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TAMIL NADU ELECTRICITY REGULATORY

COMMISSION
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Determination of Tariff for Generation
and Distribution
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Order No. 1 of 2012 dated 30-03-2012
(effective from 01-04-2012)
TAMIL NADU ELECTRICITY REGULATORY COMMISSION
(Constituted under section 82 (1) of Electricity Act 2003)

(Central Act 36 of 2003)

PRESENT : Thiru. K.Venugopal – Member


Thiru. S.Nagalsamy – Member

Order No 1 of 2012, dated 30-03-2012

In the matter of: Determination of Tariff for Generation and Distribution

In exercise of power conferred by clauses (a), (c)& (d) of sub section (1) of Section 62 and
clause (a) of subsection(1) of Section 86 (1) (a) of the Electricity Act 2003, (Central Act 36 of
2003), and after taking into account the stipulations in the National Electricity Policy and the
Tariff Policy, TNERC (Terms and conditions for determination of tariff) Regulations 2005,
TNERC (Terms and Conditions for Determination of Tariff for Intra state Transmission /
Distribution of Electricity under MYT Framework ) Regulations, 2009, and all other powers here
unto enabling in that behalf and after considering the views of the State Advisory Committee
meeting held on 27-01-2012 in accordance with section 88, after examining the comments
received from the stakeholders and after considering suggestions and objections received from
the public during the public hearings held on 30-01-2012, 02-02-2012, 06-02-2012 and 10-02-
2012 as per section 64, the Tamil Nadu Electricity Regulatory Commission, hereby, passes this
order for Generation and Distribution Tariff.

This Order shall take effect on and from the April 1, 2012.

(S. Nagalsamy) (K.Venugopal)


Member Member
Table of Contents
1 INTRODUCTION ..................................................................................................................................... 1
Background ................................................................................................................................................... 1
Preamble ....................................................................................................................................................... 1
2 Issue-wise summary of views, comments and suggestions of stakeholders on Petition and
TANGEDCO’s Replies and Commission’s Views .......................................................................................... 10
3 ENERGY SALES ..................................................................................................................................... 93
Energy Sales: ............................................................................................................................................... 93
T&D Loss: .................................................................................................................................................. 112
4 Energy Availability ............................................................................................................................. 117
Thermal Power Stations: ........................................................................................................................... 117
Gas Turbine Power Stations: ..................................................................................................................... 129
Hydel Generation: ..................................................................................................................................... 138
Wind Generation: ..................................................................................................................................... 142
Energy Available from Other Sources: ...................................................................................................... 144
5 FIXED COST ........................................................................................................................................ 164
Capital Expenditure and Capitalisation ..................................................................................................... 164
6 Expenses on account of Generation ................................................................................................. 196
Part-I: Fixed Cost: ...................................................................................................................................... 196
Return on Equity: ...................................................................................................................................... 197
Operation and Maintenance Expenses: .................................................................................................... 203
Other debts and Miscellaneous Income: .................................................................................................. 211
Part-II: Variable Cost: ................................................................................................................................ 217
Provisional Tariff for New Thermal Power Stations:................................................................................. 230
Variable cost for Gas Turbine Power Stations: ......................................................................................... 230
Hydro Generating Stations:....................................................................................................................... 237
Provisional Tariff for New Hydro Generating Stations: ............................................................................ 239
Wind Generating Stations: ........................................................................................................................ 239
Summary for Own Generation:................................................................................................................. 240
7 POWER PURCHASE COST FROM OTHER SOURCES ........................................................................... 245
Merit Order Ranking: ................................................................................................................................ 245
Power Purchase Cost: ............................................................................................................................... 248
8 Aggregate Revenue Requirement of TANGEDCO ............................................................................. 276
Regulatory Framework.............................................................................................................................. 276
Fixed Cost: ................................................................................................................................................. 277
Own Generation and Power Purchase Cost:............................................................................................. 277
Intra-State Transmission Charges: ............................................................................................................ 278
Non Tariff and Other Income .................................................................................................................... 279
Sharing of Gain and Losses ....................................................................................................................... 280
Aggregate Revenue Requirement of TANGEDCO ..................................................................................... 281
9 TARIFF PHILOSOPHY AND CATEGORY-WISE TARIFFS FOR FY 2010-11 ............................................. 283
10 TARIFF SCHEDULE ......................................................................................................................... 319
TARIFF FOR HIGH TENSION SUPPLY CONSUMERS .................................................................................... 319
TARIFF FOR LOW TENSION SUPPLY CONSUMERS..................................................................................... 325
Applicability of the Tariff Schedule ........................................................................................................... 338
11 SUMMARY OF DIRECTIVES ............................................................................................................ 340
List of Abbreviations

S. No Abbreviation Description
1 A&G Administration and General Expenses
2 ABC Aerial Bunched Cables
3 ABR Average Billing Rate
4 ARR Aggregate Revenue Requirement
5 CERC Central Electricity Regulatory Commission
6 CGS Central Generating Station
7 COS Cost of Supply
8 CPP Captive Power Plant
9 CSD Consumer Security Deposit
10 DA Dearness Allowance
11 EA Electricity Act
12 ED Electricity Duty
13 FY Financial Year
14 GFA Gross Fixed Assets
15 H1 First Half
16 H2 Second Half
17 HT High Tension
18 HVDS High Voltage Distribution System
19 kWh Kilo-watt Hour
20 LT Low Tension
21 MU Million Units
22 MW Mega-watt
23 MYT Multi-Year Tariff
24 O&M Operation & Maintenance
25 R&M Repair & Maintenance
26 O&M Operation & Maintenance
27 RoE Return on Equity
28 TO Tariff Order
29 TP Tariff Policy
30 TVS Technical Validation Session
31 Y-O-Y Year on Year
1 INTRODUCTION

Background

Preamble
1.1.1 Consequent to the enactment of the Electricity Regulatory Commissions Act 1998
(Central Act 14 of 1998), the Government of Tamil Nadu constituted the Tamil Nadu
Electricity Regulatory Commission (TNERC) vide G.O.Ms.No.58, Energy (A1)
Department, dated 17-03-1999.

1.1.2 The Commission issued its first tariff order under section 29 of the Electricity Regulatory
Commission Act, 1998, on 15-03-2003 based on the petition filed by the Tamil Nadu
Electricity Board (TNEB) on 25-09-2002.

1.1.3 In Para 7.2 of the order dated 15-03-2003, the Commission issued the following rulings:

“The Commission thus rules that the revised tariffs would be applicable from 16th March
2003 to 31st March 2004, and till such further time as the TNEB does not approach the
Commission for tariff revision. The Commission also directs that, henceforth, the TNEB
should submit a Tariff Proposal for any financial year by the end of December of the
previous financial year. In other words, the Commission expects the TNEB to submit a
tariff revision proposal for FY 2004-05 before the end of December 2003, in case the
TNEB desires to revise the tariffs for FY 2004-05.”

1.1.4 The TNEB did not come before the Commission for revision of retail tariff till January
2010. In the meantime, Electricity Regulatory Commission Act, 1998 was repealed and
the Electricity Act 2003 (Central Act 36 of 2003) (hereinafter called Act) was enacted
with effect from 10-06-2003.

1.1.5 The Commission notified the Tamil Nadu Electricity Regulatory Commission (Terms and
Conditions for Determination of Tariff) Regulations 2005 (herein after called Tariff
Regulations) on 03-08-2005 under section 61 read with section 181 of the Act.

1.1.6 The Commission issued separate order on Transmission charges, Wheeling Charges,
Cross Subsidy surcharge and Additional Surcharge on 15-05-2006, based on the petition
filed by TNEB on 26-09-2005 under section 42 of the Act.

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1.1.7 The Commission has also issued two generation Tariff Orders between 2003 and 2010
for wind, biomass based power plants and other captive and co-generation plants.

1.1.8 The Commission notified the TNERC (Terms and Conditions for Determination of Tariff
for Intra state Transmission / Distribution of Electricity under MYT Framework)
Regulations, 2009 (herein after called MYT Regulations).

1.1.9 Subsequently, TNEB filed an application for determination of tariff with Aggregate
Revenue Requirement (ARR) for all functions on 18-01-2010, which was admitted by the
Commission after initial scrutiny on 09-02-2010.

1.1.10 The Commission issued its second Retail Tariff Order on 31.07.2010.

1.1.11 Government of Tamil Nadu, in G.O (Ms) No 114 Energy Dept, dated 08-10-2008 have
accorded in principle approval for the re-organisation of TNEB by establishment of a
holding company, namely TNEB Ltd and two subsidiary companies, namely Tamil Nadu
Transmission Corporation Ltd (TANTRANSCO) and Tamil Nadu Generation and
Distribution Corporation Ltd (TANGEDCO) with the stipulation that the aforementioned
companies shall be fully owned by Government.

1.1.12 Tamil Nadu Generation and Distribution Corporation Ltd. was incorporated on 01-12-
2009 and started functioning as such w.e.f. 01-11-2010.

1.1.13 This is the third Order of the Commission on determination of Generation and Retail
Tariff.

1.1.14 TNEB was formed as a statutory body by the Government of Tamil Nadu (GOTN) on 01-
07-1957 under the Electricity (Supply) Act 1948. The Board was primarily responsible
for generation, transmission, distribution and supply of electricity in the State of Tamil
Nadu and on 1/11/2010 it was bifurcated as TANGEDCO, TANTRANSCO and and a
holding company, TNEB Limited.

1.2 Applicability of Order

1.2.1 This Order will come into effect from 01-04-2012. The Generation and retail tariff
contained in this order will be valid till 31-03-2013. TANGEDCO shall file necessary
petition in accordance with the Regulations in time to enable the Commission to pass the
next Tariff Order in time.

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1.3 Tariff Filing

1.3.1 The Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO) has filed
Application before the Commission on 17-11-2011 for preliminary true-up and approval
of Aggregate Revenue Requirement (ARR) for the year 2010-11 and approval of ARR
for the year 2011-12 and 2012-13 under Multi Year Tariff and also applied for tariff
revision with effect from 01-04-2012 or earlier.

1.3.2 The above petition was admitted and hosted by the Commission on its website on 25-11-
2011 and registered as TP 1 of 2011.

1.4 Procedure Adopted

1.4.1 Regulation 7 (2) of Tariff Regulation specifies the following: “The applicant shall
publish, for the information of public, the contents of the application in an abridged form
in English and Tamil newspapers having wide circulation and as per the direction of the
Commission in this regard. The copies of Petition and documents filed with the
Commission shall also be made available at a nominal price, besides hosting them in the
website.”

1.4.2 The public notice containing the salient details with regard to the petition was approved
and communicated to TANGEDCO on December 1, 2011, with a direction to arrange
publication of the notice in news papers on December 2, 2011 and invited written
objections/suggestions/views from by 31-01-2012.

1.4.3 The TANGEDCO published the public notice in the following newspapers on December
2, 2011.

a) The New Indian Express (English Daily);

b) The Hindu (English Daily);

c) Dinamalar (Tamil Daily) and

d) Daily Thanthi (Tamil Daily)

1.4.4 The Petition was placed before the State Advisory Committee on 27-01-2012. The list of
Members who participated in the meetings is detailed as Annexure I to this Order.

1.4.5 The views / comments expressed by the members are included in Chapter 2 of this Order.

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1.4.6 The list of stakeholders who have submitted objections/suggestions/views regarding the
petition in response to the public notice are detailed in Annexure II and
Objectios/suggestions/views are included in Chapter 2.

1.4.7 The Commission conducted public hearing at the following places on the dates noted
against each:

Date Day Place Venue


Tamil Isai Sangam, Raja Annamalai
30-01-2012 Monday Chennai Mandram, (Near High Court),5, Esplanade
Road, Chennai- 108
Corporation Kalaiarangam, R.S. Puram,
02-02-2012 Thursday Coimbatore
Coimbatore

Barbier Hall (Jubilee Building), St. Joseph's


06-02-2012 Monday Tiruchirappalli
College, Tiruchirappalli - 2

Indian Medical Association Hall, Madurai


10-02-2012 Friday Madurai Medical College Premises, No. 1 Panagal
Road, Madurai - 20

1.4.8 The lists of participants in each public hearing, is attached as Annexure III to this Order.
The views / comments / objections raised by the participants are discussed in Chapter 2.

1.5 The Electricity Act, 2003, Tariff Policy (TP) and Regulations

Section-61 of the Act stipulates the guiding principles for determination of Tariff by the
Commission and mandates that the Tariff should ‘progressively reflect cost of supply of
electricity’, ‘reduce cross-subsidy’, ‘safeguard consumer interest’ and ‘recover the cost of
electricity in a reasonable manner’.

Section-62 (1) of Act states as under:


“Section-62 (1):

1. The Appropriate Commission shall determine the tariff in accordance with


provisions of this Act for
a. supply of electricity by a generating company to a distribution licensee:
Provided that the Appropriate Commission may, in case of shortage of
supply of electricity, fix the minimum and maximum ceiling of tariff for sale

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or purchase of electricity in pursuance of an agreement, entered into
between a generating company and a licensee or between licensees, for a
period not exceeding one year to ensure reasonable prices of electricity;
b. transmission of electricity ;
c. wheeling of electricity;
d. retail sale of electricity.
Provided that in case of distribution of electricity in the same area by two or
more distribution licensees, the Appropriate Commission may, for promoting
competition among distribution licensees, fix only maximum ceiling of tariff for
retail sale of electricity.”

1.6 Similarly, the objectives stipulated in the Tariff Policy are as under:
“4.0 Objectives of the policy
The objectives of this tariff policy are to:
a. Ensure availability of electricity to consumers at reasonable and
competitive rates;
b. Ensure financial viability of the sector and attract investments;
c. Promote transparency, consistency and predictability in regulatory
approaches across jurisdictions and minimise perceptions of regulatory
risks;
d. Promote competition, efficiency in operations and improvement in quality of
supply.”

1.6.1 In the State of Tamil Nadu, Tamil Nadu Electricity Regulatory Commission in
exercise of powers vested in it under the Electricity Act, 2003 (Act) passes the Tariff
Orders.

1.7 Brief Note on Tariff Filing and Public Hearing

1.7.1 The Tariff Petition TP 1 of 2011 filed by TANGEDCO is the first Tariff Petition for
fixation of retail tariff for the year 2012-13 after the unbundling and issue of transfer
scheme by the Government of Tamil Nadu. The Transfer scheme dated 19-10-2010 is
enclosed as Annexure IV. This Transfer Scheme is a provisional Transfer Scheme,
addresses various issues like transfer of assets, revaluation of assets and partly address
the accumulated losses. This Transfer Scheme also envisages deployment of staff of the
erstwhile TNEB in the TANGEDCO and TANTRANSCO. The Commission in its earlier
Tariff Order No. 3 of 2010 dated 31-07-2010 had suggested in line with the Natioanal
Electricity Policy (para 5.4.3) and Tariff Policy that the accumulated losses should not be
passed on to the successor entities and financial restructuring has to be resorted to clean

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up the Balance Sheet of the successor companies and allow them to start on a clean slate
so that the successor entities can start performing better. The following statutory advices
have been sent to the Government of Tamil Nadu in this regard and they are appended as
Annexure V The Commission has also sent another statutory advice with regard to the
establishment of a separate Generating Company and establishment of four Distribution
Companies so that the performance of these companies can be improved which will
enable proper investments and growth of the individual company. These are also
appended as Annexure VI.

1.7.2 The Government of Tamil Nadu has issued an amended Transfer Scheme on 2-1-2012
which is appended as Annexure VII. This Transfer Scheme is also provisional and is
subject to revision. Besides various other issues, this Transfer Scheme specified that the
retirement benefits of the employees of TNEB/ successor entities will be met out of the
Revenue Account.

1.7.3 Over a period of years, the Capital Account and the Revenue Account has been mixed up
in the operation of TNEB and an attempt is being made in this order to segregate this to
bring financial discipline in the successor entities. TNEB and successor entities have
reported accumulated losses of around Rs. 50,000 crores over the years. The Commission
in its earlier Order dated 31-07-2010 through its various Statutory advices has suggested
to the Government of Tamil Nadu to take care of the accumulated losses up to the
unbundling period by way of financial restructuring so that the burden of the same is not
passed on to the consumers. This suggestion is also in line with Para 5.4.3 of the National
Electricity Policy which are extracted below.
“5.4.3 For achieving efficiency gains proper restructuring of distribution utilities is
essential. Adequate transition financing support would also be necessary for these
utilities. Such support should be arranged linked to attainment of predetermined
efficiency improvements and reduction in cash losses and putting in place appropriate
governance structure for insulating the service providers from extraneous interference
while at the same time ensuring transparency and accountability. For ensuring financial
viability and sustainability, State Governments would need to restructure the liabilities of
the State Electricity Boards to ensure that the successor companies are not burdened
with past liabilities. The Central Government would also assist the States, which develop
a clear roadmap for turnaround, in arranging transition financing from various sources
which shall be linked to predetermined improvements and efficiency gains aimed at
attaining financial viability and also putting in place appropriate governance
structures.”

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1.7.4 The following generating stations are likely to be commissioned during the year 2012-13.
Name of the Generation Commercial Operation
Sl. No. Capacity in MW
Station Date
1 North Chennai TPS Unit I 600 October, 2012
2 North Chennai TPS Unit II 600 June, 2012
Vallur TPS (JV of TNEB
3
and NTPC)
- Unit I 500 March, 2012
- Unit II 500 February, 2013
- Unit III 500
(Allocation from this station
to Tamil Nadu is 1075 MW)
300 MW by March 2012;
4 Mettur TPS Stage III 600
300 MW by June 2012
Nevyeli Lignite
250 MW by March 2012
Corporation TS Expansion
5 2 x 250 and 250 MW by
II Unit 1 &2 (Allocation to
September 2012
Tamil Nadu is 195.5 MW)
MAPS Additional PFBR
6 Kalpakkam (Allocation of 500 500 MW by May 2012
142 MW to Tamil Nadu)

1.7.5 This Order deals with major issues like accumulated losses of TANGEDCO, Regulatory
Asset, Tariff hike, power cuts. and new capacity additions by TANGEDCO etc. The
unmetered supply in the State mainly relate to agriculture and huts. TANGEDCO has
been assuming the AT&C loss level by back calculating the consumption of agriculture
and huts. This issue was also a subject matter of Appeal before the Hon’ble Appellate
Tribunal of Electricity. The Commission had estimated agricultural consumption based
on the CEA formula in its last Tariff Order. The Commission had also directed
TANGEDCO to furnish sample data of the metered connections for agricultural supply.
Based on the same data furnished by TANGEDCO the consumption per Horse Power
(HP) for agriculture was worked out and the same has been taken into account while
calculating the energy requirement for agriculture. Similarly, estimates have been made
for consumption by huts duly reflecting the number of huts with and without televisions.
It is also proposed to factor in the consumption on account of distribution of free mixers,
grinders and fans.

1.7.6 The cost of entire consumption on account of huts as well as on account of agricultural
consumption has to be borne by the Government of Tamil Nadu by way of subsidy under

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Section 65 of the Electricity Act 2003. In this matter, GoTN has issued a policy direction
and commitment letter Ms No. 8 dated 04-02-2012 detailing provision of tariff subsidy to
certain categories of electricity consumers. GoTN has also stated that they would
consider any modifications of the stated subsidy rates in future also taking into
consideration the needs of TANGEDCO and cannons of financial prudence.
TANGEDCO would prepare an estimate of the susbsidy and reflect the same in their
quarterly subsidy bills. The TANGEDCO shall furnish such details to the Commission on
quarterly basis and on approval of the same, the Government of Tamil Nadu will have to
provide the matching subsidy. As an improvement of the sampling process for
agricultural consumption, it is necessary for TANGEDCO to install Distribution
Transformer Meters in all the Distribution Transformers. These meters shall have AMR
facility so that they can be read from remote. Based on the reading of the Distribution
Transformer Meters, it will be possible to work out the unmetered consumption more
accurately after accounting for all the metered connections and a reasonable assumption
on the line loss in the last mile can be made. Nevertheless, the existing arrangement of
the sample meters shall be continued. The TANGEDCO has also stated that they have
awarded a study to Anna University for estimation of losses. This study shall be
expeditiously completed and the report, after approval by Board of Directors of
TANGEDCO, shall be submitted to the Commission latest by 30th November 2012.

1.7.7 The proposal of TANGEDCO in their petition involves creation of Regulatory Asset to
the tune of Rs. 24,762 Crores. Creation of a Regulatory Asset is not a good practice under
most conditions. In this particular case, the tariff hike sought for by the TANGEDCO for
the year 2012-13 is Rs. 9,741 Crore which amounts to 37% increase over the existing
tariff. Even after this proposal, the Petition envisages creation of Regulatory Assets of Rs.
4,806 Crore for FY 2012-13. It is not possible to hike the tariff by Rs. 24762 Crore (the
entire revenue gap), which will amount to an increase in tariff of 93%, further. Such a
steep increase may also not be justifiable as the same (high level of) tariff may not be
required to be maintained in future. While the accumulated losses before unbundling
have been proposed to be addressed through financial restructuring, losses to the
magnitude of Rs. 24762.31 Crore may be dealt with by a combination of Tariff hike and
Regulatory Asset. The Commission, therefore, would like to get the reaction of the
Government of Tamil Nadu in this regard and accordingly a reference was made to the
Government of Tamil Nadu on 16-03-2012 vide Commission letter Lr. No.
TNERC/Tariff/DDT-II/R.A./D.No.381/2012, which is enclosed as Annexure VIII in
reply of which the Government has reverted vide letter dated 25-03-2012 which is

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enclosed as Annexure IX. The Commission appreciates the concerns expressed by
various stake holders both in the written comments submitted by them to the Commission
as well as the concerns expressed during the Public Hearings held at Chennai at 30th
January 2012, Coimbatore on 2nd February 2012, Tiruchirapalli on 6th February 2012 and
at Madurai on 10th February 2012. The Commission directs the TANGEDCO to properly
monitor the on-going projects so that they are commissioned without further delay. The
TANGEDCO should also ensure that the TANTRANSCO completes all the associated
transmission system for evacuation of power from the generating stations which are
getting commissioned during the year 2012-13 so that power generated from the
generating stations are transmitted up to the Load Centers without any bottle necks. The
TANGEDCO should ensure that the power which is available at the sub-stations is taken
up to the consumption points by way of appropriate distribution system. All these
arrangements will have to be carried out through a well structured business plan and
individual schemes matching with the business plan. All such plans and schemes shall be
submitted in accordance with the Terms and Conditions of Tariff Regulations 2005,
MYT Tariff Regulations as well as Licensing Conditions to the Commission. The
submission for approval in this regard so far has been unsatisfactory. The Commission
has been addressing the utilities by way of letters as well as by way of directions. The
compliance to such letters and directions will have to be more serious.

1.8 Further, correspondence with TANGEDCO in regard to data gaps and replies furnished
are enclosed in Annexure X.

1.9 The meetings and discussions referred to in this Order pertain to meetings between the
staff of the Commission and the TANGEDCO.

1.10 Various suggestions and objections that were raised on TANGEDCO’s Petition after
issuance of the Public Notice both in writing as well as during the Public Hearing, along
with TANGEDCO’s response and the Commission's rulings have been detailed in Section
2 of this Order.

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2 Issue-wise summary of views, comments and suggestions of stakeholders
on Petition and TANGEDCO’s Replies and Commission’s Views

The following are the views/ objections/ suggestions given by stakeholders in writing as well as
in public hearing.

Issue-1: General

2.1.1 The Commission to reduce the Tariff instead of increasing the same.

2.1.2 TANGEDCO may submit the Tariff Petition every year by December and the new tariff
may be made applicable with effect from 1st April of every financial year so that the
burden on the consumers due to the abrupt rise in tariff maybe avoided.

2.1.3 The Commission to issue guidelines for domestic consumers and commercial
establishments to install single star rated installations and three star rated installations.

2.1.4 TANGEDCO may be further bifurcated into Generation Company and Distribution
Company for better management.

2.1.5 TANGEDCO may provide the Action Taken Report on the suggestions, directions and
decisions issued by TNERC in the Tariff Order No. 3/2010 dated 31-07-2010.

2.1.6 The deemed demand benefit may be continued in view of the supply of demand by the
generator to the grid while allotting energy to Open Access consumers.

2.1.7 TANGEDCO’s petition does not adhere to the directions given by the APTEL.

2.1.8 Truing-up for the previous year is based on ‘preliminary estimates’ for the year 2010-11.
The numbers approved by TNERC are different from the numbers submitted in the Tariff
Order dated 31-07-2010 and the numbers submitted for truing up on preliminary basis.

2.1.9 TANGEDCO should provide electricity bill or demand note to its consumers which will
help the consumers to understand the date of reading taken on energy meter.

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2.1.10 TANGEDCO has reduced the payment period from 30 days to 20 days. It should be
continued as 30 days and it should issue notices to all its consumers as being done by
other Government departments.

2.1.11 The neighboring states like Kerala, Karnataka, and Andhra Pradesh have lesser cost of
electricity than Tamil Nadu.

2.1.12 The Commission is processing the Tariff Petition at a fast pace in the absence of the
Chairman of the Commission.

2.1.13 The Government may control road side advertisements/ hoardings which consume
electricity.

2.1.14 The Tamil Nadu Government may constitute an Empowered Group of Eminent Energy
Experts for the resolution of power crisis and submit its recommendations within a
specified time frame.

2.1.15 TANGEDCO should take measures for non-collection of dues from even Government
departments, Panchayats, Municipalities etc.

2.1.16 The Commission may publish a white paper on the case that TANGEDCO was making
profit till 1998 and after 2003, TANGEDCO has reported a loss of Rs. 40,000 crores.

2.1.17 The interest on Current Consumption Deposit is paid at 6% whereas the BPSC charges
are levied at a higher rate.

2.1.18 Electricity cess should be introduced on the same lines as Education cess.

2.1.19 The Commission has not raised the tariff for 8 years and therefore tariff may be increased
for all the categories. Tariff revision may be uniform for all categories of consumers. The
Commission may increase the tariff but tariff shock may be avoided.

2.1.20 The tariff may be increased on account of increase in power purchase cost.

2.1.21 The Commission may direct TANGEDCO to create a special Reconciliation Wing in the
Regulatory Cell.

2.1.22 TANGEDCO has not provided backup calculations for the retail tariffs. TANGEDCO is
requested to furnish the basis of deriving Rs. 300 per KVA and Rs. 5 as energy charge.

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Issue-2: Regulatory Asset

2.1.23 The Objectors submitted that the deficit for the current year and ensuing year FY 2012-13
is projected as Rs. 14,496.53 Crore and Rs. 14,547 Crore respectively. TANGEDCO has
proposed to recover only Rs. 9,741 Crore through partial tariff revision proposal, leaving
a revenue gap of Rs. 4,806 Crore in FY 2012-13 and prayed to treat the unrecovered
revenue gap as regulatory asset. Regulatory asset could be created only under exceptional
circumstances as stipulated in National Tariff Policy and TNERC Regulation 2005.
Tariff Policy
Para 8.2.2. The facility of a regulatory asset has been adopted by some
Regulatory Commissions in the past to limit the tariff impact in a particular year.
This should be done only as exception, and subject to the following guidelines.
a. The circumstances should be clearly defined through regulations, and should
only include natural causes or force majeure conditions. Under business as
usual conditions, the opening balance of unrecovered gap must be covered
through transition financing arrangement or capital restructuring;
b. Carrying cost of Regulatory Asset should be allowed to the utilities;
c. Recovery of Regulatory Asset should be time bound and within a period not
exceeding three years at the most and preferably within control period;
d. The use of facility of Regulatory Asset should not be repetitive.
e. In cases where Regulatory Asset is proposed to be adopted, it should be
ensured that the return on equity should not become unreasonably low in any
year so that the capability of licensee to borrow is not adversely affected.

