Analysis of OPTCL`s ARR and Revenue Requirement for FY 11-12

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Analysis of
OPTCL’s ARR and Transmission
tariff for FY 2011-12
By:
World Institute of Sustainable Energy, Pune
(Consumer Counsel)
4th February, 2011
1
Proposal of OPTCL
Proposed Revenue Requirement for FY 11-12
(Rs Cr)
Employee Cost
Depreciation
11%
Return on Equity
2%
Interest on Working
Capital
4%
R&M Cost
93.89
A&G Cost
38.34
Interest on loan
Interest on Working Capital
Depreciation
Return on Equity
Interest on loan
8%
A&G Cost
3%
R&M Cost
7%
Total gross requirement: 1578.69 Rs Crore
952.06
Sub-total
111.30
59.08
156.40
24.81
1435.88
Pass through expenses
127.25
Contingency Reserve
15.16
Bad & Doubtful Debt
0.10
GCC Expense
0.30
Employee Cost
65%
3
Analysis of ARR and
Transmission Tariff
Transmission loss
5.50
5.00
4.50
4.00
3.50
3.00
2010-11 2011-12
2005-06 2006-07 2007-08 2008-09 2009-10 (upto (Propos
Sept,10)
ed)
Approved (%)
4.00
4.00
5.00
4.50
4.00
4.00
3.90
Actual audited (%)
4.60
5.04
4.82
4.52
4.11
3.89
3.90
5
Employee cost incl. terminal benefits (Rs Cr.)
Item
Proposed for
2009-10
Gross amount
498.99
186.17
875.78
290.22
961.66
7.61
7.61
10.66
10.66
9.60
491.38
178.56
865.12
279.56
952.06
Less capitalization
Net employees cost
Approved
for 2009-10
Proposed for
2010-11
10-11 Approved
Approved
2010-11
Proposed
2011-12
11-12 Proposed
Basic pay +GP
62.12
98.57
DA
20.50
62.1
9.32
19.71
49.03
49.04
140.20
717.25*
9.05
14.99
10.66
9.60
279.56
952.06
HRA
Provision towards arrear pay
Terminal benefit
Others
Less capitalization
Total
*Including payment of differential pension and pensionary benefits
6
Employee cost incl. terminal benefits
(contd.)
Submission
• OPTCL has requested 241% rise in employee cost
including terminal benefit in ARR of FY 2011-12
• Basic Pay + GP: Yearly escalation of 3% shall be allowed
over the Commissioned approved amount of 2010-11
• DA: The DA proposed for 2011-12 (63%) seems to be on
higher side and therefore may be reviewed
• HRA: The HRA Proposed for 2011-12 (20% ) may be
reviewed according to Govt norms
• Terminal benefit: may be finalized as per independent
valuation report
7
R&M and A&G Expenses (Rs Cr.)
R&M
Approved
Actual
Particulars
Proposed FY 2011-12
2004-05
14.07
4.59
2005-06
14.80
6.94
a) O&M
71.93
2006-07
36.00
11.31
b) Telecom R&M
13.10
2007-08
47.00
16.52
c) Civil Works
2.80
2008-09
53.88
15.66
d) IT
6.06
2009-10
47.00
54.03
2010-11
60.00
16.16 (upto Sept’10)
98.14 (proposed)
2011-12
93.89 (proposed)
09-10
10-11
approved Projection
A&G
Expenses
Total R&M
93.89
(56.48% increase over
approved)
14.35
26.99
10-11
11-12
approved projection
15.14
38.34
% increase
over 1011approved
153.24%
8
R&M and A&G Expenses (contd.
