 Cr. 4.4.1.5. Analysis of Aggregate Revenue Requirement (ARR) for the Control Period
DTL submitted the MYT petition for approval of ARR and determination of Transmission Service charge for the Control period of FY 08 FY 11. Summary of the petition is as follows: DTL : Summary of MYT Petition TABLE : 4.8
(Rs in Crore)
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While DTL considered financial year FY 06 as the base year for projecting certain cost elements, the Commission considered FY 07 as the base year which is as per the MYT Regulations and also in view of the availability of the audited accounts for FY 07 For the MYT period, as per the Regulations, the Commission analysed all the components of the ARR like O & M Expenses, Return on Capital Employed (RoCE), Depreciation (including Advance Against Depreciation), Tax expenses, Non tariff income and Income from other business. Accordingly, the Commission determined the ARR for the control period as follows: DTL : Approved ARR TABLE : 4.9
DTL : Approved ARR for the Control Period TABLE: 4.10

(Rs in Crore)
The MYT regulations stipulate that DTL should propose transmission tariff design for each year of the Control period. In the absence of such a proposal from DTL, the Commission determined the tariffs as per the approach specified in the Regulations. DTL was permitted to raise bills for Annual Transmission charges for each year of the Control period on the basis of the approved ARR. These charges shall be recovered every month on pro-rata basis and shared by all the Discoms including the deemed licensees and other beneficiaries in proportion to the power allocated to them from various Central Sector Generating Stations, generating stations within Delhi and contracted power on bilateral basis. Recovery of charges from short term open access customers, if any, would also be as per the MYT Regulations.
(Rs in Crore)
In accordance with the MYT Regulations, DTL was to separate its business into transmission and SLDC functions and segregate the accounts accordingly. Until this process is over, DTL was to submit the allocation statement which contains the apportionment of such costs. In line with the submissions of DTL in the MYT petition, the Commission also approved the ARR for DTL for the control period and the revenue requirement of SLDC for FY 08 is detailed as follows:
4.5. Truing-up and Analysis of ARR : BSES Rajdhani Power Ltd. (BRPL)
4.5.1. True-up for Policy Direction Period (FY 2003 to FY 2007)
The Commission trued up the ARRs of BRPL for the policy direction period of FY 03 to FY 07 and implemented the decisions of the Honble Supreme Court and the Appellate Tribunal of Electricity (ATE). The Supreme Court as per its Order of 15th February 2007 directed the Commission to allow depreciation @ 6.69% for the entire policy direction period as
52
against 3.32% to 3.75% allowed by the Commission and also stipulating that this would be effective only for the said period of 5 years. The ATE vide its Order dated 23 May 2007 observed that the Commission needs to allow all the actual expenses incurred towards employees including contractual employees. Further, the expenses incurred on telephone, postal, telegraph and conveyance charges were also to be allowed for FY05 and FY06 at actual. In addition, depreciation as per directions of the Honble Supreme Court with a carrying cost of 9% was also to be allowed. Accordingly, BRPL has claimed true up of various cost elements as a part of the MYT petition. Net increase / impact on account of true up due to the implementation of the Orders of the Supreme Court and the ATE is as follows: Truing up for FY 03: Rs 31.87 Cr Truing up for FY 04: Rs 44.00 Cr Truing up for FY 05: Rs 53.85 Cr Truing up for FY 06: Rs 87.53 Cr Carrying cost for past true up @ 9%: Rs 44.11 Cr Accordingly, the Commission after prudency check, approved the revenue gap of Rs 404.44 Cr for the FY 07 (inclusive of truing-up relating to previous years) as against BRPLs claim of Rs 597.53 Cr
BRPL : Summary of MYT Petition TABLE : 4.11

(Rs in Crore)
In accordance with the MYT Regulations, BRPL submitted the allocation statement for each component of the ARR into Wheeling and Retail Supply Business for FY 07, which was considered by the Commission as the base year for projecting all elements of the ARR for the control period.
4.5.3. Sales Forecast

BRPL projected growth in sales for the control period assuming a variety of economic, commercial and demographic factors. The Commission, after detailed study and finding that the energy sales projection of BRPL for each category did not reflect a predictive trend, decided to forecast the sales, number of consumers and connected load for the Control period on the basis of past trends and projections made by BRPL, weighted average projections of all the Discoms, combined with the CAGR methodology (computed for 2 12 years duration) for BRPL. The sales projections made by BRPL and that approved by the Commission for the control period are as follows:
4.5.2. Analysis of Aggregate Revenue Requirement (ARR) for the Control Period
BRPL submitted the MYT petition for approval of ARR and determination of Wheeling and Retail Supply Tariffs for the Control period of FY 08 FY 11. The summary of the petition is as follows:
53
BRPL : Sales Projections TABLE : 4.12

(Total Sales in MUs)
4.5.4. Aggregate Technical and Commercial (AT&C) Losses

In the policy direction period, GNCTD had set out the principles of determination of AT & C losses for measuring the efficiency of Discoms. For the MYT period, the Commission had set targets for BRPL under the provisions of the MYT Regulations for achievement of AT&C Loss level of 17% by the end of the Control period. However, BRPL expressed its inability to achieve the said target due to various constraints and instead proposed their targets based on the Abraham Committee Report on distribution loss reduction. The Commission reiterated its stand on conforming to the MYT Regulations as a number of factors, such as past achievements on loss reduction, Capex programmes, consumer mix in Delhi, metering status, loss levels of private utilities in other cities etc. have been factored in while fixing the targets in
54
the regulations. Incentives / penalties for over / under achievement of AT & C loss reduction target was also set by the Commission. Consequently, distribution loss targets were also set for BRPL after assuming reasonable collection efficiency. BRPL submissions and the figures approved by Commission are as follows: BRPL Submission TABLE : 4.13
Commission Approved TABLE : 4.14
4.5.5. Power Purchase Quantum and Cost

4.5.5.1. Power Purchase from Central Generating Stations BRPL was assigned its share from various generating stations as per the Commissions Order dated 31.03.2007. In addition to this firm allocation, BRPL also got a portion from the 15% unallocated power from the Central Pool (as decided by the CEA/ Ministry of Power, Govt. of India from time to time) based on power requirement and power shortage in different states. 4.5.5.2. Energy Availability from Future Projects BRPL considered commissioning of Kahalgaon II, Koldam HEP, Chandrapura I, Chandrapura II and Dadri Stage-II during different years of the Control Period and accounted for energy available from them accordingly. The Commission considered the commissioning schedule of the future stations based on the data available from CEA website and as per the discussions held with all the concerned Discoms. 4.5.5.3. Power Purchase from Bilateral, Other Sources, Short Term Arrangements and Banking While projecting power purchase quantum and cost for FY08, the Commission included actual power purchase from bilateral and short term arrangements upto December 2007. For JanuaryMarch 2008, an additional 100 MUs from bilateral purchase through intra-state sources were estimated by the Commission while approving the power purchase cost for FY08.
For the remaining Control Period, the Commission assumed that 5% of net annual power requirement shall be required to be sourced through bilateral purchases and short term arrangements with trading companies for meeting seasonal peak demand in summer and winter months. Further, the Commission considered that 25% of such short term peak power shall be available from intra-state sources and 75% through inter-state sources. The Commission also assumed that 20% of deficit power procured from inter-state sources will be met through banking arrangements and the balance from bilateral purchase through short term arrangements/trading companies. 4.5.5.4. Power Purchase Cost The Commission approved Power Purchase Cost by considering the following : (i) The Commission derived annual fixed charges (in proportion to the Petitioners share) applicable in FY08 and FY09 for various central sector generating stations from the relevant Tariff Order issued by CERC. The annual fixed charges for FY10 and FY11 were considered at same level as that for FY09 on the assumption that any increase in Operation & Maintenance cost will be offset by the decrease in other fixed charges. The fixed cost for State generating stations was taken as approved by the Commission in respective MYT Orders for the Control Period FY08 to FY11. The variable cost including Fuel Price Adjustment (FPA) for the Control Period was
(ii)
(iii)
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based upon the power purchase data for FY07, as submitted by DTL. An escalation of 3% and 4% was also applied for coal and gas/liquid fired plants respectively on the variable cost for subsequent years. (iv) For nuclear plants, based on the actual power purchase bill for FY07, single part tariff with 1% annual escalation was considered. For hydro stations, net charges payable were derived after deducting the free share of power. Incentives payable were calculated as applicable for generation above target PLF. Income tax and any other charges payable were considered at the same level as actual paid in FY07. Total power purchase cost was estimated considering fixed charges, variable charges, Fuel Price Adjustment (FPA), Income tax, incentive and other charges. The Commission considered power purchase from coal based future projects at 250 Paisa per unit in FY08 and subsequently escalated at 3% p.a. Power purchase from future hydro projects is considered at 270 Paisa per unit in FY08 escalated at 3% p.a. Power from DVC future projects was considered at 300 Paisa per unit in FY08 escalated at 3% per annum. The Commission considered actual cost of bilateral purchase up to December 2007 as (xi)
submitted by the Petitioner. For rest of the Control Period, the Commission considered bilateral purchase from intra-state sources at the regulated rate of Rs 2.75 per unit and from inter-state sources at Rs 7.00 per unit. The sale of surplus energy available in non peak duration was considered at the regulated rate of Rs 2.75 per unit for intrastate sale and Rs 4.00 for inter-state sale.
(v)
4.5.5.5. Transmission Losses The Commission estimated PGCIL losses at 3.5% for northern region and 3.0% for eastern region based on past trends. DTL losses were estimated at 0.95% as approved by the Commission in MYT Tariff Order of DTL dated 20 December, 2007. 4.5.5.6. Transmission Charges The Commission estimated intra-state transmission charges payable to DTL by apportioning DTLs ARR amongst all utilities namely BRPL, BYPL, NDPL, MES and NDMC in proportion to their weighted average allocation of power in MW. Inter-state transmission (PGCIL) charges were estimated by first calculating per MW transmission charges paid to PGCIL by DTL in FY07 and multiplying it with total MW capacity allocation for the Petitioner in the respective years in projects located outside Delhi. Energy Balance : Total power purchase of BRPL for the Control Period as approved by the Commission is summarized as follows:
(vi) (vii)
(viii)
(ix)
(x)
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BRPL : Energy Balance TABLE : 4.15
* Average Cost in Paisa per unit. # Includes NTPC, NHPC, SJVNL, THDC, NPCIL, Dadri TPS and Future Stations $ includes BTPS, PPCL, IP Stations, Rajghat and GTPS
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4.5.5.7.Other Expenses : For the MYT period, the Commission analysed and approved all the components of the ARR such as O&M Expenses, Return on Capital Employed (RoCE), Depreciation including Advance against Depreciation, Working capital requirement, tax expenses, non-tariff income and other miscellaneous expenses in accordance with the MYT Regulations. 4.5.5.8. Supply Margin: The Commission also designed a supply margin so as to incentivise BRPL to sell power to its consumers instead of load shedding. However, if BRPL were to achieve energy sales higher than that approved by the Commission, the additional revenue would be adjusted against the ARR during true up.
4.5.5.9. Contingency Reserve: MYT regulations provide for maintenance of contingency reserve in order to provide tariff stability and transfer of benefits accrued to the consumers during the MYT period. The Commission directed BRPL to transfer the refunds received from DTL, IP Station, Rajghat Power House, GTPS and PPCL as specified in the MYT Order of the respective companies / Licensees to the MYT contingency reserve. After detailed analysis of various heads of expenditure and income by the Commission in accordance with the business plan, loss reduction trajectory and quality of supply of BRPL, the Commission determined the ARR for the control period as below :
BRPL : Approved ARR for the Control Period TABLE : 4.16