TNERC Tariff Regulation 2005: Regulation 13: Regulatory Asset

“Wherever the licensee could not fully recover the reasonably incurred cost at the
tariff allowed with his best effort and after achieving the benchmark standards for
the reasons beyond his control under natural calamities and force majeure
conditions and consequently there is a revenue shortfall and if the Commission is
satisfied with such conditions, the Commission shall treat such revenue shortfall
as Regulatory Asset.”

The Hon’ble Appellate Tribunal for Electricity has also ruled at Para 8.10 of their
judgment rendered in Appeal nos. 196 & 206 of 2010:

“Now the question arises whether the creation of Regulatory Asset is in the
interest of Distribution Company and the consumers. Respondent no. 1 will have
to raise debt to meet its revenue shortfall for meeting its O&M expense, power
purchase costs and system augmentation works. It is not understood how the
respondent no. 1will service its debts when no recovery of regulatory asset and

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carrying costs has been allowed in the ARR. Thus, the respondent no.1 will suffer
with cash flow problem affecting its operations and power procurement which
will also have an adverse effect on maintaining a reliable power supply to the
consumers. Thus, creation of regulatory asset will neither be in the interest of the
respondent no. 1 nor the consumers.”

2.1.24 The Government may come out with a proposal for undertaking TANGEDCO’s
liabilities in line with a similar dispensation provided in 2002 based on The Ahluwalia
Committee Recommendations in which the pending payments of all the SEBs to CPUs
were undertaken by the respective state government by issue of bonds.

2.1.25 Losses accumulated to the tune of Rs. 6,273.21 Crore, upto 03-10-2010, has been
proposed to be absorbed in the final Transfer Scheme. Therefore it cannot be included as
part of regulatory asset. The Regulatory Asset concept should not be an adjustment
mechanism for accounting of losses as per International Financial Reporting System
(IFRS).

2.1.26 The entire Revenue Requirement must be met through the Tariff Proposal without any
gap. Also, it was submitted that control period for the Tariff Order must be only for 1
year. For the year 2013-14, the tariff petition should be approved before 31-03-2013,
failure of which should attract tariff reduction by 10%. This may also be incorporated in
the present order.

2.1.27 Initially, capital subsidy was given to TANGEDCO (erstwhile TNEB) which was later
stopped in 1993-94. If continued, there will be no need to create Regulatory Asset.

Issue-3: Interest on Loan

2.1.28 There is abnormal increase in the interest on loan as there is no clarity on data provided
by TANGEDCO as to how much loan has been availed for capital expenditure and how
much for revenue expenditure.

Issue-4: Pension Fund Reserve

2.1.29 TANGEDCO has not addressed the issue of creating a Reserve for Pension Fund despite
being repeatedly directed by the Commission.

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Issue-5: Fuel Cost / Fuel Price Adjustment Charge (FPAC)

2.1.30 The fuel cost shows abnormal increase compared to power purchase cost. Fuel cost has
been claimed more than twice the increase in power purchase cost, when apparently there
is no corresponding increase in quantum of energy generated from own thermal
generating stations

2.1.31 Capacity addition with respect to new thermal generating stations or in existing
generating stations may be verified in detail before approval by the Commission.

2.1.32 TANGEDCO has not resorted to seek the sanction of Fuel Price Adjustment Charge
(FPAC) even though Electricity Regulatory Commission’s Act 1998 or the Electricity
Act 2003 provided the same. An appropriate and simple formula should be derived for
calculating FPAC. Also, FPAC should be recovered from all the consumers – paying,
subsidized or non paying consumers.

2.1.33 The quarterly estimation of escalation charge should be worked out for which
TANGEDCO should get internally audited and certified figures for all the fuel purchases.
Alternatively, quarter wise FPAC comparison may be covered. Also, TANGENDCO
should get the particulars from the suppliers of power, excluding the power traders which
will ensure four or two charges per year. If TANGEDCO wants to add any other charge,
then it should be proved that such added charges for any quarter are truly related to fuel
purchases made during that adjustment period.

2.1.34 Proof of payment to the supplier of power may be provided by TANGEDCO at the time
of claiming FPAC. The Commission is requested to fix a time line for submitting FPAC
every quarter.

2.1.35 In case of blending of indigenous and imported coal for generation, the increase in value
of both the coal types must be considered with the GCV and ash value, so that the blend’s
weighted average GCV of coal can be assessed.

2.1.36 The Commission may prescribe norms of consumption for different load factors for the
units/substations.

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2.1.37 The valuation of coal or oil must be based on a weighted average methodology (ARC or
APRC) and not on FIFO or LIFO prices. TANGEDCO may be using the FIFO or LIFO
for financial accounting purpose.

2.1.38 TANGEDCO has proposed the average rate of power purchase as approved by the
Commission for FPAC on power purchase. The Commission may provide the method to
treat the excess purchases over the approved quantity of purchases while calculating
FPAC.

2.1.39 FPAC should include variable cost only. The fixed cost should not be considered in the
FPAC formula. Interest charges on increase in stock of fuel may not be included and
hence, working capital may form a part of FPAC. Any excess transportation charges or
demurrages payable for delay in clearing the coal supplies for the port or non availability
of berths in the ports of loading or discharge must not be included in FPAC. For the fuel
supplies made during the adjustment period, no transit and handling losses must be added
for calculating FPAC.

2.1.40 The FPAC may be calculated in two parts:


a. The FPAC for individual supplies or purchases of power must be identified, as the
GCV or supplies may vary as also the specific fuel consumption.
b. FPACs thus calculated, must be aggregated as a total charge per unit of consumption
for all electricity consumers.

2.1.41 TANGEDCO may ask for a consent letter from the State Government for FPAC incurred
on the partially or totally subsidized consumers.

2.1.42 The formula suggested by TANGEDCO is simple but working out the charge for
individual sources of power generation or source of supply may be very cumbersome.
Source of the coal and transportation cost incurred has been one of the major issues. The
pricing of coal may be done recognizing the multimodal mechanism of transport. The
voyages accounts of the PSC may be reconciled promptly and payments settled for the
correct grade of coal as well as its transportation costs as the landed price of coal.

2.1.43 TANGEDCO may submit the FPAC schedule timely and also account the entire major
factors involved in the fuel cost. If there is any delay in submission of FPAC, then the
FPAC may be made applicable from the date of approval by the Commission and not on
quarterly basis.

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2.1.44 The Commission may establish a normative datum reference cost per million kilocalories
of all fuels on a weighted basis and direct TANGEDCO to work out the difference in
consumption of fuels compared to normative consumption levels and allow the excess to
merge with the tariff or extend the deficit as a tariff adjustment for all the consumers.

2.1.45 TANGEDCO has filed its proposal for the FPAC formula for avoiding the uncontrollable
cost on account of hydro thermal mix in power generation and purchase. This would
enable TANGEDCO to recover the actual cost of the fuel incurred and the actual cost of
power purchase.

Issue-6: Cost of Supply

2.1.46 The Tariff may be fixed as per the consumer’s load factor, power factor, voltage, total
consumption of electricity and should reflect the Cost of Supply to the concerned
consumer category.

2.1.47 TANGEDCO should furnish a statement showing the Cost to Serve for each category of
consumers at different voltage level with allocation of Transmission & Distribution loss
and consumer wise cross subsidy at the existing tariff while submitting ARR.

2.1.48 TANGEDCO has assumed that all the energy imported into and handled in the grid is at a
single voltage level of 230 KV and priced accordingly. The ARR must reflect that
TANGEDCO is receiving power from various internal and external sources and at
different voltage levels.

2.1.49 The transmission loss for each of 110 KV and 33 KV levels have been stated to be 1409
MU, while the estimated annual consumption at these voltage levels are 2342 MU and
2805 MU respectively. The loss figures seem to be incorrect as the loss should be
approximately proportional to load factor and its squared value.

2.1.50 TANGEDCO has consumers in EHT-230 KV, 110 KV, 66 KV, 33 KV, and HT-22/11
KV voltage levels besides in LT 415/230 voltage segments. The rates mentioned do not
reflect the correct cost or loss levels. Also, the T & D loss figures may be recalculated.

2.1.51 The loss assigned to the specific consumer should be as per the voltage category.

2.1.52 The format figures did not reflect a rational approach in its calculations, to arrive at the
different voltage levels cost or average costs. The approach that has been adopted seems

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to be without validation that true operating costs have been reflected. The petition should
negate the concept of “Cost of Service” process of tariff determination.

2.1.53 The cost of supply for all categories of consumers has been furnished in Form- 25 of the
ARR formats as Rs. 5.98 per kWh. As per the orders of Appellate Tribunal for Electricity
in Appeal Nos. 192 & 206 of 2010, the Tribunal has directed the State Commission to
determine the voltage wise cost of supply within six months from the date of judgment,
i.e., July 28, 2011, but TANGEDCO has not furnished the data. Therefore, the
Commission may issue orders to TANGEDCO to furnish the voltage wise cost of supply
before finalizing the Order.

Issue-7: Subsidy

2.1.54 The amount of Rs. 2,234.32 Crore as subsidy payable by the State Government appears
to be very small. TANGEDCO has used a very low level pricing of power for a set of
consumers. Therefore, appropriate methodology should be used by TANGEDCO instead
of ‘Cost to Serve’ model.

2.1.55 The subsidy should be offered for the domestic consumers having a monthly
consumption of more than 500 units also.

2.1.56 TANGEDCO should be provided with the subsidy amount before the start of the
financial year by the Government of Tamil Nadu. The Government should pay the
subsidy towards domestic consumer to TANGEDCO on a quarterly basis.

2.1.57 The subsidy has been given as 150 paisa and 100 paisa per unit for the bi-monthly
consumption up to 100 and 200 units respectively, but there has been no provision for
subsidy for the first 200 units in the bi-monthly consumption exceeding 200 units and the
subsidy is minimal of 50 paise per unit above 200 to 500 units. Therefore, the subsidy
should be increased by at least Re. 1 per unit for the first 200 units for the consumers who
consume between 200 and 500 units bi-monthly.

2.1.58 Fixed charges and minimum charges (Rs. 110/-) should be reduced.

2.1.59 The subsidy should be provided for residents in huts using one bulb. Rs. 50 per month
should be collected from other consumers in huts.

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2.1.60 Issue-8: Cross SubsidyThe practice of cross-subsidies should be done away with. The
free and subsidized supplies to agriculture or economically weaker sections of society
should continue, but TANGEDCO should not divert electricity (in the event of a
shortage) to other consumers to cover its own deficit. The Supreme Court of India ruled
in the case of West Bengal Electricity Regulatory Commission Vs West Bengal High
Court and CESC Ltd., Kolkata that there cannot be cross subsidy from one consumer to
another.

2.1.61 The consumers below poverty line who consume below a specified level, say 30 units per
month, may receive a special support by way of cross subsidy. Tariff for such designated
group of consumers may be at least 50% of the average Cost of Supply. This provision
should be re-examined after five years.

Issue-9: Tariff for HT Industry

2.1.62 The industrial output in the state is already adversely affected due to power cuts. The
tariff increase should ensure un-interrupted power supply to HT industrial consumers.

2.1.63 Measures should be taken by TANGEDCO to increase the power supply to meet the
demand of Industry, either through spare capacity available within the State or through
procurement of power from other states.

2.1.64 The morning peak hour cut for industries should be withdrawn.

2.1.65 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers
instead of applying varying levels with high increases.

2.1.66 All HT consumers should be allowed to procure power under provisions of Open Access.

2.1.67 HT Consumers, availing power supply at high voltage are virtually consumers of
TANTRANSCO. TANGEDCO comes into picture only for metering and billing
purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from
the Grid substation of TANTRANSCO to the consumption point, switching, protection
and the metering equipment and the utility incurs no capital cost. Maintenance of these
equipments is done by TANTRANSCO and the cost of which has been covered in the

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ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore,
the demand charges should be lower.

2.1.68 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus,
the energy charges should also be reduced.

2.1.69 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for
HT Tariff IA.

2.1.70 The industrial output in the state is already adversely affected due to power cuts. The
tariff increase should ensure un-interrupted power supply to HT industrial consumers.

2.1.71 Measures should be taken by TANGEDCO to increase the power supply to meet the
demand of Industry, either through spare capacity available within the State or through
procurement of power from other states.

2.1.72 The morning peak hour cut for industries should be withdrawn.

2.1.73 Demand charges may be uniform at Rs. 200 per KVA per month for HT consumers
instead of applying varying levels with high increases.

2.1.74 All HT consumers should be allowed to procure power under provisions of Open Access.

2.1.75 HT Consumers, availing power supply at high voltage are virtually consumers of
TANTRANSCO. TANGEDCO comes into picture only for metering and billing
purposes. Hence, a HT consumer has to bear the entire cost of the transmission line from
the Grid substation of TANTRANSCO to the consumption point, switching, protection
and the metering equipment and the utility incurs no capital cost. Maintenance of these
equipments is done by TANTRANSCO and the cost of which has been covered in the
ARR of the TANTRANSCO. There is no expenditure towards Distribution. Therefore,
the demand charges should be lower.

2.1.76 The transmission loss at HT voltage is less compared to when supplied at 11 KV, thus,
the energy charges should also be reduced.

2.1.77 The energy charges should not be increased from Rs. 3.00 per unit to Rs. 5.00 per unit for
HT Tariff IA.

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2.1.78 The machineries being used by 90% of the industries are fully non linear load and
polluting the Grid.

2.1.79 In accordance with section 62 (3) of Electricity Act 2003, TNERC may differentiate the
tariff on the basis of operating voltage.

2.1.80 The stipulation of minimum demand of 90% of the sanctioned demand should be
exempted for educational institutions.

2.1.81 TANGEDCO is levying demand charges at Rs. 300/KVA for the whole of the month,
when they only supply for 14 hours per day. The Commission may penalize
TANGEDCO when consumers do not get power supply as envisaged under Electricity
Act 2003, by fixing unreliability charge or non-performance charge which may be paid to
the consumers. This could be adjusted against the Regulatory Asset, if it is created and
so long as it unamortised.

2.1.82 TANGEDCO has requested to continue to keep the present billing demand in its petition.
Accordingly, in the case of two part tariff, the maximum demand charges for any month
will be levied on the KVA demand actually recorded in that month or 90% of the
sanctioned demand whichever is higher. However, in case of R&C measures, it is the
actual recorded maximum demand or 90% of the demand quota as fixed from time to
time whichever is higher. The present billing of 90% may be reduced to 80% as
prevailing in Andhra Pradesh.

2.1.83 Electricity consumption by labor welfare establishments like canteen, hostel, dispensary,
crèche etc in HT premises are being treated as commercial use. TANGEDCO should
provide separate electricity meters for measuring the consumption at labor welfare
establishment so that it need not be charged as theft and the HT consumers should not be
penalized. Therefore, the consumption of such establishments (when not metered
separately) should be billed along with the HT consumption.

2.1.84 HT industrial consumers should be allowed to use at least 15% of their sanctioned
demand for the purpose of labor welfare measures. Separate meters should be installed to
meter the load when it exceeds 15% of the sanctioned demand and the LT tariff may be
charged for the excess demand.

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2.1.85 TANGEDCO should not demand 15% extra energy charges from a consumer
maintaining quality power at the point of common coupling with proper harmonic
equipment. Central Electricity Authority (CEA) have given power quality parameters for
the bulk consumers in their Notification No. 12/X/STD (CONN) GM/CEA (21-Feb-07)
(the Central Electricity Authority (technical) Standards for Connectivity to the Grid)
Regulations, 2007 in Part IV under the heading “Grid Connectivity Standards” applicable
to the distribution system and bulk consumers, CEA have sought compliance of the
following:
a. Total voltage harmonic distortion should not exceed 5%
b. Total current distortion should not exceed 8%

Hence, such extra charges should be levied only on those consumers who do not meet the
requirements of CEA.

TANGEDCO should notify in the Tariff Order, the reason for this 15% extra charges, as
notified in the old tariff order w.e.f. 16-03-2003 and an opportunity should be given to
the consumers to limit the harmonics within the values prescribed by CEA and get
exempted from this 15% extra energy charges.

2.1.86 Textile industry submitted that the Commission has unequally revised the tariff in the
Tariff Order dated 31-07-2010, and requested not to repeat it this time as it overloads a
few consumer categories.

2.1.87 TANGEDCO has made an allocation of 1% of the total units consumed towards
maintenance of canteen, rest shed, garden, RO plant, effluent treatment plant, residential
quarters and hostels etc., to be billed under HT Tariff IA and in case of excess, to be
billed under LT Tariff V (1) in Para 11.1.1. (viii). This move of TANGEDCO was
welcomed and there was a request that this be extended to 1.5% of the total units
consumed, when R&C measures are in force. Further, the following are the activities
integrated with the Industrial activity according to the various provisions under the
Factories Act, 1948 and Tamil Nadu Factories Rules 1950 and therefore, any industrial
consumer is required to be in compliance with the Statutory provisions:
a. Canteen (Section 46)
b. Shelters, Rest Rooms and Lunch Rooms (Section 47)
c. Creches (Section 48)
d. Garden and Greenery (Rules 52-A)
e. RO Plant for drinking water (Section 18)
f. CETP (TNPCB Norms)

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g. Borewell motors and well motors to satisfy the above purposes.

2.1.88 Printing industry, jewel merchants and the textile industry have requested that the tariff
should not be hiked and that the existing tariff should be continued.

2.1.89 The Commission may permit HT industries to draw upto 25% of the Maximum Demand
during evening peak hours instead of 10%.

2.1.90 The Commission may hike the tariff for big industries and foreign industries and Multi
National Companies (MNCs) instead of domestic consumers.

2.1.91 TANGEDCO’s proposal of charging extra 10 paisa / unit from HT consumers whose
sanctioned demand exceeds 5000 KVA and not availing the supply at i.e. 33 KV, may be
made applicable only for future supply to new HT consumers.

2.1.92 Sufficient time of at least 5 years to be provided for change from existing level to new
voltage level supply. In the meanwhile, TNERC in its Draft Notification dated 01-12-
2011 in respect of Tamil Nadu Electricity Supply (6th Amendment) Code, 2011 wherein
Section 3 “Categories of Supply” Clause d & e, it was defined as follows:
d. Three-phase three wire supply at 11 KV or 22 KV depending on the voltage
level existing in the area of supply shall be provided for a demand limit up to 3
MVA or 5 MVA as the case may be. However, the minimum demand shall be 63
KVA.

e. The Consumer shall be provided supply at 33 KV for a demand exceeding 3


MVA and up to 10 MVA if the area of supply is fed through 11 KV system and if
the area of supply is fed through 22 KV system, supply at 33 KV shall be provided
for a demand exceeding 5 MVA and up to 10 MVA.

These provisions differed from the present proposal suggested by TANGEDCO.

Issue-10: Tariff for HT - II Category

2.1.93 TANGEDCO has proposed an increase of 100 paise per unit of energy supplied to HT
IIB (i) category for the private educational institutions and 50% hike in demand charges
from Rs. 200/KVA/month to Rs. 300/KVA/month, thus raising the present average
charge from Rs. 5.50 to Rs. 7.41 (for 650 KVA demand & 1,25,000 units monthly
consumption).

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2.1.94 Educational institutions have a very low load factor and majority of consumption is
between 9:00 am to 5:00 pm. For FY 2012-13, the increase in tariff is not in proportion
with the consumption as the Consumption by LT II category has been projected as almost
double of HT II category whereas expected revenue has been projected as equal.

2.1.95 The rate for supply of energy for film exhibitors has been proposed to increase from Rs.
4.50 to Rs. 6.80 per unit for cinema theatres under High Tension Category. As the lowest
rates of admission are fixed by the state government and due to poor state of film
exhibitors (because of competition from Cable TV and Satellite TV), the requested tariff
hike may not be accepted.

2.1.96 Continue the existing demand charge of Rs. 200/KVA per month and increase the energy
charges by 5% for HT Tariff IIA.

2.1.97 Private educational institution may be included in HT IIA category as the ultimate
objective of the educational institution is to impart knowledge to students, which is a
socially desirable service. The Hon’ble Supreme Court of India in Case number Writ
Petition, (Civil) 317 of 1993 (TMA Pai Foundation Vs State of Karnataka) has ruled that
“Reasonable Surplus (Funds collected by Education Institutions) to meet cost of
expansion and augmentation of facilities in educational institutions does not amount to
profiteering.” Therefore it was suggested that private education institutions should come
under HT Tariff IIA.

2.1.98 Proposed extra levy of 20% on energy consumed during peak hours is strongly objected
by HT consumers. The proposed incentive of 5% rebate may be increased up to 20% on
energy consumption during night hours.

2.1.99 Private educational institution should not be differentiated from government institutions
with respect to tariff categorisation.

2.1.100 The proposed tariff structure for HT II (B) has been identical to HT Tariff III and it is
requested to be grouped under HT Tariff III.
a. Tariff applicability must encompass all allied utilities connected with the
educational institutions such as hostels, guest houses, canteen, laboratories,
conference hall, auditorium, indoor and outdoor stadium, water works, and other
supplementary services.
b. Extra levy for peak hour consumption have been objected on the account of being
study hours for the students for exams.

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c. The proposed rebate should be increased to 20%.

2.1.101 In Karnataka, there is no separate tariff for Government Educational Institutions. The
discrimination will lead to violation of Section 62 (3) of the Electricity Act 2003
regarding discrimination between the consumers and hence, there should not be a
separate tariff category for government and private educational institutions.

Issue-11: Tariff for HT Tariff III

2.1.102 The Commission is requested to have differential tariff for aviation and other commercial
activities such as shops, restaurants etc. If no separate metering is possible, than a
separate category other than HT Commercial can be proposed for Airports and composite
tariff can be determined for aviation and commercial activities. The ATE in its judgment
dated 22-07-2011 in Hyderabad International Airport Vs APERC has also given the same
findings.

Issue-12: Tariff for HT Tariff IV

2.1.103 Many service industries like automobile service centers, etc are brought under Tariff IV.
These industries should be brought under Tariff III B.

Issue-13: Tariff for Domestic

2.1.104 The hike in electricity tariff will greatly affect the consumers as the proposed tariff is
exorbitant and that the revision results in increase by about 100%.

2.1.105 Air conditioner users and UPS users should pay Additional Security Deposit.

2.1.106 The domestic consumers belonging to category I(A)- (a), (b), (c), (d) and (e) will end up
in paying extra 75%, 90%, 83%, 65% and 85% respectively over and above the existing
rates, after the proposed hike in domestic tariff.

2.1.107 Various combinations of energy charges for various types of slabs were suggested

2.1.108 Due to the power cuts, the domestic consumers are using inefficient Invertors, which
further consume a lot of power. As the efficiency of domestic UPS is 50% which is a loss
that results in increased subsidized domestic consumption. The increase in the failure of

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Distribution Transformers (DTs) of TANGEDCO has increased due to the poor quality of
power.

2.1.109 The slab system should be common for all consumers irrespective of total consumption
of electricity. TANGEDCO has proposed revision of Tariff for consumption of electricity
more than 500 units bi-monthly. It was submitted that the common slab system may be
implemented, without changing slab rates, based on total units consumed bi-monthly.

2.1.110 As per Electricity Act 2003, the Security Deposit amount is refundable to the consumers
if it is paid in excess of contract demand or it should be adjusted in two billing cycles. If
the contract demand exceeds the metered demand, the excess amount may be refunded by
the Board with interest before the due date of payment of third billing cycle. The
Commission may direct TANGEDCO for:
a. Levy of Additional Consumption Caution Deposit which can be adjusted in case
of disconnection of service in the event of any default in payment by the
consumer.
b. Initiate stringent recovery steps to recover long over dues.
c. Introduce a suitable Tax Saving Investment Scheme like Floating of Short term or
Long term Infrastructure Power Bonds or Certificates.
d. Resort to Differential Tariff Mechanism for end-user (like IT Corporate Majors)
of power back up gadgets like inverters and generators which also indirectly
contribute to the drain of power from the grid who can be differentiated from the
non users by adopting a suitably administered price mechanism.

2.1.111 Separate tariff may be given for the State Government and Central Government
employees.

2.1.112 Prepaid card should be introduced for the domestic consumers for the payment of
electricity in advance for the bi-monthly consumption.

Issue-14: Tariff for Hut

2.1.113 The existing sanction load for the BPL families is 110 watts (Bulb - 40 watts, Color TV
70 watts). The proposed additional load as per Government of Tamil Nadu’s
announcement for the BPL families, would be additional 970 Watts (Mixi 750 Watts,
Wet grinder 150 Watts, and Table Fan 70 Watts). For a total load of 1080 watts, the per
day consumption by the connected load is as follows:

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TV 5hrs x 70W 0.35 kWh
Fan 8hrs x 70W 0.56 kWh
Mixi 0.5hrs x 750W 0.375 kWh
Wet grinder 1hr x 150W 0.15 kWh
Bulb 6hrs x 40W 0.24 kWh
Approximately 1.7 kWh

Annual consumption per Hut SC would be 1.7 x 365 i.e. 621 units. The minimum
average generation cost of electricity with TANGEDCO’s own generation is 350 paise.
Therefore, the compensation by Government of Tamil Nadu to TANGEDCO per annum
will amount to Rs. 2173.5 per SC.

2.1.114 TANGEDCO has projected the rise in consumption of huts (BPL) as 424 MU whereas
the actual consumption is expected to be much more because of color TV, fan, Mixi,
grinder and laptop. The Commission has already stated in its Tariff Order of 2003 that for
Huts and Agricultural services a separate policy has to be evolved and followed for all
services to be metered. Hence, the Commission may direct TANGEDCO for undertaking
implementation of 100% metering, collection and disconnection mechanism.

2.1.115 The load limit to BPL category may be increased to 110 watts. Meters may be fixed and
consumption of electricity by BPL category consumers up to the limit of 100 units bi-
monthly may be free. Consumption beyond 100 units may be charged at regular tariff.

Issue-15: Tariff for Street Lighting and Water Supply

2.1.116 TANGEDCO may equip street lights with Dusk to Dawn switches so as to save
electricity.

2.1.117 Electronic chokes may be introduced by TANGEDCO instead of conventional ones.

Issue-16: Tariff for LT Educational Institutions & Recognized Hospitals

2.1.118 Under LT Tariff IIB, the pricing parity between the government educational institutions
and private educational institutions is objected by the private educational institutes. The

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Government is promoting subsidies/cross subsidies by providing concessional rates to its
own institutions.

2.1.119 Objection was raised on the increase in the fixed charges by the HT II category
consumers. Instead, it was suggested that the slabs may be defined keeping 10 KW of
contracted load instead of connected load as one slab and the rate should be fixed at Rs.
10 per slab per month. There should be separate rate for fixed charges for LTCT services.

2.1.120 Private Educational institutions have objected to the tariff hike.

2.1.121 There should not be fixed charges for LTCT services as it has no relevance. Therefore, it
may be dropped.

Issue-17: Tariff for Places of Public Worship

2.1.122 Meditation centers may be considered in the category of Actual Place of Public Worship.

Issue-18: Tariff for Tiny Industries

2.1.123 LT Tariff IIIA (i) and IIIA (ii) may be rationalized into a single category.

2.1.124 TANGEDCO has provided the minimum load under IIIA categories as 10 HP in its
petition. Most of the Micro industries with minimum work force have been operating on
a load range of 15 HP to 20 HP. It was suggested that LT Tariff IIIA may be applied to
loads up to 20 HP.

2.1.125 The charges may be computed on actual power consumed. The current rate of fixed
charges for Tariff IIIA & IIIB is Rs. 30 per connection per month. TANGEDCO could
have asked for a hike to Rs. 100 per connection per month, however, it has proposed a
change to per KW basis for a charge of Rs. 100 per KW per month. The proposal to
change the very basis of the charge from Rs. /connection to Rs. /KW may be denied.

2.1.126 TANGEDCO has requested to levy demand charges (fixed charges) at the rate of Rs.
50/KW for Tiny Industries (LT IIIA), Rs. 100/KW for LT Industries and Rs. 120/KW for
LT CT services per month. The Commission may reject the proposal of tariff hike.

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2.1.127 TANGEDCO has requested to increase the energy charges for Tiny Industries in two fold
from the existing rate. The Commission may not increase the energy charges and if
needed, the increase may limit to Rs. 0.50 per unit.