Submission
• The approved and actual R&M expenses in last
few years reveal that OPTCL actually incurred less
than 50% expenditure on R&M (except 2009-10);
therefore, consumer should not be burdened with
excessive projected R&M expenses
• As per OPTCL Business Plan 5.5% yearly
escalation in A&G expenses shall be allowed to
pass through in ARR (i.e. Rs. 15.97 Cr against
projection of Rs 38.34 Cr for FY 2011-12)
9
O&M Expenses as per CERC
O&M Expenses as per CERC Norms for FY 2011-12
Segregation of Bays
Bays
Rs Lakh/ bay
O&M (Rs Cr)
765 kv
0
81.99
0.00
400 kv
33
58.57
19.33
220 kv
224
41.00
91.84
132 kv and below
1384
29.28
405.24
TOTAL O&M EXPENSES FOR BAYS
Segregation of EHT lines
516.40
Ckt kM
(Rs Lakh / Ckt km)
0
0.600
0.00
Single Circuit (Twin & Triple Conductor)
245.201
0.400
0.98
Single Circuit (Single Conductor)
3872.553
0.200
7.75
0
1.051
0.00
276.734
0.701
1.94
6852.458
0.301
20.63
Single Circuit (Bundled conductor with four or more sub-conductors)
Double Circuit (Bundled conductor with four or more sub-conductors)
Double Circuit (Twin & Triple Conductor)
Double Circuit (Single Conductor)
TOTAL O&M EXPENSES FOR LINES
TOTAL O&M EXPENSES FOR BOTH LINES & BAYS
O&M (Rs Cr)
31.29
547.70
Projected O&M: 1084.29 Rs Crore (Employee:952.06, R&M:93.89,
A&G:38.34); whereas as per CERC Regulation it can be reduced by nearly 50%10
Loan liability
Observation:
• OPTCL has proposed new loans of 903.82 Crore
@11% to be availed in FY 2011-12
• OPTCL has reported State Govt (cash loan) balance
of the tune of Rs 2 Cr. And requested to allow Rs
0.26 Cr as a interest component of that in the ARR
Submission
• New loan interest 68.94 Cr shall not to be passed
through in the ARR of FY 2011-12
• Interest on State Govt. (Cash loan) should be kept
in abeyance as per Govt directive
11
Capex Plan
Capex Projected:
O&M
Capex plan
given in ARR for Capex Plan submitted
2011-12 (Rs Cr.) on 12.07.2010 (Rs Cr.)
291.15
106.52
Telecom
73.65
142.5
Information Technology
12.66
13.32
591.62
720.38
TP & Con. (Excluding Deposit Works)
Civil Works
Total Capital Expenditure
35.16
1004.24
982.72
Observation:
The reasons for variation in expenses under O&M and telecom reported
in earlier capex plan and ARR submission need to be verified
12
Gross fixed asset and depreciation
Gross fixed
asset
Option 1:
As on 1-4-2009
(actual)
Addition in 0910 (Given in
ARR 11-12)
1924.48
Particulars
Depreciation
Rate CERC
As on 1-4-2010
163.84
Option2:
Depreciation @
Pre-92 Rate
Addition in
10-11 (Given
in ARR 11-12)
As on 1-42011 (Rs Cr.)
2088.32
453.74
2478.16
(OERC Approved
in 10-11 order)
453.74
2542.06
2931.90
Gross Block (0104-10) (Provn.)
Gross Block (01-0411) (Projected)
Deprcn. for FY
11-12 -CERC
Deprcn. 1112 @ Pre-92
Land and Rights
0.00%
0.00%
34.75
40.87
0.00
0.00
Buildings
3.34%
1.80%
73.16
86.03
2.87
1.55
P & M(Other Civil
works)
3.34%
1.80%
4.31
5.06
0.17
0.09
Plant & Machinery
5.28%
3.80%
1153.31
1356.21
71.61
51.54
Plant & Machinery
(Lines, Cables etc)
5.28%
2.57%
1302.56
1531.72
80.87
39.37
Vehicles
9.50%
12.86%
1.43
1.69
0.16
0.22
Furniture, Fixture
6.33%
4.55%
2.22
2.62
0.17
0.12
Office Equipment
6.33%
9.00%
7.35
8.64
0.55
0.78
2579.09
3032.84
156.40
93.67
TOTAL (Rs Cr.)