(Rs in Crore)
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The Commission also analysed the total ARR of BRPL vis-a-vis revenue from existing tariffs to assess whether the ARR is met with such tariffs at the approved sales. If there was a revenue gap, the same would be bridged by way of increase in tariffs. Subsequently, the net revenue surplus / (gap) for BRPL along with the adjustment of the truing up gap at approved tariffs is as follows : BRPL : Approved ARR TABLE : 4.17
(Rs in Crore)
against 3.58% to 3.94% allowed by the Commission and also stipulating that this would be effective only for the said period of 5 years. The ATE vide its Order dated 23 May 2007 observed that the Commission needs to allow all the actual expenses incurred towards employees including contractual employees. Further, the expenses incurred on telephone, postal, telegraph and conveyance charges were also to be allowed for FY05 and FY06 at actual. In addition, depreciation as per directions of the Honble Supreme Court with a carrying cost of 9% was also to be allowed. Accordingly, BYPL has claimed true up of various cost elements as a part of the MYT petition. Net increase / impact on account of true up due to the implementation of the Orders of the Supreme Court and the ATE is as follows: Truing up for FY 03: Rs 6.35 Cr Truing up for FY 04: Rs 9.76 Cr
Truing up for FY 05: Rs 32.15 Cr Truing up for FY 06: Rs 41.81 Cr Carrying cost for past true-up @ 9%: Rs 15.30 Cr Accordingly, the Commission after prudency check, approved the revenue gap of Rs 158.50 Cr for the FY 07 (inclusive of previous years true-up) as against BYPL claim of Rs 330.39 Cr
4.6. Truing-up and Analysis of ARR : BSES Yamuna Power Ltd. (BYPL)
4.6.1.True up for Policy Direction Period (FY 2003 to FY 2007)
The Commission trued up the ARRs of BYPL for the policy direction period of FY 03 to FY 07 and implemented the decisions of the Honble Supreme Court and the Appellate Tribunal of Electricity (ATE). The Supreme Court as per its Order of 15th February 2007 directed the Commission to allow depreciation @ 6.69% for the entire policy direction period as
BYPL submitted the MYT petition for approval of ARR and determination of Wheeling and Retail Supply Tariffs for the Control period of FY 08 FY 11. The summary of the petition is as follows:
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BYPL : Summary of MYT Petition TABLE : 4.18

(Rs in Crore)
4.6.3. Sales Forecast

BYPL projected growth in sales for the control period assuming a variety of economic, commercial and demographic factors. The Commission, after detailed study and finding that the energy sales projection of BYPL for each category did not reflect a predictive trend, decided to forecast the sales, number of consumers and connected load for the control period on the basis of past trends and projections made by BYPL, weighted average projections of all the Discoms, combined with the CAGR methodology (computed for 2 12 years duration) for BYPL. The Sales projections made by BYPL and that approved by the Commission for the Control period were as follows:
In accordance with the MYT Regulations, BYPL submitted the allocation statement for allocating each component of the ARR into Wheeling and Retail Supply Business for FY 07 which was considered by the Commission as the base year for projecting all elements of the ARR for the control period.
BYPL : Sales Projections TABLE : 4.19

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4.6.4. Aggregate Technical and Commercial (AT&C) Losses:

In the policy direction period, GNCTD had set out the principles of determination of AT & C losses for measuring the efficiency of Discoms. As per the provisions of the MYT Regulations for achievement of AT&C Loss reduction, the Commission fixed the target for BYPL at 22% by the end of the Control period. However, BYPL expressed its inability to achieve the said target due to various constraints and instead proposed that their targets be based on the Abraham Committee Report on distribution loss reduction. The Commission reiterated its stand on conforming to the MYT Regulations as a number of factors such as past achievements on loss reduction, Capex programmes, consumer mix in Delhi, metering status, loss levels of private utilities in other cities etc. have been factored in while fixing the targets in the regulations. Incentives / penalties for over / under achievement of AT&C loss reduction targets were also set by the Commission. Consequently, distribution loss targets were also set for BYPL after assuming reasonable collection efficiency. BYPL submissions and the figures approved by Commission are as follows: BYPL Submission TABLE : 4.20
4.6.5. Power Purchase Quantum and Costs

The Petitioner assumed that the allocation of 299 MW i.e. 15% unallocated power with GNCTD shall remain unaltered for the rest of the Control Period. The Commission, however, assumed that from 1 April, 2008 onwards, unallocated capacity shall be reallocated between BYPL and NDPL in the ratio of 55:45 till 31 March, 2009 as per GNCTD letter no. F.11/2007/Power/426 dated 22 February, 2008. 4.6.5.1. Power Purchase from Central Generating Stations BYPL was assigned its share from various generating stations as per the Commissions Order dated 31.03.2007. In addition to this firm allocation, BYPL also got a portion from the 15% unallocated power from the Central Pool (as decided by the CEA/ Ministry of Power, Govt. of India from time to time) based on power requirement and power shortage in different states. 4.6.5.2. Energy Availability from Future Projects The Commission considered the commissioning schedule of the future stations based on the data available from CEA website and as per the discussions held with all the concerned Discoms.
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4.6.5.3. Power Purchase from Bilateral, Other Sources, Short Term Arrangements and Banking While projecting power purchase quantum and cost for FY08, the Commission has included actual power purchase from bilateral and short term arrangements upto December 2007. For January March 2008, an additional 100 MUs from bilateral purchase through intra-state sources was estimated by the Commission while approving the power purchase cost for FY08. For the remaining Control Period, the Commission assumed that 5% of net annual power requirement shall be required to be sourced through bilateral purchases and short term arrangements with trading companies for meeting seasonal peak demand in summer and winter months. Further, the Commission considered that 25% of such short term peak power shall be available from intra-state sources and 75% through inter-state sources. The Commission also assumed that 20% of deficit power procured from inter-state sources will be coming through banking arrangements and the balance from bilateral purchase through short term arrangements/trading companies. 4.6.5.4. Power Purchase Cost The Commission approved Power Purchase Cost by considering the following : (i) The Commission has derived annual fixed charges (in proportion to the Petitioners share) applicable in FY08 and FY09 for various central sector generating stations from the relevant Tariff Order issued by CERC. The annual fixed charges for FY10 and FY11 were considered at same level as (viii) (ii)
that for FY09 on the assumption that any increase in Operation & Maintenance cost will be offset by the decrease in other fixed charges. The fixed cost for State generating stations was taken as approved by the Commission in respective MYT Orders for the Control Period FY 08 to FY11. The variable cost including Fuel Price Adjustment (FPA) for the Control Period was based upon the power purchase data for FY 07, as submitted by DTL. An escalation of 3% and 4% was also applied for coal and gas/liquid fired plants, respectively on the variable cost for subsequent years. For nuclear plants, based on the actual power purchase bill for FY07, single part tariff with 1% annual escalation was considered. For hydro stations , net charges payable were derived after deducting the free share of power. Incentives payable were calculated as applicable for generation above target PLF. Income tax and any other charges payable were considered at the same level as actual paid in FY07. Total power purchase cost was estimated considering fixed charges, variable charges, FPA, Income tax, incentive and other charges. The Commission considered power purchase from coal based future projects at 250 Paisa per unit in FY08 and subsequently escalated at 3% p.a. Power purchase from future hydro projects is considered at 270
(iii)
(iv)
(v)
(vi) (vii)
(ix)
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Paisa per unit in FY08 escalated at 3% p.a. Power from DVC future projects was considered at 300 Paisa per unit in FY08 escalated at 3% per annum. (x) The Commission considered actual cost of bilateral purchase up to December 2007 as submitted by the Petitioner. For rest of the Control Period, the Commission considered bilateral purchase from intra-state sources at the regulated rate of Rs. 2.75 per unit and from inter-state sources at Rs 7.00 per unit. The sale of surplus energy available in non peak duration was considered at the regulated rate of Rs 2.75 per unit for intrastate sale and Rs 4.00 for inter-state sale.
at 0.95% as approved by the Commission in MYT Tariff Order of DTL dated 20 December, 2007. 4.6.5.6. Transmission Charges The Commission estimated intra-state transmission charges payable to DTL by apportioning DTLs ARR amongst all utilities namely BRPL, BYPL, NDPL, MES and NDMC in proportion to their weighted average allocation of power in MW. Inter-state transmission (PGCIL) charges were estimated by first calculating per MW transmission charges paid to PGCIL by DTL in FY07 and multiplying it with total MW capacity allocation for the Petitioner in the respective years in projects located outside Delhi. 4.6.5.7. Energy Balance Total power purchase of BYPL for the Control Period as approved by the Commission is summarized as follows:
(xi)
4.6.5.5. Transmission Losses The Commission estimated PGCIL losses at 3.5% for northern region and 3.0% for eastern region based on past trends. DTL losses were estimated
63
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BYPL : Energy Balance TABLE : 4.22
* Average Cost in Paisa per unit. # Includes NTPC, NHPC, SJVNL, THDC, NPCIL, Dadri TPS and Future Stations $ includes BTPS, PPCL, IP Stations, Rajghat and GTPS
4.6.4.8. Other Expenses For the MYT period, the Commission analysed and approved all the components of the ARR such as O&M Expenses, Return on Capital Employed (RoCE), Depreciation, including Advance against Depreciation, Working capital requirement, tax expenses, non-tariff income and other miscellaneous expenses in accordance with the MYT Regulations. 4.6.4.9. Supply Margin The Commission also designed a supply margin so as to incentivise BYPL to sell power to its consumers instead of load shedding. However, if BYPL were to achieve energy sales higher than that approved by the Commission, the additional revenue would be adjusted against the ARR during true up.
4.6.4.10. Contingency Reserve MYT regulations provide for maintenance of contingency reserve in order to provide tariff stability and transfer of benefits accrued to the consumers during the MYT period. The Commission directed BYPL to transfer the refunds received from DTL, IP Station, Rajghat Power House, GTPS and PPCL as specified in the MYT Order of the respective companies / Licensees to the MYT contingency reserve. After detailed analysis of various heads of expenditure and income by the Commission in accordance with the business plan, loss reduction trajectory and quality of supply of BYPL, the Commission determined the ARR for the control period as follows :
BYPL : Approved ARR for the Control Period TABLE : 4.23
(Rs in Crore)
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The Commission analysed the total ARR of BYPL vis-a-vis revenue from existing tariffs to assess whether the ARR is met with such tariffs at the approved sales. If there was a revenue gap, the same would be bridged by way of increase in tariffs. Subsequently, the net revenue surplus / (gap) for BYPL along with the adjustment of the truing up gap at approved tariffs is as follows: BYPL : Approved ARR TABLE : 4.24
(Rs in Crore)
2007 directed the Commission to allow depreciation @ 6.69% for the entire policy direction period as against 3.75% allowed by the Commission. The ATE, in its Order dated 23 May 2007 directed the Commission to allow carrying cost on such additional depreciation for the entire Policy Direction Period @ 9% including on assets acquired out of APDRP grants. The ATE also directed the Commission in its Order of 23 May 2007 to allow the actual expenses towards employees including contractual employees, Consultancy charges, telephone, Postal & telegraph, Conveyance charges, Service tax and Reactive energy charges. The Commission was also directed to approve all the Legal expenses except for those which the Commission can specifically point out to be imprudent. Such expenses on litigation which are found to be frivolous by the Courts may be disallowed. The Commission trued up the expenses and Depreciation in accordance with the ATE Order dated 23 May 2007 for the FY 2003 to FY 2007. The Commission also allowed the monthly pension, provisionally for the FY 2005, 2006 and 2007 along with the carrying cost @ 8% per annum subject to the outcome of the Arbitration Tribunal Award.
4.7. Truing-up and Analysis of ARR : North Delhi Power Ltd. (NDPL)
4.7.1. True-up for Policy Direction Period (FY 2003 to FY 2007)
The Commission trued up the ARRs of the NDPL for the Policy Direction period from FY 2003 to FY2007 and implemented the decisions of the Honble Supreme Court and the Appellate Tribunal of Electricity (ATE). The Supreme Court in its Order dated 15 February
NDPL submitted the MYT petition for approval of ARR & determination of wheeling and Retail Supply Tariff for the Control Period of FY 08- FY 11. The summary of the Petition is as follows:
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NDPL : Summary of MYT petition TABLE : 4.25