2.1.128 The proposed increase of 10% in energy charges for LT III (B) category (i.e. from Rs.
5.00/unit to Rs. 5.50/unit) may be uniformly charged to all categories of consumers
including LTCT services.

2.1.129 Flour mills submitted that due to the presence of HT consumer units near their site, they
need to pay TANGEDCO Rs. 2000 for the damage due to natural accidents in the HT
line. It is requested to exempt the damage charges for the damages due to natural
accidents.

2.1.130 Silver chain makers which were earlier categorized under LT Tariff IIIA (1) have
requested for the same tariff to continue.

2.1.131 A separate dedicated power station may be setup in Tirupur for the benefit of knitwear
sector.

Issue-19: Tariff for Power Loom

2.1.132 The concessional tariff is allowed to cottage, micro and power loom consumers with the
intention of helping poor self-employed consumers. However, these concessions are
being misused. Further, it submitted that Auto Loom consumers that have been
categorized under the Power Loom category have been enjoying concessional tariff rates
and subsidies from Tamil Nadu Government.

Issue-20: Tariff for LT Industries

2.1.133 For the LT consumers, TANGEDCO has proposed an average increase of 59% energy
charges while the range for individual consumer category is 0% for bulk supply and
589% for agriculture. In terms of absolute values of energy rates, against a existing rate
of 25 paise per unit for agriculture and 666 paise per unit for LT commercial category,
the proposed rates are 175 paise for agriculture and 872 paise per unit for LT Industries.
In monetary terms, TANGEDCO has proposed to collect Rs. 7,260.76 Crore through
proposed revision, out of Rs. 9,741.01 Crore.

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2.1.134 Objections submitted on LT CT services are:
a. The fixed charges have been increased from Rs. 60 for two months to Rs.
240/KW/month which is a 400% increase.
b. The energy charges have been increased from 500 paise per unit to 600 paise per
unit. This is 20% increase in the rates. Hence, the slab charges are requested to be
retained at the existing levels.
c. The monthly minimum charge is escalated by 250%.

Therefore, the LT CT based industries will have to bear 82.30% of the entire increase in
charges, under category III of the LT tariffs.

2.1.135 The fixed charges should not be related to MD or connected load and should be retained
at the existing energy charges.

2.1.136 The export units may be exempted from tariff hike so that they can sustain themselves in
the global market.

Issue-21: Tariff for LT Agriculture

2.1.137 For calculation of revenue from sale of power by Agriculture category, the connected
load may be considered as submitted by consumers for the replacement of energy
efficient motors.

2.1.138 The unauthorized additional load may be regularized by collecting Rs. 10,000 per HP.
This amount may be utilized for improving the TANGEDCO’s infrastructure.

2.1.139 TANGEDCO has admitted that the agricultural consumption has been 100% free. There
has been no road map submitted on fixing meters in the agricultural services. The
Commission in its Tariff Order 3 of 2010 dated 31-07-2010 directed TANGEDCO that a
time bound program for 100% metering needs to be worked out and submitted to the
Commission. It was requested that necessary directions should be given to provide meters
for all services.

2.1.140 The farmers who are having above 10 acres of land have to be supported for constructing
a storage tank to avoid lift irrigation.

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2.1.141 As observed by the Commission earlier in its Tariff Order 3 of 2010 dated 31-07-2010,
the gap between the expenditure incurred by TANGEDCO and the subsidy paid by the
government is the main reasons for the poor financial health of TANGEDCO.

2.1.142 As provided in the Electricity Act 2003, the Commission should safeguard consumer’s
interest and recover the cost of electricity in a reasonable manner. The Commission
should pass appropriate orders directing the utility to recover the cost of electricity, if not
from consumers, then from the Government since the Government itself is responsible
for the free supply of electricity as per Section 65 of the Electricity Act which states:
“Provided that no such direction of the state Government shall be operative if the
payment is not made in accordance with the provision contained in this section
and the tariff fixed by the state Commission shall be applicable from the date of
issue of orders by the Commission in this regard.”

2.1.143 For fixing meters to free services in Agriculture sector, a sum of Rs. 2,000 Crores will be
required which may be born by Government of Tamil Nadu.

2.1.144 The Free Electricity Pump Set scheme should be stopped.

2.1.145 The water from agriculture connection should be permitted to be used for poultry and
feeding animals. There should not be any penalty for using the agricultural water for
animal husbandry, sericulture etc.

2.1.146 Enforcement squads are misusing the provisions relating to theft of energy and are
charging commercial tariff for agriculturists. There may be a ceiling of 25,000 to 35,000
numbers of cattle to bring an agricultural service connection within the meaning of
commercial category.

2.1.147 The ex-service men squad employed by TANGEDCO has booked farmers maintaining
cows and goats in their agricultural field under the theft of energy which should not to be
done as Government also gives free cows and goats to the farmers.

2.1.148 The electricity used for Integrated Farming may not be considered as Electricity Theft.

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Issue-22: Tariff for Commercial

2.1.149 TANGEDCO has proposed to levy uniform 1% of consumption at LT Tariff V {page 129
clause 11.1.1 (viii)}, for usage of the energy for other purposes, irrespective of actual
usage. This proposal may badly affect the major consumers like Foundries. Applying 1%
of the energy to the LT Tariff V would be irrational for the industries whose consumption
of the energy for other purposes is nil or very minimal.

2.1.150 The marriage/community halls should have 2 service connections for indoor and outdoor
consumption and the lavish illumination should be charged at appropriate tariff.

2.1.151 The Commission may re-categorize telecom towers under separate sub-category within
the existing commercial category.

2.1.152 The tariffs currently charged to consumers falling under the Commercial category in
Tamil Nadu are on the higher side when compared to various states in India.

2.1.153 The Commission has been requested to consider the proposal of compulsory installation
of AMR meters and roll out of consolidated billing for large consumers with multiple
connections.

2.1.154 The Commission may consider reducing the tariff proposed for the commercial
consumers.

2.1.155 There is no definition of commercial tariff in the Tariff Order of 31-7-2010. Therefore,
those consumers who do not fall in the tariff slabs of LT I to IV may not be brought
under the Commercial category.

2.1.156 The proposed fixed charge under LT Tariff V should be charged at a rate of Rs. 50 per
month plus Rs. 5 per slab of 10KW of motive power (connected load) per month taking
grinder, A/C and water heater under motive power. Separate rate for LTCT services may
be denied.

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Issue-23: Tariff for LT Temporary Supply

2.1.157 Presently, for any power used for construction activity by an existing consumer, it is
classified as power theft/misuse. It is suggested that the procedure may be modified and
TANGEDCO should accept the application for permission for the extra power
requirement for the construction activities. The extra charges, if any, may be collected in
the existing meters. There should be no requirement for applying fresh temporary
connections.

2.1.158 The compounding fees should not be collected for the misuse of the energy and instead,
the consumer should pay the difference in tariff for misuse of energy.

2.1.159 Proposal for applying LT Tariff VI category for the construction activities which are
carried out by HT Category consumers with the purpose of expansion or improvement or
replacement for the infrastructure connected with the main utility for which HT supply
has been availed, contradicts with the applicability of HT Tariff III submitted by
TANGEDCO the new proposal which also dealt with construction activity.

2.1.160 The lavish illumination has to be discouraged during R&C period. The tariff for lavish
illumination should be more than excess demand and energy charges payable for
violation of quota.

2.1.161 The temporary power usage for construction activity for temple functions, public
meetings, exhibitions, conferences of political parties and religious discourses, etc., are
different from the construction activity which would become a part of main building after
completion. Hence, a separate category within Temporary Supply may be required.

2.1.162 The power theft by political parties in public meetings and functions should be
discouraged by TANGEDCO through a minimum charge of Rs. 5000 towards Madras
Electricity Supply (MES) charges.

2.1.163 The existing rate of Rs. 10.50 per unit should be reduced to Rs. 9.00 per unit which
would be 50% more than the LT commercial tariff of Rs. 6.00 per unit as suggested.
TANGEDCO has not mentioned the unit of the connected load or contracted demand in
its submission. The per day basis approach may be replaced by the fixed charge per
month adopting a charge of Rs. 10 per KW since the consumer is also paying the cost of
extension to the supply agency.

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2.1.164 The monthly minimum charge has no relevance to LT temporary supply and hence it may
be dropped.

Issue-24: Free/Concessional Tariff

2.1.165 As per National Tariff Policy, the minimum and maximum of tariff should be +/- 20% of
the average cost of energy. The free energy to huts and agriculture is against the Tariff
policy. Power supply to huts should be metered and ceiling for consumption of electricity
should be specified for these categories of consumers. Agricultural supply should also be
metered and should be rationalized with respect to the area of agricultural land with
consumption ceiling.

2.1.166 The Government may pay the cost of energy incurred by TANGEDCO for free
electricity, wherever provided, for agriculture and huts, on a quarterly basis.

2.1.167 The concession given to consumers whose bi-monthly consumption is up to 100 units is
proposed to be withdrawn i.e. on fixed rates and the rate of Rs. 1.50 per unit has been
proposed to be charged throughout, resulting is the consumer paying a bi-monthly
minimum of Rs. 110 instead of Rs. 40 charged earlier. The tariff may be hiked for the
consumers who consume 1000 or 2000 units per two months.

2.1.168 Ice Producers have sought for concessional tariff.

2.1.169 The Steel plants should be exempted from the 15% extra energy charges and limit the
harmonics within the limits prescribed by Central Electricity Authority (CEA).

2.1.170 Salt manufacturing industries, Non Government Organizations, Rice Mills, CMC Vellore
and hospitals attached to educational institutions have requested for concessional tariff.

2.1.171 Electricity generation tax should be waived as long as R&C measures are in force.

Issue-25: Free Power

2.1.172 TANGEDCO should provide free power to the farmers who are having more than 10
acres of land and should be encouraged to install solar power panels. The free power for
farmers having 5 to 10 acres of land should be charged at a rate of 50 paise per unit.

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2.1.173 The number of free connections to the farmers has to be restricted to only one service
while all other remaining services should be charged.

2.1.174 The concept of free power should be dropped and there should be no exemption in
electricity tariffs to any category of consumers.

2.1.175 Free power to horticulture service connection for farmers may be provided.

Issue-26: Generation

2.1.176 TANGEDCO may limit its activities in respect of its own generation. Power purchase by
TANGEDCO may be monitored and controlled by the Commission.

2.1.177 The seven generators which were classified as captive generators were exempted from
the payment of cross subsidy charges. Their status may be verified again and cross
subsidy charges may be recovered from these consumers.

2.1.178 TANGEDCO has lost Rs. 1500 Crore in the dispute between GMR and PPN.
TANGEDCO may try to lodge a claim for this loss from both the parties.

2.1.179 The Kudankulam Nuclear power project may begin power generation to meet the
shortage of 1500 MW in the State.

2.1.180 The energy generation by TANGEDCO’s thermal power stations has dropped by 2000
MUs for the year 2010-11 compared to 2009-10 which amounts to Rs. 600 crores of loss.
The Commission may ask TANGEDCO to find out the reasons so that the further
generation loss could be avoided.

2.1.181 There has been heavy loss incurred in the Fixed Cost and Variable Cost in respect of
power purchased from Independent power Producers except Pillaiperumalnallur.
TANGEDCO may take necessary steps to reduce the cost.

2.1.182 The tariff for GMR, PPN, Samalpatti, Madurai and ST CMS has not been regulated. The
fixed cost of IPPs should come down from 24% of capital cost to approximately 9% after
a period of 10 years. The O&M cost in fixed cost component of IPP tariff should be
checked.

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2.1.183 TANGEDCO should follow a strategy to meet the demand by having more power
stations than actually planned, and may exploit the full potential of non conventional and
renewable sources of energy as also mobilize private investment.

2.1.184 TANGEDCO may promote jatropha/bio-diesel cultivation to be used as fuel for


generation of power.

2.1.185 TANGEDCO may add sufficient capacities to cater to the future demand.

2.1.186 The Basin Bridge plant may be converted to Combined Cycle plant.

2.1.187 TANGEDCO may prioritize local small scale industries (SSI) which are not having
sufficient supply of electricity over the multinational companies for giving new
electricity connections. The new connections to the multinationals sectors should be
continued but the generation capacity should be increased proportionately.

2.1.188 The electricity tax at the rate of 10 paisa per unit on self generation of electricity from
generators may be withdrawn.

2.1.189 Big shopping malls and Business houses should install their own non-conventional
electricity production units.

Issue-27: Power Purchase

2.1.190 TANGEDCO may purchase power from affordable generating stations except the power
from Kayangulam.

2.1.191 The power purchase from non conventional energy sources may be restricted to statutory
limits, if it is not affordable.

2.1.192 TANGEDCO is firming up the infirm power from wind generations with a very high
reactive component, causing serious losses to them. TANGEDCO may account for the
quantum of losses under a separate head. TANGEDCO might have made losses by way
of banking of 6000 MW of infirm power in 10000 MW grids with high technical losses
by way of accommodating very high reactive component.

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2.1.193 TANGEDCO should not purchase power above Rs. 3 per unit. Instead, it is better to shed
load instead of such high purchase.

2.1.194 HT consumers are allowed to enter into power purchase agreements with potential
suppliers of power. Medium and small industries have requested for permission to source
power from other states. Power generators may be given permission to sell power to other
states under open access (Inter-state Open Access).

2.1.195 In 2009-10, 14500 MUs was purchased from open market. Private generators which
constitute 19% of the total power purchases by TANGEDCO have swindled 50% of the
total revenue earned by TANGEDCO. TANGEDCO has bought power at Rs.15 per unit
from the open market, which the Commission may regulate.

2.1.196 TANGEDCO started incurring losses from the year 2002-03 amounting to Rs.1,000
Crore and gradually increased up to the present level of Rs.53,000 Crore. This is because
of high power purchase cost from IPPs, traders and open market. The Commission may
regulate the private power purchase as per the provisions of the Electricity Act, 2003.

2.1.197 The procedure of involving FPAC is unnecessary as the tariff determination process is an
annual exercise which may take care of fuel price adjustment during the year.

2.1.198 The hydro power generation from Pycara and Kundah projects costs 20 paise per unit as
all its fixed cost has been recovered. Therefore, this source should be earmarked for
agricultural sector.

Issue-28: Renewable Energy

2.1.199 The barrier to wind power development may be removed (including infrastructure for
evacuation) and an enabling regulatory and policy environment for investments in this
sector should be created.

2.1.200 The consumers having contract demand more than 10 MVA may generate electricity up
to 5% to 10% of the contract demand which should gradually increase to 25% from
renewable sources.

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2.1.201 Banking of wind energy may be dispensed with to avoid serious losses. Demand side
management may be enforced for the wind mills by levying common power factor
compensation.

2.1.202 A separate company may be formed for cheap power sources like hydro power station
which should sell power to TANGEDCO at non conventional energy cost and utilize the
fund to compensate weaker section like hut and agriculture.

2.1.203 Solar power generation should be promoted. Government of Tamil Nadu may take
initiatives and offer subsidized rates to boost solar energy use. The usage of solar energy
to power the domestic consumers and schools may be promoted as is done in Karnataka.

2.1.204 The power generation from wind mills may be enhanced. The power generation potential
from Courtrallan falls may be examined for hydro electric power scheme.

2.1.205 The Commission may direct TANGEDCO to procure additional power from wind energy
generators or alternatively allow to bank the same for a longer duration as third party sale
is technically restrictive.

2.1.206 Manufacturing & selling of storage electric water heaters may be banned. Instead, solar
water heater should be promoted. Similarly, usage of solar water heating system for
colleges, big canteens for the hot water usage for cooking purpose may be promoted.

2.1.207 There should be no sales tax for LED lighting systems, solar PV panels, and solar water
heaters. The concession of tax percentage for domestic appliances should be according to
star rating approval.

2.1.208 Green houses may be promoted by lowering the power tariffs for such type of houses.

Issue-29: Energy Audit/ Demand Side Management / Energy Efficiency

2.1.209 TANGEDCO has not been checking the correctness of Current Transformers/Power
Transformers and meters provided for the feeders.

2.1.210 Under the Energy Conservation Act 2001, power generation, transmission and
distribution are designated consumers for energy audit, whereas, TANGEDCO has not
undertaken any such audit.

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2.1.211 TANGEDCO may undertake measures to check loss in transmission/theft and install
meters in huts (BPL) so that excess energy consumed over the allotted free units could be
checked and properly accounted.

2.1.212 TANGEDCO may have a full time Member in charge of DSM and this activity may be
given same importance as Generation and Distribution.

2.1.213 The Bachat Lamp Yojna may be implemented throughout the State. It is also requested to
constitute a high level local experts committee in all the districts for assessing the
potential of energy savings and implementing the recommendations in a phased manner.

2.1.214 In street lighting and Government offices, incandescent lighting may be replaced with
efficient fluorescent lamps (CFLs).

2.1.215 Energy efficient pump sets should be distributed to farmers replacing their old pump sets.

Issue-30: Time of Day Tariff and Extending evening peak hours

2.1.216 It was appealed to the APTEL that the morning peak hours have been set between 6 am
and 9 am without any study or statistics. The Regulations in this regard provide for 6:00
am to 9:00 am as the morning peak and 18:00 hours to 21:00 hours as the evening peak.
APTEL has accepted this Regulation because the Commission’s Regulations provide for
specific timings. However, in TANGEDCO’s petition, the evening peak is sought to be
revised to 18:00 hours to 23:00 hours. TANGEDCO has not provided any justification for
the change sought for. Therefore, the Commission may maintain the Peak hour from
morning 6 am to 9 am and evening 6 pm to 9 pm.

2.1.217 Peak hour charges are collected at 20% whereas the incentive for consumption during
10:00 pm to 5:00 am is provided at 5%. The night shift allowance (incentive for night
shift consumption) may be increased to 20%.

2.1.218 Extending of evening peak hours has been objected by the consumers on the account of:
a. There have already been R&C measures in place whereby TANGEDCO has allowed
industries to draw only 10% of the eligible quota during the evening peak hours.
b. By extending peak hours, TANGEDCO has proposed to levy additional 20% of the
tariff for the two additional hours. There has been no proper justification for
extending the evening peak hours.
c. The rebate for consumption during night hours will be reduced by one hour.

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d. The proposed change will increase the overall power cost for the industries.

2.1.219 The night hour concession may be increased by 10% for the months of June to October to
encourage consumption at night hours.

2.1.220 TANGEDCO has provided an incentive of 5% on the energy charges being used between
22:00 hrs to 05:00 hrs. The industrial consumer may loose its shift production this way,
thereby incurring huge loss and increasing the cost. Maharashtra State Electrcity Board in
1984 has announced such a scheme with 23 paisa per unit as concession which was a
failure.

2.1.221 Peak hour tariff and night hour rebate may be treated on equal footing.

Issue-31: Retail Tariffs

2.1.222 Varieties of consumers avail access to power and each consumer has different affordable
concerns for the price to be paid for energy consumed. TANGEDCO being a commercial
organization is eligible to earn 14% return on their equity. TANGEDCO is not concerned
about the ‘ability to pay’ of consumer. TANGEDCO has proposed an extraordinary
increase in tariff of nearly 100% for HT consumer and 63% for LT consumer.

2.1.223 If the Government is directing such supplies (under Section 65 and or Section 108 of the
Electricity Act 2003) the Commission may instruct the Government to provide for the
grant of the deficit too.

2.1.224 The retail tariff for such consumers who fall under the category of free or subsidized
supplies must be determined by the Commission truly and meticulously, so that the
consumers do not suffer any part of the burden of such supplies. About 22% of the total
consumption in Tamil Nadu is falling under this category.

2.1.225 Industrial and Commercial classes of consumers are under burden because of cross-
subsidy.

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2.1.226 Introduce KVAH billing for LT and HT consumers so that TANGEDCO can get
additional revenue without investment, which may also enable optimum utilization of
transformers and related equipment. . Already few states in India have implemented this
approach and recently Andhra Pradesh has also implemented KVAH billing for HT
consumers.

Issue-32: Power factor Incentive

2.1.227 TANGEDCO is levying low power factor surcharges in respect of HT & LT services,
when the power factor falls below 0.90 & 0.85 respectively. It is suggested that the
incentive for maintaining power factor above the minimum required level may be
considered as given below. As per the APTEL Order, it was prayed in front of the
Commission to provide Power Factor incentive as below:

For HT Services maintaining A rebate of 1% of Current


above 0.95 to 1.0 Consumption charges for every
increase of 0.01 in power factor
from 0.9 to 1.0
For LT Services maintaining A rebate of 1% of Current
above 0.90 to 0.95 Consumption charges for every
increase of 0.01 in power factor
from 0.85 to 0.9
For LT Services maintaining A rebate of 2% of Current
from 0.95 to 1.0 Consumption charges for every
increase of 0.01 in power factor
from 0.95 to 1.00

2.1.228 The power factor incentive should be reintroduced for the industry which was withdrawn
in July/August 2010 as it may help efficient consumers of energy.

Issue-33: Wheeling Charges

2.1.229 TANGEDCO has proposed to increase the Wheeling Charge from the existing 14.74
paise per unit to 20.80 paise per unit for 2011-12 and 19.84 paise per unit for 2012-13.
This increase, as presented by TANGEDCO in the petition is due to the increased cost of
distribution network incurred by TANGEDCO.

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2.1.230 The proposed reduction in wheeling loss has been objected as the reduction in wheeling
loss has been carried away by the increase in wheeling charge.

Issue-34: AT&C Losses

2.1.231 Out of the total electricity distributed, around 22% of the total consumption in the State
has not been metered. Steps may be taken to measure the total losses to calculate the
actual T&D loss.

2.1.232 Strict police action may be taken against the people using hooks to pilfer electricity from
the transformers.

2.1.233 The transmission and distribution loss has remained static at 18% against 17% in 80s and
90s. TANGEDCO may use one size conductor for LT and one size conductor for HT
instead of various sizes.

Issue-35: Power Supply

2.1.234 Though TANGEDCO has announced 2 hours mandatory power cut, the time of power
cut exceeds 5 to 6 hours. Thus, there is production loss to Medium and Small Enterprises
(MSE). No remedial measures have been taken by TANGEDCO in this regard. A Weekly
power holiday may be introduced dividing Tamil Nadu into 6 regions and continuous
uninterrupted power supply may be maintained for 5 days a week.

2.1.235 Due to frequent power shutdown, following issues were presented:


a. Due to scheduled and unscheduled load shedding, each switching creates
switching surges which is injurious to the equipment. It was submitted that a lot
of failure of equipments due to switching (especially sensitive electronic
components).
b. TANGEDCO’s HT breaker life has reduced drastically, which would result in
heavy expenses for replacement of all existing breakers within a short time.
Breakers are rated for number of mechanical operations at No Load but
TANGEDCO has switched off the breakers at the time of load conditions. Hence,
the average operating cycle has reduced than the manufacturer’s recommendation.
c. Frequent power cuts have also resulted in failure of winding in the distribution
transformers due to the voltage transients and high inrush current. Most of the
industries availed additional loads to run the existing industry fully or up to 90%
by showing additional machineries. The purpose of 20% power cuts becomes
meaningless and TANGEDCO has been requested to impose scheduled and

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unscheduled power cuts during the day times. Power cut to all HT industries was
requested to increase by 5% to 10%. The norms for additional demand sanctioned
should to be stringent in sanctioning and additional demand has to be given only
for expansion of machineries with proof.

2.1.236 The hospitals responsible for health of citizen may be given uninterrupted power supply.

2.1.237 TANGEDCO has proposed to give supply only at 33 KV if the sanctioned load is
between 5000 KVA and 10000 KVA and 110 KV or 230 KV supply to be effective only
if the demand exceeds 10000 KVA. The Objectors suggested that this change maybe
made applicable for the future supply to the new HT consumers.

2.1.238 The Commission has approved 40% power cut and 2 hours load shedding including
restriction to use power during hours of 6:00 pm and 10:00 pm in the Order No. MP 42 of
2008 dated 28-11-2008, which TANGEDCO has violated and extended the load shedding
to more than 8 hours a day. Therefore, it has rendered itself for the consequences under
Section 24 of the Electricity Act 2003.

Issue-36: Surcharge on Welding Power Supply

2.1.239 Presently, 15% surcharge on welding power supply is being levied. This practice has
started due to non maintenance of power factor earlier. Now, since the power factor is
maintained and levy of penal charges are in force, there should be no necessity to levy the
additional surcharge.

2.1.240 Welding surcharge is not levied in any other part of the country. Therefore, it is requested
that the same may be followed in TANGEDCO.

2.1.241 Welding surcharge is levied only for IIIB category. This charge should be levied on other
categories like Tariff VI (temporary supply) and IIB (Educational institutions like ITI,
Diploma & Engineering Colleges).

Issue-37: Levying of Extension estimate cost

2.1.242 TNERC has already approved for levying estimate cost for effecting the supply to the
intending consumers, which TANGEDCO has not implemented till now.

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2.1.243 A flat rate may be collected as estimate cost for all the extension category works other
than IB & IV (other than RSFS Category).

Issue-38: Quality of Power

2.1.244 The quality of power may be improved so as to have better life of installations at
consumer end. The power cut may be uniformly enforced in the urban and rural areas
through out the State without affecting the Industrial development.

2.1.245 The permissible AT&C and T&D losses may be specified by TNERC without comparing
with the National Average power losses so as improve the system by TANGEDCO which
will improve the power quality and the availability of power.

Issue-39: Metering

2.1.246 The meters being used are not standardized as per TANGEDCO requirement. Meters
provided at 91,000 distribution transformers at the cost of Rs. 91 Crore was a redundant
exercise because of insufficient manpower.

2.1.247 The electricity consumption may be noted monthly instead of bi-monthly to avoid the
upward trend in the energy charges in the tariff slab.

2.1.248 The Commission may call for the following details of the amount collected by vigilance
department to get more information on issues based on end use classification of tariff:
a) Unauthorized use of electricity (change in tariff classification)
b) Theft of energy (i.e. tampering, by-passing meters)
c) Details of expenditure incurred by vigilance department

2.1.249 It was suggested that Commission may switch to voltage level based tariff.

2.1.250 The Commission may direct TANGEDCO to notify the meter reading once in two month
as the meter readings are taken by TANGEDCO staff over and above 70 days.

2.1.251 The old meters may be replaced by new meters.

2.1.252 The subsidy is provided for the value Rs. 10 per month under the Hut Service scheme –
“One Light for One Hut” by Tamil Nadu Government. However, in many huts, grinding

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is done commercially. Thus, the hut and power loom connections should be properly
metered.

2.1.253 The Commission may consider installation of Static meters with demand recording
facility in the service connections given under LT Tariff IIIA (1) and LT Tariff IIIA (2).

2.1.254 Power supply to the domestic consumer may be strictly monitored in a way. A second
supply to the same house may be given in case of separate entry and kitchen for tenants.

2.1.255 The overcharging of tenants by the house owner is an offence and may be punished under
section 142 and 146 of the Electricity Act 2003. Tenants may be provided with a separate
meter.

Issue-40: Economic and Efficient Operational Aspects

2.1.256 Power may not be purchased from Ennore TPS as its specific fuel consumption is 1.17
kg/kWh and auxiliary consumption is 14.48%. The coal meant for Ennore TPS should be
diverted to NCTPS, which will enhance the performance of NCTPS.

2.1.257 The Commission may fix a deadline for segmentation of TANTRANSCO and
TANGEDCO into SLDC and Sub-SLDC.

2.1.258 The HT: LT ratio has been almost same for the past few years. No HVDS system has
been introduced in a substantial manner. Therefore, transformer failures are increasing.

2.1.259 TANGEDCO may concentrate on R-APDRP scheme in high density areas, so that the
losses can be contained.

Issue-41: Request for Separate Category

2.1.260 Health care service providers are service sectors and may not be considered as
commercial. As per Supreme Court judgment in 2005, with respect to a case filed by
Madhya Pradesh Electricity board, it was stated that Health Care providers should not be
treated as commercial entities.

