Arr Transco Fy09 10

ANNUAL REVENUE REQUIREMENT &
TARIFF APPLICATION
FY 2009-10
Uttar Pradesh Power Transmission Corporation Limited LUCKNOW
ARR & TARIFF: FY10
Table of Contents
1. 1.1. 1.2. Introduction.................................................................................................................. 1-1 U P Power Transmission Corporation Limited (UPPTCL) ................................................. 1-1 Procedure Envisaged for ARR FY 08 & 09 ....................................................................... 1-1
UP Power Transmission Corporation Limited:............................................................................. 1-3 2. 2.1. 2.2. 2.3. 2.4. 3. Existing Transmission System- a preview: ............................................................... 2-3 Interconnections and Northern Region Load Dispatch Centre (NRLDC)........................... 2-4 Availability of Lines ........................................................................................................... 2-4 Load Levels ...................................................................................................................... 2-4 Bulk Transmission System Flows: .................................................................................... 2-5 Performance Analysis of ARR FY 08 & FY 09 Filing: .............................................. 3-6
3.1. Review of UPERC FY 08 & FY 09 Tariff Order: ................................................................ 3-6 3.2. Comparison of Estimated Cost and Actual Figures To-Date ............................................. 3-7 3.2.1. Demand Forecast-Tariff Order and Actual FY (2007-08): .............................................. 3-7 3.2.2. Expense items- Approved and Estimated: ..................................................................... 3-7
3.3. Investments: ..................................................................................................................... 3-8 3.3.1. Proposal for Ensuing Year: ............................................................................................ 3-9 3.3.2. 3.3.3. 3.3.4. 3.3.5. 3.4. 4. 4.1. 5. Normal Development Works: ......................................................................................... 3-9 Transmission Works in NCR.......................................................................................... 3-9 Renovation and Modernization ...................................................................................... 3-9 Augmentation of Transmission System due to RE works............................................... 3-9 Compliance of UPERC Directives: .................................................................................. 3-18 Power Wheeling & Demand: ..................................................................................... 4-20 Losses external to UPPTCL system:............................................................................... 4-20 Annual Revenue Requirement: FY 2009-10 ............................................................. 5-21
5.1. ARR FY 2009-10:......................................................................................................... 5-21 5.1.1. Escalation Index/Inflation Rate .................................................................................... 5-22 5.2. Operation & Maintenance Expenses............................................................................... 5-22 5.2.1. Employee Costs: ......................................................................................................... 5-23 5.3. 5.4. 5.5. 5.6. 5.7. 5.8. 5.9. 5.10. 5.11. 6. 6.1. 7. Administration and General (A&G) Expenses: ................................................................ 5-24 Gross Fixed Assets (GFA) Balances and Capital Formation Assumptions ..................... 5-25 Repair and Maintenance (R&M) Expenses ..................................................................... 5-27 Depreciation Expense:.................................................................................................... 5-27 Interest and Financing costs: .......................................................................................... 5-27 Other Income: ................................................................................................................. 5-29 Reasonable return/ Return on Equity: ............................................................................. 5-29 Service tax: ..................................................................................................................... 5-30 TransCo ARR: ................................................................................................................ 5-31 Proposed Transmission Tariff:................................................................................. 6-32 Derivation of Tariff:.......................................................................................................... 6-32 SLDC Charges: .......................................................................................................... 7-33 i
Uttar Pradesh Power Transmission Corporation Ltd.
ARR & TARIFF: FY10
List of Tables
Table 2-1: Table 2-2: Table 2-3: Table 2-4: Table 3-1: Table 3-2: Table 3-3: Table 3-4: Table 3-5: Table 3-6: Table 3-7: Table 4-1: Table 5-1: Table 5-2: Table 5-3: Table 5-4: Table 5-5: Table 5-6: Table 5-7: Table 5-8: Table 5-9: Table 5-10: Table 5-11: Table 5-12: Table 6-1: Table 7-1: Total existing Sub-Stations: ..................................................................................... 2-3 Total existing Lines (Circuit Km).............................................................................. 2-4 Yearly System Peak in M.W. ..................................................................................... 2-5 Monthly System Peak for current Year .................................................................... 2-5 Approved and Actual FY 2007-08: Energy Demand (MU) ..................................... 3-7 Approved and Actual FY 2008-09: Energy Demand (MU) ..................................... 3-7 Estimated and Actual ARR FY 08, Components: ................................................... 3-8 Estimated and Actual ARR, Components:.............................................................. 3-8 Proposed Program for Transmission Works (Rs. Cr.) ......................................... 3-10 Detailed Program of Transmission Works for ensuing Year (Augmentation): .. 3-16 Compliance of UPERC Directives: ......................................................................... 3-18 Actual & Estimated Energy Profile:....................................................................... 4-20 Escalation Index ..................................................................................................... 5-22 Details of Employee Cost: ..................................................................................... 5-23 A &G Expenses: ..................................................................................................... 5-25 Transco Investment Plan: (Rs. Cr) ........................................................................ 5-26 Capital Formation during FY 09 ............................................................................ 5-26 Capital Formation during FY 10 ............................................................................ 5-26 R&M Expenses: ...................................................................................................... 5-27 Details of Interest & Finance Cost: ....................................................................... 5-28 Interest on Working Capital: ................................................................................. 5-29 Summary of Other Income: ................................................................................... 5-29 Return on Equity: .................................................................................................. 5-30 Annual Revenue Requirement: ............................................................................ 5-31 Derivation of Transmission Tariff: ....................................................................... 6-32 Break-up of SLDC Charges................................................................................... 7-33
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Executive Summary:
In accordance with the Section 62 of the Electricity Act2003 and provisions of the Transmission Tariff Regulations notified by the Commission, UP Power
Transmission Corporation Limited is submitting before UPERC the Aggregate Revenue Requirement and Tariff petition for FY 2009-10. As prescribed in the Regulation, the petitioner is required to file the Aggregate Revenue requirement complete in all respect along with requisite fee as prescribed in the Commissions Fee and Fine Regulations each year containing the details of the estimated expenditure and the expected revenue that it may recover in the ensuing financial year at the prevailing tariff. Further the petitioner is required to file ARR for the ensuing financial year indicating the manner in which the gap between the expenses, which is permitted to recover and expected revenue for ensuing financial year, shall be bridged. As per provisions under Electricity Act 2003, separate State Load Despatch Centre (SLDC) is to be established by the state government to ensure integrated operation of Power system in the State. Further Transmission Regulation such time function provides that till