(Rs in Crore)
The following table shows the details of NDPL sales projections consumer categorywise and yearwise
during the control period and the extent approval thereto given by the Commission:
NDPL : Sales Projections TABLE : 4.26

The Commission approved an amount of Rs.2218.48 Crore towards Aggregate Revenue Requirement for the FY 2008-09, which consisted of the following major items: 4.7.2.1. Power Purchase Cost The Commission approved the Cost of Power Purchase at Rs.1659.66 crores for 6009.56 Million
Units of Power for 2007-09 in due consideration of the Sources of Power available, allocation from Generating stations, energy availability from other sources, viz. bilateral, short term and banking arrangements. Total power purchase for the Control Period approved by the Commission is summarized as follows:
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NDPL : Energy Balance TABLE : 4.27
* Average Cost in Paisa per unit, # Includes NTPC, NHPC, SJVNL, THDC, NPCIL, Dadri TPS and Future Stations $ Includes BTPS, PPCL, IP Stations, Rajghat and GTPS
4.7.2.2. Aggregate Technical and Commerical Losses The Commission approved the AT&C loss reduction targets of 22.03% against 22.38% proposed by the Petitioner for the year 2007-08 in line with the MYT Regulations, 2007. The Commission also prescribed Incentive/Penalty on account of over/ under achievement of the AT&C loss targets. The NDPL submission and the Commissions approval to the yearwise AT&C loss reduction targets during control period are as follows: NDPL Submission TABLE : 4.28
Commission recommendations in determination of employee expenses and hence, shall true-up its impact based on actual basis. The Commission also provisionally approved the SVRS Pension expenses as proposed by the Petitioner. The Commission expressed concern over the high O&M cost of the petitioner and expected the petitioner to improve its performance considering the repetitive nature of O&M works and introduction of new technologies. 4.7.2.4. Depreciation For the purpose of allocating the approved Gross Fixed Assets and Depreciation, the Commission considered the allocation statement submitted by the Discom. After detailed analysis of various heads of expenditure and income by the Commission in accordance with the business plan, loss reduction trajectory and quality of supply of NDPL, the Commission determined the ARR for the control period as follows : NDPL : Approved ARR for the Control Period TABLE : 4.30
4.7.2.3. Operation and Maintenance Expenses The Commission determined the Operation & Maintenance (O&M) expenses (Employee expenses, Administrative & General expenses and Repair & Maintenance expenses) using the methodology detailed in the MYT Regulations, 2007. The Petitioner also submitted the allocation of respective heads of O&M expenses into Wheeling and Retail supply business. As regards Employee expenses, the Commission recognized the uncontrollable nature of the 6th Pay
(Rs in Crore)
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4.7.2.5. Supply Margin The Commission designed Supply Margin in such a manner that there is an incentive for the Petitioner to sell power to their consumers and not resort to load shedding. 4.7.2.6. Revenue Gap/Surplus (i) Revenue Surplus The NDPL was revenue surplus by Rs.15.99 crores in the FY 2007-08 at the existing level of tariffs. At the tariffs approved by the Commission for the FY 2007-08 and 200809, the Revenue Surplus increased to Rs.19.85 crores and Rs.207.72 crores, respectively for these years. (ii) Revenue Gap for the FY 2003-07 The Revenue gap on account of total truingup for the policy direction period FY 2003 to FY 2007 was arrived at Rs.138.94 crores. (iii) Net Revenue Gap/Surplus The Commission amortized the truing-up gap of the Policy Direction Period to the extent of availability of the Revenue Surplus for the FY 2007-08; and arrived at a net Revenue surplus after completely amortising the balance Revenue gap (with a carrying cost @ 9%) in the FY 2008-09. The Commission also analysed the total ARR of NDPL vis-a-vis revenue from existing tariffs to assess whether the ARR is met with such tariffs at the approved sales. If there was a revenue gap, the same would be bridged by way of increase in tariffs. Subsequently, the net revenue surplus / (gap) for NDPL along with the adjustment of the truing up gap at approved tariffs is as follows :
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NDPL : Approved ARR TABLE : 4.31

(Rs in Crore)
4.8 Tariff Structure Across Discoms

New Tariff Structure as ordered vide the first MYT Order dated 23rd Feb. 2008 became effective from 1st Mar, 2008. The Commission approved a 05 Paise per unit increase in Energy charges of BRPL, BYPL and NDPL uniformly across all consumer categories (except DMRC) and kept the tariffs same across all Discoms in Delhi. Fixed charges of all the Consumer categories remain the same as during the previous year. Energy charges for DMRC were increased to 300 Paise/kVAh from the 230 Paise / kVAh earlier while making no change in the Fixed Charges. Any surplus generated by the Discoms after the effect of the tariff increase and recovery of truing up gap would be transferred to their respective Contingency Reserve as detailed in the MYT Regulations, 2007.
4.9. Discoms : Cost of Service

The Commission carried out a study for calculating the Voltage-wise Cost of Supply for the FY 200708. The approved ARR of the Wheeling and Retail supply business (excluding Supply Margin) was allocated to different Voltage levels and was considered vis--vis the Voltage-wise respective Sales to arrive at a Paise per unit Wheeling charge and Retail supply charge for that Voltage level.
booked to electricity department vis--vis all the other departments, as directed in the tariff order for the FY 2007.
4.10.2. Analysis of Aggregate Revenue Requirement (ARR)

NDMC submitted the MYT petition for approval of AAR and determination of Wheeling & Retail Supply Tariff for the Control Period of FY 08-11. The summary of the Petition is as follows: NDMC: Summary of MYT Petition TABLE : 4.32
(Rs in Crore)
4.10. Truing-up and Analysis of ARR : New Delhi Municipal Council (NDMC)
4.10.1. True-up for FY 2006-07
The Commission analysed all the components of the ARR with the constraints that the details of actual Employee expenses, Administration & General expenses, Repairs & Maintenance expenses, slabwise sales and revenue, revenue from various components of tariff etc. for the FY07 were not submitted by the petitioner. The Commission trued-up all the elements of ARR based on the information provided in the revised estimate of expenses and revenue, for the FY 2007 and after ensuring that the expenses satisfied the test of reasonable prudence. The Petitioner did not comply with any of the Directives issued by the Commission on O&M expenses and also to separately account the cost of works carried out by civil engineering department for electricity department and provide complete details of such works and associated costs at the end of the year bringing out clearly the percentage expenditure of Civil Engineering Department
4.10.2.1. Sales Forecast The Commission projected energy sales in consideration of the past trends and projections made by the Petitioner. The Commission analysed the year-on-year variations in sales as well as the short term and long term trends in sales for deciding the appropriate growth rate to forecast the energy sales for a particular category. The Commission considered the 4 years CAGR for projecting sales duly taking into account consumption trends in recent
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period and approved 1047.38 MUs of Sales against the Sale forecast of 1059.83 MUs by the petitioner. The following table shows the details of NDMC sales projections consumer categories wise &
year wise during the Control Period and the extent approved by the Commission:
NDMC : Sales Projections TABLE : 4.33