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2.1.261 Addiction treatment and rehabilitation centres for alcohol and drug dependents requests
for change in the tariff category from Commercial and may be provided concessional
tariff.

2.1.262 TANGEDCO has proposed to consider the Information Technology Enabled Service
(ITES) industries as different from Information Technology industries by fixing the tariff
under the classification as “Commercial” while treating IT industries as “Industries”. In
this regard, it is stated that the differentiation is against the mandate in Section 62(3) of
the Electricity Act 2003 and contrary to letter issued by TANGEDCO to the Commission
dated 12-4-2010 and IT policy framed by the Govt. of Tamil Nadu. Clause 9.5 of
Information Communication Technology (ICT) polity, 2008 states , Tamil Nadu
Electricity Board will provide power supply for low tension units as per LT Tariff IIIB
and for high tension units as per HT Tariff IA to IT industries setup in IT-ITES parks or
in stand-alone locations and also ensure the quality of power as required by the industry.
For the purpose of power tariff, IT (as defined in Para 5, 5(a), 5(b) and 5 (c) of this
policy) maintenance and servicing units and hardware units will be treated as Industrial
and not Commercial consumers and electricity tariff as applicable to Industry Consumers
will be charged.”

2.1.263 The Commission in its order dated 31-07-2010 stated that the tariff for IT services/PCP
may be continued in HT Tariff IA and LT Tariff IIIB and for IT Enabled Services, tariff
under HT Tariff III and LT Tariff V would be applicable.

2.1.264 Charitable institutions have sought for the change of tariff categories to LT Tariff IIC for
the meditation hall, dormitories and the offices.

2.1.265 LTCT connections catering to residential complex consisting of kitchen, canteen, staff
quarters, guest blocks, toilet blocks, training centers, administrative blocks etc have
requested for tariff under LT Tariff IC.

2.1.266 100% free schools that are run by charitable institutions and which do not receive any
Government grants may have a separate tariff slab and tariff may be charged at 50% of
proposed domestic rates.

2.1.267 National Highway Authority of India (NHAI) and the contractors have requested to
change the tariff category of National Highway maintained street lights from Tariff V to
IIB (i).

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2.1.268 A separate category of “Aquaculture” tariff may be introduced and Pisciculture should be
introduced.

2.1.269 Job works in computer typing in small towns have requested to change the tariff category
from LT V to LTIII A (1).

2.1.270 Orphanages have requested change of tariff from LT II B (2). To LT I A

2.1.271 Many guesthouses, gents’ hostel, ladies hostel have come up in residential building for
which they do not pay any commercial charge and continues to pay subsidized domestic
tariff. A separate category of tariff is requested for such PGs, hostels.

2.1.272 Ice manufacturing units may be charged under HT Industrial IA instead of HT


Commercial Tariff III.

2.1.273 The Cellular towers who use green energy have requested to be classified under bulk LT
Consumer slab.

2.1.274 Fishing Harbor have requested to be charged under Industrial Tariff.

2.1.275 Sericulture, floriculture, raising fruit fodder and waste land development have requested
to change their tariff from LT Tariff IIIA (1) to Tariff IV.

2.1.276 MSME industry has requested to change the tariff category from LT Tariff V to LT Tariff
IIIB.

2.1.277 Residential quarters of staff of hotels have requested to be considered under LT Tariff IA
instead of LT Tariff V.

2.1.278 Poultry and jewellery manufacturers have submitted to change the tariff to LT Tariff IIIA
and Tariff IIIB respectively.

2.1.279 Yoga meditation centers have requested for change of tariff category to LT Tariff IC.
Textile industry has requested for a separate tariff.

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Issue 42: Objections/Suggestions by Southern Railways

2.1.280 The cross subsidy charged to railway traction is proposed to be increased from 15.37% in
2011-12 to 46.40% in 2012-13.

2.1.281 Demand and Energy charges for EHT categories may be fixed at a rate lower than those
for corresponding HT categories considering the reduced infrastructure expenditure and
reduced losses for power supply at EHT voltage than when compared to HT level.

2.1.282 Excess MD surcharge should be levied only when recorded maximum demand exceeds
120% of the contract maximum demand and the excess MD surcharge may be reduced
from 200% to 100%.

2.1.283 Excess MD surcharge should not be levied for feed extensions necessitated due to
reasons attributable to TANGEDCO, TANTRANSCO and reasons beyond the control of
Railways.

2.1.284 Railway Traction tariff may be separate from general industrial tariff.

2.1.285 HT supply points at Erode (HTSC No. 19) and Tiruchirappally (HTSC No. 129) availed
for water pumping may be classified under HT-IIA, and LT supply points exclusively for
water pumping should be classified under LT IIA tariff categories. Also, it was submitted
that HT supply point (HTSC No. 1002) at MRS/Villivakkam may be exempted from
availing supply at 110 KV or may be permitted to continue at 33 KV, as a special case,
without any penalty till the 33 KV transformers complete their useful lives.

2.1.286 Railways Tiruchirapalli division submitted that they have 12 numbers of HT supply
points under various categories. The HT supply points availed by Railways mainly caters
to Railway Hospital, Railway stations and pumping installations. Introducing TOD tariff
on the said HT II A and HT III tariff will be an extraordinary additional burden on the
Railways. The operation in Tamil Nadu is predominantly passenger oriented without
much scope for more financially viable freight movements.

2.1.287 Classify HT supply points with respect to major pumping loads and major colony under
HT IIA category.

2.1.288 Railways may be exempted from TOD tariff under HT II A and HT III tariff supply
points.

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2.1.289 Electricity tariff for Government of India undertaking and public utilities should be lower
than the tariffs charged to other bulk consumers in HT category.

2.1.290 Suitable rebate on the demand and energy charges may be granted for a period of at least
5 years from the date of commissioning for the new Railways Traction substations.
Madhya Pradesh Electricity Regulatory Commission (MPERC) and Rajasthan Electricity
Regulatory Commission (RERC) are providing concessional tariffs to new electrification
projects by Railways.

2.1.291 HT supply points availed by Railway for hospitals, Railways stations and residential
quarters may be exempted from TOD metering.

2.1.292 Leading power factor should be ignored for power factor metering for Railway Traction
load. Alternatively, approve voltage linked VAR charges as given below at the rates
prescribed by CERC for Reactive power exchange:
a. Railways get paid for VAR return when voltage is below 97%
b. Railways pays for VAR return when voltage is above 103%

2.1.293 Railways stated that reactive power absorption/supply is a service to be rendered by the
utility at a cost as per recommendation of CEA. TANGEDCO in its petition has stated
that for the year 2011-12 and 2012-13, 168 MVAR of HT fixed capacitors are proposed
to be provided in 11 KV and 22 KV but yet to be complied with. Stipulating lag + lead
metering for PF computation for Traction who are availing supply at transmission voltage
of 110 KV and distributing 25 kV up to Loco terminal needs to be changed to Lag only
metering for PF computation as being done in other states connected to the southern grid
for honoring the principle of cost causation in tariff setting.

2.1.294 Railways have sought for introduction of EHT category. Most of the states in the country
have differentiation between EHT and HT consumers. In the southern grid also all the
three States except Tamil Nadu have separate EHT category. Tamil Nadu Electricity
Supply Code and Distribution Code also distinguish EHT consumers from HT consumers
and therefore merits separate EHT and HT category for tariff consideration.

2.1.295 Separate EHT tariff may be introduced with demand and Energy Charges lower than the
HT tariff. Railway traction may be subcategorized under EHT category considering the
special nature of moving Railway traction load and the purpose of public carriage without
profit motive.

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Issue-43: Objections/Suggestions by Airport Authority of India

2.1.296 Airport Authority of India (AAI) submitted that TANGEDCO should provide a sub meter
to capture the consumption of operational offices of AAI administrative offices and
charge their electricity consumption under HT II A category.

2.1.297 AAI has requested that its offices be included in HT II A and LT IC.

2.1.298 AAI has submitted that 97% of electricity is used only for Aviation activities while only
3% is used for commercial activities like shops, restaurants which are actually an integral
and small part of the airport operations as an Industry. The services of Aerodromes come
under ESMA 1968 cannot be charged under Commercial tariff. As per Tariff Order dated
31-07-2010, energy charges for Railway Traction is same as that of Industrial
establishment which means that transport sector is considered under Industrial category.
Hence, Airports should also to be charged under Industrial category. The Industrial
Disputes Act 1947 has also considered AAI as Industry.

2.1.299 AAI has further submitted that as per Section 62(3) of the Electricity Act 2003, the
Commission may differentiate the tariff for Airport and allied services. The Appellate
Tribunal of Electricity (ATE) in its judgment dated 26-02-2009 in the Appeal No 106 of
2008 had observed that Mumbai International Airport Pvt. Ltd. would not be treated on
par with consumers of HT II commercial category and directed MERC to re-determine
tariff by way of special category as the services was a public utility.

2.1.300 AAI requested for the permission to extend the power supplies to all user agencies
working at airport for facilitation of passengers at same rate of TANGEDCO tariff.

2.1.301 AAI have requested for change of tariff for CISF Barracks HT SC 727 to HT II A and
inclusion of the term “ CISF Barracks “ in Tariff Schedule HT II A and LT I C. AAI
Residential complexes have also requested to be included in HT II A and LT I C instead
of Commercial category.

TANGEDCO’s Response to Railways

2.1.302 Considering wind energy injection, as already prayed by the Commission in Appeal No.
75 of 2010 by Indian Railways at APTEL, any EHT and HT consumers has to pay the

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entire distribution cost. Hence, the existing method of adoption of single tariff for the
both demand and energy charges for EHT and HT may continue.

2.1.303 The demand and energy charges for Railways may be kept on for HT industries.

2.1.304 The prayer regarding power factor by the Railways is not related to tariff petition filed,
but it is related to Regulation on Supply Code. The prayer made in respect of excess MD
surcharge to be levied only for RMD above 120% is not feasible of compliance. In
respect of request of ignoring leading power factor, the average power factor is arrived
considering both the leading and lagging VAR and hence the request may not be
accepted.

2.1.305 TOD metering is proposed to be based on the additional expenditure incurred by


TANGEDCO based on UI mechanism. TANGEDCO is also serving the public without
profit motive and without receiving any concession from Railways. Therefore, the
exemption of TOD metering may not be considered.

2.1.306 With respect to connections of water pumps, since the water pumped are not exclusively
for public and it has been used for railways purpose also, the existing tariff may continue.

2.1.307 The Railway substation at Villivakkam has served more than 15 years (more than 100%
depreciation and served life time). The HT supply point (HTSC No. 1002) at
MRS/Villivakkam need not be exempted from availing supply at 110KV and penalty may
be levied. If penalty is levied, only then will Railways take necessary action for
conversion from 33 KV to 110KV.

2.1.308 Due to non availability of voltage wise assets, as directed by Hon’ble APTEL in appeal
no. 192 & 206 and appeal no. 102, 113, 112, preliminary working with apportioning the
total cost at different voltage, taking into account loss at relevant voltage level has been
submitted in the tariff petition. Further, the Hon’ble Commission in the counter affidavit
of Appeal No 75 filed by the Indian Railways in APTEL has stated the technical loss up
to 110 KV systems alone cannot be added to the Railway Tariff because during the wind
season, around 25% of the energy comes from the wind energy generators and these wind
generators are connected to 33/22/11 KV lines of Distribution System. Hence, the
Railways have to bear all the expenditure incurred by the licensee in the transmission as
well as distribution system and tariff may be fixed at +/- 20% of average cost of supply.

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TANGEDCO’s Response to Airport Authority of India

2.1.309 APTEL in the Appeal No 195 of 2009 (Mumbai International Airport Private Limited Vs
MERC & RInfra-D) dated 31-05-2011 has directed that “the State Commission to have
differential tariff for the aviation as well as the purely commercial activities, such as
shops, restaurants, etc. at the airport. However, if the aviation services could not be
metered separately and purely commercial activities separately, then the State
Commission could re-categorize the Appellant in a separate category other than HT
Commercial II and determine the composite tariff for aviation and the commercial
activities of the Appellant”. Accordingly, Airport (HTSC No. 15 and 232 /Chennai
South) may be categorized under High Tension tariff IIB (ii) with lesser tariff than HT
Commercial.

2.1.310 Extension of power supply to all user agencies working at Airport for facilitation of
passengers does not come under purview of TANGEDCO. The extension of power
supply for construction activities within the premises of Airport for the development of
Airport is to be charged HT Tariff III, since the construction could not be considered as
aviation activity.

2.1.311 Since AAI’s operational offices’ (comprising only AAI Administrative offices) are
getting power supply from Airport power supply, therefore, it may be separately metered
in High Tension tariff IIB (ii) and charged under LT tariff V.

2.1.312 CISF Barracks (HT SC No 727/Chennai South) power supply tariff may be changed to
HT Tariff IIA. The term “CISF Barracks” need not be included in Tariff schedule HT IIA
(under HT category) since this comes under the term “Housing Complexes”. “CISF
Barracks” is also not included under LT Tariff IC since no LT service connection for the
same is available at present.

2.1.313 AAI Residential Complexes may be included in HT Tariff IIA. Tariff for HTSC No
208/Chennai South may be changed to HT Tariff IIA.

2.1.314 The term “AAI Residential Complexes” may not be included in Tariff schedule HT IIA
(under HT category) since this comes under the term “Housing Complexes” and “AAI
Residential Complexes” is also not to be included under LT Tariff IC since there is no LT
service connection for the same available at present.

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TANGEDCO’s Response to General Issues

2.1.315 TANGEDCO will try to file tariff petition every year in future.

2.1.316 Since the last partial revision in tariff from 01-08-2010, there has been substantial
increase in operational costs of TANGEDCO on account of increase in its cost of inputs,
production cost, wages-salaries of employees as well as the inflationary conditions.

2.1.317 Hon’ble APTEL has directed to amortize along with the interest charges as per the
provision of the Act, Policy and the Regulations and true up for ARR for the year 2010-
11 and gave consequential directions for recovery of the revenue gap derived after true up
along with the carrying cost within a period of three years. The un-recovered gap for the
year 2010-11 to 2012-13 may be treated as regulatory asset and carried over to be
recovered through future tariffs with necessary allowance on regulatory asset in five
financial years with necessary amendments in the Tariff Regulation.

2.1.318 TANGEDCO submitted that it has not claimed for the losses from 2003-04 to 2009-10
for Regulatory asset and have only proposed for losses for control period years of 2010-
11 and 2012-13.

2.1.319 The control period could not be one year as per Multi Year tariff process.

2.1.320 TANGEDCO has drawn up a detailed investment and capital expenditure program to
augment the generation capacities and also to strengthen the Transmission & Distribution
systems with the aim to provide efficient service to the consumers. Any project expansion
and improvement of Transmission & Distribution (T&D) Network has to be borne out of
internal generation of resources. However, in the absence of revenue surplus, this amount
can be raised only from the debt market. This has resulted in increase in the interest and
finance charges on the borrowings to fund these expenditures.

2.1.321 TANGEDCO is also undertaking R&M of its old generating stations, which would lead
to extension of life and improvement of the Plant Load Factor (PLF) .All these efforts,
would ultimately result in enhanced availability of power at lower cost to the consumer.

2.1.322 The Transfer Scheme transferring the properties and personnel of the erstwhile TNEB
was notified by the Government of Tamil Nadu vide G.O. (Ms.) No. 100 dated 19-10-
2010.

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2.1.323 As per Clause 6(2) of the Government Order, all personnel of the Board (excluding
Chairman and Director of the Board) shall stand transferred to and absorbed in
TANGEDCO on a provision basis, subject to finalization of Employee Transfer Scheme
by the State Government in consultation with the Chairman of TNEB Limited.

2.1.324 Clause 6(5) of the Transfer Scheme states that the personnel of the Board shall stand
assigned to the services of the relevant Transferee, on deputation basis, on “as-is-where-
is” basis, namely that they will continue to serve in the place where they are posted on the
date of transfer.

2.1.325 As per clause 6(17) of the Government Order, till finalization of transfer of personnel to
TANTRANSCO, the payment of terminal benefits to existing pensioners will be
continued to be met from the cash flow of the operations of the TANGEDCO and
TANTRANSCO would reimburse its proportionate share. The more accurate and realistic
assessment of the probable amount of pension liability could be made, only when
employee transfer is finalized. Hence the process of assessment of liability and creation
of corpus fund could be started by the successor entities once the employee transfer is
finalized.

2.1.326 The limitation of power purchase could not be done, since the same is based on demand.
If the same will be limited and fixed, for the month/day/month/year there will be no
power during fag end of that period (i.e. Quota will be finished before the expiry of that
period).

2.1.327 The procurement of fuel inside India is based on the allocation and TANGEDCO could
not change the grade of coal at the allocated site. However, all efforts are being taken to
maximize efficiency.

2.1.328 The fuel price adjustment charges have been proposed for all the consumers. With respect
to unmetered service, the sampling data of agriculture consumption and computed
consumption of Hut service may be considered.

2.1.329 As per Tariff Policy, Tariff is to be fixed at +/- 20% of the average cost of supply. It has
proposed tariff for HT industries (Textile Industries) as +6.69% of average cost of
supply and since the tariff for HT industries has not been revised from 2003 and
marginally increased by Tariff Order dated 31-07-2010, the reduction of cross subsidy
could not de done. Further, if the tariff has not been revised for HT industries, the same

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will be -10.3% of the average cost of supply and reduction of cross subsidy cannot be
considered at this juncture for HT industries.

2.1.330 The HT industries have not been overloaded by means of cross subsidy. There has been
no direction to propose tariff below Average Cost of Supply for the consumers with
lesser cost to serve and the tariff has been proposed above the average cost of supply
considering affordability.

2.1.331 The demand charges have been proposed based on the expenditure to be incurred for
fixed cost and variable cost (available power). Hence the proportionate reduction of
demand charges does not arise for R&C period. Considering the expenditure to be
incurred, more demand charges has to be proposed in the tariff petition but it has not been
proposed due to further increase of cross subsidy.

2.1.332 The preparation of actual cost to serve model will be complex due to wind energy. Since
cost to serve model is to be used for deriving cross subsidy and the same need to be
arrived based on the cost coverage cross subsidy analysis submitted in the ARR. Hence
the tariff may be fixed at +/- 20% of average cost of supply.

2.1.333 On the query raised regarding the fixation of tariff subsidy, TANGEDCO clarified that
any decision related to tariff subsidies is under purview of Government of Tamil Nadu
for all the consumers.

2.1.334 The tariff subsidy is being paid by the Government of Tamil Nadu in advance. This is
vide GO Letter (Ms) No 8 dated 04-02-2012 wherein the Government has given
concurrence for payment of subsidy for various categories of consumers and issued the
commitment letter.

2.1.335 As per Tariff Policy, tariff is to be fixed at +/- 20% of the average cost of supply. The
proposed tariff for HT industries (Textile Industries) is within +6.69% of average cost of
supply and since the tariff for HT industries has not been revised from 2003 and
marginally increased in the Tariff Order dated 31-07-2010, the deduction of cost subsidy
could not de done.

2.1.336 The tariff for HT industries has been increased to 18.59% with minimum cross subsidy
burden of 6.69%.

2.1.337 Separate metering for other purposes for constructions in the HT industries premises may
not be considered as industrial activity and has to be treated as Temporary supply.
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Similarly, the employee dormitory system cannot be considered as residential activity
since they are similar to Hotels without charges.

2.1.338 The tariff petition was filed before the issue of the Draft Notification dated 01-12-2011
with regard to Tamil Nadu Electricity Supply (6th Amendment) Code, 2011 by the
Commission. TANGEDCO has already submitted the recommendation for exemption of
existing 33 KV HT consumers who availed supply at 110KV supply to the Commission.
For the surcharge of 10 paisa per unit, it submitted that the consumer has to pay it until
the conversion to respective voltage wise supply by the existing consumer.

2.1.339 The Multi National Companies (MNCs) and Information Technology (IT) companies are
providing employment and foreign exchange to the State. Considering the long term
development of the state, continuous supply has been given to the MNCs. Such
concessions and levy of industrial tariff for IT services is based on the Policy of
Government of Tamil Nadu.

2.1.340 As per National Tariff Policy, tariff for any category of consumer has to be fixed at +/-
20% of average cost of supply. Accordingly, the tariff for HT private recognized
education institutions has been proposed more than average cost of supply but within the
range of +/- 20% of cost of supply.

2.1.341 The tariff for HT industries has to be more than LT industries since the cross subsidy by
LT industries is less than HT industries. Hence, the tariff hike for HT and LT industries
may not be the same.

2.1.342 The basis of adoption of Rs. 300/KVA for demand charge have already been submitted to
Hon’ble TNERC. Energy charge (Rs. 500/unit) has been proposed in order to have
minimum cross subsidy for HT industries.

2.1.343 The demand charges for educational institutions have been proposed based on the fixed
cost. Since the demand charges is not related to variable cost, reduction of demand for
minimum consumption need not be considered.

2.1.344 As per section 62(3) of Electricity Act 2003, tariff may be fixed based on the load factor
and nature of supply. With respect of private educational institutions, load factor will be
high and is commercial in nature. Hence, private educational institutions should be
charged a higher tariff. In other states, the fixed charges have been collected on KW
basis. The estimated expenditure towards fixed cost for the year 2012-13 work out to be

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Rs. 158/KW/month. However, Rs. 120/KW/month has been proposed in the tariff
petition.

2.1.345 TANGEDCO submitted that considering the nature and usage of supply, tariff hike has
been proposed from HT Tariff III.

2.1.346 Higher tariff for domestic consumption above 500 units has been proposed for both urban
and rural consumers which cover the A/C units for villages.

2.1.347 After a gap of seven years, tariff has been proposed to increase marginally during the
year 2010-11 for certain category of consumers. The domestic consumers have been
given tariff hike of only Rs. 1.00 per unit for their bi-monthly consumption of above 600
units. For the consumption up to 600 units, the tariff has been kept the same from the
year 2003 itself. The operational cost (68%), the coal and oil cost (229%) and power
purchase cost (235%) have increased drastically whereas the tariff for the industrial
consumers remained the same as that of 2003.The loss per unit has increased vis-à-vis the
average cost of supply (CoS) and the average rate of realization (RoR) from the year
2005-06 onwards to 2012-13.

2.1.348 In order to complete the on-going power projects and subsequent reduction in power cuts
and for day to day operation, the tariff hike is essential.

2.1.349 The tariff for commercial category has been reduced. Tariff for 0-100 units is proposed
from Rs. 5.30 per unit to Rs. 4.30 per unit and tariff for 0-200 units is retained at Rs. 5.30
per unit. Tariff for above 200 units has been raised marginally from Rs. 5.80 per unit to
Rs. 6.50 per unit.

2.1.350 The tariff for domestic category is -56.99% which has been proposed to increase up to
42% and the cross subsidy has been increased to (-38.46%).

2.1.351 Since the cross subsidy by the LT industries is less than HT industries, the proposed tariff
is more for LT industries than HT industries. The tariff for the affluent consumers such as
cinema theatres, commercial complexes, health clubs are proposed at a higher tariff.

2.1.352 The detailed representation for a separate dedicated power station for knitwear sector
and total no. of services etc. and availability of land in Tirupur area may be forwarded to
Director (Distribution)/TANGEDCO for further analysis.

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2.1.353 The proposed tariff for domestic and local bodies is still below average cost of supply
and the existing tariff of industries itself is above the average cost of supply. In order to
reduce the cross subsidy, lesser tariff increase has been proposed for HT industries.

2.1.354 The tariff for LT Industries has been proposed based on HT and LT slabs system
provided for consumption of domestic, cottage and power loom industries. Since the
cross subsidy by the LT industries are less than HT industries, the proposed tariff is more
for LT industries than HT industries.

2.1.355 The tariff for agriculture has been increased by 600% and directions for road map have
been requested in the tariff petition for proposing future tariff for all categories.

2.1.356 Due to less hours of supply to the Agriculture sector, agriculture consumption is
reducing.

2.1.357 TANGEDCO submitted that considering the nature and usage of supply, tariff hike has
been proposed for LT Commercial category.

2.1.358 Maximum tariff for lavish illumination has been proposed in the tariff petition.

2.1.359 The construction of college building may not be considered as educational activity and
may be charged under LT Tariff IV.

2.1.360 Section 46 of Electricity Act 2003 is related to the extension of new line and not related
to fixing tariff for consumers. As per the Section 62(3), electricity charges may be fixed
for the purpose for which the supply is required. Therefore, temporary supply for
construction purpose of building has to be charged higher than normal supply services.

2.1.361 The power purchase from the private generators is based on the power purchase
agreements and disputes in this regard are under legal jurisdiction.

2.1.362 TANGEDCO is taking all efforts to commission the new generating plants.

2.1.363 Since there is no sufficient own generation and increasing demand, power has been
purchased based on the agreements and from traders for the benefit of consumers, which
if not done, will lead to reduction in existing power supply and increase in power cut.

2.1.364 Considering the demand, TANGEDCO will adhere to the merit order dispatch to be
issued by the Commission to the extent possible.

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2.1.365 If the power purchase cost is limited to Rs. 3/unit, then there will be more power cuts
which may not be endured by the people of Tamil Nadu.

2.1.366 If cheaper hydro power is marked for the Agriculture category, then tariff for other
consumers will increase.

2.1.367 As regards the requests of the horticulture growers to be treated under agriculture, it is
submitted that the classification has to be decided by the GoTN. For orchards, there can
be no free power as stated by the GoTN assembly. TANGEDCO requested the
Commission to take steps as per rules.

2.1.368 All suggestion for promoting renewable energy shall be considered.

2.1.369 The suggestion of promoting CFL and energy saving measures will be considered.

2.1.370 Quality management, preventive maintenance, Demand side management and


improvement works are being undertaken under various schemes with available financial
and human resources.

2.1.371 TANGEDCO will make necessary efforts for Demand Side Management (DSM) and
Energy Efficiency (EE) as per direction of the Commission, after perusal of blue print for
DSM and Energy Efficiency.

2.1.372 As per the Tariff Policy, the tariff for hut services will be atleast 50% of cost of supply.
The proposed tariff is -53% of average cost of supply and in order to submit the future
proposal, road map for reduction of cross subsidy is being prayed from the Commission.

2.1.373 The revised peak hour timing proposal is based on the load condition and extra
expenditure to be incurred for that timing. The consumer has to pay for the energy
consumed during peak hours with surcharge.

2.1.374 The night hour incentive has been included to motivate the consumers to use the excess
energy available during night hours. There is no excess energy available during the night
hours at present. The night hour incentive may be withdrawn, but the same is not
proposed due to less capacity addition. The peak timing does not depend on peak. Instead
it depends on sustained peak hours.

2.1.375 TANGEDCO has submitted the appeal for power factor incentive before the Supreme
Court of India and the same is pending for jurisdiction.

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2.1.376 Action is being taken by TANGEDCO to reduce the line loss. Further, the enforcement
wing has been effectively undertaking remedial measures for reduction of commercial
losses.

2.1.377 The petition filed is not a final true up petition. The petition is based on the preliminary
Balance sheets and final true up petition will be filed in the later years as being done in
other States.

2.1.378 The income from Trading has been furnished as zero based on assumption. In case of any
variation, the actual figures will be submitted at the time of true up petition.

2.1.379 The detailed Capex schemes will be submitted as per direction of the Commission.

2.1.380 The limitations of interest on loan can be detrimental. Any clarification sought in regard
to the equity by the Commission will be submitted.

2.1.381 Fresh capital for on-going works is being raised.

2.1.382 The net annual transmission capacity has been adopted in the petition based on the
Commission’s Order No. 2 dated 15-05-2006.

2.1.383 The Government of Tamil Nadu has been addressed for provision of meters for 100%
metering at agriculture service, considering social conditions of Tamil Nadu.

2.1.384 The consumption of unmetered Agriculture services is based on scientific sampling and
connected HT consumption has been submitted for measurement of T&D loss. In
addition, Anna University has also been appointed for evolution of metering at
agriculture services.