the State Govt establishes separate SLDC ,STU shall operate SLDC & till complete segregation of accounts between SLDC function &
transmission function , STU shall apportion its Cost between (i) SLDC function and (ii) Transmission Function based on an allocation statement& basis of such
apportionment shall be clearly indicated in the ARR petition. Currently the function of SLDC is being discharged by a separate section within UPPTCL. Expenses of SLDC function & ARR has been worked out on the basis of best estimate available. In present petition, expenses of SLDC are being charged through UPPTCL ARR however in the a separate section of SLDC ARR has been added for approval of SLDC charges for other practical purposes such charges being levied to open access consumers. The layout of this petition among other things includes background, proposed expenditure plan for the ensuing year ,estimation of the Aggregate Revenue Requirement , explanatory notes where ever required and status of directive issued by the Honble Commission and other information as mandated in the regulation. The objective of the petitioner in this filing has been to contain the expenses to a reasonable level to offset inflationary pressure as prevailing in the market. For the current year petitioner has endeavoured to limit the expenses with in the approved limit . For ensuing year petitioner has also taken a daunting task to control the
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expenses to the reasonable level but due to prevailing market condition some time it is not possible to limit expenses to current level due to uncontrollable factors. The petitioner in the current and ensuing year has continued with the execution with the all major capital investment project as also the must do projects for meeting the demand growth ,creating adequate capacity for reducing the over load of heavy loaded feeders and transformers. The petitioner has proposed a capital expenditure of Rs 794 Cr for FY2008-09 and Rs 2870 Cr for FY2009-10 .Detail of major capital investment plan is described in subsequent section with the proposed funding mechanism. The petitioner while estimating expenses for current & ensuing year has taken into account the actual expenses incurred in previous years as per its audited /un to drive the
audited balance sheet and up to date expenses for current year expenses at a reasonable level.
The petitioner has endeavoured to control the employee expenses in the current year to the approved level. While projecting the expenses for ensuing year petitioner has adopted the same method to contain inflationary pressure but due to announcement of 6th pay commission, it is bound to increase.
The petitioner while projecting A& G expenses for ensuing year has proposed a marginal increase in the A&G expenses this is only in order to off-set inflationary pressure. This is in real term can be termed as reduction in expenses as virtually in nearly same expenses are ensured to be incurred in spite of creation of additional Division & Circle.
The petitioner has projected R&M expenses for current year taking into account actual trends and for ensuing year R&M expenses has been estimated as per methodology adopted in previous years. The petitioner is making all round effort to optimize the R&M expenses despite steep rise in metals & fuels costs. The proactive preventive maintenance initiatives and capital expenditure are done in various improvement schemes which would result in improvement in quality of supply and reduction in number of overloaded lines &substations.
The petitioner has projected Rs 0.243 per unit Tariff for FY2009-10.
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ARR & TARIFF: FY10
1. Introduction
1.1. U P Power Transmission Corporation Limited (UPPTCL)
The U P Power Transmission Corporation Limited (hereinafter referred to as TransCo) is the company incorporated under the Companies Act, 1956 by making amendment in the Object and Name clause of Uttar Pradesh Vidhyut Vyapar Nigam Ltd and having duly passed Special Resolution on 7th June 2006 in term of Section 21 of the Companies Act, 1956 which was originally incorporated on 31stMay, 2004. UPPTC started functioning with effect from 26th July 2006 and is entrusted with the business of transmission of electrical energy to various utilities with the help of its transmission lines and substations within the geographic area of Uttar Pradesh. Before incorporation of UPPTC, transmission work was entrusted with UPPCL. Govt of UP in exercise of power under section30 of the Electricity Act 2003 vide notification No: 122/U.N.N.P/24-07 dated 18 July 2007 notified U P Power Transmission Corporation Limited as the State Transmission Utility of Uttar Pradesh.The UPPTCL now deal with the transmission of electricity for catering power requirement of four distribution companies viz Madhayanchal Vidyut Vitran Nigam Ltd, Dakshinanchal Vidyut Vitran Nigam Ltd, Pashchimanchal Vidyut Vitran Nigam Ltd and Poorvanchal Vidyut Vitran NigamLtd in addition to two other distribution companies serving Kanpur (KESCO) and Noida (NPCL).
1.2.
Procedure Envisaged for ARR FY 08 & 09
Uttar Pradesh Power Transmission Corporation submitted before U.P. Electricity Regulatory Commission the Annual Revenue Requirement (ARR) and Tariff proposal for FY 2008-09 on 19th
December, 2007 along with the information/data for FY 2007-08 in accordance with the provisions
of the Transmission Tariff Regulations notified by the Commission on 6th October 2006.These regulations are applicable for the purpose of ARR Filing and Tariff determination of the transmission Licensee with in the State of UP. The Commission vide its order dated 4th January 2008 observed certain deficiencies in the above petitions, which were clarified by the licensee as under Licensee has submitted that as per requirement of Commission under electricity act 2003 the UPPTCL is in the process of taking action for obtaining separate licence. Draft Transfer Scheme has been formulated and submitted to the GoUP for their consideration and shall be notified by the GoUP. All the new PPAs are being allocated to DisComs and a proposal for allocation of old PPAs to the DisComs has been submitted to the GoUP. With reference to the Intra-State ABT in the state Licensee has submitted that the work of installation of boundary meters is in progress.
The Commission admitted the petition filed by the Licensee on 25th January 2008 and directed the Licensees to advertise the salient features of ARR/Tariff petition in the widely circulated newspapers of the area of supply.
Uttar Pradesh Power Corporation Ltd. UPPCL TransCo
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ARR & TARIFF: FY10
Comments of general public including electricity consumers on ARR/Tariff proposals were also invited. An advertisement in this regard appeared in five leading news papers on 31st January 2008. The Commission conducted public hearing at Lucknow, Kanpur, Ghaziabad and Gorakhpur .Various stakeholders, industry associations and consumer forums participated in the public hearing and submitted their comments. UPERC issued a Joint Tariff Order for FY 2007-08 & 2008-09 on 15th April 2008 with an average hike in Retail Tariff of about 14%.
The structure of this submission:
In accordance with the provisions of Transmission Tariff Regulations UPPTCL is filing Annual Revenue Requirement of the Transmission business including tariff and charges. This ARR filing includes detailed Tariff proposal for transmission and wheeling of Electricity. The structure of this submission is as follows
Section 1. Section 2. Section 3. Introduction: This contains a brief background and rationale used for the submission; major assumptions used and describe the structure of the submission. UPPTCL, Transmission System- a preview Performance Analysis of ARR FY2008&FY2009 Filing: This includes: a) A review of the UPERC FY 08&FY09 Tariff Order. b) Comparison of estimated cost and actual figures to-date; c) An action plan undertaken by UPPTCL for improvement of Transmission Loss d) Investment plans. e) Compliance of UPERC directives. Section 4. Section 5. Section 6. Power Wheeling & Demand: This includes demand forecasts for FY10, also summarised actual FY 08 & FY09. Annual Revenue Requirement: (ARR) for FY 2009-10: forecast for FY10 for UPPTCL. This includes the ARR
Proposed Transmission Tariff: This provides the proposed transmission tariff for UPPTCL, which will be a simple postage stamp tariff. This tariff would be applied to all DisComs and current Bulk Supply consumers. SLDC-Annual Revenue Requirement (ARR) for FY 2009-10: This includes the ARR forecast for FY10 for SLDC and provides the proposed SLDC charges, for the capacity handled by UP Power Transmission Corporation Ltd.
Section 7.
Notes:
In this petition: Previous year is defined as financial year FY2007-08. Current year is defined as financial year FY2008-09 Ensuing year is defined as financial year FY2009-10
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ARR & TARIFF: FY10
UP Power Transmission Corporation Limited: 2. Existing Transmission System- a preview:

The transmission system in UP is composed of 400 kV, 220 kV and 132 kV AC lines and substations. UPPTCL has also built one 765 kV AC single circuit line which connects the Anpara thermal station in the southern part of UP to Unnao s/s (Unnao District). Presently, this line is being operated at 400 kV. Majority of the transmission lines & substations in UP are owned and operated by UPPTCL. However, there are other transmission lines & substations in UP (including a 500 kV HVDC line from Rihand to Dadri) that carry electricity from the central sector plants to the neighbouring states and these are owned and operated by the Power Grid Corporation of India Limited (PGCIL). In addition, some of the above transmission facilities are jointly owned by UPPTCL & PGCIL. Until the 400 kV grid was fully developed, the 132 kV lines were part of the transmission network. Now the 400 kV and 220 kV network forms the transmission grid while the 132 kV systems can be treated as a sub transmission system. Over a period of time, some of the 132 kV lines formed local grids while a majority of them are radial lines. The total circuit lengths of the existing 765 kV, 400 kV, 220 kV and 132 kV lines are given in Table 2-1 & sub station are given in Table 2-2.
Table 2-1: Total existing Sub-Stations:

Sl. NO. 400 K.V. 1234Transmission Area Transmission Central Area Transmission Eastern Area Transmission Southern Area Transmission Western Area Total The No. of Sub Centres 4 4 2 4 14 Capacity (MVA) 2220 1750 1110 2850 7930
220 K.V. 1234-
Transmission Central Area Transmission Eastern Area Transmission Southern Area Transmission Western Area Total
12 10 15 17 54
3000 3010 3740 4980 14730
132 K.V. 1234-
Transmission Central Area Transmission Eastern Area Transmission Southern Area Transmission Western Area Total
46 74 52 64 236
3500 4850 4705 6002 19057
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Table 2-2: Total existing Lines (Circuit Km)
T ra n s m is s io n L in e s 7 6 5 K V L in e s (c h a rg e d a t 4 0 0 k V ) 4 0 0 K V L in e s 2 2 0 K V L in e s 1 3 2 K V L in e s 2.1.
c k t.k m 409 4260 6904 11384
Interconnections and Northern Region Load Dispatch Centre (NRLDC)
UPPTCLs existing transmission system is interconnected to the electrical grids of its neighbouring States, namely, Uttaranchal, Haryana, Rajasthan and the central system of New Delhi. In addition, it maintains asynchronous ties (i.e. AC-DC-AC) with the electrical grids of Bihar in the east and Madhya Pradesh in the South. Until November 2002, there was only one State of UP and one transmission grid for the entire erstwhile UP. The ownership of lines and substations have changed since division of UP into two States, i.e. UP & Uttaranchal. The UPPCL power system is a part of the Northern Regional Grid of India. The Northern Grid is controlled from a unified regional load dispatch centre at Delhi. The Northern Regional Load Dispatch Center (NRLDC) is equipped with modern SCADA and Energy Management System Software. The SCADA system is fully functional as are key applications like State Estimation, Economic Dispatch and security assessment. The NRLDC modified its economic dispatch software to take into account the Availability Based Tariff (ABT). UPPTCL has been upgrading its own unified load dispatch centre at its head office in Lucknow and the four area control centres.
2.2.
Availability of Lines
Availability of lines and other equipments of UPPTCL system is positively around 98% and with this system UPPTCL handles Transmission of energy from different generating units to the Distribution Licensees (Points) effectively.
2.3.
Load Levels
The load centre power demands and their daily, monthly & yearly load levels and associated load power factors are important factors that influence the planning of the bulk transmission system. UPPTCL loads are generally scattered throughout the state with heavy demands in Varanasi, Allahabad, Lucknow, Kanpur, Agra and Meerut areas. The annual peak load generally occurs in summer month. Figure 2-3 & Figure2-4 typically show the yearly peak demand of previous years & monthly current year peak demand.
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Table 2-3: Yearly System Peak in M.W.
Month 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Availability 5403 5717 6112 7188 7504 8222
R.D.M. (MW) 6788 6870 7437 7653 8604 8337
Restriction (MW) 600 1100 1100 1100 1500 2250
UDM (MW) 7368 7970 8537 8753 10104 10587
Table 2-4: Monthly System Peak for current Year
Month Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
Availability 7130 7617 8036 7521 7725 7889 8222 6466 7413 7546 7555 7474
R.D.M. (MW) 8045 8417 8066 8281 8115 9064 8337 7946 8098 7621 8040 7982
Restriction (MW) 1500 1500 1500 1500 1500 1500 2250 1500 1100 2250 1500 1500
UDM (MW) 9545 9917 9566 9781 9615 10564 10587 9446 9198 9871 9540 9482
2.4.
Bulk Transmission System Flows:
Bulk transmission system flow characteristics are dominated by the coal based thermal generating plants available in southeast of UP. These plants at Anpara, Obra, Rihand and Singrauli generate about 6300 MW out of which 4500 to 5000 MW generation flows to the western regions after meeting Varanasi regional demand. This power transfer level continues through Sultanpur-Allahabad, LucknowKanpur, Moradabad-Agra interfaces since the available generation in each of the regions almost matches with its respective demand. In the east, power from the aforementioned plants flows towards north to supply Varanasi, Azamgarh and Gorakhpur load centers. A small amount of power is imported from Bihar through a connection at 132 kV level. Power supply to Uttaranchal in the North West is normally less than 500 MW due to the available hydroelectric generation in the state. In the west, more than 3000 MW flows to Delhi and Rajasthan through 500 kV HVDC bi-pole line and 400 kV transmission network across the state. The existing bulk transmission system capacity with the current level of power transfer requirements is well equipped to handle the flow of energy.
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3. Performance Analysis of ARR FY 08 & FY 09 Filing:

As previously mentioned, this section contains the following: a) A review of FY 08 & FY 09 UPERC Tariff Order; b) Comparison of estimated cost and actual figures to-date c) An action plan undertaken by UPPTCL for improvement of Transmission Loss. d) Investments plan. e) Compliance with Commission directives.
3.1.
Review of UPERC FY 08 & FY 09 Tariff Order:
The Commission under the statuary obligation to restore regulatory synchronism, directed UP TransCo on 19th October 2007 to submit the ARR/Tariff application for FY 2008-09 by 30th November, 2007 along with the data/information for the FY 2007-08. The Licensee filed their ARR/Tariff petition for FY 2008-09 on 19th December in accordance with the provisions of the Transmission Tariff Regulations notified by the Commission on 6th October 2006. The Commission admitted the petition filed by the Licensee on 25th January 2008. U.P. Electricity Regulatory Commission issued Tariff Order for FY 2007-08 & 2008-09 on 15th April 2008. The single Order for FY 08 & FY 09 covered all five of the successor companies to the erstwhile UPPCL. With respect to UPPCL Transco, the salient points of the Order may be summarised as follows: The Commission approved a transmission tariff of Rs 0.222 per kWh for FY 2008-09 and Rs 0.190 per kWh for FY 2007-08, compared to an equivalent amount of Rs 0.191 per kWh for FY 09 & Rs 0.231 per kWh for FY 08 in the Transco tariff petition. Although cost inputs and forecast sales were revised by the Commission to yield the different result, the basic methodology of dividing total Transco ARR by energy delivered by TransCo was accepted. The transmission Tariff for FY 08 & FY 09 thus represents an increase of 12% & 15 % over the Transmission Tariff for FY 2006-07. The tariff was designed to meet Transcos annual revenue requirement; in order to make revenue gap zero. Additionally, it should be noted that Transcos annual revenue requirement for FY 200708 was approved to Rs 1025.39 Cr as against Rs 1015.31 filed in the petition. The annual requirement for FY 2008-09 was approved to 1195.12 as against 1272.09 filed in the petition. The Commission in order to encourage the Open Access Transmission in the state facilitated the customers seeking Open Access, approved transmission charges payable by all Open Access customer based on the voltage level at which they are connected to the grid .Commission has approved Open Access transmission charges of Rs 0.22/kWh and Rs 0.05/kWh for long term and short term in FY 09 for consumers connected at 132 kV voltage level. For consumers connected above 132 kV voltage, these charges are Rs 0.16/kWh & Rs 0.04/kWh for long term and short term Open Access.
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3.2.
Comparison of Estimated Cost and Actual Figures To-Date

3.2.1. Demand Forecast-Tariff Order and Actual FY (2007-08):
Table 3-1 provides a summary of UPERC approved demand in Tariff Order FY 08 and actual demand for FY 08. In Table 3-2 the same values are given for FY 09.
Table 3-1: Approved and Actual FY 2007-08: Energy Demand (MU)
Licensee (Rs Cr) Agra DisCom(Incld. Bulk) Meerut DisCom(Incld. Bulk) Lucknow DisCom Varanasi DisCom Total
Tariff Order FY2007-08 14053 17751 9426 12377 53607
Actual FY2007-08 14,246 16,968 8,683 11,596 51,493
Diff -1.4% 4.4% 7.9% 6.3% 3.9%
Table 3-2: Approved and Actual FY 2008-09: Energy Demand (MU)
Licensee (Rs Cr) Agra DisCom (Incld. Bulk) Meerut DisCom (Incld. Bulk) Lucknow DisCom Varanasi DisCom Total
3.2.2.
Tariff Order FY2008-09 14712 18294 9684 12722 55412
Estimated FY2008-09 14,409 17,214 8,958 12,198 52779
Diff 2.1% 5.9% 7.5% 4.1% 4.8%
Expense items- Approved and Estimated:
Table 3-3 & Table 3-4 provide a summary of the various ARR components of Tariff Order FY08 & FY 09. It is evident from the tables that all expenses are well with in the approved limit.
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Table 3-3: Estimated and Actual ARR FY 08, Components:
E xpense Item s (R s C r)
Em ployee cost A&G expenses R &M expenses Interest charges D epriciation G ross Expenditure Expenses capitalisation Em ployee cost capitalised Interest capitalised A&G expenses capitalised N et expenditure Prior period Adjustm ent T otal net expenditure w ith provision add: R eturn on Equity Less: N on T ariff Incom e Annual R evenue R equirem ent(AR R )
T ariff O rder FY 2007-08