4.10.2.2. Aggregate Technical and Commercial (AT&C) Losses The Commission approved the AT&C loss targets of 11.13% in line with the MYT Regulations, 2007 as against the target of 11.25% proposed by the petitioner for the year 2007-08. The Commission also prescribed Incentive/Penalty on account of over/ under achievement of the AT&C loss targets. The following tables show NDMC submission and the Commissions approval to the year - wise AT & C loss reduction targets during control period:
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NDMC Submission TABLE : 4.34
Commission Approved
4.10.2.3. Power Purchase Cost The Commission, in determining the Power purchase cost, made reasonable assumption for PLF, auxiliary consumption, transmission losses and weighted average allocation of the NDMC to arrive at the quantum of energy available to the Petitioner. The Commission observed that the Petitioner had
surplus power available for sale during FY 2008. The Commission approved the power available for sale at 1178.48 MUs at Rs.240.39 crores for the FY 2008. Total Power Purchase for the Control Period approved by the Commission is summarized as follows:
NDMC : Energy Balance TABLE : 4.35
4.10.2.4. Operation and Maintenance Expenses The Commission determined the Operation & Maintenance expenses (employee expenses, Administration & General expenses and Repair & Maintenance expenses) in accordance with the MYT Regulations, 2007. While calculating the employee expenses, the Commission recognised the uncontrollable nature of the 6th Pay Commission recommendations in determination of employee expenses during the
Control Period. The Commission considered an increase of 10% in total employee expenses from January 1, 2006 and payment of all the arrears due to this impact in the FY2009. 4.10.2.5. Administrative Department and Civil Engineering Department Expenses The Petitioner assured to provide complete details of expenditure relating to the electricity distribution related expenses separately once the National Municipal Accounting Manual and Double entry
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accounting system is implemented within NDMC. In the absence of any details of cost of works carried out by the Civil Engineering Department and the Administrative Department, the Commission considered and approved the same expenses which were approved for the FY 2007. 4.10.2.6. Capital Investment The Commission observed that the capital investment proposed by the Petitioner is significantly higher than the actual investments and opined that the Capital investments need a review for considering prudent investment in an efficient and economical manner. The Commission provisionally approved the Capital Investment proposed by the Petitioner. However, this does not imply approval of
the Schemes for which separate Scheme-wise approval has to be obtained for the Capital expenditure to be incurred. 4.10.2.7. Depreciation In the absence of the asset-wise break up, the Commission considered an average depreciation rate of 3.6% for the Control Period subject to trueup, once the break up of assets and their classification is provided by the petitioner. After detailed analysis of various heads of expenditure and income by the Commission in accordance with the business plan, loss reduction trajectory and quality of supply of NDMC, the Commission determined the ARR for the Control Period as follows:
NDMC : Approved ARR TABLE : 4.36

(Rs in Crore)
4.10.2.8. Tariff Design The Commission observed that the Petitioner shall be Revenue Surplus in FY08 at existing tariffs i.e. there would be no requirement for increase in existing tariff as the Petitioner would be able to recover its net revenue requirement for FY08 through existing tariff. The Commission, therefore, retained existing tariffs in respect of the Energy Charges for the FY 08 for all categories.
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The Commission also noted that the current practice of levying Monthly Minimum Charges (MMC) would lead to under-recovery of fixed cost in cases where the consumption exceeded certain minimum levels, as only energy charges were levied in such cases. Thus, as a part of the Tariff rationalization measure the Commission replaced Monthly Minimum Charges (MMC) with Fixed Charges from 1 April 2008 onwards for all categories.
DIRECTIVES
4.11. Directives of the Commission : Generating Companies (GENCOs)
The Commission derives power from the Delhi Electricity Reform Act (DERA), 2000 and Section 61 of the Electricity Act, 2003 to issue directives for fostering competition, efficiency, and economical use of the resources, good performance and optimum investments. The Commission in its MYT Tariff Orders gave the following directives to the Generating Companies in Delhi : 4.11.1.IPGCL was directed to inform the SLDC regarding the fuel being used for generation on any particular slot/ day, since the variable cost is different for each fuel and the SLDC could consider the same during merit order dispatch. 4.11.2.PPCL was directed to inform the SLDC when the plant was operated on Spot R-LNG, since the variable cost is expected to be significantly higher and the SLDC can consider the same during merit order dispatch. 4.11.3.SLDC may test the declared capacity of GTPS and Pragati Power Station at random and in the event of the power station failing to demonstrate the declared capability, the SLDC shall report the matter to the Commission, which would then determine the penalty, if any, to be levied for false declaration. 4.11.4.IPGCL and PPCL were directed to consider
any source of cheaper fuel available in the future, and accordingly, restructure the order of scheduling of fuel to ensure that the cheapest available fuel is utilized first.
4.12. Directives of the Commission : Delhi Transco Ltd. (DTL)

The Commission in its MYT Tariff Orders directed DTL to :4.12.1. take all possible measures to ensure that the projects/schemes are completed on schedule. 4.12.2. seek approval of the Commission for all schemes as per the terms and conditions of the License. 4.12.3. submit quarterly progress reports for the schemes being implemented during each year of the Control Period within 15 days of the end of each quarter and also to submit the actual details of capitalisation for each year of the Control Period by June 30 of the following year for consideration of the Commission. All information regarding capitalisation of assets shall be furnished in the formats prescribed by the Commission. These formats shall be submitted along with the necessary statutory clearances/ certificates of Electrical Inspector, etc. for all EHV & HV works and certificate of SLDC for commissioning/commercial operation. 4.12.4. file a separate petition for determination of SLDC charges for the subsequent years, including details of actual expenses for FY08.
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The commission also clarified that this petition would entail no petition fee. 4.12.5. maintain a separate account for the reactive energy wheeled and the respective reactive charges levied to the Discoms. Since no proposal for reactive energy charges was included by the Petitioner in this petition, the existing arrangement for levy of reactive energy charges shall continue. The DTL was further directed to file an appropriate petition for reactive energy charges within three months of issue of the MYT order (2008-11). 4.12.6. submit details of actual receipt of the incentive amount received from CPSUs under the one-time settlement scheme as well as the time and manner it was put to use. Any interest earned on the incentive amount shall be adjusted during true-up. 4.12.7. take up the issue of interest rate on Plan Funds with GNCTD for appropriate reduction. It may also borrow from other lenders at a lesser rate of interest. 4.12.8. submit details of actual R&M works carried out at the end of each quarter, within 30 days of the end of the quarter, as in the past.
clarification on the refund of the intervening monthly pension payments. The Commission also directed the Discoms to inform the Commission of any interim/final Order on the aforesaid issue. 4.13.2. Asset Capitalisation: The Commission directed the Discoms to submit actual details of capitalization for each year for the Control Period by September 30 of the following year for scrutiny and year-wise capitalization of assets. The Commission also directed the Discoms to organize for scheme-wise completion and consequent capitalization of the assets in consonance with the commissioning/ commercial operation of the respective scheme which would be certified by the Electrical Inspector/ SLDC/ relevant authority. The Discoms were further directed to furnish the relevant information in the formats prescribed by the Commission for capitalization of assets. The said formats are to be submitted along with the necessary statutory clearances/ certificates of Electrical Inspector, etc. for all EHV & HV works and certificate of SLDC for commissioning/ commercial operation. 4.13.3. Contingency Reserve: The Commission directed the Discoms to transfer the amount allowed as contribution to contingency reserve in the past to MYT contingency reserve and to maintain separate accounts in their books and reflect the balance in the MYT Contingency Reserve Account in the Balance Sheet. The Discoms could use the amount for investing in safe securities and
4.13. Directives of the Commission : Distribution Companies (Discoms)

The Commission in its MYT Orders issued the following directives to the Discoms: 4.13.1. Special Voluntary Retirement Scheme (SVRS) related expenses: The Commission directed the Discoms to expedite constitution of the Actuarial Tribunal; and also, seek
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earning returns based on market conditions, however, the Discoms were refrained from using the money for speculative purposes. 4.13.4. Voltage-wise Assets Segregation: The Commission directed the Discoms to carry out Voltage-wise Assets Segregation and provide the details of the same to the Commission. 4.13.5. Submission of case wise details of legal expenses: The Commission directed the Discoms to submit casewise details and their expenses where, either the courts have found the litigation by the Discoms frivolous, or the courts pronounced decision against the Discoms, for final approval of the legal expenses. 4.13.6. Break-up of energy charges: The Commission directed the Discoms to bill the consumers using Wheeling Tariff, Retail Supply charge and Supply Margin charge instead of the existing practice of billing the consumers on energy charges. 4.13.7. Voltage wise distribution losses: The Commission directed all the Discoms to immediately carry out energy audit of the sales at HT level (33 kV and 11kV) and submit the report to the Commission, so as to use the data to calculate the cost of supply in the next Tariff Order. 4.13.8. Tariff structure of JJ Clusters: The Commission directed the Discoms to install meters in JJ clusters and bill them as per the applicable tariff for domestic category slabs in line with the National Tariff Policy. 4.13.9. Power connections in un-electrified left out
pockets and villages: The Commission directed the Discoms to furnish the number of installations where supply is already metered and the number of connections which are yet to be provided with meters. The Directives continued from the previous tariff orders: 4.13.10. Capital Investment: The Commission directed the Discoms to submit complete Detailed Project Reports (DPRs) with cost benefit analysis for schemes more than Rs 2 Cr for obtaining investment approval. The approval of the Commission shall also be obtained for individual schemes less than Rs 2 Cr but aggregating to Rs 20 Cr in a year. 4.13.11. Payments through Cheques: The Commission directed the Discoms to accept the payment of the Bill by means of an Account Payee cheque/DD in case the bill for consumption of electricity is more than Rs. 4,000. 4.13.12. kVAh Billing: The Commission directed the Discoms to maintain data on the average power factor, kWh, kVAh and kVRh consumption for consumers having electronic meters. The Discoms have been submitting the compliance reports. 4.13.13. AT&C Loss monitoring : The Commission directed the Discoms to provide the break up of energy input to the Discom supply area, energy sold, energy billed by the Discoms, the revenue realisation against billed energy and the Division/ District-wise AT&C losses on a monthly basis to the Commission within fifteen days after the end of each calendar
77
month. The Discoms have been complying with this directive.
4.14. Directives of the Commission : New Delhi Municipal Council (NDMC)

4.14.1. Aggregate Technical and Commercial (AT&C) Losses
The Commission directed the NDMC to provide break up of energy input to its supply area, energy sold, energy billed, the revenue realisation against billed energy and the district-wise AT&C losses on a monthly basis to the Commission within fifteen days after the end of each month.
operation of the respective scheme which would be certified by the Electrical Inspector/ SLDC/ relevant authority and considered as an element of distribution system in operation. The Petitioner was also directed to submit the necessary statutory clearances/ certificates of Electrical Inspector, etc. for all EHV & HV works and certificate of SLDC for commissioning/ commercial operation.
4.14.5. Operation and Maintenance Expenses

The Commission directed the Petitioner to carry out a proper cost benefit analysis before taking up any new initiatives and submit the same for the approval to the Commission.
4.14.2. Capital Expenditure