2.1.385 Necessary steps will be taken to adhere to the specific directions of the Commission
regarding improving operational efficiency.

2.1.386 Drug and rehabilitation centers may not be treated on par with physically handicapped.
Mentally retarded and rehabilitation centers may not be given any concessional tariff.
However, Private educational institutions which run for free of cost for special purpose
(mentally retarded and physically handicapped) alone deserve concessional and separate
tariff. LT Tariff IIB (1) may be adopted for rehabilitation center for mentally ill which
offers totally free treatment.

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2.1.387 If the request of separate tariff category for textile industry is considered, then other
consumers of industrial category will also request for the same and thus, there would be
no tariff rationalization.

2.1.388 The industrial tariff for Information Technology (IT) industries has been recommended
based on Government of Tamil Nadu clarification.

2.1.389 Housing complexes may be included under HT Tariff IIA.

Commission’s Views on the Objections / Comments / Suggestions

Southern Railways

2.1.390 Calculation of cross subsidy is based on cost to serve. The Tariff Policy states that “for
achieving the objective that the tariff progressively reflects the cost of supply of
electricity, the SERC would notify roadmap within six months with a target that latest by
the end of year 2010-2011 tariffs are within ± 20 % of the average cost of supply.” Thus,
average cost of supply is to be reckoned for determination of tariff for various categories
of consumers.

2.1.391 Nothing in the Tariff Policy states the tariff should be determined on the basis of paying
capacity of a consumer. Therefore, the contention of the Railways in this regard is a
misplaced one. It is submitted that this Commission has to strictly adhere to section
62(3) of the Electricity Act in the matter of determination of tariff. The said section
prescribes the circumstances under which differentiation can be made between various
categories of consumers in the matter of determination of tariff as reproduced below:
“(3) The Appropriate Commission shall not, while determining the tariff under
this Act, show undue preference to any consumer of electricity but may
differentiate according to the consumer's load factor, power factor, voltage, total
consumption of electricity during any specified period or the time at which the
supply is required or the geographical position of any area, the nature of supply
and the purpose for which the supply is required.”

2.1.392 The Commission also noted that the Railways require uninterrupted power supply and
such uninterrupted power supply reduces the available quantity of energy to various other
categories of consumers. Ensuring uninterrupted power supply is a factor which places

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the Railways in a different category than other consumers. All HT consumers in the State
are subject to R & C measures wherein upto 90% power cut is imposed upon them on
peak hour consumption. They also need to pay extra charges for consumption in peak
hours due to TOD tariff. Railways, however is not subject to R & C measures and TOD
tariff.

2.1.393 High power factor incentive was withdrawn by the Commission for different reasons.
The important reason is that maintaining high power factor itself is an incentive to the
consumer as it leads to stable voltage, reduction of strain to consumer equipments and
reduction of current consumption charges to the consumer.

2.1.394 Tamil Nadu Electricity Supply Code has adopted Lag + Lead logic for imposing penalty
for low power factor. High reactive power, both due to leading and lagging power factor
is injurious to the grid system. It affects the system voltage, capacity and stability. Only
for this reason, the Commission introduced the Lag + Lead logic for power factor
measurement by appropriately amending the Supply Code. Lag + Lead logic for power
factor measurement is followed in many States.

2.1.395 System loss is minimum only at unity power factor. It means, the losses will increase
both at lagging and leading power factors and hence not desirable. Both leading and
lagging power factors have to be controlled. Both capacitive VAR and inductive VAR
pumped into the system are detrimental to the grid and therefore, the consumer has to
improve the power factor as specified in the Commission’s Regulations / Codes. Even
though, the 110 KV lines are dedicated for the Railways, the drawal/injection of leading
reactive power will reflect on the State grid causing voltage fluctuation, increased line
losses, etc.

2.1.396 The request of Railways for considering its water pumping load under HT IIA and LT
IIA categories depending on the type of connection and the request for exemption from
TOD tariff cannot be considered because it is a mixed load as water is used for all
purposes like residential quarters, stations, trains etc.

2.1.397 As regard to the request for allowing MRS/Villivakkam to avail supply at 110 KV, the
Commission is of the view that this issue is a local issue and related to the Supply Code
and cannot be included in the tariff determination exercise.

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Airport Authority of India:

2.1.398 The Commission is of the opinion that the two services i.e. AAI Residential Complex and
CISF Barracks used for residential purpose of the staff and the security personnel may be
given under HT Tariff 2A meant for Housing Complexes.

2.1.399 The power used for other activities like shops, banks, restaurants, temples, etc. in the
residential area shall be metered and billed accordingly by TANGEDCO under the
respective LT categories.

2.1.400 As regards the request of AAI relating to consider its offices under HT IIA and LT IC,
the Commission states that all the Government of Tamil Nadu offices are classified under
Commercial category and therefore this request cannot be accepted.

2.1.401 The supply of power to aerodomes and commercial activities likes shops, restaurants
services which are used for airports are composite in nature involving both aviation and
non-aviation activities. The main issue involved is on the determination of the quantum
of power used for aeronautical and non-aeronautical activities. Therefore, a decision on
this can be taken after detailed study by the Commission. Till such time the status quo
may continue

General Issues

2.1.402 The Commission examined various issues raised by different stakeholders and the
response of the TANGEDCO. These issues were raised in the written comments received
by the Commission as well as highlighted during the hearings held at different locations.
The views expressed by the TANGEDCO are in the form of response to the comments of
individual stakeholders and the response of TANGEDCO at the conclusion of hearings in
each location. The Commission would like to make a summary comment on these issues.

2.1.403 As regards to the functioning of the Commission and processing the Tariff petition in the
absence of Chairman of the Commission, the Commission would like to follow the
provision of the Electricity Act 2003:
Section 93. (Vacancies, etc. not to invalidate proceedings):
No act or proceedings of the Appropriate Commission shall be questioned or
shall be invalidated merely on the ground of existence of any vacancy or defect in
the constitution of the Appropriate Commission.

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Section 92. (Proceedings of Appropriate Commission):

(2) The Chairperson, or if he is unable to attend a meeting of the Appropriate
Commission, any other Member nominated by the Chairperson in this behalf and,
in the absence of such nomination or where there is no Chairperson, any Member
chosen by the Members present from amongst themselves, shall preside at the
meeting.
(3) All questions which come up before any meeting of the Appropriate
Commission shall be decided by a majority of votes of the Members present and
voting, and in the event of an equality of votes, the Chairperson or in his absence,
the person presiding shall have a second or casting vote.

Regulation 12 of Tamil Nadu Electricity Regulatory Commission Conduct of Business


Regulations dated 08-01-2004, reads as follows
“12. Except for initial procedural issues like notices, filing of copies and
documents, the quorum of the Commission shall be two among the three members.
For all initial procedural issues, the quorum may be one member.”

From the above provisions, it could be seen that the Electricity Act 2003 and TNERC
Conduct of Business Regulations enables the two Members to function in the absence of
Chairperson.

2.1.404 On the contentions of consumers that the tariff hike is nearly 100% for domestic
cateogry, the Commission would like to clarify that this increase in tariff has been
proposed after the year 2002-03 for most categories of domestic consumers and after
introduction of subsidy in 2004.

2.1.405 The issue of Transmission and Distribution losses is discussed separately in this Order.

2.1.406 The Commission advises TANGEDCO to streamline the procedure for temporary power
supply requirement for construction activities.

2.1.407 The accumulated losses submitted by TANGEDCO up to 31-10-2010 is Rs. 17207.30


Crore, which needs to be addressed in final transfer scheme through financial
restructuring. Statutory advice of the Commission to GoTN in this regard vide TNERC
letter dated 09-12-2010 (Annexure VI) may also be referred.

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2.1.408 Even in the subsequent years FY 2011-12 and FY 2012-13, the TANGEDCO has
indicated losses in each of the years. The analysis on expenditure on individual item is
discussed under respective heading separately in this Order.

2.1.409 For Tariff design of FY 2012-13, the Commission has carried out prudence check of each
of the cost elements submitted by TANGEDCO in its petition. Based on this prudence
check, the Commission has determined Net Revenue Requirement recoverable from
tariff. The Commission in this Order has adopted a Tariff Philosphy to allow incremental
revenue from approved tariff matching with the net additional revenue requirement,
thereby designing the tariff for FY 2012-13 on revenue neutral basis.

2.1.410 The Commission directs TANGEDCO to submit the detailed CAPEX schemes with in 3
months of the date of issue of this Order.

2.1.411 As regards to levying of estimate extension cost, the Commission clarifies that it has
already been directed to TANGEDCO for not collecting the estimated cost from the
intending consumers and also to reimburse the amount collected earlier against the
provision of TNERC Distribution Code.

2.1.412 As regards tenants being overcharged by the house owners, the Commission in this
regard had issued a press note on 04-08-2010 in which TANGEDCO had been advised to
file such complaints under Section 142 of Electricity Act 2003 or before the appropriate
judicial magistrate under Section 146 of Electricity Act 2003.

2.1.413 The Commission directs TANGEDCO to comply with various provision of Energy
Conservation Act 2001 pertaining to energy audit.

2.1.414 The major reasons for the losses are shortage of power, exponential growth of demand
and the need for power purchase from the market at high price coupled with lower
average billing rate as compared to average cost of supply, notwithstanding the increase
in various input costs.

2.1.415 The proposal of TANGEDCO in its petition involves creation of Regulatory Asset to the
tune of Rs. 24762.31 Crores. Generally creation of Regulatory Asset is not encouraged.
In this particular case, the tariff hike sought for by the TANGEDCO for the year 2012-13
is Rs. 9741 Crore which amounts to 37% of increase over the existing tariff. Even after
this proposal, the Petition envisages creation of Regulatory Assets of Rs. 4806 Crore for
2012-13 alone. Proposed tariff hike to yield revenue of Rs. 24762 crore, which is the

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revenue gap upto FY 2012-13 on standalone basis, would be around 93%, further. Such
an increase may not also be justified as the same tariff may not be required to be
maintained in future. While the accumulated losses before unbundling has been proposed
to be addressed through financial restructuring, losses to the magnitude of Rs. 24762.31
Crore may be dealt with by combination of Tariff hike and Regulatory Asset. The
Commission, therefore, would like to get the reaction of the Government of Tamil Nadu
in this regard and accordingly a reference is made to the Government of Tamil Nadu on
16-03-2012 which is enclosed as Annexure VIII.

2.1.416 The Commission appreciates the concerns expressed by various stake holders both in the
written comments submitted by them to the Commission as well as the concerns
expressed during the Public Hearings held at Chennai at 30th January 2012, Coimbatore
on 2nd February 2012, Tiruchirapalli on 6th February 2012 and at Madurai on 10th
February 2012. The Commission directs the TANGEDCO to properly monitor the on-
going projects so that they are commissioned without further delay. The TANGEDCO
should also ensure that the TANTRANSCO completes all the associated transmission
system for evacuation of power from the generating stations which are getting
commissioned during the year 2012-13 so that power generated from the generating
stations are transmitted up to the Load Centers without any bottle necks.

2.1.417 As regards the generation cost of new capacity addition, the Commission has directed
TANGEDCO to file separate petition for the approval of capital cost and tariff
determination of new power plants. However, the Commission in this Tariff Order has
provisionally considered the variable charges for new power plants.

2.1.418 The Commission clarifies that Ennore TPS has been proposed to be decommissioned by
2016-17.

2.1.419 The Commission has received the comments from the industrial consumers supporting
for restarting the incentive for maintaining near about unity power factor. A view was
also expressed that most of the consumers would maintain the power factor at around 0.9
lag and therefore TANGEDCO will be the most affected party in the discontinuance of
the incentive.

The provisions relating to power factor are reproduced below:


Regulation 13(3) of Tamil Nadu Electricity Distribution Code dated 21-07-2004

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“It shall be obligatory on the part of the consumers to improve the power factor of
their connected loads to the required level in accordance with provisions made in this
code. Every consumer with a power factor less than the stipulated level may be
suitably advised to rectify the situation by installing appropriate power factor
correction equipment, without prejudice to the levy of compensation charges as per
the orders of the Commission from time to time.”

Regulation 8(6)(ii) of Tamil Nadu Grid Code dated 19-10-2005


“ii) All the end users, distribution licensees, transmission licensees and STU are
expected to provide local VAR compensation such that they do not draw VARs from
the HV Grid. VAR compensation has to commence in the following order.
• Consumer end
• Distribution transformer end
• At the substations end of 11 / 22 KV distribution feeders
• Substations
• Generating stations”

Regulation 4.6.1(a) of Indian Electricity Grid Code (IEGC)


Reactive Power compensation and/or other facilities, shall be provided by STUs, and
Users connected to ISTS as far as possible in the low voltage systems close to the
load points thereby avoiding the need for exchange of Reactive Power to/from ISTS
and to maintain ISTS voltage within the specified range.

As per the above stipulations, the Commission is of the view that it shall be obligatory on
the part of the consumer to generate adequate reactive power at his load end so as to
maintain stipulated power factor in the network. The role of the consumer is most
important because only if the consumer maintains a power factor of near unity in his load
end, the entire network (from generator to the load) is relieved of carrying the reactive
power.

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2.1.420 In the Explanatory Memorandum to the Tamil Nadu Electricity Supply (Amendment)
Code, 2010 notified vide Notification No. TNERC/SC/7-21 dated 25-10-2010, it was
stated that
“7. Maintaining high power factor at load end (consumer end) helps to maintain the
stability of the grid and good voltage profile in the electrical network. This ultimately
helps the consumer to avail quality power.
8. The important factor to be considered is that by maintaining a high power factor, a
consumer could save his electricity charges considerably by way of reduced demand
charges. By way of lower demand charges, a consumer can recover his capacitor
installation cost within a few months. After this short pay back period, the consumer
is continuously benefited by the lower demand charges.
9. In the above circumstances, the Commission considers that any further incentive
provided to the consumer by the TNEB would be a bonus for the consumer. The
incentive being paid as power factor incentive, if used directly by TNEB for installing
additional capacitors, it will benefit all the consumers. Therefore, the Commission
finds no reason to extend the benefit of high power factor incentive to limited
consumers and therefore the Commission decides to withdraw the incentive
component for power factor improvement with effect from 01-08-2010 as stipulated in
the tariff order No. 3 of 2010 dated 31-07-2010.”

PF disincentive and incentive should not be equated with each other. The Commission
notes that PF disincentive mainly caters to passing the additional cost of the grid
imbalance settlement to the consumer. Whereas, maintaining high power factor itself is
an incentive to the consumer as it leads to stable voltage, reduction of strain to consumer
equipments and reduction of current consumption charges to the consumer. The
Commission in TNERC (Terms and Conditions for Determination of Tariff) Regulations,
2005 dated 18.03.2011 has stated that
“12. Power Factor
The Commission may direct certain categories of consumers to maintain power
factor at a prescribed level and allow incentive / disincentive for maintaining
above / below the prescribed level.”

The Commission has only specified the minimum power factor to be maintained by the
consumers as 0.9 for levying penalty and has not specified any benchmark power factor
for the purpose of incentive.

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2.1.421 The Commission would like to state that it is understood that the matter regarding power
factor incentive is yet to be taken up for hearing by the Supreme Court.

2.1.422 The TANGEDCO should also ensure that the power which is available at the sub-stations
are taken up to the consumption points by way of appropriate distribution systems. All
these arrangements will have to be carried out through a well structured business plan and
individual schemes matching with the business plan. All such plans and schemes shall be
submitted in accordance with the Terms and Conditions of Tariff Regulations 2005,
MYT Tariff Regulations as well as Licensing Conditions. The submission in this regard
so far has been very unsatisfactory. The Commission has been addressing the utilities by
way of letters as well as by way of directions. The compliance to such letters and
directions will have to be more serious.

2.1.423 The Commission clarifies that lavish illumination for weddings and other private
functions are charged LT VI i.e. Supply to Temporary Connections.

2.1.424 As regards the request of certain stakeholders seeking TANGEDCO to provide separate
electricity meters for measuring the consumption at labor welfare establishments and not
treating as theft, the Commission states that there are several such cases which have been
stayed by the High Court. Tariff schedule of this Order may also be referred in this
regard.

2.1.425 Various issues raised by stakeholders relating to Supply Code Regulations and R&C
Orders do not fall under the purview of present exercise of Tariff determination.

2.1.426 Objection regarding the waiving off electricity generation tax during the period of R&C
measures, the Commission would like to specify that Electricity Generation Tax is in the
domain of Government of Tamil Nadu.

2.1.427 The drives against theft of electricity are governed by Section 126 (Assessment) and
Section 135 (Theft of Electricity) of Electricity Act 2003. Enforcement Squad has to
work in accordance with such provisions and the Regulation of the Commission.

2.1.428 Sufficient data is not available to assess the impact of the additional hour in Peak hours,
and hence the Commission is continuing with the existing TOD slabs. The TANGEDCO
is directed to submit data on ToD consumption alongwith the next Tariff Application
along with proper justification and consideration by the Commission. Depending on the

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impact and response to the ToD tariffs, the Commission may consider extending the ToD
tariffs depending on data availability and viability.

2.1.429 The Commission disagrees with the suggestion that peak hour tariff and night hour rebate
should be on equal footing. During the Peak hours, marginal cost of power procurement
is very high and being in revenue neutral regulated business, a pass through mechanism
has to be made available to the Utility to recover its cost and also to disincentivise the
avoidable consumption during the peak period. During the night off-peak hours the
Utility would be operating its base load plants to cater to the off peak load, which are
built in to the tariff of the consumer and there is no equitable avoidance of cost for the
Utility vis-à-vis peak hour consumption.

2.1.430 The tariff for agricultural consumers is not zero. The Commission in its last Tariff Order
dated 31-07-2010 has prescribed Rs. 250 per HP per annum and TANGEDCO has
proposed to increase the same to Rs. 1750 per HP per annum which is borne by the
Government of Tamil Nadu by way of subsidy.

2.1.431 As regards to the determination of tariff on the basis of operating voltage, the
Commission is of the opinion that the voltage wise cost of supply is synonymous with
Cost to Serve method to determine tariff as already discussed by the Commission.

2.1.432 Since audited accounts are not available for the year FY 2011-12, the Commission has
considered two stage of True-up i.e. Provisional True-up and final True-up. Presently, the
Commission is providing Provisional True-up and the final True-up based on the audited
accounts for FY 2011-12 will be done in the next Tariff determination process.

2.1.433 As regards to the objection raised by the objector regarding TANGEDCO not incurring
any cost towards supplying power to the consumer drawing power directly from the grid,
the Commission is of the opinion that as per Section 38 & 39 of the Electricity Act 2003
specifying the functions of Central Transmission Utility (CTU) and State Transmission
Utility (STU), it has been clearly mentioned that CTU and STU cannot engage in the
trading of power and therefore, cost incurred in the supply of power of such consumers
also comes under the purview of Distribution Company. Section 38 & 39 of the
Electricity Act 2003 are as below:
“Section 38. (Central Transmission Utility and functions):
(1) The Central Government may notify any Government company as the Central
Transmission Utility:

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Provided that the Central Transmission Utility shall not engage in the business of
generation of electricity or trading in electricity.

Section 39. (State Transmission Utility and functions):


(1) The State Government may notify the Board or a Government company as the
State Transmission Utility:
Provided that the State Transmission Utility shall not engage in the business of
trading in electricity.”

In view of this, all consumers, even if served at EHT voltages, are billed by Distribution
licencees only.

2.1.434 The Commission has directed TANGEDCO in its Tariff Order dated 15-03-2003 that
“7.13 Surcharge for Arc Furnaces
In the existing tariff schedule, High Tension industries under Tariff I-A having arc
furnaces are being charged 25% extra to the High Tension Tariff I-A for the electricity
consumption. This additional charge is on account of the harmonics created by the
rectifiers used by the arc furnaces. The Commission has modified this clause in the
Tariff Schedule and these arc furnaces will now have to pay additional energy charges
of 15%, on the base HT I-A tariffs. Further, the Commission is of the opinion that
this extra charge should be levied only till such time as the harmonics are created by
such industries. These industries and TNEB would be well advised to study remedial
measures available to rectify the situation. If such remedial measures are adopted by
the industries / TNEB, then this surcharge has to be reviewed.”

The clause for review of surcharge if TANGEDCO/Industries adopt remedial measure to


rectify the harmonics in the system does not appear in the Commission’s last Tariff Order
dated 31-07-2010. However the Provision in Tariff order No. 3 of 2010 dated 31-07-2010
for similar charges is reproduced below:

“9.11.2.4 The consumption of electrical energy by the HT Industrial Consumers under


HT IA having Arc furnaces will be charged an additional energy charge of 15% on the
HT IA tariff.”

The Commission’s Supply Code has the following provisions for levy of additional
charges for harmonics dumping:

Regulation 4(1)(iv) of Supply Code:


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“Additional charges for harmonics dumping
Where any equipment installed by a consumer generates harmonics, the consumer
shall provide adequate harmonic suppression units to avoid dumping of harmonics
into Licensee’s distribution system and the Licensee is at liberty to provide suitable
metering equipment to measure the harmonic level pursuant to such harmonic. Where
the consumer fails to provide such units, he shall be liable to pay compensation at
such rates as the Commission may declare from time to time.”

2.1.435 The Central Electricity Authority in its Technical standards for connectivity to the grid
regulations, 2007 has specified the following limits for harmonic distortions in the
Distribution system and Bulk consumers:

“3. Voltage and current Harmonics

(1) The total harmonic distortion for voltage at the connection point shall not exceed
5% with no individual harmonic higher than 3%.
(2) The total harmonic distortion for current drawn from the transmission system at
the connection point shall not exceed 8%.
(3) The limits prescribed in (1) and (2) above shall come into force not later than five
years from the date of publication of these regulations in the official gazette.”

2.1.436 The above regulation was notified in the Government Gazette on 21-02-2007. As
specified in the Supply Code, when the consumer fails to provide adequate harmonic
suppression unit to avoid dumping of harmonics into Licensee’s distribution system he
shall be liable to pay compensation at 15% of the respective tariff. If such remedial
measures are adopted by consumers/TANGEDCO to bring down the harmonics within
the limit as specified by CEA regulations, then this compensation charge shall not be
levied. The measurement of harmonics shall be done by the Distribution Licensee using
standard meters/equipments in the presence of the consumers or their representative.
Accordingly, non-levy of Compensation Charge, if consumer takes corrective action as
per CEA Regulations, is being introduced in this Order.

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Fuel Cost

2.1.437 Adjusting FPAC charges in the mid of the year has been allowed by the Electricity Act
2003 under section 62 sub section 4, which states:
“No tariff or part of any tariff may ordinarily be amended, more frequently than
once in any financial year, except in respect of any changes expressly permitted
under the terms of any fuel surcharge formula as may be specified.”

Also, the APTEL in its Order O.P. 1 of 2011 dated 11-11-2011 under para 65 (vi) has
stated that
“(vi) Fuel and Power Purchase cost is a major expense of the distribution
Company which is uncontrollable. Every State Commission must have in place a
mechanism for Fuel and Power Purchase cost in terms of Section 62 (4) of the
Act. The Fuel and Power Purchase cost adjustment should preferably be on
monthly basis on the lines of the Central Commission’s Regulations for the
generating companies but in no case exceeding a quarter. Any State Commission
which does not already have such formula/mechanism in place must within 6
months of the date of this order must put in place such formula/ mechanism.”

Therefore, the Commission clarifies that FPAC exercise is important and should be
implemented and it is irrespective of annual tariff increase.

2.1.438 The derivation of Fuel Price Adjustment Charge (FPAC) is dealt separately in this Order.

2.1.439 As regards to the deriving Cost per million kilocalories for all the fuels, the Commission
is of the view that fuel cost cannot be adjusted on the basis of calorific value of the fuel.
Separate fuel cost is to be dealt with for the power generation plants consuming different
type of fuel and hence it cannot be brought at same platform on the basis of calorific
value. Further, the Commission would like to clarify that the Fuel Supply Aggrements are
based on the weight or Volume and not on Calorific Value basis.

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Regulatory Asset

2.1.440 The issue of Regulatory Asset is dealt with in Regulation No. 13 of the Terms and
Conditions of Tariff Regulations 2005. This issue was also the subject matter of appeal
before the Hon’ble Appellate Tribunal for Electricity arising out of the Commission’s
Order No. 3 of 2010 dated 31-07-2011 and the decision of the Appellate Tribunal for
Electricity is extracted below:-

8.4. Let us first examine the provisions of the Tariff Policy in this regard. The
relevant extracts are as under:
“8.2.2. The facility of a regulatory asset has been adopted by some Regulatory
Commissions in the past to limit tariff impact in a particular year. This
should be done only as exception, and subject to the following
guidelines:
a. The circumstances should be clearly defined through regulations, and
should only include natural causes or force majeure conditions. Under
business as usual conditions, the opening balances of uncovered gap
must be covered through transition financing arrangement or capital
restructuring;
b. Carrying cost of Regulatory Asset should be allowed to the utilities;
c. Recovery of Regulatory Asset should be time-bound and within a period
not exceeding three years at the most and preferably within control
period;
d. The use of the facility of Regulatory Asset should not be repetitive.
e. In cases where regulatory asset is proposed to be adopted, it should be
ensured that the return on equity should not become unreasonably low
in any year so that the capability of the licensee to borrow is not
adversely affected”.

The Tariff Policy stipulates creation of the regulatory asset only as an exception
subject to the guidelines specified above. According to the guidelines the
circumstances under which the regulatory assets should be created are under
natural causes or force majeure conditions.

8.5. Let us now examine Regulation 13 of the 2005 Tariff Regulations of the State
Commission:
“13. Regulatory Asset:

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(1) Wherever the licensee could not fully recover the reasonably incurred cost at
the tariff allowed with his best effort after achieving the benchmark
standards for the reasons beyond his control under natural calamities and
force majeure conditions and consequently there is a revenue shortfall and if
the Commission is satisfied with such conditions, the Commission shall treat
such revenue shortfall as Regulatory Asset.
(2) The regulatory asset shall first be adjusted against the contingency reserve.
The balance regulatory asset, if any, will be allowed to be recovered within a
period of three years as decided by the Commission.
(3) The licensee shall intimate the Commission then and there when such
contingency arises.

(4) Any un-recovered gap at the beginning must be covered through transition
financing arrangement or capital restructuring”.

Under the State Commission’s Regulations also the regulatory asset is to be created
when the licensee is not able to recover the reasonably incurred cost for reasons
beyond its control under natural calamities and force majeure conditions. Further,
the regulatory asset has to be recovered within a period of three years. Admittedly,
in the present case occurrence of natural calamities and force majeure conditions
did not arise.

8.6. Now we shall examine the findings of the State Commission in this regard. The
relevant extracts from the impugned order under paragraph 9.15.3 (9) are
reproduced in paragraph 7.4 above.

8.7. The State Commission has justified creation of the regulatory asset for the
anticipated revenue gap during the control period to prevent the tariff shock.
The order does not clearly state the total amount of the regulatory asset
created but if we add up the projected revenue gap of Rs. 7904.04 Cr., Rs.
6062.24 Cr. and Rs. 3489.18 Cr. for FY 2010-11, 2011-12 and 2012-13
respectively it totals upto Rs. 17445.46 Cr. It is also noticed that the State
Commission has also not provided for any carrying cost on the regulatory
asset and the programme for recovery of the amount to be taken as expenses in
future tariff.

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8.8. We are of the opinion that the regulatory asset created by the State Commission
is not in consonance with the Tariff Policy and its own Regulations. Moreover,
the impugned order does not provide for recovery of the regulatory assets with
the carrying cost as envisaged in the Regulations and the Tariff Policy.

8.9. The State Commission has justified creation of regulatory asset for avoiding
tariff shock. Now, let us examine the increase in tariff decided in the impugned
order. We reproduce below the response of TNEB (Respondent-1) recorded in
the impugned order regarding the tariff increase.