286.73 29.24 60.45 252.73 270.8 899.95 83.15 50.49 5.55 760.76 760.76 278.24 (13.61) 1,025.39
A ctual FY 2007-08
252.49 21.52 67.89 242.92 257.38 842.19 73.22 15.81 6.62 746.53 15.30 761.83 293.81 (17.17) 1,038.47
D iff
-12% -26% 12% -4% -5% -6% -12% -69% 19% -2%
6% 26% 1%
Table 3-4: Estimated and Actual ARR, Components:
Expense Items (Rs Cr)

Em ployee cost A&G expenses R&M expenses Interest charges Depriciation Gross Expenditure Expenses capitalisation Employee cost capitalised Interest capitalised A&G expenses capitalised Net expenditure add: Return on Equity Less: Non Tariff Incom e Annual Revenue Requirement(ARR)
Tariff Order FY2008-09

316.99 32.32 66.83 305.51 325.65 1047.3 91.93 61.74 6.14 887.49 321.96 (14.33) 1195.12
Estimated FY2008-09
285.72 31.88 101.18 265.77 280.82 965.38 82.86 34.52 6.06 841.94 314.49 (18.47) 1,137.96
Diff
-10% -1% 51% -13% -14% -8% -10% -44% -1% -5% -2% 29% -5%
3.3.
Investments:
Investments will be made in key areas with the objective of strengthening the transmission networks, thus contributing to the reduction of losses and reliability of supply. This work will be conducted with the help of loans from financial institution and equity from GoUP.
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3.3.1. Proposal for Ensuing Year:

It will be necessary to execute many works for ensuring reliability, stability and quality of transmission system but on the basis of experience of the past years, availability of money and other special reasons the restricted list of transmission works. During FY 2009-10 investments will be made in key areas with the objective of strengthening the transmission networks, thus contributing to the reduction of losses & reliability of supply. Most of the works are to be financed by M/s. Power Finance Corporation, New Delhi, NCR Board, Rural Electrification Corporation, New Delhi and HUDCO loan. The transmission works have been categorized as follows:1. Normal Development Works 2. Transmission works in National Capital Region 3. Renovation and Modernization 4. Transmission works on account of 100% electrification of villages 5. Installation of Capacitors
3.3.2. Normal Development Works:

Due to increase demand of electricity, some of the sub-stations/lines are overloaded. To meet out this demand it is essential to increase the capacity of the sub-stations and to create new substations and lines.
3.3.3. Transmission Works in NCR

All the district of Meerut Commissionery is covered in National Capital Region. Industries from Delhi are to be shifted to National Capital Region for which Electricity Supply position has to be improved. NCR Board will provide financial aid by way of loan.
3.3.4. Renovation and Modernization

A large number of S/Ss, Transmission lines & communication equipment are around 30 years old and equipment's like transformer, Circuit breakers, Relay Panels etc. needs replacement for prolong service as spares for same are not available anymore and more they based on obsolete technology. Hence, provision has been made for the renovation and modernization of various equipments.
3.3.5.
Augmentation of Transmission System due to RE works
In order to meet increased demand due to electrification of villages in REC scheme and mazras in Rajiv Gandhi village electrification scheme, various transmission sub-stations and lines are to be strengthened and new sub-stations and lines are proposed to be constructed.
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Table 3-5: Proposed Program for Transmission Works (Rs. Cr.)
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Table 3-6: Detailed Program of Transmission Works for ensuing Year (Augmentation):
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3.4.
Compliance of UPERC Directives:
In compliance with the directive issued by Honble commission in its Tariff Order for financial year 200708 & 2008-09 issued on 15th April 2008 under chapter 9 regarding the compliance of UPERC directives. It is to submit that directives are under various stage of compilation and will be submitted to Commission by the Licensees. However partial compliances are submitted as under:-
Table 3-7: Compliance of UPERC Directives:

Sr. No 1 Ref. No 6.3.6 Description of Directive for TransCo
The Commission directs the transmission licensee to submit voltage wise transmission loss study report for last three years along with the estimation for current and ensuing year The Commission directs the licensees to submit the study report on actuarial valuation for the purpose of estimating employers contribution towards pension and gratuity. The licensees are also directed to intimate the Commission on the status of the study within a period of one month from the date of issue of Tariff Order.
Time Period for compliance

3 Month
Action Taken
Voltage wise transmission losses are submitted in the Regulatory Format P1 along with the ARR.
6.6.5.5
6 Months Status report within 1 month
Action is being taken as per direction. Status report will be submitted to the Commission.
6.6.12.3
The Commission directs the Licensees to carry out a proper cost benefit analysis before taking up any new initiatives and submit the same for the approval to the Commission. The Commission directs the licensee to submit the investment plan for next year filing strictly in accordance with Transmission Tariff Regulation 2006 failing which no investments would be approved. As regards to the investments approved for FY 2007-08 and FY 2008-
As and when required
Action is being taken as per the directives.
6.7.13
Next Year Filing
TransCo Investment Plan are submitted with ARR.
6.7.13
2 Months
Action is being taken as per directive.
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Sr. No
Ref. No
Description of Directive for TransCo

09, the Commission directs the licensee to submit the necessary information required under the Transmission Tariff Regulations approved by the Commission within two month from the issue of this tariff order
Time Period for compliance
Action Taken
6.8.6
The Commission directs the licensees to maintain proper and detailed fixed assets registers at field offices to work out the depreciation expense as specified in the UPERC (Terms and Conditions of Transmission Tariff) Regulations, 2006 and directs the Licensees to submit a report to the Commission citing clearly as to how they are maintaining fixed assets registers for the various assets.
2 Months
All units have been directed to take maintain fixed assets register to workout the depreciation expenses. The report will be submitted to the Commission.
6.11.3
The Commission directs the licensee to submit the information regarding the basis used for computation of the Opening Equity and the detailed working on a year to year basis and supporting financial statements used for the same.
1 Month
Draft Transfer scheme for notification has been submitted to GoUP. As per the draft notification presented on consultation with M/s PWC the opening equity as on 01.04.2007 is Rs.1843 crore and in the year 2007-08 GoUP provided Rs. 365.3652 crore as equity for transmission works through the budget of GoUP. During 2008-09 GoUP provided equity of Rs. 428.55 crore for the transmission work through the budget. The total equity as on 01.04.2009 work out to Rs. 2637 crore. Budget for the SLDC is being submitted separately.
6.13.1
The Commission hereby directs the SLDC that the ARR/budget for SLDC should be submitted separately along with the ARR submission of Transco. The Commission directs the Transmission Licensee to formulate the billing procedure for transmission charges and submit the same for approval of the Commission.
Next Tariff Filing
6.14.7
1 Month
Actions have already been taken and billing is being done as per the directives of the Commission.
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ARR & TARIFF: FY10
4. Power Wheeling & Demand:

UPPTCL (Transco) is performing the business of transmission of electricity received at UP periphery from various central generating station and station out side state as well as energy generated with in the state. UPPCL is purchasing power from various sources including State and Central Generating stations and dispatching to the Distribution Licensees as required, using Transmission system of UP Transco. In purchasing/ wheeling of electricity from various generating station out side the state, losses out side the UP transmission system also come into the picture. Therefore it is prudent to separately analyses losses internal as well as external to the system so that petitioner should not be accountable for loses external to the system i.e. losses in PGCIL system.
4.1.
Losses external to UPPTCL system:
The petitioner submits that while considering losses to meet the requirement of various distribution licensees, losses external to UPPTCL system, i.e. in the Northern Region PGCIL system need to be accounted for. The availability of power from various sources out side the state gets reduced to the extent of these losses and the petitioner has to bear these losses as commission is approving total transmission losses irrespective of loses occurring in PGCIL or other lines. NRLDC computes the losses in the regional transmission system on a weekly basis and the same are used by it in the scheduling process subsequently. These losses have varied between 3.76% and 5.24% between 5th Jan 2009 and 22nd March 2009. UPPTCL has considered an average level of 4.35% losses in its energy transactions with the Northern Region for FY2009-10. Here it is to noted that these losses are applicable to only energy received external to state, therefore petitioner has taken a weighted average of 2.06% for FY2009-10. On the basis of Power requirement provided by DisCom a detailed energy balance is summarized for Distribution Licensees of the state using Transmission system of TransCo for dispatching the energy in Table 4-1: -
Table 4-1: Actual & Estimated Energy Profile:

L ic e n c s e e M E E R U T (In c ld . B u lk ) A G R A (In c ld . B u lk ) LUCKNO W VARANASI P u r c h a s e d & B ille d E n e r g y (M U ) P e rip h e ra l L o s s (U p to in te r c o n n e c tio n P o in t) E n e rg y A v a ila b le fo r T ra n s m is s io n (M U ) FY2007- 08 1 8 ,1 2 4 .5 1 1 5 ,2 1 6 .2 2 9 ,2 7 4 .8 8 1 2 ,3 8 6 .0 8 5 5 ,0 0 1 .6 9
2 .3 5 % 5 3 ,7 0 8 .3 2
FY2008- 09 1 8 ,3 8 6 .4 0 1 5 ,3 9 1 .0 8 9 ,5 6 8 .3 5 1 3 ,0 2 9 .1 7 5 6 ,3 7 5 .0 0
2 .3 5 % 5 5 ,0 4 9 .3 4
FY2009- 10 1 8 ,4 6 9 .1 5 1 6 ,4 5 8 .7 6 9 ,7 8 8 .5 6 1 3 ,0 8 3 .5 2 5 7 ,8 0 0 .0 0
2 .0 6 % 5 6 ,6 0 9 .3 2
Ie n e r g y D e liv e r e d to D is C o m D is C o m (M U ) C o n s o lid a te d D is c o m M E E R U T (In c ld . B u lk ) A G R A (In c ld . B u lk ) LUCKNO W VARANASI

5 1 ,4 9 3 .1 0 1 6 ,9 6 8 .3 4 1 4 ,2 4 5 .5 7 8 ,6 8 3 .2 3 1 1 ,5 9 5 .9 7 5 2 ,7 7 8 .8 1 1 7 ,2 1 3 .5 2 1 4 ,4 0 9 .2 7 8 ,9 5 7 .9 8 1 2 ,1 9 8 .0 3 5 4 ,3 4 4 .9 5 1 7 ,3 6 5 .1 4 1 5 ,4 7 4 .9 2 9 ,2 0 3 .4 4 1 2 ,3 0 1 .4 4
T r a n s m is s io n L o s s e s UPPTCL
4 .1 2 % 4 .1 2 % 4 .0 0 %
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ARR & TARIFF: FY10
5. Annual Revenue Requirement: FY 2009-10

The development of the FY 2009-10 ARR follows the methodology as adopted in the Terms and Conditions for Determination of Transmission Tariff Regulations, 2006.
5.1.
ARR FY 2009-10:
Honble Commission has issued Transmission Tariff regulation 2006 which require that ARR shall consist of following items: 1. Operation & Maintenance expenses Employee Expenses Administrative & General Expense. Repair & Maintenance Expenses
2. Interest expenses Loan capital Working Capital
3. Depreciation Expenses 4. Other Expenses 5. Return on equity 6. Contingency Reserve 7. Taxes on Income 8. Any other relevant expenditure Further regulation provide that the State Transmission Utility, when also looking after the SLDC
function, shall file segregated costs for SLDC operations and any surplus / deficit in recovery of SLDC costs vis--vis SLDC fee and charges collected by the STU shall form part of its ARR. This section provide ARR for FY2009-10 in accordance with the Tariff regulation and each component of ARR as mentioned above is dealt in detail in following section. Further it is to submit that UP TransCo is also looking after the function of SLDC as such SLDC cost is embedded in TransCo cost. How ever as prescribed in Tariff Regulation segregated costs for SLDC has also been computed at the end. The petitioner has estimated ARR for ensuing year based on provisional un-audited account of FY2007-08 and expenses available till date of FY2008-09. In order to put the various proposed amounts in proper context, the corresponding figures for actual FY08, estimates for FY09 & forecast for FY10 based on year-to-date experience are also presented for certain account categories. For each such major account category of expenses, an explanation of the derivation is given, along with the logic for departing from FY08 values. Further Tariff regulation provide that O&M expenses and other expense shall be escalated on the basis of prevailing rate of inflation from base figure & inflation shall be calculated on the basis of indexes notified by central government .Therefore Petitioner has calculated inflation index in following section:
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ARR & TARIFF: FY10
5.1.1. Escalation Index/Inflation Rate

Regulation issued by Honble commission provides that expenses of the base year shall be escalated at inflation rate notified by central government for different years. The inflation rate for this purpose shall be weighted average of wholesale Price Index and Consumer Price Index in the ratio of 60:40. Therefore for the purpose of this ARR petitioner has used this methodology in arriving at Escalation Index/ Inflation Rate. Calculation as tabulated below: Inflation Rate=0.6*Inflation based on WPI + 0.4*Inflation based on CPI Table 5-1: Escalation Index
M o n th Jan Feb M ar Apr M ay Jun Jul Aug Sep O ct Nov D ec In fla tio n
W h o lesa le P rice In d ex 2007 2 0 8 .8 2 0 8 .9 2 0 9 .8 2 1 1 .5 2 1 2 .3 2 1 2 .3 2 1 3 .6 2 1 3 .8 2 1 5 .1 2 1 5 .2 2 1 5 .9 2 1 6 .4 2008 2 1 8 .1 2 1 9 .9 2 2 5 .5 2 2 8 .5 2 3 1 .1 2 3 7 .4 240 2 4 1 .2 2 4 1 .5 239 2 3 4 .2 2 2 9 .7 6 .1 5 % 2009 0 0 0 0 0 0 0 0 0 0 0 0
C o n su m er P rice In d ex 2007 127 128 127 128 129 130 132 133 133 134 134 134 2008 134 135 137 138 139 140 143 145 146 148 148 147 9 .7 0 % 7 .5 7 %
CPI-http://labourbureau.nic.in/intab.html
2009 148 148
W e ig h te d A v e ra g e (C P I 4 0 % :W P I 6 0 % )
WPI-http://eaindustry.nic.in
5.2.
Operation & Maintenance Expenses
Operation & maintenance expenses comprise Employee costs, Administrative & General Expenses and Repair & Maintenance expenses. The regulation 4.2 of the Transmission Tariff Regulation issued by the Commission stipulates: The O&M expenses for the base year shall be calculated on the basis of historical/audited costs and past trend during the preceding five years. However, any abnormal variation during the preceding five years shall be excluded. O & M expenses so calculated for the base year shall then be escalated on the basis of prevailing rates of inflation for the year as notified by the Central Government and shall be considered as a weighted average of Wholesale Price Index and
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ARR & TARIFF: FY10
Consumer Price Index in the ratio of 60:40. Base year, for these regulations means, the first year of tariff determination under these regulations. However in last tariff order Commission was of the opinion that a suitable norm for allowance of O&M expenses could be adopted only after undertaking a thorough study of the O&M expenditure based on the past performances, and the cost drivers of the same, through a separate process. This study also has to be backed by audited information for the past which needs to be made available by the licensees. Only then the true picture if the trend in the O&M expenses may emerge. Till any such norm for O&M expenditure is determined, the Commission emphasised considering the individual elements of O&M expenditure. As stated above, in the absence O&M norms petitioner has estimated individual components of O&M expenses based on methodology described in following section:
5.2.1. Employee Costs:

The projection of employee costs involves a detailed examination of the various components of salary such as basic pay and dearness allowance for the various grades of employees. It would also involve an understanding of the extent of retirements as well as the manpower additions planned. Considering above Petitioner has estimated employee cost for FY2009-10 based on un-audited data of FY2007-08 and data available for FY2008-09 to date. Here it is also to mention that in FY 2009-10 petitioners have taken impact of increase due to implementation of sixth pay commission. Details of Employee Cost for FY08 to FY10 are provided in Table 5-2 below.
Table 5-2:
Details of Employee Cost:

Details (R s.C r)
FY 2007-08
Unaudited
FY 2008-09
E stimated
FY 2009-10
P rojected
B asic Salaries O vertim e Dearness Allow ance O ther allow ances B onus / Ex-gratia Medical expenses re-im bursem ent Leave travel assistance Interim Relief/ O ther E arned leave encashm ent Leave S alary contribution P aym ent under w orkm en's com pensation A ct S taff w elfare expenses E m ployers Contribution for Pension & G ratuity E m ployee Costs (before charge to capital) Less expenses capitalized Net em ployee cost
137.06 0.00 54.63 9.72 2.96 7.22 0.00 1.34 5.22 0.00 0.04 0.79 33.51 252.49 73.22 179.27
142.54 0.00 74.48 11.40 3.62 8.00 0.01 0.00 3.16 0.00 0.29 0.82 41.41 285.72 82.86 202.86
240.89 0.00 60.22 19.27 5.02 8.86 0.02 0.00 17.57 0.00 0.48 1.39 57.45 411.18 119.24 291.93
As mentioned above evolution of sub account of employee cost has been forecasted from base figure of FY2007-08 balance sheet and actual figure available for FY2008-09 till date. While projecting the expenses for ensuing year, petitioner has endeavoured to control the employee expenses but cost has
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ARR & TARIFF: FY10
increased due to impact of pay commission factor which is totally beyond the control of the petitioner. Various sub account are estimated as follows: Basic salary: The petitioner would like to submit that the projected growth in basic salaries in FY2008-09 due to mainly time bound increment and annual increase in pay. The annual increase depends on the pay scale of an employee and such increase is mandatory for employees. Therefore petitioner has estimated basic salaries for FY2008-09 as per actual cost incurred on this account till date & for FY2009-10 basic salaries has been projected to increase by 69% from FY2008-09 cost due to implementation of sixth pay commission recommendation. Dearness Allowance (DA) is estimated to be 52.25 %( 47% for 3 month&54% for 9 month) for FY2008-09 and for FY2009-10 DA has been projected 25%. Other allowance has been forecast to be 8% of basic salary. Likewise, Medical Expenses have been forecast to increase by inflation index per year from FY07, taking 3% as contingency. Pension and Gratuity have been calculated at 16.7% and 2.38% (i.e., 19.08%) of Basic Salary and Dearness Allowance. Leave travel Assistance & compensation is assumed to be .01% & 0.2%of Basic Pay respectively. Staff welfare ex. Is assumed to in same ratio as actually incurred in FY09. Employee Expenses Capitalized has been taken 29% as approved by Honble Commission in last Tariff order.
5.3.
Administration and General (A&G) Expenses:
These expenses are incurred by the petitioner for meeting the day-to-day expenses relating to the administration of its offices, insurance, communication, professional charges, audit fees, advertisement expenses, freight etc. All these expenses are directly affected by inflation .Therefore A&G expenses have been projected considering the impact of inflation and need for addition of more substation and offices. Forecast A&G expenses for Transco are summarised below in Tables 5-3, beginning with the figures from the provisional figures for FY08.
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ARR & TARIFF: FY10
Table 5-3: A &G Expenses:

Details (Rs.Cr)
FY 2007-08 Unaudited
FY 2008-09 Estimated
FY 2009-10 Projected
Rent, Rates & Taxes Insurance Telephone,Postage&Telegrams,Telex charges Legal charges Audit fees Consultancy charges Technical fees and professional charges Conveyance and traveling Regulatory expenses Electricity Charges Other expenses Total Capitalized Net
0.55 0.10 1.83 1.11 0.11 0.26 0.61 4.80 2.36 9.80 21.52 6.62 14.89
0.59 0.11 1.97 1.19 0.11 6.28 0.66 5.16 2.74 2.54 10.54 31.88 6.06 25.82
0.64 0.11 2.12 1.28 0.12 6.75 0.71 5.55 2.82 2.73 11.34 34.17 6.49 27.67
It may be noted that licensee is capitalizing a portion of A&G cost .For current submission licensee has taken capitalization as 19%, approved by commission in its last tariff order. As a reflection of the continuing commitment of the Petitioner to keep costs under control, almost all A&G Expenses are forecast to increase by only inflation index per year across the board to only offset the effect of inflation. In FY2008-09 & FY2009-10 under the head consultancy charges an amount of Rs 6 Cr has been added for IT related expenses which are urgently required to cope with the present pace of technological development in Power sector. In addition to above regulatory expenses Rs 10 lacs application fees and Rs 500 per MU energy delivered to distribution licensees as license fees has been added in A&G expenses in FY2008-09& FY2009-10 which is Rs 2.64& 2.72 crs respectively.
5.4.
Gross Fixed Assets (GFA) Balances and Capital Formation Assumptions
The estimate of a number of ARR components is dependent on the FY10 opening balance of GFA, one of which is R&M in the next section. It is therefore appropriate at this point to provide FY10 GFA estimates, as well as estimates for other fixed asset accounts. The assumptions used for projecting GFA and CWIP are as follows: The opening GFA and CWIP for Lucknow DisCom for FY 2008-09 have been taken as per the closing figures provisional annual accounts of FY 2007-08.
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ARR & TARIFF: FY10
30% the opening CWIP and 30% of investment made during the year, expenses capitalised & interest capitalised (30% of total investment) has been assumed to get capitalised during the year.
Investment through deposit work has not been taken for capital formation as per policy adopted by commission in its last tariff Order. Thus investment shown in capital formation table below table 5.4&4.5 dont include work funded through deposit work.
Table 5.3 shows Licensees investment plan for FY09 and FY10 along with the proposed funding of each component of the investment plan. The detail of activities carried out in each scheme has already been explained in section 3.3.
Table 5-4: Transco Investment Plan: (Rs. Cr)

Particulars Equity from GoUP for Transmission Works Loans for Transmission Works PFC REC NCR HUDCO Deposit Works Total Transm ission Loan 88.55 52.09 140.64 Grant FY 2008-09 Deposit 225.00 225.00 Equity 428.55 428.55 Total 428.55 88.55 52.09 225.00 794.19 Loan 826.94 826.94 1,653.88 Grant FY 2009-10 Deposit Equity 325.00 325.00 891.57 891.57 Total 891.57 826.94 826.94 325.00 2,870.45
Table 5-4 and Table 5-5 shows the forecast evolution of the GFA, Accumulated Depreciation and Work in Progress Accounts under the assumptions noted below the table.
Table 5-5: Capital Formation during FY 09
Table 5-6: Capital Formation during FY 10