The Commission directed the NDMC to submit the scheme-wise details of the capital schemes carried out in FY07 by 30 September 2008.
4.14.6. Administrative & Civil Engineering Department Expenses

The Commission directed the NDMC to separately book the cost of works carried out by civil engineering department for electricity department and provide complete details of such works and associated costs at the end of the year bringing out clearly the percentage expenditure of Civil Engineering Department booked to electricity department vis--vis all the other departments.
4.14.3. Capital Investments

The Commission directed the NDMC to file a detailed proposal for various capital expenditure schemes implemented/ to be implemented during Control Period.
4.14.7. Depreciation
The Commission directed the petitioner to submit the break-up of opening block of assets and assets capitalized during the year as per the classification specified in the MYT Regulations, 2007.
4.14.4. Asset Capitalisation

The Commission directed the NDMC to submit actual details of capitalization for each year of the Control Period by September 30 of the following year to the Commission for scrutiny and year-wise capitalization of assets. The Commission also directed the Petitioner to organize for scheme-wise completion and consequent capitalization of the assets in consonance with the commissioning/ commercial
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4.15. Rationalization of Tariff Structure

The Commission directed the NDMC to record revenue collected on account of fixed charges and energy charges separately and submit the same
along with slab-wise number of consumers and sanctioned load within six months of issue of the Tariff Order so that the Commission can take appropriate steps to rationalise tariff structure for NDMC consumers in the subsequent Tariff Orders. The Commission further directed the NDMC that the estimated surplus revenue realised in FY 08 of Rs. 113.49 Crore be transferred to MYT Contingency reserve. The Petitioner was directed to maintain separate accounts in their books and reflect the balance in the Contingency Reserve Account in the
balance sheet. There shall be yearly additions and drawals to/from these Contingency Reserve accounts based on the annual review and performance of the Petitioner. Funds under the MYT Contingency Reserve shall be kept in a separate bank account and shall be effectively invested and managed to earn returns based on market conditions ensuring adequate liquidity. This fund shall not be utilized for speculative purposes. The use of these funds in any other manner shall be only with the prior approval of the Commission.
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5. LAW DIVISION
5.1. DERC Regulations
During the period under report, the Commission framed the following Regulations: (i) (ii) Delhi Electricity Supply Code and Performance Standards, Regulations, 2007; Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Generation Tariff) Regulations, 2007; Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Transmission Tariff) Regulations, 2007; Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff) Regulations, 2007; Delhi Electricity Regulatory Commission (Levy and Collection of Fee and Charges by State Load Dispatch Centre) Regulations, 2007; and Delhi Electricity Regulatory Commission (State Grid Code), Regulations 2008. The salient features of these Regulations, mentioned above, are as follows: Sections 57, 86 and 181 of the said Act, framed these Regulations which were notified on 18.04.2007. These Regulations are an important mile stone in the electricity sector of Delhi which bind the Distribution Companies to attend to complaints and redress the grievances of consumers in a time bound manner. These Regulations provide for the system of supply and classification of supply; the procedure to deal with new connections in electrified and unelectrified areas; problems relating to metering and billing and procedure thereof; disconnection and reconnection. The Regulations also prescribe the procedure to deal with the cases relating to theft and unauthorized use of electricity; procedure for lodging complaints and their handling by the utilities, the guaranteed and overall standards of performance. These Regulations specifically mention the maximum time limit in which a complaint is to be attended to and redressed and in case of failure on the part of the Distribution Licensee, to impose penalty and also award compensation to the affected consumer. In Schedule III of the Regulations, Guaranteed Standards of performance and compensation to consumers in case of default by the Licensee, have been specifically provided which are as follows:
(iii)
(iv)
(v)
(vi)
5.1.1. Delhi Electricity Supply Code and Performance Standards, Regulations, 2007
The Commission, in exercise of its powers under Section 50 of the Electricity Act, 2003, read with
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TABLE : 5.1
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The Regulations also provide the manner of payment of compensation amount which in brief is as follows: 1. The Licensee shall register every complaint of a consumer regarding failure of power supply, quality of power supply, meters, bills etc., at the Centralized Complaint Center or Complaint Centers and intimate the complaint number to the consumer; The Licensee shall maintain consumer-wise records regarding the Guaranteed Standards of performance in order to give a fair treatment to all consumers and avoid any dispute regarding violation of standards; and All payments of compensation shall be made by way of adjustment against current and/or future bills for supply of electricity, but not later
than ninety days from the date of violation of a Guaranteed Standard. However, if the Licensee fails to disburse the compensation amount, the aggrieved consumer can approach the respective Consumer Grievance Redressal Forum for redressal of grievances of consumers to seek such compensation. In such event, additional penalty may be levied on Licensee for not implementing Regulations faithfully on a caseto-case basis.
2.
5.1.1. Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Generation Tariff) Regulations, 2007.
The Commission, in exercise of its powers under Sub-sections (zd), (ze) and (zf) of Section 181(2) read with Sections 61, 62 and 86 of the Electricity
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3.
Act, 2003 and all powers enabling it in that behalf, framed these Regulations which were notified on 30.05.2007. The enactment of these Regulations is an important development in the NCT of Delhi as it provides for a framework to determine Multi Year Tariff by the State Commission. The State of Delhi has, thus, become one of the very few States in the Country, to frame such Regulations and issue multi year tariff orders for the first control period i.e. from FY 2007-08 to FY 2010-11. The Generation Tariff Regulations, provide for the procedure for determination of generation tariff, general approach and guiding principles, principles for determination of tariff, operational norms for Thermal Power Generating stations and the procedure for Multi-Year Tariff filing. The general approach and guiding principles of these Regulations are, as mentioned in Sections 61 and 62 of the Act, to encourage competition, efficiency, economical use of resources, good performance and optimum investments. The Regulations, further, provide that the Commission shall adopt Multi Year Tariff framework for determination of tariff for each year of the Control Period which shall be based on the following: i) Business Plan of the Generating Company (plant wise separately) for the entire Control Period to be submitted to the Commission for approval; Applicants forecast of expected tariff for sale of power for each year of the Control Period, based on reasonable assumptions of the underlying financial and operational parameters, as submitted in the Business Plan; Trajectory for specific parameters shall be
stipulated by the Commission, where the performance of the applicant is sought to be improved through incentives and disincentives; iv) Annual review of performance shall be conducted vis--vis the approved forecast. The Regulations also empower the Commission to set targets for each year of the Control Period for the items or parameters that are deemed to be controllable and which include: Station Heat Rate; Availability; Auxiliary Energy Consumption; Secondary Fuel Oil Consumption; Operation and Maintenance Expenses; Plant Load Factor; Financing Cost which includes cost of debt (interest), cost of equity (return); and Depreciation.
5.1.2
i) ii) iii) iv) v) vi) vii) vii)
These Regulations also provide for review at the end of the control period as well as periodical reviews to ensure smooth implementation of the MYT framework.
ii)
5.1.3. Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Transmission Tariff) Regulations, 2007.
The Commission, in exercise of its powers under Sub-sections (zd), (ze) and (zf) of Section 181(2) read with Sections 61, 62 and 86 of the Electricity
iii)
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Act, 2003 and all powers enabling it in that behalf, framed these Regulations notified on 30.05.2007, to provide a detailed mechanism and procedure to determine transmission tariff and other related issues. Like the Regulations applicable in the case of Generation, these Regulations also provide for general approach and guiding principles, principles for determination of ARR, transmission tariff and procedure for filing multi year tariff petitions. These Regulations further provide for review at the end of the control period as well as periodic reviews by the Commission to ensure smooth implementation of the Multi Year Tariff framework.
Regulations specifically provide that the Commission shall adopt MYT framework for approval of ARR and expected revenue from tariffs and charges. The control period shall commence from the date of issue of the MYT Order and extend till 31.03.2011. These Regulations further provide that the MYT frame work shall be based on the following: (i) Business Plan of the Distribution Licensee for the entire Control Period to be submitted to the Commission for approval; Applicants forecast of expected Wheeling Tariff and Retail Supply Tariff for each year of the Control Period, based on reasonable assumptions of the underlying financial and operational parameters, as submitted in the Business Plan; Trajectory for specific parameters shall be stipulated by the Commission, where the performance of the applicant is sought to be improved through incentives and disincentives; Annual review of performance shall be conducted vis--vis the approved forecast and categorization of variations in performance into controllable factors and uncontrollable factors; Profit sharing shall be applied on the profits arising from the Distribution Licensees better performance vis--vis AT&C loss reduction targets specified by the Commission; Variation in revenue/cost on account of uncontrollable factors like sales and power purchase shall be trued up.