“2.27.2 Domestic users consume 15 million units/ day. Individual consumption has
already crossed more than 1000 units, whereas the per capita consumption
envisaged in the 11th Plan is 1000 units only. Last year, the average cost of supply
was Rs.4.70/unit and it is expected to increase to Rs.4.90 / unit. Ason date, the
average recovery is Rs.2.60/unit. For every consumer, the average subsidy is
Rs.2.30/unit. In Tamil Nadu, except Commercial and Industry, other categories
come under subsidized tariff. Out of 2.09 crores consumers, no hike is proposed for
1.65 crores consumers. Out of 1.50 crores domestic consumers, there is no hike for
1.40 crores consumers. Hike is proposed for only 10 to 12 lakh domestic consumers.
The average increase is 65 ps. Only”.

Thus, despite huge gap between average cost of supply and average recovery,
TNEB had proposed no hike in tariff for 1.65 crores consumers out of total 2.09
crores consumers i.e. tariff was not to be increased for about 79% of the
consumers. Out of 1.5 Crores domestic consumers no hike was proposed for 1.4
Crores (93%) consumers. In fact, the first respondent withdrew its own petition for
tariff increase for domestic consumers consuming from 201 units to 600 units bio-
monthly and the State Commission permitted the same. In its response to the
comments of the stakeholder the State Commission has recorded in para 2.29.1(6)
of the impugned order that it had proposed to increase tariff only to certain
categories of consumers. We do not understand why no tariff was increased for
majority of consumers even though the Respondent no. 1 was facing huge revenue
gap while it had proposed to carry out a number of system improvement works for
which funds were required and considering that the tariff was being increased after
a span of seven years. When the tariff has not been increased for most of the
consumers, how the creation of the regulatory asset of such high magnitude, that

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too without any direction for its amortization, can be justified on the pretext of
avoiding tariff shock?

8.10. Now, the question arises whether the creation of the regulatory asset is in the
interest of the distribution company and the consumers. The respondent no. 1 will
have to raise debt to meet its revenue shortfall for meeting its O&M expenses,
power purchase costs and system augmentation works. It is not understood how the
respondent no. 1 will service its debts when no recovery of the regulatory asset and
carrying cost has been allowed in the ARR. Thus, the respondent no. 1 will suffer
with cash flow problem affecting its operations and power procurement which will
also have an adverse effect on maintaining a reliable power supply to the
consumers. Thus, creation of the regulatory asset will neither be in the interest of
the respondent no. 1 nor the consumers.”

2.1.441 Order No. 3 dated 31-07-2010 had extensively discussed the reasons for the accumulated
losses of the utility as already discussed in the Chapter 1-Introduction. The losses of
TNEB have accumulated over a period of more than ten years. While the load has been
growing continuously, the capacity addition has not kept pace with the increasing
demand. Consequently power was purchased from the market. The tariff has not kept
pace with the increase in costs with tariff revisions only in 2003 and then in 2010. The
gap up to the unbundling of the TNEB on 1-11-2010 is Rs. 17207.30 Crore. Thereafter
the revenue gap up to 31st March 2013 is Rs. Rs. 34503.32 Crore. The Commission had
expressed a view earlier that the accumulated losses up to the date of unbundling will
have to be dealt with in accordance with Para 5.4.3 of the Naional Elelctricity Policy and
Tariff Policy. The provisions of the National Electrcity Policy and Tariff Policy
envisages that the gap at the time of unbundling will have to be sorted out by financial
restructuring and support from the Government rather than passing on the accumulated
losses to the successor entities. The intention of the Tariff Policy is to allow the
unbundled utilities to start on a clean slate. Accordingly, this Commission leaves the
matter of the accumulated losses up to the date of unbundling for resolution by the
Government of Tamil Nadu. The Commission’s suggestion to Government of Tamil
Nadu in this regard is that such restructuring of successor entities should not result in
increase in tariff to consumers. The TANGEDCO and TANTRANSCO have also not
claimed any relief of account of accumulated losses prior to unbundling on 1-11-2010 in
this tariff petition.

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2.1.442 After the date of unbundling i.e., with effect from 01-11-2010 and up to the end of this
control period i.e. up to 31-3-2013, the proposed revenue gap is Rs. 34503.32 Crore. Out
of this the proposal of TANGEDCO is to raise additional revenue to the extent of Rs.
9,741.01 Crore by raising the tariff. The uncovered deficit is still Rs. 24762.31 Crore.
The proposal of TANGEDCO is to create Regulatory Asset for this uncovered deficit.
The Commission is concerned with creation of such a large Regulatory Asset especially
when the same is to be amortized during the next three to five years. Even if there is no
other change in the tariff, the regulatory asset alone would be required to be serviced at
Rs. 5,000 to 6,000 Crore every year for the next three to five years. Such an arrangement
may not be workable as the tariffs would become very high and may not really be
necessary subsequent to the amortization of the Regulatory Asset. A practical view needs
to be taken to handle this grave situation. Two Committees constituted by Government of
India are going through these issues. The Shunglu Committee has already submitted its
report. The report of the Chaturvedi Committee is awaited. The Commission is of the
view that the short term borrowings which have been resorted to by the two utilities
should be converted into long term borrowings with appropriate moratorium periods.
Support of the State / Central Governments are also required to be assessed in dealing
with the Regulatory Assets. The Commission would therefore like to obtain the view of
the Government of Tamil Nadu in this regard. The Commission has addressed the
Government of Tamil Nadu on 16-03-2012 on this issue as enclosed Annexure VIII.

Capacity Addition

2.1.443 The Commission has considered energy from all available sources including upcoming
Generating Stations during FY 2012-13. The details of energy available during FY 2012-
13 have been elaborated in the Chapter on Energy Availability in this Tariff Order.

2.1.444 Basin Bridge GTPS (BBGTPS) is a peaking Station in which Naptha is used as fuel.
Since the cost of generation for BBGTPS is high, the Commission has considered the
PLF as approved in the last Tariff Order for FY 2012-13.

2.1.445 The Commission has considered the following capacity addition while calculating energy
availability during FY 2012-13:

Name of the Generation Commercial Operation


Sl. No. Capacity in MW
Station Date
1 North Chennai TPS Unit I 600 October, 2012

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Name of the Generation Commercial Operation
Sl. No. Capacity in MW
Station Date
2 North Chennai TPS Unit II 600 June, 2012
Vallur TPS (JV of TNEB
3
and NTPC)
- Unit I 500 March, 2012
- Unit II 500 February, 2013
- Unit III 500
(Allocation from this station
to Tamil Nadu is 1075 MW)
300 MW by March 2012;
4 Mettur TPS Stage III 600
300 MW by June 2012
Nevyeli Lignite
250 MW by March 2012
Corporation TS Expansion
5 2 x 250 and 250 MW by
II Unit 1 &2 (Allocation to
September 2012
Tamil Nadu is 195.5 MW)
MAPS Additional PFBR
6 Kalpakkam (Allocation of 500 500 MW by May 2012
142 MW to Tamil Nadu)

2.1.446 The Commission observes that there are time-over-runs in Capacity Addition. However
all upcoming Generating Stations are expected to be commissioned during FY 2012-13
and has been considered by the Commission for estimating energy availability.

Power Purchase

2.1.447 The Commission in this Tariff Order has considered the power purchase quantum and
cost on the basis of Merit Order Despatch according to the variable cost of various power
plants.

2.1.448 The Commission has elaborated the details of power purchase allowed from FY 2010-11
to FY 2012-13 in the chapter of Power Purchase Cost.

2.1.449 As regard to earmarking power from Pycara and Kundah small Hydro stations to
agriculture sector, the Commission is of the opinion that the tariff is determined for all
the categories on the basis of the consolidated ARR which is arrived after determination
of various components including power purchase cost as well.

2.1.450 The Commission appreciates the concern of the objectors regarding huge quantum being
purchased from Open Market. The Commission has given specific directive in this regard

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under which TANGEDCO is required to take prior approval from the Commission if the
power purchase quantum and cost from Traders is expected to exceed the specified
quantum and cost for FY 2012-13 in this Order.

Quality of Supply:

2.1.451 The concern expressed by various consumers with regard to the quality of supply is very
relevant. The Commission has already notified the Standards of Performance
Regulations, which stipulate the quality of supply levels to be maintained by the Utility.
While overall standards may be maintained by the Utility, it is quite possible that some
chronic problems may exist in the system. TANGEDCO should take adequate efforts to
attend to these problems.

2.1.452 The common problems expressed by the consumers include low voltage, overloading and
burning of transformers, cable failures, load shedding etc.

2.1.453 While load shedding is directly related to the availability of power and the ability of
TANGEDCO to purchase power at high cost, the other issues are technical in nature and
will need investment in improving last mile connectivity.

2.1.454 The distribution planning to be done by the TANGEDCO, duly taking into account the
requirements of Supply Code, Distribution Code etc. would go a long way in improving
the quality of supply.

2.1.455 The Commission believes that TANGEDCO has its own in-house guidelines with regard
to operation and maintenance of distribution system. Adequate transformation ratio will
have to be created depending on the requirement.

2.1.456 HT/LT ratio needs to be improved.

2.1.457 The distribution transformers are to be metered to get the profile of the voltage, down
time as well as the energy. Normally load on transformers should be limited to the extent
of 80% of the rated capacity to prevent failures.

2.1.458 The cables should be properly selected to prevent overloading and frequent failures. The
voltage at the tail end needs to be monitored at regular intervals. Proactive action on the

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part of TANGEDCO will go a long way in reducing the consumers’ complaints and
improving their satisfaction.

2.1.459 Erection procedure and safety requirements as per section 53 of Electricity Act, 2003
should be followed in letter and spirit.

2.1.460 As far as consumers are concerned, these complaints could be taken up with the Utility
directly and in the absence of corrective action by TANGEDCO, the issue could be taken
up with the Consumer Grievance Redressal Forum (CGRF) for Redressal of grievances.
In case the consumer is not satisfied with the Order of CGRF, an appeal could be
preferred to the Ombudsman. The Regulations relating to CGRF and Ombudsman could
be referred from the website of the Commission.

Cost to Serve, Average Cost of Supply and Cross Subsidy:

2.1.461 These are inter-related issues. The provisions regarding these three items are extensively
covered in the Order of Hon’ble Appellate Tribunal of Electricity dated 11th January
2012 in Appeal Nos. 57 of 2008, 155 of 2007, 125 of 2008, 45 of 2010, 40 of 2010, 196
of 2009, 199 of 2009, 163 of 2010, 6 of 2011 and 144 of 2010. Para 40 of the said order
is relevant and is extracted below.
“17. Section 61(g) of the 2003 Act stipulates that the tariff should progressively
reflect the cost of supply and cross subsidies should be reduced within the time
period specified by the State Commission. The Tariff Policy stipulates the target for
achieving this objective latest by the end of year 2010-11, such that the tariffs are
within ± 20% of the average cost of supply. In this connection, it would be
worthwhile to examine the original provision of the Section 61(g). The original
provision of Section 61(g) “the tariff progressively reflects the cost of supply of
electricity and also, reduces and eliminates cross subsidies within the period to be
specified by the Appropriate Commission” was replaced by “the tariff progressively
reflects the cost of supply of electricity and also reduces cross subsidies in the
manner specified by the Appropriate Commission” by an amendment under
Electricity (Amendment) Act, 2007 w.e.f. 15.6.2007. Thus the intention of the
Parliament in amending the above provisions of the Act by removing provision for
elimination of cross subsidies appears to be that the cross subsidies may be reduced
but may not have to be eliminated. The tariff should progressively reflect the cost of
supply but at the same time the cross subsidy, though may be reduced, may not be

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eliminated. If strict commercial principles are followed, then the tariffs have to be
based on the cost to supply a consumer category. However, it is not the intent of the
Act after the amendment in the year 2007 (Act 26 of 2007) that the tariff should be
the mirror image of the cost of supply of electricity to a category of consumer.

18. Section 62(2) provides for the factors on which the tariffs of the various
consumers can be differentiated. Some of these factors like load factor, power factor,
voltage, total electricity consumption during any specified period or time or
geographical position also affects the cost of supply to the consumer. Due weightage
can be given in the tariffs to these factor to differentiate the tariffs.

19. The National Electricity Policy provides for reducing the cross subsidies
progressively and gradually. The gradual reduction is envisaged to avoid tariff
shock to the subsidized categories of consumers. It also provides for subsidized tariff
for consumers below poverty line for minimum level of support. Cross subsidy for
such categories of consumers has to be necessarily provided by the subsidizing
consumers.

20. The Tariff Policy clearly stipulates that for achieving the objective, the State
Commission has not been able to establish that the tariff progressively reflects the
cost of supply of electricity, latest by the end of the year 2010-11, the tariffs should
be within ±20% of the average cost of supply, for which the State Commission would
notify a road-map. The road map would also have intermediate milestones for
reduction of cross subsidy.

21. According to the Tariff Regulation 7 (c) (iii) of the State Commission the cross
subsidy has to be computed as difference between cost-to-serve a category of
consumer and average tariff realization of that category.
22. after cogent reading of all the above provisions of the Act, the Policy and the
Regulations we infer the following:

i) The cross subsidy for a consumer category is the difference between cost to serve
that category of consumers and average tariff realization of that category of
consumers. While the cross-subsidies have to be reduced progressively and
gradually to avoid tariff shock to the subsidized categories, the cross-subsidies may
not be eliminated.

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ii) The tariff for different categories of consumer may progressively reflect the cost
of electricity to the consumer category but may not be a mirror image of cost to
supply to the respective consumer categories.

iii) Tariff for consumers below the poverty line will be at least 50% of the average
cost of supply.

iv) The tariffs should be within ±20% of the average cost of supply by the end of
2010-11 to achieve the objective that the tariff progressively reflects the cost of
supply of electricity.

v) The cross subsidies may gradually be reduced but should not be increased for a
category of subsidizing consumer.

vi) The tariffs can be differentiated according to the consumer’s load factor, power
factor, voltage, total consumption of electricity during specified period or the time or
the geographical location, the nature of supply and the purpose for which electricity
is required.

Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer
category is not increased but reduced gradually, the tariff of consumer categories is
within ±20% of the average cost of supply except the consumers below the poverty
line, tariffs of different categories of consumers are differentiated only according to
the factors given in Section 62(3) and there is no tariff shock to any category of
consumer, no prejudice would have been caused to any category of consumers with
regard to the issues of cross subsidy and cost of supply raised in this appeal.”

“29. The State Commission has indicated in the impugned order that the voltage-
wise cost determination is the first step in determining the consumer-wise cost of
supply but has expressed difficulties in determination of voltage-wise cost of supply
due to non-segregation of costs incurred by the licensee related to different voltage
levels and determination of technical and commercial losses at different voltage
levels due to non-availability of meters. The State Commission has also noted that
the data submitted by the distribution licensee does not have technical or
commercial data support.

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30. It is regretted that even after six years of formation of the Regulations data for
the distribution losses. The position of metering in the distribution system of
respondent no. 2 is pathetic. Only about 1/4th of 11 KV feeders have been metered
and very small numbers of transformers have been provided with meters. Only 68%
of the consumer meters are functional in the distribution system as indicated in
Table-37 of the impugned order. It is also noticed that a large number of meters are
old electro mechanical meter which are not functioning. This is in contravention to
Section 55 of the Act. Section 55(1) specifies that no licensee shall supply electricity
after the expiry of two years from the appointed data, except through installation of
a correct meter in accordance with the Regulations of the Central Electricity
Authority. According to Section 55(2) meters have to be provided for the purpose of
accounting and audit. According to Section 8.2.1 (2) of the Tariff Policy, the State
Commission has to undertake independent assessment of baseline data for various
parameters for every distribution circle of the licensee and this exercise should be
completed by March, 2007. In our opinion the State Commission can not be a silent
spectator to the violation of the provisions of the Act. In view of large scale
installation of meters, the State Commission should immediately direct the
distribution licensee to submit a capital scheme for installation of consumer and
energy audit meters including replacement of defective energy meters with the
correct meters within a reasonable time schedule to be decided by the State
Commission. The State Commission may ensure that the meters are installed by the
distribution licensee according to the approved metering scheme and the specified
schedule. In the meantime, the State Commission should institute system studies for
the distribution system with the available load data to assess the technical
distribution losses at different voltage levels.

31. We appreciate that the determination of cost of supply to different categories of


consumers is a difficult exercise in view of non-availability of metering data and
segregation of the network costs. However, it will not be prudent to wait indefinitely
for availability of the entire data and it would be advisable to initiate a simple
formulation which could take into account the major cost element to a great extent
reflect the cost of supply. There is no need to make distinction between the
distribution charges of identical consumers connected at different nodes in the
distribution network. It would be adequate to determine the voltage-wise cost of
supply taking into account the major cost element which would be applicable to all

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the categories of consumers connected to the same voltage level at different
locations in the distribution system. Since the State Commission has expressed
difficulties in determining voltage wise cost of supply, we would like to give
necessary directions in this regard.

32. Ideally, the network costs can be split into the partial costs of the different
voltage level and the cost of supply at a particular voltage level is the cost at that
voltage level and upstream network. However, in the absence of segregated network
costs, it would be prudent to work out the voltage-wise cost of supply taking into
account the distribution losses at different voltage levels as a first major step in the
right direction. As power purchase cost is a major component of the tariff,
apportioning the power purchase cost at different voltage levels taking into account
the distribution losses at the relevant voltage level and the upstream system will
facilitate determination of voltage wise cost of supply, thoughnot very accurate, but
a simple and practical method to reflect the actual cost of supply.

33. The technical distribution system losses in the distribution network can be
assessed by carrying out system studies based on the available load data. Some
difficulty might be faced in reflecting the entire distribution system at 11 KV and 0.4
KV due to vastness of data. This could be simplified by carrying out field studies
with representative feeders of the various consumer mix prevailing in the
distribution system. However, the actual distribution losses allowed in the ARR
which include the commercial losses will be more than the technical losses
determined by the system studies. Therefore, the difference between the losses
allowed in the ARR and that determined by the system studies may have to be
apportioned to different voltage levels in proportion to the annual gross energy
consumption at the respective voltage level. The annual gross energy consumption at
a voltage level will be the sum of energy consumption of all consumer categories
connected at that voltage plus the technical distribution losses corresponding to that
voltage level as worked out by system studies. In this manner, the total losses
allowed in the ARR can be apportioned to different voltage levels including the EHT
consumers directly connected to the transmission system of GRIDCO. The cost of
supply of the appellant’s category who are connected to the 220/132 KV voltage may
have zero technical losses but will have a component of apportioned distribution
losses due to difference between the loss level allowed in ARR (which includes

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commercial losses) and the technical losses determined by the system studies, which
they have to bear as consumers of the distribution licensee.

34. Thus Power Purchase Cost which is the major component of tariff can be
segregated for different voltage levels taking into account the transmission and
distribution losses, both commercial and technical, for the relevant voltage level and
upstream system. As segregated network costs are not available, all the other costs
such as Return on Equity, Interest on Loan, depreciation, interest on working capital
and O&M costs can be pooled and apportioned equitably, on pro-rata basis, to all
the voltage levels including the appellant’s category to determine the cost of supply.
Segregating Power Purchase cost taking into account voltage-wise transmission and
distribution losses will be a major step in the right direction for determining the
actual cost of supply to various consumer categories. All consumer categories
connected to the same voltage will have the same cost of supply. Further,
refinements in formulation for cost of supply can be done gradually when more data
is available.”

2.1.462 The judgment of the Apex Court regarding the withdrawl of Cross subsidy for West
Bengal Electricity Regulatory Commission (WBERC) Vs. West Bengal High Court and
CESC Ltd. was prior to the Electricity Act 2003. The judgment was issued on 03-10-
2002. Hence, the directions of Electricity Act 2003 and Electricity (Amendment) Act
2003 with effect from 15-6-2007 would be applicable which says:
“Section 39. (State Transmission Utility and functions):


Provided further that such surcharge and cross subsidies shall be progressively
reduced in the manner as may be specified by the State Commission”

2.1.463 Cost to Serve, Average Cost of Supply and Cross Subsidy are also discussed extensively
in the above referred Order of the Hon’ble Appellate Tribunal of Electricity in
paragraphs, 36, 37, 38 and 39. The Hon’ble Appellate Tribunal of Electricity had
expressed the opinion that consequent to the Electricity (Amendment) Act 2003 with
effect from 15-6-2007, elimination of cross subsidy has been omitted which implies that
the tariff for a particular category of consumers need not be the mirror image of cost to
serve. Provisions of Tariff Policy envisage that the tariff for various categories of
consumers shall be within +/- 20% of the average cost of service. A conjoint reading of

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the Electricity Act 2003 after the amendment in the year 2007 with the other provisions
of the Act as well as the Tariff Policy, the intent of the Act seems to be that the tariff
need not be the mirror image of the cost of supply of electricity to a category of
consumers. The applicable portion of the Judgment which is contained in para 22 of the
decision of the Hon’ble Appellate Tribunal of Electricity in Appeals No. 102, 103 and
112 of 2010 rendered on 30th May 2011 is extracted below:
“22. After cogent reading of all the above provisions of the Act, the Policy and the
Regulations we infer the following:
i. The cross subsidy for a consumer category is the difference between cost to serve
that category of consumers and average tariff realization of that category of
consumers. While the cross-subsidies have to be reduced progressively and
gradually to avoid tariff shock to the subsidized categories, the cross-subsidies may
not be eliminated.
ii. The tariff for different categories of consumer may progressively reflect the cost of
electricity to the consumer category but may not be a mirror image of cost to supply
to the respective consumer categories.
iii. Tariff for consumers below the poverty line will be at least 50% of the average cost
of supply.
iv. The tariffs should be within ±20% of the average cost of supply by the end of 2010-
11 to achieve the objective that the tariff progressively reflects the cost of supply of
electricity.
v. The cross subsidies may gradually be reduced but should not be increased for a
category of subsidizing consumer.
vi. The tariffs can be differentiated according to the consumer’s load factor, power
factor, voltage, total consumption of electricity during specified period or the time
or the geographical location, the nature of supply and the purpose for which
electricity is required.
Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer
category is not increased but reduced gradually, the tariff of consumer categories is
within ±20% of the average cost of supply except the consumers below the poverty line,
tariffs of different categories of consumers are differentiated only according to the
factors given in Section 62(3) and there is no tariff shock to any category of consumer,
no prejudice would have been caused to any category of consumers with regard to the
issues of cross subsidy and cost of supply raised in this appeal.

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“29. The State Commission has indicated in the impugned order that the voltage-wise
cost determination is the first step in determining the consumer-wise cost of supply but
has expressed difficulties in determination of voltage-wise cost of supply due to non-
segregation of costs incurred by the licensee related to different voltage levels and
determination of technical and commercial losses at different voltage levels due to non-
availability of meters. The State Commission has also noted that the data submitted by
the distribution licensee does not have technical or commercial data support.”

(1) From the above it can be seen that the following are the tests for deciding the tariff in
compliance of the Electricity Act, Tariff Policy and Regulations of the Commission.

1. The Cost of service for each category of consumer will have to be worked out
separately.
2. The cross subsidy should be going down from year to year.
3. The tariff fixed for various categories should be within +/- 20% of the average cost
of service.
4. Tariff need not be a mirror image of cost to supply to the respective consumer
categories.
5. Tariff for different categories of consumers are differentiated only according to the
factors give in Section 62(3).
6. There is no tariff shock to any category of consumer.

(2) If the above are carried out and the tariff decided accordingly, no prejudice would
have been caused to any category of consumers with regard to the issues of cross-
subsidy and cost of supply.

Renewable Energy

2.1.464 Banking of wind energy and related issues are not under the purview of existing tariff
determination process.
Power Supply

2.1.465 The Commission recognizes the power cuts for the HT industry under Restriction &
Control (R&C) which were specified by Government of Tamil Nadu by the policy
directives in letter Ms. 121 Energy dated 22-10-2008, as below:
“4.2.2. Present R&C Measures:

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20% cut on base Demand & Energy for HT Industrial and Commercial Services
from 10.05.2011. (Partially relaxed for willing HT consumers with effect from
08.08.2011 up to September 2011 during 22:00 Hours to 05.00 Hours using Wind
energy).”

The Commission in its Order M.P. no. 15 of 2011 dated 22-03-2012, regarding lifting of
R&C measures has stated that:

“Normal Hours: The load relief available corresponding to 40% restriction is 800
MW. With the commissioning of every 400 MW capacity, 200 MW relief shall be
provided during the normal hours i.e. R & C measures shall be reduced to 30% from
40% with addition of 400 MW installed capacity. 10% additional relief in R & C will
be provided with the capacity addition of 400 MW of conventional power capacity.
Thus the entire restriction and control measures during the normal hours shall stand
lifted when 1600 MW of conventional capacity is added to the Tamil Nadu Electricity
System.
Evening Peak Hours: 90% restriction as existing today provides a relief of 700 to
800 MWs. With commissioning of every 400 MW of conventional capacity, 200 MW
relief shall be provided in the restriction and control during evening peak hours. In
effect, with the addition of 1600 MW of additional conventional power generation,
the entire R & C measures of 90% during evening peak hours shall stand withdrawn.
In this arrangement, the consumers who own captive generation, both wind and other
types of generation, would get the relief earlier during the wind season commencing
from May onwards. The Commission believes that this will be a fair approach to
lifting R & C measures for HT consumers both industrial and commercial. This
arrangement would also be providing some relief to other consumers who face load
shedding. The expectations of new consumers who are waiting in the queue for new
connections could also be satisfied to some extent.”

2.1.466 As regards to uninterrupted power supply, the Commission directs TANGEDCO to


maintain quality of supply as specified in Tamil Nadu Electricity Distribution Standards
of Performance Regulations dated 21-07-2004 in which it is specified that
“3. Quality of Service
Quality of service means providing uninterrupted, reliable electric supply at stipulated
voltage and frequency, which will be the end result of its planning, designing of
network, operation and service management to ensure stability in supply and prompt
compliance of consumers’ complaints on metering and billing. The supply with

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frequent power failure, fuse of calls, voltage fluctuations will not ensure continuity in
supply. These factors determine the degree of satisfaction of the consumers.”
Also, the Commission feels that if the capacity addition would be on time, as
discussed in later chapters, the power supply situation should improve.

Demand Side Management, Energy Efficiency

2.1.467 Demand Side Management is an effective tool to meet the demand – supply position in
the short term. Being a cheaper option, it helps in meeting the demand as compared to
capacity addition. Also, it enables to reduce the carbon emission and defers the
investment to subsequent years.

2.1.468 It is necessary to create awareness among users for promoting Energy Conservation and
Demand Side Management.

2.1.469 TANGEDCO should motivate the domestic and agriculture sector to adopt DSM
measures. Awareness has to be created for using Star Labelled Appliances which may
cost more but would pay back by way of energy saving.

2.1.470 TANGEDCO is suggested to submit relevant schemes for implementing DSM and
Energy Efficiency schemes to the Commission.

2.1.471 Use of CFLs should be encouraged with adequate arrangement for disposal of
unserviceable CFLs.

Metering and Energy Audit

2.1.472 Section 55 of the Electricity Act envisages that all connections shall be energised through
a correct meter. The relationship between Utility and the Consumer is through the meter.
The specification of meters has already been laid down by Regulations of the Central
Electricity Authority (CEA) in accordance with the Act. The Commission in its last Tariff
Order No. 3 of 2010 dated 31-07-2010 had directed TANGEDCO to submit a time bound
program for 100% metering which was not submitted within the time frame of six
months. This should be submitted within 3 months of the issue of this Order.

2.1.473 TANGEDCO should implement SCADA/ data management system which will enable
carrying out Energy Audit and Demand Side Management. The Commission in its last

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Tariff Order has asked TANGEDCO to submit the Study for Assessment of Transmission
& Distribution (T&D) Losses. TANGEDCO should submit the study so as to properly
assess the power purchase to be allowed for an estimated sales projection.

2.1.474 As regards to the metering of huts, the Commission is of the view that hut consumption
should be metered. Metering should be done as otherwise it distorts the subsidy
payments.

2.1.475 TANGEDCO should provide sub meters with AMR facility and additional modems to the
commercial and industrial consumers. This would help in bringing down the loss levels.
APDRP funds should be utilized properly for this purpose.