13
Gross fixed asset and depreciation
Submission:
• Consumer counsel has calculated the Gross
Fixed Asset by taking reference 0f OERC actual
and approved GFA as on 1.04.2009 and
1.04.2010 respectively
• After addition the yearly addition (09-10 & 1011 as given in ARR), the GFA arrived are lower
than that claimed by OPTCL
• Commission may consider the GFA as
determined in the previous slide
14
Return on equity, Reserve & others
Observation:
• Equity claimed by OPTCL: Rs 160.07 Cr – 60.07
(old) + 48.05 (received) + 51.94 (expected)
Submission:
• Commission shall not allow RoE on ol d equity and
expected equity base
• Reasonable RoE = 48.05 * 15.5% = Rs 7.45 Cr
(claimed RoE - Rs 24.81 Cr)
• Disallow the claim for further Contingency reserve
• Interest on working capital, bad debts and pass
through expenses shall not be pass through in ARR
15
Summary of ARR (2011-12)
ITEMS
Approved
for 09-10
Approved for
2010-11
Proposed
for FY11-12
10-11 Vs.
09-10
11-12 vs
10-11
Employees Cost including Terminal Benefits
173.11
279.56
952.06
61.49%
240.5%
R&M Cost
97.00
60.00
93.89
-38.14%
56.48%
A&G Cost
14.35
15.14
38.34
5.51%
153.24%
Interest on Loan Capital
70.53
53.39
111.30
-24.30%
108.47%
Depreciation
66.07
76.60
156.40
15.94%
104.18%
Repayment obligation
44.36
-
Return on Equity
0.00
4.35
24.81
Interest on Working Capital
0.00
-
59.08
415.42
489.04
1435.88
17.72%
193.61%
24.63%
198.3%
227.2%
Sub-Total
39.37
Special Appropriation
Pass Through Expenses
-
127.25
Contingency Reserve
9.08
-
15.16
Bad & doubtful debt Debts
0.00
-
0.10
GCC Expense including SLDC charges
0.15
0.82
0.30
424.65
529.23
1578.69
30.50
48.30
5.00
Annual Revenue Requirement (Rs Cr.)
394.15
480.93
1573.69
22.02%
Transmission Charges (paise/unit)
20.50
23.50
68.68
14.64%
Total (Rs Cr.)
Less Misc. Receipts
192.2% 16
Proposed Transmission tariff
Sl No
Customer
MU
Rate (P/U)
Loss (%)
MU including Loss
Amount (Rs. Cr.)
1
CESU
7722
23.5
0
7722
181.47
2
NESCO
5465
23.5
0
5465
128.43
3
WESCO
6720
23.5
0
6720
157.92
4
SOUTHCO
2848
23.5
0
2848
66.93
22755
534.74
Total DISTCOs
22755
5
Emergency Sale
10
23.5
0
10.00
0.24
6
Wheeling of IMFA
50
23.5
3.9
52.03
1.22
7
Wheeling of NALCO
100
23.5
3.9
104.06
2.45
22921
538.65
Total
22915
Total Annual Revenue Requirement for FY 2011-12.
1573.69
Total Million Units proposed for Wheeling in MU
22915
Less: Revenue to be earned from LTOA Customers at the existing
Transmission Charge @ 23.5 P/U
538.65
Deficit in ARR for FY 11-12 at the existing Transmission Charge @ 23.5 P/U
Proposed transmission tariff (P/U)
-1035.04
68.68
17
Open access charges
2010-11
2011-12
Long term OA charges
(Rs / MW/ Day)
5640.00
16482.02
Short term OA charges
(Rs / MW/ Day)
1410.00
4120.51
Proposed
increase of 192%
18
Summary
• OPTCL has claimed a hike of 192% in transmission
tariff which will increase the cost of electricity at
consumer end
• The increase in transmission tariff is resulted due to
higher claim of OPTCL in following components:
• Employee cost incl. terminal benefits and
pension/R&M expenses/ A&G expenses/ Interest on
new loan and old state govt. loans/ Gross fixed asset
and depreciation/ RoE, Contingency reserve, Interest
on working capital and pass through expenses
• Commission may consider the submission of consumer
counsel and reduce the transmission tariff at reasonable
level
Thank you
20
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