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(ii)
5.1.4. Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff) Regulations, 2007.
5.1.4.1.The Commission, in exercise of its powers under Sub-sections (zd), (ze) and (zf) of Section 181(2) read with Sections 61, 62 and 86 of the Electricity Act, 2003 and all powers enabling it in that behalf, framed these Regulations, notified on 30.05.2007, for specifying the terms and conditions for determination of Wheeling and Retail Supply Tariff in the case of Distribution Companies. The Regulations provide for general approach and guiding principles, principles for determination of ARR, Treatment of income from cross subsidy surcharge and additional surcharges, quality of supply and services, multi year tariff process, Government support for social causes, truing up and periodical reviews etc. These
(iii)
(iv)
(i)
(vii)
5.1.4.2.The Commission has also been empowered to set targets for each year of the control period for the items or parameters that are deemed to be controllable and which include: i) AT&C Loss, which shall be measured as the difference between the units input into the distribution system and the units realised (units billed and collected) wherein the units realised shall be equal to the product of units billed and collection efficiency; Distribution losses, which shall be measured as the difference between total energy input for sale to all its consumers and the total energy billed in its license area in the same year; Collection efficiency, which shall be measured as ratio of total revenue realised to the total revenue billed for the same year. The revenue realisation from arrears relating to the DVB period, electricity duty and late payment surcharge shall be included for computation of collection efficiency; Operation and Maintenance Expenditure which includes employee expenses, repairs and maintenance expenses, administration and general expenses and other miscellaneous expenses viz. audit fees, rents, legal fees etc; Return on Capital Employed Depreciation; Quality of Supply.
(i)
NDPL AT&C Loss level shall be at 17 percent at the end of the Control Period i.e. 31.03.2011. Provided that the year-wise loss reduction trajectory for the Control Period shall be fixed for the Distribution Licensee in the Multi Year Tariff Order for 2007-08; Provided that profits arising from achieving loss level better than specified in the loss reduction trajectory shall be equally shared between the Licensee and Contingency Reserve; Provided that profits arising from achieving loss level better than 15% in any year shall be completely to the account of the Licensee; Provided that the loss reduction targets and year-wise loss reduction trajectory for subsequent Control Periods shall be specified by the Commission before the start of each Control Period;
ii)
iii)
(ii)
iv)
BRPL AT&C Loss level shall be at 17 percent at the end of the Control Period i.e. 31.03.2011. Provided that the year-wise loss reduction trajectory for the Control Period shall be fixed for the Distribution Licensee in the Multi Year Tariff Order for 2007-08; Provided that profits arising from achieving loss level better than specified in the loss reduction trajectory shall be equally shared between the Licensee and Contingency Reserve; Provided that profits arising from achieving loss level better than 15% in any year shall be completely to the account of the Licensee;
v) vi) vii)
5.1.4.3. The Commission, in these Regulations, has fixed the target for AT&C Loss levels to be achieved by the Distribution Licensees at the end of the control period which are as under
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Provided that the loss reduction targets and year-wise loss reduction trajectory for subsequent Control Periods shall be specified by the Commission before the start of each Control Period. (iii) BYPL AT&C Loss level shall be at 22 percent at the end of the Control Period i.e. 31.03.2011. Provided that the year-wise loss reduction trajectory for the Control Period shall be fixed for the Distribution Licensee in the Multi Year Tariff Order for 2007-08; Provided that profits arising from achieving loss level better than specified in the loss reduction trajectory shall be equally shared between the Licensee and Contingency Reserve; Provided that profits arising from achieving loss level better than 20% in any year shall be completely to the account of the Licensee; Provided that the loss reduction targets and year-wise loss reduction trajectory for subsequent Control Periods shall be specified by the Commission before the start of each Control Period. (iv) NDMC AT&C Loss level shall be at 10 percent at the end of the Control Period i.e. 31.03.2011. Provided that the year-wise loss reduction trajectory for the Control Period shall be fixed for the Distribution Licensee in the Multi Year Tariff Order for 2007-08; Provided that profits arising from achieving loss level better than specified in the loss
reduction trajectory shall be equally shared between the Licensee and Contingency Reserve; Provided that profits arising from achieving loss level better than 9% in any year shall be completely to the account of the Licensee; Provided that the loss reduction targets and year-wise loss reduction trajectory for subsequent Control Periods shall be specified by the Commission before the start of each Control Period. These Regulations make a clear provision that for any class of consumers be it a consumer below the poverty line, school, hospital, etc. desirous of seeking concessional tariff, shall approach the Government of NCT of Delhi for obtaining subsidy. It would be the discretion of the Government of NCT of Delhi to consider giving subsidy to any class of consumers it so desires; Provided that the amount of the subsidy for a particular year of the Control Period shall be paid atleast in four equal quarterly instalments and in advance of the period to which it is applicable; The Regulations also provide for periodic review of the Licensees performance during the control period by the Commission so as to ensure smooth implementation of the MYT framework.
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5.1.5. Delhi Electricity Regulatory Commission (Levy and Collection of Fee and Charges by State Load Despatch Centre) Regulations, 2007
The Commission, in exercise of its powers under section 181(2)(g) read with section 32 (3) of the Electricity Act, 2003 and the Electricity (Removal of Difficulty) Sixth Order 2005, framed these Regulations for levy and collection of fee and charges by SLDC in the National Capital Territory of Delhi. The Regulations were notified on 18.10.2007. These Regulations provide for levy of fee on the existing generating stations, Transmission Licensees and beneficiaries falling under the domain of SLDC. The SLDC would be entitled to recover annual charges incurred while discharging its functions from the beneficiaries which shall include the following: (i) (ii) The component of return on equity/ investments; Employee cost, Administrative & General (A&G) expenses, Repair and Maintenance (R&M) expenses, depreciation, advance against depreciation, interest and finance charges, interest on working capital, if any, and any other expenses incidental to discharging the functions of SLDC as deemed appropriate by the Commission.
ii)
The Beneficiaries shall make payment to the SLDC within one month of the date of receipt of the bill; Non-payment within the given time or late payment shall attract penalty; and Disputes to be settled amicably and mutually. In case of failure to resolve any dispute mutually, the matter shall be referred to the Commission, whose decision shall be final and binding on all parties.
iii) iv)
5.1.6. Delhi Electricity Regulatory Commission (State Grid Code) Regulations, 2008
In exercise of the powers vested with the Commission under sub-section (zp) of Section 181(2) read with sub-section (h) of Section 86(1) of the Electricity Act, 2003, the Delhi Electricity Regulatory Commission (State Grid Code ) Regulations, 2008 were notified on 31st March, 2008. The Delhi Grid Code (DGC) lays down the regulations, guidelines and standards to be followed by various agencies and participants in the State Transmission System (STS) to plan, develop, maintain and operate the STS, a part of Northern Region Grid System, in the most efficient, reliable, economic, and secure manner, while facilitating a healthy competition in the generation and supply of electricity. The DGC governs the boundary between the State Transmission Utility (STU), Transmission Licensee(s) and other Users and establishes procedures for operations of facilities, which use the STS. It lays down both the information requirements and the procedures governing the relationship between various users of STS as well as the State Load Despatch Centre (SLDC). The DGC, however, is not concerned with the detailed design and
These Regulations also provide for the procedure for collection of charges by SLDC and the dispute resolution which are detailed as follows: i) The SLDC shall furnish necessary monthly bills at the rate of 1/12th of the annual charges as approved by the Commission, to the beneficiaries;
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operation of Generators, Power Stations, Suppliers and Distribution Systems, provided that their overall compatibility with the Transmission System needs are assured. The DGC covers all material technical aspects relating to connections to operation and use of the STS including the operation of electric lines and electrical plant connected thereto in so far as relevant to the operation and use of the Transmission System. It is designed so as to permit the planning, development, maintenance and operation to facilitate an efficient, coordinated, secured, reliable and economical system for the transmission and supply including trading of electricity in the State.
vi)
Review of re-assignment of PPAs Order of the Commission dated 31.03.2007 on the petition of NDMC requesting to re-allocate power from three different plants instead of one (Order dated 07.03.2008) has been discussed in detail in Chapter 3 at paragraph number 3.7. Procurement of 309 MW power on mediumterm basis by the Discoms (Order dated 28.03.2008) has been discussed in detail in Chapter 3 at paragraph number 3.8.
vii)
Brief description of the above orders is as follows:
5.2. DERC Orders