2.1.476 The Commission observes that feeder level metering and DT metering has not been
100% achieved as directed by the Commission in its Tariff Order dated 31-07-2010. The
Commission also considers the consumption of unmetered Agriculture services based on
scientific sampling for this Order. The study report of Anna University on Transmission
& Distribution losses shall be submitted to the Commmission upto 30th November 2012.

2.1.477 The Regulation issued by the CEA envisages installation of Static Meters for all
consumers. The Static meters will help in reduction of tampering, identifying various
parameters, downloading of data, introduction of time of the day tariff etc. besides
reducing billing errors.

Tariff categorization

2.1.478 Tariff categorization is dealt with in detail within the tariff schedule.

2.1.479 In this context, quite a few consumers have been representing before the Commission
during the Public Hearings, stating that they are not undertaking any “commercial”
activity or activities for making “profit” within their premises, and hence, they should not
be classified under the “commercial” category. It is clarified that the Commercial
category actually refers to all “non-residential, non-industrial” purpose, or which has not
been classified under any other specific category. For instance, all office establishments
(whether Government or private), hospitals, educational institutions, airports, bus-stands,
multiplexes, shopping malls, small and big stores, automobile showrooms, etc., are all
covered under this categorisation, since they cannot be termed as residential or industrial.

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2.1.480 The Commission issued a clarificatory Order no. 3-1 of 2010 dated 08-11-2010 where in
the Commission clarified various categories of services which are covered under each
group of Information Technology services.

2.1.481 Health care service providers have referred to a Supreme Court judgement in 2005 which
states that health care providers should not be treated as commercial entities. The
Commission has perused the judgement and observes that the judgement relates to the
occupation carried on by individual professionals such as doctors, lawyers, chartered
accountants in their individual capacity and not for nursing homes/hospitals.

2.1.482 As regards submission by different consumers for creation of new categories is to protect
their own interest, the past experience has shown that whenever the Commission created
some new categories, the same was challenged on the ground that such creation of new
category was neither proposed by the Utility nor the public or the concerned consumer
was put to notice. In the result such matters were remanded to the Commission for
reconsideration by the concerned Apellate authorities. Hence, in case the distribution
licencee feels the justification and necessity for the creation of a new category, then it
should submit the necessary data on consumer and consumption pattern and also ensure
that the categorisation is in accordance with the criteria for differentiation provided under
Section 62(3) of the EA 2003, for the Commission's consideration.

2.1.483 A similar impression is conveyed as regards the “Industry” categorisation, with the
Commission receiving several representations during and before the Public Hearings,
from the AAI, stating that they have also been classified as “industry” for the purpose of
taxation and/or other benefits being extended by the Central Government or State
Government, and hence, they should also be classified as “industry” for the purpose of
tariff determination. In this regard, it is clarified that classification as Industry for tax
purposes and other purposes by the Central or State Government shall apply to matters
within their jurisdiction and have no bearing on the tariffs determined by the Commission
under the EA 2003, and the import of the categorisation under Industry under other
specific laws cannot be applied to seek relief under other statutes. Broadly, the
categorisation of “Industry” is applicable to such activities, which entail “manufacture”.
While appreciating the anxiety of different classes of consumers to reduce their payments
on account of use of electricity, the reasonable costs incurred by the Utilities have to be
recovered irrespective of the number of consumer categories or the sub-classification
considered in accordance with the provisions of Section 62(3) of the EA 2003. The

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Commission is of the view that services defined under ESMA 1968 do not automatically
qualify the consumer to be cateogrized under Industrial category.

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3 ENERGY SALES
3.1.1 Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), in its
Petition submitted the actual energy sales for various categories during FY 2010-11 and
the projection towards FY 2011-12 and FY 2012-13. In this Section, the Commission has
analysed the sales and Distribution Loss trajectory from FY 2010-11 to FY 2012-13. On
the basis of approved sales and Distribution Loss, the Commission has approved the
energy balance.

Energy Sales:
3.1.2 The Commission in its previous Tariff Order has approved the category-wise energy sales
after considering the past trends. The category-wise energy sales approved for FY 2010-
11 to FY 2012-13 are tabulated below:
Table 1: Energy Sales for various consumer categories approved in the last Tariff Order

(MU)

Consumer
Sl. No. Tariff FY10 FY 11 FY 12 FY 13
Category
I High Tension
1 Industries I 14820 16055 17392 18841

Government
2 Educational II A 970 1034 1102 1175
Institutions etc.
Place of Public
3 II B 4 4 4 4
Worship
4 Commercial III 1600 1744 1901 2072
5 Lift Irrigation IV 9 9 9 9
Supply to
6 V
Puducherry
Sale to Other
7
States
Total HT 17403 18846 20408 22101
Low Tension
1 Domestic IA 15535 16282 17065 17886
2 Huts IB 393 411 428 447
3 Bulk Supply IC 3 4 5 6
Public Lighting
4 II A 1540 1581 1625 1669
& Water Supply

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Consumer
Sl. No. Tariff FY10 FY 11 FY 12 FY 13
Category
Government
5 Educational II B 357 386 416 450
Institutions, etc.
Places of Public
6 II C 93 98 104 110
Worship
Cottage & Micro
7 III A-1 111 117 122 128
Enterprises
8 Power Loom III A-2 822 855 889 924
9 Industries III B 3942 4089 4242 4401
10 Agriculture IV 10976 11206 11436 11666
11 Commercial V 4257 4555 4874 5215
Temporary
12 VI 11 19 33 56
Supply
Total LT 38040 39603 41239 42958
Grand Total 55443 58449 61647 65059

3.1.3 TANGEDCO in its Petition submitted that the load forecast has been done after taking
into account the economic growth and other factors that affect electricity consumption in
the major categories of load. TANGEDCO further submitted that it has attempted to
refine the forecasts in the wake of economic outlook for the State and check that they are
consistent with the likely movements of the principle macroeconomic parameters of
demand. The basic parameters underlying load forecast by TANGEDCO are:
• Sales data up to FY 2010 has been used for analysis
• Managing agricultural demand
• Rationalization of tariffs which included incentive structure for HT consumers,
increase in tariffs at inflationary level for subsidizing categories and increase in
tariffs for subsidized categories including agriculture.”

3.1.4 TANGEDCO has submitted the following approach for development of the load forecast
for each category:
a) Domestic or Residential: The domestic load has been expected to grow with the increase in
population as well as growth in per capita income. The past trend showed increase of demand
in this category. TANGEDCO submitted the growth trend in consumption by domestic
consumers as the quality of life increases, thereby increasing energy requirement as well.
Also, consumers may shift from Huts category to domestic category.

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b) Commercial: The Commercial load is expected to grow again with the increase in
population as well as increased spending. Tamil Nadu primarily being to a large extent a
service economy, commercial demand growth has been expected to continue growing during
the projection period.
c) Industrial Load (Low, Medium, High): The Industrial load would depend upon the capital
formulation as well as the growth in manufacturing sector. The effect of captive generation
has also been a major parameter in determining the future demand growth in industrial HT
sector. It further submitted that the past trends have shown small increase YOY growth rate
in industrial HT demand, though industrial LT demand has shown reasonable growth. With
measures to retain HT clients and neutralize the impact of captive generation, HT demand is
expected to grow at a low YOY rate.
d) Public Lighting, water works, etc.: The load growth for Public Lighting, Water works etc.
has been expected to depend upon the spending of Government for social services. During
the past, YOY growth rate has shown a significant increase in load growth. The previous
year rates have been taken as an indicative benchmark for projecting growth in this category.
e) Agriculture: TANGEDCO has nearly 20 lakh agricultural consumers with a connected load
of 103.30 lakh HP. TANGEDCO further estimated an increase of 40000 agricultural
connections per year.

3.1.5 Based upon above TANGEDCO in their Petition has projected the sales from FY 2010-
11 to FY 2012-13 for various consumer categories which is tabulated below:
Table 2: Energy Sales from FY 2010-11 to FY 2012-13

(MU)

S.
Category Tariff FY 2010-11 FY 2011-12 FY 2012-13
No
Estimated
Estimated No. of Estimated No. of
High Tension No. of Consumpti
Consumption Consumer Consumption Consumer
Category Consumers on
(MU) s (MU) s
(MU)

1 HT Industries, I-A 5359 16817 5413 19155 5521 21645

Railway
2 I-B 21 485 21 494 23 549
Traction
Government
Educational
3 II-A 643 903 643 911 649 929
Institutional Etc.
(HT)

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S.
Category Tariff FY 2010-11 FY 2011-12 FY 2012-13
No

Pvt. Educational
4 II-B 212 155 212 157 214 163
Institutions etc.

Places of Public
5 II-C 6 3 6 3 7 3
Worship
Commercial and
6 III 1470 1906 1544 2211 1621 2498
Other HT
Lift irrigation
7 IV 12 7 12 8 13 8
and co-ops (HT)
Supply to Other
8 413 413 425
States
Low Tension
Category
9 Domestic I-A 15061518 16249 15739286 17550 16445796 18610
10 Huts I-B 1420109 350 1519517 385 1625883 424
Defence
11 I –C 715 10 794 10 894 13
Colonies etc
Public Lighting
12 II-A 439348 1597 477722 1709 497216 1942
& water works
Government
13 Educational II-B 1 42000 219 43050 221 44520 223
Institution

Pvt. Educational
14 II B-2 74054 149 75905 150 78591 300
Institutions

Places of Public
15 II-C 131869 98 138462 106 145386 114
Worship (LT)
Cottage and
16 IIIA(1) 72370 122 79607 125 87568 128
Tiny Industries
17 Power Loom IIIA(2) 124026 822 131468 873 139356 925
18 Industries III-B 276513 4418 363123 4529 372201 4891
Agriculture &
19 Government IV 1922400 10417 1949164 10903 1973528 11546
seed farm
Commercial and
20 V 2252596 4592 2760421 4914 2870838 5258
Other
Temporary
21 VI 3450 16 3700 17 4200 18
Supply
Total
21848691 59750 23290069 64843 24292341 70342
Consumption

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Commission’s View:

3.1.6 The Commission observed the past trends for projection of sales of various consumer
categories. The Commission has also studied the methodology adopted by TANGEDCO
for projection of various consumer categories. Accordingly the Commission has
projected the sales of various consumer categories as detailed below:
Sales for Consumer under Metered Categories

3.1.7 As regards sales for various consumer categories in FY 2010-11, TANGEDCO has
submitted category-wise actual energy sales. In reply to data gaps raised by the
Commission, TANGEDCO submitted revised Form-19 on March 6, 2012. The
Commission observed that the energy sales on account of various consumer categories
during FY 2010-11 were also revised by TANGEDCO. Since this is the latest submission
of TANGEDCO, the Commission has considered the revised sales for all metered
categories as submitted in revised Form-19.

3.1.8 For FY 2011-12, TANGEDCO in reply dated March 4, 2012 to data gaps raised by the
Commission submitted the category-wise actual energy sales for first ten months, i.e.,
from April 2011 to January 2012 and projections for next two months, i.e., February 2012
and March 2012. Since TANGEDCO has submitted the actual energy sales for various
consumer categories during first ten months and projections for next two months, the
Commission has considered the same for all consumer categories except agriculture
consumption and Hut Consumption in FY 2011-12.

3.1.9 During discussion with TANGEDCO officials on the clarification sought by the
Commission on wheeling adjustment amount claimed as a part of power purchase cost, it
was observed that the captive consumption through wheeling by various sources like
Wind, Cogeneration, Captive Power Plants, etc., are booked under power purchase as
well as Sale of power. In reply to data gaps raised by the Commission, TANGEDCO
segregated wheeling undertaken for various categories of consumers, which is tabulated
below:

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Table 3: Energy on account of wheeling

(MU)

Sales incl. Wheeling Sales excl. Wheeling Wheeling Breakup


Category
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
HT I Industry 16817 16718 21707 11968 10338 15707 4849 6380 6000
Pvt
HT II Educational 155 232 240 148 221 230 7 11 10
B Inst. etc.
HT
Commercial 1906 1916 2498 1756 1637 2248 150 279 250
III
Total 18878 18867 24445 13872 12197 18185 5006 6670 6260

3.1.10 Based on detailed analysis of the data submitted by TANGEDCO, the Commission’s
observations on treatment of wheeling energy done by TANGEDCO are as under:
a. Wind Energy: Quantum of wheeled energy was included in the Power Purchase quantum
and added equal quantum of energy in the Sales . For cost part, TANGEDCO has
considered at Rs 4/kWh and also deemed revenue from sale of power was included in
Form 19. This overstatement of sales on account of wheeling energy led to
understatement of T&D loss.

The Commission would like to take an illustration to explain its view on this wheeling
adjustment practice. For example: The energy consumption of a consumer is 150 MU
out of which 50 MU is wheeled back to the Utility. The same consumer raises a credit
note of 50 MU and the Utility charges the consumer only for 100 MU, i.e, net of wheeled
energy. At the time of ARR, the Utility claims 150 MU out of which 100 MU is direct
sales and rest 50 MU is sales on account of wheeling. Similarly in power purchase cost
the Utility claims cost pertaining to 150 MU instead of 100 MU. By this method the T&D
Loss appears less and at the same time, the Utility is claiming additional revenue on the
wheeling sales and power purchase cost on account of wheeled energy. This does not
give true picture of sales, power purchase quantum, power purchase cost, revenue and
T&D Loss.
This adjustment also has an impact on revenue from sale of power where the revenue is
also over projected on account of higher sales.

b. Cogen, Captive Power Plants and other Wheeling sales: Quantum of wheeled energy was
not included in the Power Purchase quantum but TANGEDCO added wheeled quantum

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of energy in the Sales. For cost part, TANGEDCO has considered at Rs 4/kWh and
shown as a wheeling adjustment in Form 6 of the Petition and also deemed revenue from
sale of power considered at Rs 4/kWh was included in Form 19. The Commission found
that this inconsistent approach is followed by TANGEDCO for wheeling from Wind and
other sources. This overstatement of sales on account of wheeling energy led to
understatement of T&D loss.
c. No wheeling loss was deducted from wheeled energy injected in the system, which was
shown in revised Form 6.

3.1.11 Let us also try to understand as to how actually the billing of a wheeling consumer works.
Let us take an example of a captive consumer, say a Captive consumer has a requirement
of 100 MU in a month and credit that is available to him on part of his own wind
generation is say 50 MU after adjusting 5% wheeling loss. In this case, the Utility will
raise the bill for the net energy consumed, i.e., 50 MU by the Captive Consumer for that
month. However, in this case the TANGEDCO is raising the bill to the captive consumer
for 50 MU, but at the same time raising a book entry of deemed revenue for sales of
another 50 MU totalling 100 MU.
Wheeling is defined in Electricity Act 2003 as under:
“Wheeling means the operation whereby the distribution system and associated facilities
of a transmission licensee or distribution licensee, as the case may be, are used by
another person for the conveyance of electricity on payment of charges to be determined
under section 62”

As regards Open Access, Section-42 (3) of Electricity Act 2003 states as under:
“42 (1)…

(3) Where any person, whose premises are situated within the area of supply of a
distribution licensee, (not being a local authority engaged in the business of
distribution of electricity before the appointed date) requires a supply of electricity
from a generating company or any licensee other than such distribution licensee, such
person may, by notice, require the distribution licensee for wheeling such electricity in
accordance with regulations made by the State Commission and the duties of the
distribution licensee with respect to such supply shall be of a common carrier
providing non-discriminatory open access”

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3.1.12 As regards Transmission and Wheeling Charges, the Commission in its Tariff Order
(Order No. 1 of 2009) dated March 20, 2009 ruled as under:
“8.3 Transmission and Wheeling Charges
The transmission and wheeling charges were initially fixed by the TNEB at 2% in
1986 The charges were enhanced to 5% by the TNEB in September 2001. They
remained at that level till 2006. The Commission adopted the same rate of 5%
towards the transmission and wheeling charges including line losses in order
No.3 dated 15-5-2006. The TNEB has now pleaded for stepping up the charges to
15% on the ground that transmission and distribution losses have gone up in the
recent years. The transmission and distribution losses of the TNEB has remained
static at 18% since 2003 and therefore, the Commission does not see merit in the
plea of the TNEB to abruptly raise the charges to 15%. The Commission decides
to retain the wheeling and transmission charges including line losses at 5%
uniformly for captive use and third party sale of wind energy in the case of HT /
EHT consumption. However, the charges in regard to captive use and third party
sale in LT services are fixed at 7.5%. “

3.1.13 Similarly for Biomass and Cogeneration based power plants, the Commission in its Tariff
Order dated April 27, 2009 and May 6, 2009 approved the same line loss of 5%
uniformly for captive use and third party sales.

3.1.14 For CPP, the actual loss for the injection at 110 kV and drawal at 11 kV is 6.25%. In case
of IEX the power is injected into the grid and then drawal is done at 11 kV which results
in wheeling loss as 5.5%. Thus wheeling loss should be charged accordingly.

3.1.15 The Commission is of the view that the inclusion of energy on account of captive
consumption through wheeling in sales and power purchase is not correct and should be
treated in kind.

3.1.16 The Commission has considered the quantum which was submitted by TANGEDCO on
account of wheeled energy by Wind, Biomass, Cogen, Captive Power Plants and has
applied 5% wheeling as an illustration in absence of proper segregation of data regarding
wheeled energy included in Power Purchase and Sales. Once the segregated data is made
available by TANGEDCO, the Commission will consider the same. The Commission
directs TANGEDCO to submit the detailed segregation of wheeled energy included in
power purchase and sales in next Tariff determination process.

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3.1.17 The wheeled energy which has been deducted by the Commission from energy sales in
FY 2010-11 and FY 2011-12 has been tabulated as under:
Table 4: Wheeled Energy included in sales

(MU)

S. No Particulars Units FY 11 FY 12 FY 13
Quantum on account of wheeling of cogeneration, biomass
1 MU 946 1073 1218
CPP etc.
2 Quantum on account of wheeling of Wind Energy MU 3169 3942 4141
Quantum on account of wheeling of Open Access
3 MU 892 1654 900
Consumers, Reliability Power & TPS
4 Total Quantum on account of wheeling MU 5006 6670 6260
5 Wheeling loss % 5% 5% 5%
6 Total sales on account of wheeling MU 4756 6337 5947

3.1.18 The Commission has further divided the sales on account of wheeling as shown in the
above table in the ratio submitted by TANGEDCO for the identified consumer
categories. The wheeled energy as deducted by the Commission from the consumer
categories identified by TANGEDCO is tabulated below:
Table 5: Sales deducted on account of wheeling from various Consumer Categories

(MU)

Wheeling Sales
Category
FY 11 FY 12
HTI A Industry 4607 6061
HT II B Pvt Educational Inst. etc. 6.65 10
HT III Commercial 143 265
Total 4756 6337

3.1.19 The Commission has deducted the above energy from the sales approved for respective
consumer categories in FY 2010-11 and FY 2011-12.

3.1.20 The energy sales for various consumer categories as approved by the Commission in this
Order for FY 2010-11 and FY 2011-12 is tabulated below:

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Table 6: Energy sales approved for FY 2010-11 and FY 2011-12

(MU)

TANGEDCO Actuals Commission


Particulars
2010-11 2011-12 2010-11 2011-12 2010-11 2011-12
HT Category
I-A Industries 16817 19155 16817 16718 12210 10657
I-B Railway Traction 485 494 485 654 485 654
Govt. Educational Instns.
II-A 903 882
Etc. 903 911 903 882
II-B Pvt Educational Inst. etc. 155 157 155 232 148 222
II-C Place of Worship 3 3 3 5 3 5
III Commercial 1906 2211 1906 1916 1763 1651
IV Lift Irrigation 7 8 7 6 7 6
Supply to Puducherry and
V
Other States 413 413
LT Category
I-A Domestic 16249 17550 16309 17428 16309 17428
I-C LT bulk supply 10 10 10 11 10 11
Public Lighting and Water
1603 1614
II-A Supply 1597 1709 1603 1614
Govt. & Govt. Aided
84 127
II-B-1 Education Instns. Etc. 219 221 84* 127
II-B-2 Private College etc. 149 150 150 254 150 254
IIC Places of Pub. Worship 98 106 99 102 99 102
IIIA 1 Cottage and Tiny Industries 122 125 123 123 123 123
IIIA 2 Power Looms 822 873 824 730 824 730
IIIB L.T. Industries 4418 4529 4435 4015 4435 4015
V L.T. Commercial 4592 4914 4598 4514 4598 4514
VI Temporary supply 16 17 17 20 17 20
*Private Educational Institutions were earlier categorised along with Government Educational Institutions under
Recognised Educational Institutions. The Commission vide its Order No. 3 of 2010 recategorised Private
Educational Institutions separately.There may be some abnormality in booking sales under these categories during
FY 2010-11. The Commission has considered sales submitted by TANGEDCO in Form-19 submitted on March 17,
2012 for the purpose of approval of sales in FY 2010-11 and FY 2011-12 and projection of sales in FY 2012-13.

3.1.21 As regards sales for various metered consumer categories in FY 2012-13, the
Commission has worked out 5 year CAGR, 3 year CAGR and Y-O-Y growth rate which
is tabulated as under:

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Table 7: Growth rates for HT Categories on the basis of actual sales in previous years

(MU)

Y on Y
5 Year 3 Year
Consumer Category FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Growth
CAGR CAGR
Rate
HT I-
Industries 11423 13879 15434 14219 14468 16817* 10.94% 5.88% 19.59%
A
HT I- Railway
485
B Traction
Govt.
HT
Educational 731 815 872 871 954 903 9.68% 10.15% 10.89%
II-A
Institutions**
Private
HT Educational
155
II-B Institutions,
etc.
HT Place of -
2 2 2 3 4 3 10.67% 0.00%
II-C Worship 26.83%
HT
Commercial 1070 1231 1408 1433 1600 1906 15.53% 15.33% 19.13%
III
HT - -
Lift Irrigation 5 7 9 9 8 7 6.48%
IV 11.81% 12.50%
Other HT
Supply/Supply
- -
HT V to Puducherry 897 603 576 685 413
15.32% 39.68%
and Other
States
* FY 11 Sales considered after including sales on account of Railway Traction

** FY 11 Sales considered after including sales on account of Private Educational Institutions, Cinema,
Studio etc.

Table 8: Growth rates for LT Categories on the basis of actual sales in previous years

(MU)

Y on Y
5 Year 3 Year
Consumer Category FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Growth
CAGR CAGR
Rate
LT I-
Domestic 11051 12033 12575 13603 15361 16309 10.22% 9.50% 6.17%
A
LT I- LT bulk
2 3 3 12 10 10 49.53% -8.71% -4.75%
C supply
Public
LT
Lighting and 1179 1295 973 1285 1494 1603 7.98% 11.69% 7.26%
II-A
Water Supply
LT Government
II-B- Educational 283 314 335 595 509 84 -26.19% -37.29% -54.03%
1 Institutions

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Y on Y
5 Year 3 Year
Consumer Category FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 Growth
CAGR CAGR
Rate
LT Private
II-B- Educational 150
2 Instt. Etc.
LT Places of
49 60 68 80 91 99 19.22% 11.24% 8.78%
IIC Pub. Worship
LT Cottage and
IIIA Tiny 242 260 264 574 605 123 -15.56% -53.71% -79.67%
1 Industries
LT
Power
IIIA 578 643 672 743 805 824 9.29% 5.31% 2.32%
Looms
2
LT L.T.
3921 4454 4585 3750 3979 4435 3.13% 8.75% 11.47%
IIIB Industries
L.T.
LT V 2897 3467 3720 3690 4137 4598 12.24% 11.38% 11.14%
Commercial
LT Temporary
11 11 11 39 35 17 11.50% -33.98% -50.73%
VI supply

3.1.22 The Commission has adopted the following methodology for calculation of energy sales
in FY 2012-13:
Methodology adopted for HT Categories:
a. Category-HT I-A (Industries): Since there is negative growth in the approved energy
sales due to R&C measures, Power Cuts and wheeled sales in FY 2011-12 on account
of this category, the Commission has applied 5 Year CAGR, i.e., 10.94% (as shown
in Table-3) considering FY 2010-11 as the base year.
b. Category-HT I-B (Railway Traction): Since this category was a part of HT I-A
Category up to FY 2009-10, the Commission has adopted the same percentage, i.e.,
10.94% as calculated in the case of Category-HT I-A on the sales approved for FY
2011-12.
c. Category-HT II-A (Government Educational Institutions): The Commission observed
that there is negative growth in the approved sales of this category in FY 2011-12.
This is due to the change in categorisation of consumers from Recognised
Educational Institutions to two different consumer categories, i.e., Government and
Private Educational Institutions. Therfore, the Commission has not considered any
increase in the sales of this category.
d. Category-HT II-B (Private Educational Institutes etc.): The Commission observed
that there is substantial growth in this category in FY 2011-12. This is due to adding

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of all recognised Institutions in Private Educational Institutions which were earlier
grouped in HT-II A. Therefore the Commission has considered 5 year CAGR on the
basis of past data for projecting the sales for this category in FY 2012-13.
e. Category-HT II-C (Place of worship): The Commission observed that there has not
been significant growth in sales of this category from FY 2005-06 to FY 2011-12.
Therefore, the Commission has not considered any increase in this category.
f. Category-HT III (Commercial): The Commission has considered 5 year CAGR on the
basis of past data for projecting the sales for this category in FY 2012-13.
g. Category-HT IV (Lift Irrigation): The Commission observed there has not been
significant growth in sales of this category from FY 2005-06 to FY 2011-12.
Therefore, the Commission has not considered any increase in this category.
h. Category-HT V (Supply to Puducherry and other States): The Commission has not
considered the sales on account of this category, based on the rulings of the
Commission in its previous Tariff Order dated July 31, 2010.

Methodology adopted for LT Categories:


a. Category-LT I-A (Domestic): For this category, the Commission has calculated the
average of y-o-y increase in last 5 years in the number of consumers. The
Commission has further applied this average on FY 2010-11 to arrive at the number
of consumers in FY 2011-12. The Commission has further applied the same
percentage on number of consumers in FY 2011-12 to arrive at number of consumers
in FY 2012-13. Based upon the sales approved for this category in FY 2011-12 in this
Tariff Order, the Commission has calculated the specific consumption. The
Commission has calculated the energy sales on account of this category in FY 2012-
13 by multiplying the specific consumption in FY 2011-12 with the number of
consumers calculated for FY 2012-13. The energy sales for LT I-A (Domestic) as
calculated by the Commission is tabulated below:
Table 9: Energy Sales for LT I-A (Domestic) in FY 2012-13

(MU)

Avg.
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Inc.
No. of
11974293 12948941 13726048 13788042 14401239 15061518 15773164 16518436
Consumers
Consumption
11052 12033 12575 13603 15361 16309 17428 18252
(MU)

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Avg.
Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Inc.
% Increase
in 4.49 8.14 6.00 0.45 4.45 4.58 4.72 4.72 4.72
Consumers
% Increase
in 14.23 8.88 4.50 8.17 12.92 6.17
Consumption
Specific
Consumption
923 929 916 987 1067 1083 1105 1105
(kWh/
Annum)

b. Category-LT I-C (LT Bulk Supply): The Commission observed there has not been
significant growth in sales of this category from FY 2008-09 to FY 2011-12.
Therefore, the Commission has not considered any increase in this category.
c. Category-LT II-A (Public Lighting and Water Supply): The Commission has applied
y-o-y percentage increase, i.e., 0.68% in the sales approved for FY 2011-12 over sales
approved for FY 2010-11 considering FY 2011-12 as the base year.
d. Category-LT II-B-1 (Government & Government Aided Educational Institutions):
The Commission observed there has been negative growth in the approved sales of
this category due to re-categorisation. . Therefore, the Commission has not considered
any increase in this category.
e. Category-LT II-B-2 (Private College): The Commission observed there has been
sudden increase in the sales on account of this category due to re-categorisation.
Therefore, the Commission has not considered any increase in this category.
f. Category-LT IIIA-1 (Cottage and Tiny Industries): The Commission has adopted the
percentage increase equal to the percentage increase as considered by TANGEDCO
for projection of sales for this category in FY 2012-13 over sales projected in FY
2011-12. .
g. Category-LT IIIA-2 (Power Looms): The Commission observed that there has been
negative growth in the approved sales of this category due to R&C measures.
Therefore, the Commission has not considered any increase in this category.
h. Category-LT-III B (Industries): The Commission observed that there has been
negative growth in the approved sales of this category due to re-categorisation.
Therefore, the Commission has not considered any increase in this category.
i. Category-LT V (LT Commercial): The Commission has considered 5 year CAGR,
i.e., 12.24% as shown in Table-5 on the basis of past sales data for projecting the
sales for this category in FY 2012-13.