Rs crore Balance 31Mar-09 Invest-ments Cap interest Cap expenses To GFA Depreciation Balance 31Mar-10
Gross Fixed Assets Accumulated Depreciation Work in Progress
(1) 5,598.2 2,307.7 1,258.1
(2)
(3)
(4) 1,220.5 (1,220.5)
(5) 327.2 6,818.8 2,634.9 2,847.9
2,545.5
139.2
125.7
Notes:
(1)
FY08 Balances as per provisional financial statements.
(2) Capitalized interest - see Table 5-8.
(3) Capitalized expenses are from Table 5-2 &5-3. (4) Depreciation expense for FY09 = 5.27% of average GFA.
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ARR & TARIFF: FY10
5.5.
Repair and Maintenance (R&M) Expenses
Forecast R&M expenses for TransCo are summarised below in Tables 5-7, beginning with the figures from the provisional figures for FY08.The forecast R&M Expenses are estimated as 2.0% of the opening GFA balances. In the last tariff order commission approved Rs 66.83 cr for FY2008-09 while petitioner has estimated Rs 101.18 cr , This increase is mainly attributed to substantial increase in raw material and fuel cost. The metal prices have increased phenomenally as compared to past few years. This has substantially increased the cost burden of the petitioner. Moreover, the petitioner has added a number of transformers, cables, grid substation, etc for which there has been an increase in the amount of annual maintenance contracts, this would have translated to a higher R&M expenses in the ensuing year for the petitioner. The petitioner has estimated Rs 111.96 Cr for ensuing year. The amount so estimated has been spread out proportionally among the sub-accounts.
Table 5-7: R&M Expenses:

D etails (R s.C r)
Plant & Machinery Building Civil works O ther Expenses Lines, Cable Network, etc Vehicles Furniture & Fixtures O ffice equipm ent Total
54.45 7.39 0.06 5.79 0.01 0.20 67.89
81.15 11.01 0.09 8.62 0.02 0.29 101.18
89.79 12.18 0.10 9.54 0.02 0.32 111.96
5.6.
Depreciation Expense:
FY10 Depreciation Expenses may be estimated with reference to Table 5-6, which has projected the opening GFA balance for FY10. Applying the rate of 5.27% to average GFA during year petitioner has projected a Depreciation Expense of Rs 327.2 crores for FY2009-10. This is line with the method used by commission in recent Tariff order.
5.7.
Interest and Financing costs:
The interest and financing costs projected for FY10 are based on the current schedule of long-term debt, repayments and new debt requirements. The summary of the interest and finance costs is provided in Table 5-8 below:
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ARR & TARIFF: FY10
Table 5-8: Details of Interest & Finance Cost:
P a rticu la rs (R s C r )
F Y 2 0 0 7 -0 8 U n a u d ited
F Y 2 0 0 8 -0 9 E stim a ted
F Y 2 0 0 9 -1 0 P ro jected
W o rld B a n k L o a n N C R PFC UPPCL I.D .B .I. L o a n R E C (U P P C L ) R E C R e s ch e d u le d H u d co R E C T ra n sm issio n P F C T ra n sm issio n G ro s s In te re s t C o s t ID C N e t In te re s t C o s t F in a n c e C h a rg e s F in a n ce C h a rg e s/ G u a ra n te e F e e s B a n k C h a rg e s T o ta l F in a n c e C h a rg e s T o ta l In te re s t a n d F in a n c e C h a rg e s
1 6 .6 7 3 .7 1 9 7 .4 4 0 .0 5 1 9 .9 0 1 5 .3 9 3 7 .4 3 4 .5 3 0 .9 5 1 9 6 .0 6 1 5 .8 1 1 8 0 .2 5 1 7 .2 0 0 .1 6 1 7 .3 7 1 9 7 .6 2
1 4 .9 6 3 .7 0 1 0 3 .2 1 0 .1 2 3 5 .0 0 9 .5 5 2 9 .9 6 1 0 .5 7 1 0 .1 3 2 1 7 .2 0 3 4 .5 2 1 8 2 .6 7 1 6 .2 1 3 .8 0 2 0 .0 1 2 0 2 .6 8
1 4 .9 6 2 .8 7 9 4 .7 9 0 .0 0 3 2 .4 9 9 .2 2 1 5 .4 6 6 3 .8 2 6 2 .6 4 2 9 6 .2 4 1 3 9 .1 9 1 5 7 .0 6 1 4 .2 9 1 8 .7 3 3 3 .0 3 1 9 0 .0 9
Interest on Working Capital:

1. The Transmission tariff regulations provides for normative interest on working Capital based on the methodology outlined in the regulations. The petitioner is eligible for interest on working capital worked out on methodology specified in the regulations. 2. Further Transmission tariff regulations provide following methodology for calculating working capital (i) Operation and Maintenance expenses, which includes Employee costs, R&M expenses and A&G expenses, for one month; (ii) One-twelfth of the sum of the book value of stores, materials and supplies at the end of each month of current financial year. (iii) Receivables equivalent to 60 days average billing of consumers less security deposits by the beneficiaries 3. Rate of interest on working capital shall be the Bank Rate as specified by Reserve Bank of India as on 1st April Based on above methodology petitioner has computed interest on working capital in following table:
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ARR & TARIFF: FY10
Table 5-9: Interest on Working Capital:

Sr. N o. 1 2 P a r tic u la r s O n e m o n t h 's O & M E x p e n s e s O n e -tw e lfth o f th e s u m o f th e b o o k v a lu e o f s to r e s , m a te r ia ls a n d s u p p lie s a t th e e n d o f e a c h m o n th o f s u c h fin a n c ia l year R e c e iv a b le s e q u iv a le n t to 6 0 d a y s a v e r a g e b illin g o f B e n e fic ia r ie s G r o ss T o ta l P r e v io u s Y e a r 2 8 .4 9 3 4 .3 3 C urrent Y ear 3 4 .9 0 3 .9 5 E n s u in g Y e a r 4 6 .4 4 1 7 .6 8
1 7 3 .0 8 2 3 5 .9 0
1 8 9 .6 6 2 2 8 .5 1
2 1 9 .9 8 2 8 4 .1 0
L ess: 1 S e c u r it y D e p o s it s b y t h e b e n e f ic ia r ie s (if a n y ) N e t W o r k in g C a p ita l R a t e o f I n t e r e s t f o r W o r k in g C a p i t a l In te r e s t o n W o r k in g C a p ita l
2 3 5 .9 0 1 2 .5 0 % 2 9 .4 9
2 2 8 .5 1 1 2 .5 0 % 2 8 .5 6
2 8 4 .1 0 1 2 .5 0 % 3 5 .5 1
5.8.
Other Income:
Other Income includes only non-tariff income, which comprises interest on loans and advances to employees, income from fixed rate investment deposits and interest on loans and advances to Licensees. It is estimated that other income will increase by inflation index for FY09 from FY08 provisional financial statement & same hike projected for FY10.
Table 5-10:
Summary of Other Income:
Details (Rs.Cr) Share of Incom e from the other businesses Interest on loan to Staff Incom e from Investm ents Revenue from surcharges for late paym ent Any other Incom e Total Non- tariff Income
FY 2007-08 Unaudited 0.31 1.41 15.45 17.17
FY 2008-09 Estimated 0.33 1.52 16.62 18.47
FY 2009-10 Projected 0.36 1.63 17.88 19.87
5.9.
Reasonable return/ Return on Equity:
Under provisions of the Regulation licensees are allowed a return of @ 14% on equity base, For equity base calculation debt equity ratio shall be 70:30.Where equity involves is more than 30%, the amount of equity for the purpose of tariff shall be limited to 30%.Equity amount more than 30% shall be considered as loan. In case of actual equity employed is less than 30%, actual debt and equity shall be considered for determination of tariff. Here it is to submit that GOUP has yet to notify the transfer scheme for affecting the transfer of assets & liability. Due to this debt: equity process for calculating return is not practical. ROE is being calculated on the equity inflow from GOUP up to FY2009 and to be received in FY2009-10.In this ARR petitioner used same methodology for computation of return as adopted by commission in its last tariff order.
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ARR & TARIFF: FY10
Table 5-11:
Return on Equity:
Particulars FY2007-08 1,843 350.37 105.11 1,948.08 FY2008-09 1,948.08 539.19 161.76 2,109.84 FY2008-10 2,109.84 1220.55 366.16 2,476.00
Return on Equity Regulatory equity at the beginning Capitalised assets during the year Equity portion of expenditure on capitalised assets Regulatoryequity at the end Return computation Return Regulatory equity at the beginning Returnon Equity portion of expenditure on capitalised assets Total return on regulatory equity
285.66 8.15 293.81
301.95 12.54 314.49
327.03 28.38 355.40
5.10. Service tax:

Para 4.9 of UPERC Transmission Regulations provide Any cess or duty or royalty or tax imposed by the State Government shall be allowed as pass through to be recovered from the distribution licensees / long term open access consumers in proportion of their allotted capacity or quantity of energy delivered, as the case may be. Service tax liability is imposed on the service provider which would be UPPTCL in this case. Service tax would be chargeable on actual energy wheeled during a financial year and at the rates as notified & amended by the Govt from time to time. The Petitioner seeks allowance of such statutory liability on the service provider UPPTCL as pass through in tariff. Also such liability may be imposed on UPPCTL retrospectively like it was done in the case of PGCIL. In such an event the Petitioner would approach the Commission for allowance of such liability in its ARR accordingly.
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ARR & TARIFF: FY10
5.11. TransCo ARR:

The FY10 ARR for UP Power Transmission Corporation is summarised below in Table 5-12 from the expenses and allowances described in previous section:
Table 5-12:
Annual Revenue Requirement:
Details (Rs.Crore)
Employee Costs (net of capitalization) A&G Costs Repair & Maintenance Expense Depreciation Interest & Finance Charges Less Other Income Return on Equity Debits, Write-offs and any other items Annual Revenue Requirement
179.27 14.89 67.89 257.38 227.10 (17.17) 293.81 15.30 1,038.47
202.86 25.82 101.18 280.82 231.25 (18.47) 314.49 1,137.96
291.93 27.67 111.96 327.19 225.60 (19.87) 355.40 1,319.90
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ARR & TARIFF: FY10
6. Proposed Transmission Tariff:

6.1. Derivation of Tariff:
The proposed transmission tariff is derived in Table 6-1 in accordance with the methodology provided in Transmission Tariff Regulation. It provides that in case of more than one long-term customers of the Transmission system (distribution licensee/long term open access customers), utilizing transmission system, the wheeling charges leveable on such customers shall be computed as per the following formula: Transmission /wheeling charges payable by the long term of customer of Transmission system for use of transmission system for a month = (Net ARR/12)*(CL/SCL) CL =Allotted Transmission Capacity in MW of particular long term customer. SCL=Sum of the Allotted Transmission Capacities (in MW) to all long-term customers. Presently DisComs have not been allotted transmission capacity as such Transmission tariff has been calculated on the basis of numbers of units wheeled by the transmission licensee for distribution licensees. This is based on the same approach adopted by the Commission in its last Tariff Order. Based on the above mentioned methodology, the transmission charges payable by all the licensees in the state is computed bellow:
Table 6-1: Derivation of Transmission Tariff:

FY2008-09 Details Estimated Proposed FY2009-10
UPPCL Transco ARR (Rs Cr) Total energy delivered(MU) Transmission Tariff (Rs/ kWh)
1138 52779 0.216
1320 54345 0.243
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ARR & TARIFF: FY10
7. SLDC Charges:
Table 7-1 provides a summary of estimated costs of running UPPTCL central load dispatch centre in Lucknow and four regional load dispatch centres at Panki, Sahupuri, Modipuram and Moradabad which are owned and operated by UPPTCL.
Table 7-1: Break-up of SLDC Charges

Details (Rs.Crore) FY2008-09 Estimated FY2009-10 Proposed
Employee Costs A&G Costs Repair & Maintenance Expense Subtotal Depreciation Interest & Finance Charges Less: Other Income Return on Equity Total SLDC ARR
5.02 0.20 0.29 5.51 4.69 3.86 (0.31) 5.25 18.99
7.22 0.22 0.29 7.73 5.86 4.04 (0.36) 6.37 23.64
All direct cash expenses in the above estimates, including Employee Costs, A&G and R&M, have been obtained from central load dispatch centre. However, capital related charges including Interest &
Finance Charges, Depreciation and the Return on equity, could not be separated because SLDS is functioning as integral part of UP Transco, such the same have been approximated as follows: Depreciation Expense for Transco is 86% in FY09 of the sum of above cash expenses. This may be calculated from Table 4-9 in the absence of precise information on the cost of the SLDC assets; an adder of these values account for SLDC Depreciation Expense. Interest and Finance charges & other Income have been similarly approximated. has been applied to SLDC cash costs to
Pending a better delineation of capital charges, the above SLDC estimates are the best available. However, it may also be noted that the estimated SLDC costs comprise only about 1.7 % of total transmission costs. This means that any major error in the SLDC cost estimate (which is quite likely) will be very small when compared to total transmission costs.
7-33
ARR & TARIFF: FY10
PRAYER: The petitioner prays that the Commission may be pleased to:
a. Admit the accompanying Annual Revenue Requirement and Tariff Petition. b. Approve the Annual Revenue Requirement for financial year 2009-10. c. Allow the petitioner to add/change / alter / modify this application at a future date. d. Issue any other relief, order or direction which the commission may deem fit.
7-34

Arr Transco Fy09 10

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Arr Transco Fy09 10

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ANNUAL REVENUE REQUIREMENT &

Uttar Pradesh Power Transmission Corporation Limited LUCKNOW

ARR & TARIFF: FY10

Uttar Pradesh Power Transmission Corporation Ltd.

ARR & TARIFF: FY10

Uttar Pradesh Power Transmission Corporation Ltd.

ARR & TARIFF: FY10

Uttar Pradesh Power Transmission Corporation Ltd.

ARR & TARIFF: FY10

Uttar Pradesh Power Transmission Corporation Ltd.

ARR & TARIFF: FY10

Procedure Envisaged for ARR FY 08 & 09

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

UP Power Transmission Corporation Limited: 2. Existing Transmission System- a preview:

Table 2-1: Total existing Sub-Stations:

220 K.V. 1234-

3000 3010 3740 4980 14730

132 K.V. 1234-

3500 4850 4705 6002 19057

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

Table 2-2: Total existing Lines (Circuit Km)

c k t.k m 409 4260 6904 11384

Interconnections and Northern Region Load Dispatch Centre (NRLDC)

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

Table 2-3: Yearly System Peak in M.W.

Month 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Availability 5403 5717 6112 7188 7504 8222

R.D.M. (MW) 6788 6870 7437 7653 8604 8337

Restriction (MW) 600 1100 1100 1100 1500 2250

UDM (MW) 7368 7970 8537 8753 10104 10587

Table 2-4: Monthly System Peak for current Year

Bulk Transmission System Flows:

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

3. Performance Analysis of ARR FY 08 & FY 09 Filing:

Review of UPERC FY 08 & FY 09 Tariff Order:

ARR & TARIFF: FY10

Comparison of Estimated Cost and Actual Figures To-Date

Table 3-1: Approved and Actual FY 2007-08: Energy Demand (MU)

Tariff Order FY2007-08 14053 17751 9426 12377 53607

Actual FY2007-08 14,246 16,968 8,683 11,596 51,493

Diff -1.4% 4.4% 7.9% 6.3% 3.9%

Table 3-2: Approved and Actual FY 2008-09: Energy Demand (MU)

Tariff Order FY2008-09 14712 18294 9684 12722 55412

Estimated FY2008-09 14,409 17,214 8,958 12,198 52779

Diff 2.1% 5.9% 7.5% 4.1% 4.8%

Expense items- Approved and Estimated:

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

Table 3-3: Estimated and Actual ARR FY 08, Components:

T ariff O rder FY 2007-08

Table 3-4: Estimated and Actual ARR, Components:

Expense Items (Rs Cr)

Tariff Order FY2008-09

Uttar Pradesh Power Corporation Ltd. UPPCL TransCo

ARR & TARIFF: FY10

3.3.1. Proposal for Ensuing Year:

3.3.2. Normal Development Works:

3.3.3. Transmission Works in NCR