The Commission during the period under report issued some important orders which are as under: i) Proposal of Amnesty Scheme for Voluntary Declaration of Tampered Meters (Orders dated 28.09.2007 and dated 31.01.2008). Timarpur-Okhla Waste Management Company Pvt. Limited (Determination of tariff for sale of power generated by the integrated Waste Management Plant) (Order dated 17.08.2007 and 08.11.2007). The details of the project have already been given in Chapter-3 at paragraph number 3.12. Refusal to grant Distribution License to Delhi Metro Rail Corporation (DMRC) in its area of operation (Order dated 25.06.2007). Payment of interest on consumer Security Deposits (Order dated 23.04.2007). Discoms Rebate/Adjustment Scheme to domestic consumers for 2007-08 (Order dated 09.05.2007).
5.2.1. Amnesty Scheme for Voluntary Declaration of Tampered Meters

All the three Distribution Companies (Discoms), namely, BRPL, BYPL and NDPL submitted an identical proposal to introduce a time-bound Voluntary Disclosure Scheme for consumers within their respective distribution area. The Discoms sought approval of the Commission under Clause 55 of the Delhi Electricity (Supply Code and Performance Standards) Regulations, 2007 by relaxing Clause 70 of the said regulations wherein the Commission has the powers to relax any of the provisions of the Regulations, in public interest. While submitting the Scheme, it was explained by the Discoms that with the enforcement becoming more stringent with the deployment of CISF, creation of Special Courts, amendment of law making theft a cognizable offence, etc., the consumers having tampered meters can be given one last chance to come clean. It was also pointed out that enforcement actions are not easy either for the Discoms or for the consumers and therefore, it is in the interest of both that the tampered meters get changed at the
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ii)
iii)
iv) v)
earliest and consumers start paying fully for the electricity they use. It was also explained that the Scheme would also help the Discoms in their drive to change electro-mechanical meters with electronic meters. The Commission, while considering the Scheme, also felt that all possible efforts need to be made to bring in as many consumers as possible into the billing net and this objective would be well served by introducing the proposed Scheme which would also help in overcoming the stiff resistance the Distribution Companies face in installation of electronic meters. The Commission, after considering all these aspects, approved the proposed Amnesty Scheme in the larger public interest vide its Order dated 28.09.2007 with the direction that during the period of operation of the Scheme, if any meter is found tampered, the consumer shall have the option to settle the matter in terms of the Scheme. Seeing the good response from the residents in the NCT of Delhi, BYPL requested the Commission to extend the Scheme by another two months which was allowed by the Commission vide its Order dated 31.01.2008.
5.2.2. Delhi Metro Rail Corporation (DMRC) Application for Distribution License
The DMRC filed a Petition for grant of license for distribution and supply of electricity in its area of operation. In its Petition, the DMRC raised several issues, legal as well as factual, in support of its case. It was stated that under the DMRC Act, the Applicant had an exclusive authority to undertake business and activities within the area of its operation and the Applicant had the right to exclude the interference or control of any other party within that area. It was,
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further, stated by DMRC that Sections 31, 64, 67, 68, 74 etc. of the DMRC Act and the Rules 65 to 80 of the Delhi Metro Railway General Rules, 2002 and also Rules 37 to 41 of the Opening of Delhi Metro Railway for Public Carriage of Passengers Rules, 2002 give exclusive powers and rights to DMRC to deal with the aspect of conveyance and transmission of energy within its area of operations and therefore it is necessary for it to have a reliable and fully controlled power system essential for uninterrupted operations. It was submitted by DMRC that the Applicant alone is entitled to lay down and place service lines in its area of operations and that no person including the Distribution Licensees can enter the area of operation of the Applicant or otherwise legally claim access to the service line, power supply and traction arrangement without the authority of the Applicant. It was also stated that the Petition was submitted under Delhi Electricity Reform Act, 2000 and it continued to be a valid application under the said Act. It was submitted that the provisions of the Electricity Act, 2003 need not be applicable in the present situation and that the license to the Applicant may be granted under the provisions of the Delhi Electricity Reform Act, 2000, rather than the Electricity Act, 2003. As per DMRC, the provisions of Distribution of Electricity License (Additional Requirements of Capital Adequacy and Credit Worthiness and Code of Conduct) Rules, 2005 would not be applicable in its case. Without going into the full text of arguments made by DMRC in support of its case, which are elaborately dealt in the Commissions Order dated 09.05.2007, only some important issues have been stated above. The Distribution Licensees vehemently opposed the grant of Distribution License to DMRC and said that
the application for grant of License should be considered within four corners of the Electricity Act, 2003 as the said Act is a statute which is posterior in time both to the DMRC Act as well as the Delhi Electricity Reform Act, 2000. Further, attention was invited to Section 185 of the Electricity Act, 2003 where the provisions of State Acts given in the Schedule are saved only to the extent they are not inconsistent with the provisions of the Electricity Act, 2003. It was also stated that for the purpose of distribution and retail supply of electricity, the Electricity Act, 2003, is the special Act and the DMRC Act, a general law and therefore, the Electricity Act, 2003 will have an overriding effect on the provisions of DMRC Act, 2002. Further, attention was also invited to Section 173, 174 and 175 of the Electricity Act, 2003. It was stated that the Electricity Act, 2003 under Section 173, expressly excludes its application to the extent of inconsistency, with that of the provisions of Consumer Protection Act 1986, Atomic Energy Act 1962, and the Railways Act, 1989 and therefore, the provisions of these three Acts will have an overriding effect on the provisions of the Electricity Act, 2003. The aforesaid section does not create an exception in favour of the Applicant to seek priority over the provisions of the Electricity Act, 2003. It was also argued that the application for the distribution license squarely attracts 6th Proviso of Section 14 of the Electricity Act, 2003. The proposed area of supply falls within the respective area of supply of the three Distribution Companies of Delhi and, therefore, the Applicant must comply with the 6th Proviso of Section 14 of the Electricity Act, 2003. Objections have also been received from New Delhi Municipal Council which is a local authority within
the area of operations of DMRC. It is stated that the present application is not maintainable and is defective on various counts as it does not conform to the provisions of the Electricity Act, 2003 and Regulations made thereunder. In view of Section 185(3) of the Electricity Act, 2003, the application is required to be considered under the Electricity Act, 2003 and not under Delhi Electricity Reform Act, 2000. Even otherwise, the relevant date for consideration of a license is the date on which it is considered for grant, and not the date of application. It has submitted that the area of supply as defined in the application is very ambiguous and is incapable of precise definition. It was stated that the area of supply as mentioned by the Applicant is not covered within the meaning of Section 2(3) of the Electricity Act, 2003. Further, the Applicant is a consumer as defined under Section 2(15) rather than a Distribution Licensee as defined under Section 2(17) of the Electricity Act, 2003. It was claimed that a prospective Licensee has to specify the area of supply which has to be read within the meaning as provided under the Distribution of Electricity License (Additional Requirements of Capital Adequacy, Creditworthiness and Code of Conduct) Rules, 2005, which has prescribed the minimum area as a Revenue District. The Application, thus, has to be in the format covering a minimum area as stated in the notification and it cannot be for an area listed as per desire of the Applicant. It was stated that the Applicant has made an attempt to escape from the mandate of the sixth proviso to Section 14 by erroneously stating that DMRC is not asking for license for distribution of electricity as a parallel licensee or a multiple licensee in terms of sixth proviso of Section 14. It is an erroneous submission
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that the area of operations of DMRC and the area of operation of the existing distribution licensees are different and the requisites of sixth proviso to Section 14 are dispensable. In fact, the geographic area of operations of the Applicant also runs through the area of supply of the Distribution Companies as well as NDMC. It was further added that Section 6(2)(h) of the Delhi Metro Railway (Operation & Maintenance) Act, 2002 is only an enabling provision which allows the Applicant to lay or place electric supply lines for conveyance and transmission of energy and to obtain license for that purpose. This provision has been carved out to achieve the purpose of the aforesaid Act. However, if an application is made for a distribution license then it has to be seen whether such application satisfy the provisions of the Electricity Act, 2003. Finally, it was also stated that the averments of the Applicant that the Delhi Metro Rail Act is a Special Act vis-a-vis the Electricity Act, 2003, is incorrect. It is stated that the non-obstante provisions in Sections 173 & 174 of the Electricity Act, 2003 have deliberately excluded the Railway Act, 1989, but not the DMRC Act as contended by the Applicant. The Commission after considering the averments made by the parties on the issue of minimum area of supply is of the view that this being a statutory requirement, the DMRC has to show that the application is made for an area of supply constituting atleast a revenue district. In a place like Delhi where the entire geographical area of the city has been divided into nine revenue Districts, the Applicant has not been able to show as to which revenue District it intends to supply electricity as a Distribution Licensee. What DMRC has been pleading is that 6th proviso of Section 14 of the Electricity Act, 2003
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and the Rules made thereunder, including the requirement of minimum area of supply, are not applicable to it. The Commission was however, convinced that the application of DMRC, has necessarily to be considered under the Electricity Act, 2003 and the 6th proviso to Section 14 and the Rules made thereunder, including the requirement of minimum area of supply, are applicable in the present case. The Applicant cannot escape from the said requirements as there is no provision of granting exemption to any class or category of persons seeking license for distribution of electricity in the same area. The condition prescribed under the Rules for the minimum area of supply is incorporated to avoid a situation of cherry picking and is, therefore, based on very sound logic and principle. The Commission, therefore, refused to accept the request of DMRC for grant of a distribution and retail supply license. However, the DMRC was held to be at liberty to approach the Commission as and when it satisfies the requirements of the Electricity Act, 2003 and the rules made thereunder, as amended from time to time.
5.2.3. Payment of Interest on Consumer Security Deposit : Discoms Petitions

The three Distribution Companies, named above, had filed separate petitions before the Commission for payment of Interest on Consumer Security Deposit. It was submitted that the Distribution Licensee is to pay interest to the consumers on the Security Deposit under Section 47(4) of the Electricity Act, 2003. The opening Balance Sheet indicated that the aggregate Security Deposit held by them was only Rs. 29 Crore (NDPL Rs.10 Crore, BRPL Rs.11 Crore and BYPL Rs.8 Crore).
The rest of the liability on account of the consumer Security Deposits was transferred to the Holding Company, i.e., the Delhi Power Company Limited (DPCL). It was the Licensees contention that according to the DVB books of accounts, the Security Deposits from the consumers as on 31.03.2001 was in the region of about Rs.175 Crore. As against this, the amount transferred to the Distribution Company was only Rs.29 Crore and, therefore, the Distribution Companies cannot be liable to pay interest on the deposits which were never held by them. It was submitted by the Discoms that directions to be issued to DPCL to pay interest on the Security Deposits held by it which can be disbursed by the petitioners (Discoms) on behalf of DPCL. Alternately, the DPCL can transfer the amount of consumer Security Deposit held by it to the Discoms so as to enable them to remit the interest to the consumers. The petition of Discoms was opposed by the DPCL. One of the grounds raised was that DPCL is not a Distribution Licensee and being a Holding Company, is only concerned with the erstwhile liabilities of the defunct DVB in terms of the Schedule of the Transfer Scheme. Schedule G does not include interest on the consumer deposits which are stated under Section 47(4) of the Electricity Act, 2003. It was argued by DPCL that the accounts, as on the date of unbundling, were frozen and that no new liabilities can be created against the erstwhile DVB or the Holding Company. The only exception to this are the cases where there are notes to accounts in the Schedule and that the present case is not covered therein. The DPCL also raised several other grounds to oppose the petition of the Distribution Companies. The Commission considered the matter in detail
including the issues, legal as well as factual, raised by the parties and observed in its Order dated 23.04.2007 that a major portion of the consumer Security Deposits is held in the books of DPCL as the liability of the erstwhile DVB transferred to DPCL. It is an accepted financial principle that any party which enjoys the funds, has to pay for the cost of holding the funds. In the instant case, the interest liability on account of deposits made by the consumers, arises in line with the provisions of the Act and the Distribution Licensees are required to pay the interest to all the consumers. However, the amount of Security Deposits is not fully held by Distribution Companies and a major portion is still held by the DPCL. However, the liability towards payment of interest on Security Deposits devolves on all the Distribution Licensees and DPCL to the extent of funds held by each of them. The funds held by the Licensees and DPCL as per records are as follows: NDPL BRPL BYPL DPCL Rs. 10 Crore Rs. 11 Crore Rs. 8 Crore Rs. 257 Crores (plus interest)
While disposing of the petition of Discoms vide its Order dated 23.04.2007, the Commission has made the following observations/ directions: One of the most vital functions of the Commission is to protect the interest of the consumers in line with the provisions of the Act. As far as issuing directions to M/s DPCL to transfer the amount of security deposits held by it, to the successor distribution licensees is concerned, the Commission has decided not to issue such
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directions to M/s DPCL as M/s DPCL is not a regulated entity. However, the Commission after considering all relevant legal provisions and related factors, have decided to issue a statutory advice to the Govt. of NCT of Delhi under Section 86(2) of the Electricity Act, 2003, for directing M/s DPCL to transfer the amount of security deposits held by it, alongwith interest, to the successor distribution licensees after identifying the amount of consumer deposits from the records. The distribution licensees, on receipt of such amount, shall give effect to the provisions of Section 47(4) of the Electricity Act, 2003 to be read with relevant Regulations and provide necessary credit to the individual consumer towards interest on security deposits.
Tariff Order for the Financial Year 2007-08 which will also align the Discom adjustment with the Govt. of NCT of Delhi subsidy. It was further submitted that since the transition period was over on 31.03.2007, the Discom adjustment for the period from 01.04.2007 onwards may be accounted for as an expense item in the ARR for the FY 2007-08. In a subsequent communication, the NDPL clarified that the adjustment during the extended period beyond 31.03.2007, should be adjusted from the consumers share of additional revenue gains accrued in FY 2006-07 from the over achievements of AT & C loss reduction targets. The other two Discoms, namely, BYPL & BRPL also made similar submissions and stated that the cumulative amount for the Discom adjustment for the period commencing from 01.04.2007 will be in the nature of expense which will be adjusted (totally or partially) against any over achievements of AT & C Losses and residual amount, if any, after such adjustment, be treated as expense in the ARR of FY 2007-08. The Discoms also clarified that they had not made any prayer for creation of Regulatory Asset for the purpose of deferring the Discoms adjustment in subsequent financial year. The Commission while considering the proposal of the Discoms for extension of the Discom Rebate/ Adjustment scheme beyond 31.03.2007 observed that it would be in the overall interest of the consumers to extend the scheme, till the issue of the order for the FY 2007-08. The Commission, therefore, approved the scheme submitted by the Discoms vide its Order dated 09.05.2007, subject to the condition that the rebate shall be adjusted against the consumers share of over achievements of AT & C losses ideally during 2006-07 and 200708. This approval was given subject to certain other terms and conditions stipulated in the Commissions earlier Order dated 29.09.2006. The Commission
5.2.4. Discoms Rebate/Adjustment Scheme for Domestic Consumers during FY 200708

The three Distribution companies, namely, BRPL, BYPL and NDPL submitted proposal to continue the existing rebate scheme by offering reduction in the tariff to the extent that the effective tariff for the Domestic and Agricultural Consumers, for the period beyond 31.03.2007 up till the issue of next Tariff Order for Financial Year 2007-08, remains at the same level as was applicable by virtue of the Tariff Order dated 07.07.2005. The proposed Discom Rebate/Adjustment scheme was in consonance with the earlier scheme which was approved by the Commission vide its Order dated 23.09.2005. The NDPL in its proposal submitted that since the Tariff Order for the Financial Year 2007-08 was yet to be issued, they would request the Commission to approve extension of the scheme till the issue of next
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also directed that the said scheme shall continue till the date when the next years tariff i.e. for 2007-08 becomes effective.
5.3. Complaints Under Section 142 of Electricity Act, 2003

During the period under report the Commission has received complaints alleging violation of certain provisions of the Electricity Act, 2003 and/or the
Regulations framed thereunder by the Commission. In such complaints the concerned Discom was issued notice and after hearing version of both sides if it was established that certain provisions of Law / regulation have been violated, the Commission imposed penalty against the erring Discom under Section 142 of the Electricity Act, 2003. The details of cases where penalty has been imposed during this period, are as follows:
Details of Penalties and Compensations TABLE : 5.2
NDPL: 01
BRPL:
03
BYPL: 04
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6. ADMINISTRATION AND ACCOUNTS

6.1. Administration
6.1.1. The Commission has been facing problems relating to the lack of availability of skilled man power capable of handling the technical functions of the Commission relating to electricity tariffs, Engineering and Law. The man power trained on regulatory aspects is hardly available in Govt. Ministries / Departments. The Commission cannot provide higher pay packages to the employees than those applicable to government employees working in Ministries / Departments of the Government. Hence, the quality staff crunch persists. The Officers recruited on deputation basis have a certain gestation period before they can begin delivering. The deputationists revert to their parent cadres after completing their term of 3-5 years thereby denting the institutional memory and leaving the organization poorer while taking alongwith the skills they attained during the period of their association with the Commission. The skills acquired, as such, are often not of much use in their parent Cadre. The contract employees have higher attrition rate since they find more attractive jobs in the private domain after gaining some useful regulatory experience. 6.1.2. A study of incumbency position, particularly, of the Group A Officers of the Commission after it was initially set up in December 1999, shows that the average stay of a Group A
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Officer in the Commission is less than 2 years. This only spells weak institutional memory and low returns from the skill sets developed during the stay of the officers in the Commission. Absorption of Officers working in the Commission on deputation basis could be an option before the Regulatory Intuitions. Many of the SERCs have already formulated their absorption scheme. DERC is in the process of finalizing its own scheme in consultation with GNCTD. 6.1.3. The other limiting factors which dissuade the quality man power from joining Regulatory bodies are the lack of perquisites permissible to employees of these institutions vis--vis those in vogue in the public and private sector institutions. For instance medical and housing benefits related problems continue to be a cause of concern to the Officers working in the Commission since they are not entitled to retain such benefits as they were entitled to in their parent organizations.
6.2. Revenue Receipts

Apart from the receipt of grant-in-aid which is exclusively meant for the expenditure of the Commission, the other source of income of the Commission is the Revenue Receipts. During the year 2007-08, the Commissions Revenue Receipts amounted to Rs.3,21,96,175/- as per head-wise details as follows:
DERC : Revenue Receipts TABLE : 6.1
(Amount in Rs.)
In accordance with the guidelines of the Govt. of NCT of Delhi communicated by the Office of the Controller General of Accounts through Principal Accounts Office vide letter no. Pr.A.P./Misc./12/2001/T-II/2459 dated 04.12.2001; the Revenue Receipts have not been utilized for expenditure of the Commission. The entire Revenue Receipts as and when received including interest earned on the unutilized amount of grant-in-aid were regularly remitted to the Govt. of NCT of Delhi.
6.4.Budget and Maintenance of Accounts Rules

In compliance to the provisions of the Electricity Act, 2003, the Draft Rules on the Delhi Electricity Regulatory Commission (Budget) Rules stand submitted to the Government for approval in consultation with the Office of Comptroller and Auditor General of India for Gazette notification thereof. Similarly, Gazette notification of the Delhi Electricity Regulatory Commission (Maintenance of Accounts) Rules duly vetted by the Government stand submitted to the Government for notification.
6.3. Annual Accounts

The Annual Accounts of the Commission for the year 2007-08 have been prepared on cash basis in the formats approved by the Office of Comptroller and Auditor General of India. The Annual Accounts of the Commission after being certified by the Office of the AG (Audit) Delhi along with audit report and audit certificate have been submitted to the Govt. of NCT of Delhi for placing before the State Legislature. This is a statutory requirement under the Electricity Act, 2003.
6.5. Staff Welfare

In order to provide statutory benefits of Provident Fund and Insurance Coverage to the regular & contractual employee of the Commission, the approval of the Govt. of NCT of Delhi was obtained and the benefit of Employees Provident Fund (EPF) has been extended to the regular employees and those appointed on contract basis w.e.f April, 2007.
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TABLE OF CONTENTS Chapter 1. 2. Subject Introduction Consumer Welfare

2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 Delhi Electricity Supply Code & Performance Standards, Regulations, 2007 Consumer Satisfaction Survey Meter Testing Drives Discoms monthly meeting with Residents Welfare Associations Grievance Redressal Officer Hearings Call Centre Monitoring Electricity Consumers Advocacy Committee Third Party Meter Testing Hearing Under Section 142 of Electricity Act, 2003 Consumer Grievances Redressal Forums & Ombudsman Public Grievances Cell
Page Number
1
3
3 4 4 6 6 6 7 8 8 8 10
3.
Delhi Power Sector : Development of Infrastructure, Services and Some Associated Issues
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 Power Availability in Delhi Capital Expenditure and Improved Infrastructure Reduction in Aggregate Technical & Commercial Losses Improvement in Plant Load Factor of Generating Units in Delhi Sale / Banking of Surplus Power Rate for Inter-Discom Trading within Delhi Reassignment of Power Purchase Agreement to Distribution Licensees and Deemed Licensees Procurement of Power on Short / Medium Term basis Co-ordination Forum Status of Open Access Special Voluntary Retirement Scheme Municipal Solid Waste Projects Govt. of NCT of Delhi Targetted Subsidy Scheme
11
11 11 12 12 13 14 15 18 19 22 22 25 26
99
Tariff
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 Tariff Filing Stakeholders Comments Truing-up & Analysis of ARR : Generating Companies Truing-up & Analysis of ARR : Delhi Transco Ltd. Truing up and Analysis of ARR : BSES Radhani Power Ltd. Truing-up and Analysis of ARR : BSES Yammuna Power Ltd. Truing-up and Analysis of ARR : North Delhi Power Ltd. Tariff Structure Across Discoms Discoms: Cost of Service Truing-up and Analysis of ARR : New Delhi Municipal Council Directives of the Commission : Generating Companies Directives of the Commission : Delhi Transco Ltd. Directives issued by the Commission : Distribution Companies Directives issued by the Commission : New Delhi Municipal Council Rationalization of Tariff Structure
28
28 30 45 48 52 59 66 70 71 71 75 75 76 78 78
Law Division
5.1 5.2 5.3 DERC Regulations DERC Orders Complaints Under Section 142 of Electricity Act, 2003
80
80 88 94
Administration and Accounts

6.1 6.2 6.3 6.4 6.5 Administration Revenue Receipts Annual Accounts Budget and Maintenance of Accounts, Rules Staff Benefits
96
96 96 97 97 97
100
101
ANNUAL REPORT 2007-08

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ANNUAL REPORT : 2007-08

ANNUAL REPORT : 2007-08

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

Overall Satisfaction level of consumers.

2.2. Consumer Satisfaction Survey

2.3. Meter Testing Drives

ANNUAL REPORT : 2007-08

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

2.5. Grievance Redressal Officer Hearings

2.4. Discoms monthly meeting with Residents Welfare Associations (RWAs)

2.6. Call Centre Monitoring

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

Discom Call Centres : Types of complaints handled TABLE : 2.2

2.7. Electricity Consumers Advocacy Committee (ECAC)

ANNUAL REPORT : 2007-08

2.9. Hearings Under Section 142 of Electricity Act, 2003

2.8. Third Party Meter Testing

2.10. Consumer Grievances Redressal Forums (CGRFs) and Ombudsman

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

Discom CGRFs : Details of complaints received TABLE : 2.4

Discom CGRFs : Details of complaints disposed of TABLE : 2.5

Ombudsman : Details of Appeals Disposed of TABLE : 2.6

(from 2nd Aug, 2004 to 31st March, 2008)

ANNUAL REPORT : 2007-08

2.11. Public Grievances Cell

ANNUAL REPORT : 2007-08

significant growth in power demand.

3.2. Capital Expenditure and Improved Infrastructure

ANNUAL REPORT : 2007-08

3.3. Reduction in Aggregate Technical & Commercial (AT&C) Losses

3.4. Improvement in Plant Load Factor of Generating Units in Delhi

ANNUAL REPORT : 2007-08

Generating Units in Delhi : Overall Generation and PLF TABLE : 3.3

3.5. Sale / Banking of Surplus Power

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

3.6. Rates for Inter-Discom Trading within Delhi

ANNUAL REPORT : 2007-08

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

ANNUAL REPORT : 2007-08

3.8. Procurement of Power on Short/ Medium Term

ANNUAL REPORT : 2007-08

ANNUAL REPORT : 2007-08

3.9. Co-ordination Forum

ANNUAL REPORT : 2007-08

Term Basis TABLE : 3.5

DELHI ELECTRICITY REGULATORY COMMISSION

ANNUAL REPORT : 2007-08

ANNUAL REPORT : 2007-08

3.10.2.Open Access Charges in Distribution System

3.10.3. Applicable Charges