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i. Category-LT VI (Temporary Supply): The Commission observed there has not been
significant growth in sales of this category from FY 2010-11 to FY 2011-12.
Therefore, the Commission has not considered any increase in this category.

3.1.23 The energy sales calculated by the Commission for various metered categories in FY
2012-13 are tabulated below:
Table 10: Energy Sales calculated for various metered categories in FY 2012-13

(MU)

Particulars TANGEDCO Commission


HT Category
I-A Industries 21645 13545
I-B Railway Traction 549 726
II-A Govt. & Govt. Aided Educational Instns. Etc. 929 882
II-B Pvt Educational Inst. etc. 163 243
II-C Place of Worship 3 5
III Commercial 2498 1908
IV Lift Irrigation 8 6
V Supply to Puducherry and Other States 425
LT Category
I-A Domestic 18603 18252
I-C LT bulk supply 11 11
II-A Public Lighting and Water Supply 1829 1625
II-B-1 Govt. & Govt. Aided Education Instns. Etc. 223 127
II-B-2 Private Educational Instt. Etc. 152 254
IIC Places of Pub. Worship 114 102
IIIA 1 Cottage and Tiny Industries 128 126
IIIA 2 Power Looms 925 730
IIIB L.T. Industries 4891 4015
V L.T. Commercial 5258 5066
VI Temporary supply 18 20

Methodology adopted for Unmetered Categories:

3.1.24 The Commission observed that there are two unmetered categories, i.e., Huts and
Agriculture . The Commission has adopted the following methodology for calculation of
sales on account of unmetered categories:
a. Category-LT I-B (Huts): In reply to data gaps raised by the Commission,
TANGEDCO submitted the revised details towards the category of Huts from FY

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2010-11 to FY 2012-13. The Commission has accepted the revised submission of
TANGEDCO towards the category of Huts in FY 2010-11. As regards the
consumption of Hut services in FY 2011-12 and FY 2012-13, the Commission
observed that TANGEDCO has furnished calculations towards energy projection on
account of Huts Category on the basis of certain assumptions. The Commission
observed that the assumptions made by TANGEDCO are not in conformity with
Government Order (G.O.).Ms. No.2 dated 03-06-2011 issued by GoTN. Therefore the
Commission has recalculated the consumption based on the details available in the
above said G.O. The load details and the duration of running hours per day for fan,
mixie and grinder furnished by TANGEDCO are 80, 800 and 200 Watts and 12, 0.5
and 2 hours respectively. However the label of the GoTN depicts 61, 550 and 300
watts for fan, mixie and grinder respectively. The Commission has further considered
the wattage as considered by the GoTN and the duration as provided by
TANGEDCO. The Commission has considered the lighting load of 11 Watts (CFL)
for new hut service and running hours of 6 Hours per day. Energy sales on account of
Huts Category as calculated by the Commission are tabulated below:
Table 11: Hut Consumption for FY 2011-12 and FY 2012-13

FY 2011-12

No. of Connected Load Energy


Description
Huts (KW) (MU)
Present consumption of energy by all Hut
1476351 113940 403
services
No. of consumers supplied with Fan, Mixie and
201687
Grinder in 2011-12
Fan 12303 27
Mixie 110928 10
Grinder 60506 22
Total Consumption for 2011-12 462

FY 2012-13

No. of Connected Load Energy


Description
Huts (KW) (MU)

Number of Huts at the beginning of the year 1476351 297677 521


Addition of new Hut services in 2012-13 27000 297 0.33
Total Hut services at the end of year 1503351
No. of consumers supplied with Fan, Mixie and
201687
Grinder in 2011-12

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No. of Connected Load Energy
Description
Huts (KW) (MU)

Number of Huts at the beginning of the year 1476351 297677 521


No. of consumers supplied with Fan, Mixie and
325416
Grinder in 2012-13
Fan 19850 43
Mixie 178979 16
Grinder 97625 36
Total Consumption for 2012-13 617

GOTN has programmed to distribute Fan, Mixie and Grinder during 2011-12 to 25
Lakh families out of 1.83 Crore beneficiary families. Accordingly, number of hut
beneficiaries has been calculated based on the total number of hut services during
2011-12. The balance hut services are split across 4 years period from FY 2012-13 to
FY 2015-16.

b. Category-LT IV (Agriculture Consumption): The Commission has recalculated the


energy sales on account of Agriculture Consumption. The Commission observed
discrepancy in the data regarding number of agriculture service connections
submitted by TANGEDCO in Form-19 annexed along with the Petition. In reply to
data gaps raised by the Commission, TANGEDCO revised the number of agriculture
service connections along with the connected load at the end of respective years.
Further, the Commission vide its letter dated September 8, 2011 directed
TANGEDCO to conduct a sample study for proper estimation of agricultural
consumption. The Commission had also directed to estimate T&D losses
scientifically and such study shall be reflected in their tariff petition so as to calculate
the power purchase correctly. In response to the data gap raised, TANGEDCO
submitted the methodology adopted for arriving at the agricultural consumption and
line loss as below:

“The agricultural consumption is calculated every month based on the sample


meter reading furnished by the field in the absence of 100 % metering. The
sample meters to a value of 5 % are provided/ available in each area/circle in
which readings are taken every month by the field staff. As sample meter readings
are available in each area/circlewise on monthly basis, the areawise
geographical condition and seasonal condition are taken care for arriving at

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computed consumption. This calculated agricultural consumption in each
area/circles are combined /added to arrive at the total agricultural consumption
in the State. Since 5 % sample meters are available in each and every area/circle
and the readings are taken in all the sample meters every month by the field staff,
the computed consumption of the total agricultural consumption in the State
based on sample meter readings is a reasonable and scientific agricultural
consumption data. However Anna University has already been appointed for
suggesting a suitable scientific methodology for arriving at the agricultural
consumption in Tamil Nadu in the absence of 100 % metering.

The agricultural consumption thus computed for 2010-11, based on the actual
sample meter readings taken from the field is enclosed herewith. For the year
2011-12, the same is arrived with the actual sample meter readings received from
the field for the period up to December 2011 and projected for the balance period
of three months. Similarly, for the year 2012-13, the projected values are
enclosed considering the addition of new agricultural services proposed to be
effected during that period.”

In another query raised by the Commission, the average consumption of agriculture


consumers was submitted by TANGEDCO. The Commission for the purpose of
calculation of sales on account of Agriculture Consumption has referred to the revised
data submitted by TANGEDCO in reply to data gaps. However, the Commission has
capped specific consumption for FY 2012-13 at 951 kWh/HP/Annum based on
actuals of FY 2011-12.The Commission has calculated the average capacity of
pumpset at the middle of the year by dividing the connected load at the middle of the
year by number of service connections on account of agriculture consumption at the
middle of the year. The Commission has further multiplied the average capacity of
pumpset, the revised average specific consumption on account of agriculture
consumers and number of service connections at the middle of the year. The sales on
account of agriculture consumption approved in the Order the Commission from FY
2010-11 to FY 2012-13 is tabulated below:

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Table 12: Sales approved by the Commission for Agriculture Consumption

(MU)

S. No Details FY 2010-11 FY 2011-12 FY 2012-13


1 No. of Service Connection 1999237 2029237 2069237

No. of Service Connection at


2 1962091 2014237 2049237
the Middle of the Year
Connected Load in HP at the
3 10872018 11036118 11254918
end of the year
Connected Load in HP at the
4 10734318 10954068 11145518
middle of the year
Average capacity of the
5 pumpset in HP at the middle 5.47 5.44 5.44
of the year (4/2)
Average Consumption in
6 kWh/HP/Annum arrived 896.08 951.10 951.10
from sample study
Consumption in MU
7 9618.8 10418.4 10600.5
(2x5x6)

3.1.25 On the basis of above discussion the Category-wise energy sales as calculated by the
Commission is tabulated below:
Table 13: Category-wise energy sales approved by the Commission

(MU)

TANGEDCO Commission
Particulars
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
HT Category
I-A Industries 16817 19155 21645 12210 10657 13545
I-B Railway Traction 485 494 549 485 654 726
Govt. & Govt. Aided
II-A
Educational Instns. Etc. 903 911 929 903 882 882
II-B Pvt Educational Inst. etc. 155 157 163 148 222 243
II-C Place of Worship 3 3 3 3 5 5
III Commercial 1906 2211 2498 1763 1651 1908
IV Lift Irrigation 7 8 8 7 6 6
Supply to Puducherry
V
and Other States 413 413 425
Total HT 20689 23352 26220 15520 14078 17315
LT Category

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TANGEDCO Commission
Particulars
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
I-A Domestic 16249 17550 18603 16309 17428 18252
I-B Huts 350 385 424 355 462 617
I-C LT bulk supply 10 10 11 10 11 11
Public Lighting and
II-A Water Supply 1597 1709 1829 1603 1614 1625
II- Govt. & Govt. Aided
B-1 Education Instns. Etc. 219 221 223 84 127 127
II- Private Educational Instt.
B-2 Etc. 149 150 152 150 254 254
IIC Places of Pub. Worship 98 106 114 99 102 102
IIIA Cottage and Tiny
1 Industries 122 125 128 123 123 126
IIIA
2 Power Looms 822 873 925 824 730 730
IIIB L.T. Industries 4418 4529 4891 4435 4015 4015
IV L.T. Agriculture 10417 10903 11546 9619 10418 10601
V L.T. Commercial 4592 4914 5258 4598 4514 5066
VI Temporary supply 16 17 18 17 20 20
Total LT 39059 41492 44122 38226 39819 41546
Grand Total 59750 64844 70342 53746 53897 58861

3.1.26 With lifting of R&C, if sales increases for industrial consumers, the licensee’s revenue as
well as Power Purchase Cost will increase without creating much of gap especially with
the Power Purchase Cost adjustment which is already built in this Order.

T&D Loss:
3.1.27 The Commission in its previous Tariff Order approved y-o-y reduction of 0.4% in T&D
loss from FY 2008-09 onwards. The Commission fixed the T&D loss of 18% in FY
2009-10.
Table 14: T&D Loss approved by the Commission

Particulars 2009-10 2010-11 2011-12 2012-13


Loss level in % 18 17.6 17.2 16.8

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3.1.28 The Commission further ruled that in case the licensee achieves a loss at a level less than
the target, he may retain 50% of the gain out of the loss reduction and the balance 50%
will be passed to the consumers as per Regulation 3 (ix) of MYT Regulations.

3.1.29 TANGEDCO submitted that the energy balance for the current year and ensuing financial
year has been formulated after considering all the factors relating to demand and energy
requirement. TANGEDCO submitted the T&D loss which has been calculated on the
basis of energy input into the system and total output from the system for the year 2009-
10 and 2010-11 and as per balance sheet, AT&C loss has been adopted for the year 2011-
12 and 2012-13.

3.1.30 TANGEDCO further submitted that as on 30.06.2011 only 45.35% of the total
Distribution Transformers (DTs) havebeen metered.

3.1.31 TANGEDCO also submitted that in order to arrive at proper estimate of AT&C loss and
T&D loss as a pilot study with the above arrangement in Gopi, Bhavani, Sathya
mangalam (UA) under R-APDRP scheme, modems in the DT meters have been fixed to
enable the Automatic Meter Reading (AMR) facility. The DT meters would be connected
to the data center through necessary hardware and software. On completion of pilot
project, and Data capturing, the Energy Accounting/ Auditing could be completed in the
pilot area. Based on that sample data, AT&C loss can be evaluated for the pilot area.

3.1.32 TANGEDCO submitted that it has approached Anna University for scientific
measurement of T&D loss and measurement of unmetered Agricultural consumption.
This exercise is under progress.

3.1.33 TANGEDCO has listed some other initiatives taken to reduce losses to the maximum
extent possible which are as under:
• Reduction of HT: LT ratio by erecting more High Tension lines and erecting new
DT.
• Establishment of new substations.
• Strengthening of HT line conductors
• Installation of HT shunt capacitors at substation end
• Installation of LT fixed capacitors at LT side of DT
• Erection of link lines & Re-routing of feeders

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3.1.34 The T&D loss for FY 2009-10 and AT&C Loss for FY 2010-11 and FY 2011-12 as
submitted by TANGEDCO in its Petition are tabulated as under:
Table 15: T&D Loss as submitted by TANGEDCO from FY 2010-11 to FY 2012-13

Particulars 2010-11 2011-12 2012-13


Total sales (MU) 59750 64843 70342
Energy Loss in the system
12762 15349 16222
(MU)
AT&C loss % 17.60% (T&D) 19.14% 18.74%

Commission’s View:

3.1.35 The Commission observed that TANGEDCO has not submitted T&D loss for FY 2011-
12 and FY 2012-13 in its Petition but the same was submitted later. Since the actual
energy available during FY 2010-11 and first ten months of FY 2011-12 has been
submitted by TANGEDCO, the Commission has re-estimated the T&D loss on the basis
of energy sales from FY 2010-11 to FY 2011-12 and the energy available during FY
2010-11 and FY 2011-12 approved by the Commission in this Order.

3.1.36 As regards FY 2012-13, the Commission has maintained the T&D loss, i.e., 16.80%
approved for FY 2012-13 in the previous Tariff Order. The Commission has grossed up
the total sales approved for FY 2012-13 by the T&D loss approved for FY 2012-13 in
order to arrive at energy requirement during FY 2012-13.

3.1.37 Energy Consumption on account of Kadamparai Pump Mode: The Commission observed
that energy is required for the purpose of Pumping in Kadamparai. The Commission is of
the view that the energy requirement on account of Pumping in Kadamparai is also met
through the energy available during respective year. The Commission obtained the details
of actual net energy generation and the energy consumed for the purpose of pumping in
Kadamparai in FY 2010-11 and FY 2011-12 which are tabulated below:
Table 16: Data submitted by TANGEDCO for Kadamparai
(MU)
Particulars Reference FY 2010-11 FY 2011-12
Kadamparai-Gen A 568 489
Kadamparai-Pump Mode B 612 508
Net Energy Required C=A-B (43) (19)

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3.1.38 Based upon the data submitted by TANGEDCO, the Commission has considered the net
difference between the net generation of Kadamparai and energy consumed for the
purpose of pumping in Kadamparai as the differential energy required for Kadamparai
Pump Mode during respective years. For FY 2012-13, the Commission has considered
the average of differential energy calculated for FY 2010-11 and FY 2011-12.

3.1.39 The T&D loss computed by the Commission from FY 2010-11 to FY 2012-13 is
tabulated below:
Table 17: T&D Loss computed by the Commission

TANGEDCO Commission
Particulars Units
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
Sales MU 59750 64844 70342 53746 53897 58861
Differential
Energy required
MU 0 0 0 43 19 31
for KDM Pump
Mode*
Total Energy
MU 59750 64844 70342 53789 53916 58892
consumption
T&D Loss** % 17.60% 19.14% 18.74% 21.78% 22.13% 16.80%
T&D Loss MU 12762 15349 16222 14981 15324 11892
Total Energy
MU 72512 80193 86564 68770 69240 70784
Requirement

*Difference between net energy generated by Kadamparai and energy required for Pumping
**TANGEDCO submitted T&D Loss for FY 2010-11 and then AT&C for FY 2011-12 and FY 2012-13

3.1.40 As shown above the Commission has arrived at the energy requirement of 70784 MU in
FY 2012-13. The Commission has considered this quantum for Merit Order Ranking in
Order to decide the sources from which power is required to be purchased by
TANGEDCO in FY 2012-13. However due to the delays in schedule of commissioning
of the upcoming power stations MOD may get distorted and some more stations may get
despatched.

3.1.41 The Commission observed that the actual/revised T&D loss for FY 2010-11 and FY
2011-12 is 21.78% and 22.13% as compared to 17.60% and 17.20% approved by the
Commission in its previous Tariff Order. The Commission has discussed the additional
cost incurred by TANGEDCO on this account in Power Purchase chapter, later in this
Order.

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3.1.42 As regards the pilot study being conducted by TANGEDCO, the Commission is of the
view that based upon the success of the same, it may be extended to the remaining areas.

3.1.43 The Commission directs TANGEDCO to complete the exercise being done by
TANGEDCO for accurate measurement of T&D Loss and unmetered agricultural
consumption before October 31, 2012 and submit the findings before the Commission
before December 1, 2012.

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4 Energy Availability
4.1.1 Tamil Nadu Generation and Distribution Company Limited (TANGEDCO), in its
Petition submitted the expenses towards its Generation and Distribution activities from
FY 2010-11 to FY 2012-13 based on the actual energy available and various expenses
incurred during FY 2010-11 and FY 2011-12 (First Half (H1)). For FY 2011-12 (Second
Half (H2)) and FY 2012-13, TANGEDCO projected the availability and expenses on
account of various heads on the basis of certain assumptions and past trends.

4.1.2 The Commission in its Order dated July 31, 2010 (Order No. 3 of 2010) determined the
performance norms and expenses for various Generating Stations of TANGEDCO.
Accordingly the Commission in this Section has analysed the performance and expenses
on various heads for the Generation Business of TANGEDCO from FY 2010-11 to FY
2012-13 in accordance with TNERC (Terms and Conditions for determination of Tariff)
Regulations, 2005.

4.1.3 The energy availability of various own Generating Stations have been discussed in this
section in the Order given below:
1. Thermal Power Stations
2. Gas Turbine Power Stations
3. Hydel Generation
4. Wind Generation
5. Other Sources

Thermal Power Stations:


4.1.4 Energy Availability mainly depends upon net generation available from the Power Plants.
The Net Generation is determined on the basis of Plant Load Factor (PLF) and Auxiliary
Consumption which are discussed below:
Plant Load Factor

4.1.5 Gross Generation of Generating Station depends upon its PLF. The Commission in its
Previous Tariff Order calculated the Gross Generation for various Generating Stations on
the basis of PLF which is tabulated as under:

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Table 18: Plant Load Factor (PLF) approved in Previous Tariff Order

S. No Particulars MW FY 2010-11 FY 2011-12 FY 2012-13


1 Ennore TPS 450 50.81% 50.81% 50.81%
2 Tuticorin TPS 1050 90.02% 90.02% 90.02%
3 Mettur TPS 840 91.75% 91.75% 91.75%
4 North Chennai TPS 630 86.79% 86.79% 86.79%
5 NCTPS Stage-II 80% 80%
6 MTPS Stage-III 80% 80%

4.1.6 TANGEDCO in its Petition submitted the actual PLF during FY 2010-11. For FY 2011-
12 and FY 2012-13, TANGEDCO projected the PLF for its various Generating Stations.
The PLF from FY 2010-11 to FY 2012-13 as submitted by TANGEDCO in its Petition is
tabulated as under:
Table 19: Plant Load Factor (PLF) submitted in Petition

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Ennore TPS 35.42% 29.04% 20.28%
2 Tuticorin TPS 77.33% 79.79% 82.25%
3 Mettur TPS 82.42% 92.70% 89.01%
4 North Chennai TPS 81.74% 91.70% 86.17%

4.1.7 TANGEDO in its Petition has also projected net generation from new station, i.e., MTPS
(Stage-III) during FY 2011-12. However TANGEDCO has not submitted the gross
generation for the same.

4.1.8 Similarly for FY 2012-13 TANGEDCO has projected generation from new stations
(NCTPS (Stage-II Unit-1 and 2) and MTPS (Stage-III)) but separate PLF for these Units
have not been submitted in the Petition and the generation from these Units have been
clubbed with the existing Units in its Forms submitted along with the Petition.

Commission’s View:

4.1.9 As regards Target PLF to be achieved by various Thermal Power Stations, Regulation-37
of TNERC Tariff Regulations, 2005 states as under:
“37. Norms of Operation
The norms of operation for Thermal Generating Stations shall be as under:

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(i) Target Availability for recovery of full capacity (fixed) charges:
a) All Thermal Generating Stations in Tamil Nadu except Ennore Thermal
Power Generating Station-80%
b) Ennore Thermal Power Generating Station (Till Renovation and
Modernisation works in all units are completed)-50%.
c) In respect of Generating Stations of Independent Power Producers- As per
PPA
d) New Thermal Stations-80%”

4.1.10 The Commission observed that the PLF projected for all Thermal Power Stations (TPS)
except Ennore TPS is more than 80%. In reply to the data gaps raised by the Commission
regarding lower PLF for Ennore TPS during FY 2010-11, TANGEDCO submitted that
all the Units at Ennore TPS have already served their lifetime and on completion of major
R&M Works, the above Units of Ennore TPS have served further 5-10 years.
TANGEDCO submitted that the Units are proposed to be de-commissioned by 2015-17
in phased manner. TANGEDCO further submitted the reasons for non-availability of
various Units of Ennore TPS which are as under:
1. In Unit-I and Unit-II, the load is restricted due to non-availability of UAT, Turbine
vibration, wet coal, stones in coal and to minimize oil usage.
2. In Unit-III, the load is restricted due to Chloride Ingress and severe O2 crash problem.
3. In Unit-IV, the load is restricted due to O2 crash, Low vacuum, Turbine vibration due
to aged Rotors, etc.
4. In Unit-V, the load is restricted due to partial shaving of LP Rotor blades, RH
pressure limit, low condenser vacuum, wet coal, stones in coal.

4.1.11 In view of the above reasons submitted by TANGEDCO for lower PLF of Ennore TPS,
the Commission has decided to accept the actual PLF in FY 2010-11 for Ennore TPS as a
special case. As regards other Thermal Power Stations, the Commission observed that the
actual PLF is around 80% in FY 2010-11 and there is considerable difference as
compared to the target set by the Commission in last Tariff Order. Since FY 2010-11 is
already over and TANGEDCO has submitted the actual PLF for its various generating
stations, the Commission has decided to adopt the actual PLF for all Thermal Generating
Stations in FY 2010-11. However while allowing capacity charges during FY 2010-11,
the Commission has followed Regulation-37 of TNERC Tariff Regulations, 2005 which
states as under:
“37. Norms of Operation

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The norms of operation for the Thermal Generating Stations shall be as under:
i. Target availability for recovery of full capacity (fixed) charges
a. All Thermal Generating stations in Tamil Nadu except Ennore Thermal
Power Generating Station - 80%
b. Ennore Thermal Power Generating Station (Till Renovation and
Modernization works in all units are completed) – 50%
c. In respect of Generating Stations of Independent Power Producers - As
per PPA
d. New Thermal Stations – 80%”

4.1.12 For FY 2011-12 and FY 2012-13, TANGEDCO in reply to data gaps, submitted the
detailed annual overhauling and servicing schedule for various Thermal Power Stations
in support of its projections towards projection of PLF and gross generation during FY
2011-12 and FY 2012-13.

4.1.13 As regards energy availability from Thermal Power Stations in FY 2011-12, the
Commission in the data gaps asked TANGEDCO to submit the actual generation up to
December 2011 and projections for the next three months, i.e., from January to March
2012. TANGEDCO in its reply submitted actual Gross Generation up to December 2011
and revised projections from January to March 2012 which is tabulated below:

Table 20: Revised Projections submitted by TANGEDCO for FY 2011-12

Projections
Actual Up to FY 2011-12
S. No Particulars January-March
Dec 2011 (MU) (MU)
2012 (MU)
1 Ennore TPS 728 289 1017
2 Tuticorin TPS 5774 2033 7807
3 Mettur TPS 5119 1680 6799
4 North Chennai TPS 3706 1125 4831

4.1.14 Based on the above data submitted by TANGEDCO, the Commission has calculated the
PLF for various Generating Stations which is tabulated below:
Table 21: PLF for Generating Stations

S. No Particulars FY 2011-12
1 Ennore TPS 25.81%
2 Tuticorin TPS 84.87%
3 Mettur TPS 92.40%
4 North Chennai TPS 87.54%

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4.1.15 The Commission observed that the PLF for all Generating Stations except Ennore TPS
are within approved limits in accordance with Regulation-37 of TNERC Tariff
Regulations, 2005. Since the above figures of PLF are based on 9 months actuals and 3
months projections, the Commission has decided to consider the above PLF during FY
2011-12. As regards energy availability from MTPS (Stage-III) during FY 2011-12,
TANGEDCO has reported Generation of 259 MU for MTPS (Stage-III) for FY 2011-12.
The Unit is not yet synchronized. Therefore, the Commission has not considered any
generation from MTPS (Stage-III) for FY 2011-12.

4.1.16 For FY 2012-13, TANGEDCO in its reply submitted the Unit-wise detailed report on
projection of energy availability for Ennore TPS along with the constraints for reduced
PLF.

4.1.17 The Commission has noted the submission of TANGEDCO regarding the constraints in
achieving higher PLF for Ennore TPS and the detailed basis for projection of energy
available from Ennore TPS during FY 2012-13. Since this Power Station is to be
decommissioned shortly, no major Repair and Maintenance work or capital work is
expected to be undertaken. Therefore, the Commission has considered the PLF of 20.28%
for Ennore TPS in FY 2012-13 as submitted by TANGEDCO.

4.1.18 As regards PLF of Tuticorin and Mettur TPS during FY 2012-13, the Commission has
worked out the last five years average PLF, i.e., from FY 2007-08 to FY 2011-12.
Table 22: PLF on the basis of last 5 years average

5 Years
S. No Particulars FY 08 FY 09 FY 10 FY 11 FY 12
Average
Tuticorin
1 86.70% 85.35% 77.91% 77.33% 84.87% 82.43%
(TTPS)
2 Mettur (MTPS) 90.94% 87.78% 86.85% 82.42% 92.40% 88.08%

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4.1.19 As regards PLF for TTPS in FY 2012-13, the Commission observed that there was an
irregular pattern for past five years. Therefore the Commission has considered average
PLF calculated on the basis of last 5 years data.

4.1.20 For MTPS, the Commission observed that the PLF projected by TANGEDCO is higher
as compared to last 5 years average. Hence for MTPS the Commission has considered the
PLF as projected by TANGEDCO in the Petition.

4.1.21 For North Chennai TPS, TANGEDCO has reported that the poor PLF for FY 2010-11 is
due to the forced shutdown of Unit-1 and Unit-2 for a considerable period on the account
of certain specific problems.

4.1.22 Therefore for NCTPS the Commission has taken average PLF from FY 2006-07 to FY
2011-12 excluding FY 2010-11. The average PLF on the basis of past trends as computed
by the Commission is tabulated below:
Table 23: PLF on the basis of last 5 years average

5 Years
S. No Particulars FY 07 FY 08 FY 09 FY 10 FY 12
Average
North Chennai
1 88.87% 84.38% 86.52% 87.43% 87.54% 86.95%
(NCTPS)

4.1.23 Therefore, the Commission has decided to adopt the following PLF during FY 2012-13
for various TPS for estimating the energy availability:
Table 24: PLF adopted by the Commission for FY 2012-13

Last 5 years
S. No Particulars Last Order Petition Commission
Average
1 ETPS 50.81% 20.28% 40.00% 20.28%
2 TTPS 90.02% 82.25% 82.43% 82.43%
3 MTPS 91.75% 89.01% 88.08% 89.01%
4 NCTPS 86.79% 86.17% 86.95% 86.95%

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4.1.24 For new upcoming units, i.e., NCTPS (Stage-II, Unit-1 and 2) and MTPS (Stage-III), the
Commission has considered PLF as 80% during FY 2012-13 in accordance with Clause-
37 of TNERC Tariff Regulations, 2005. The comparison of PLF as projected by
TANGEDCO in the Petition and that approved by the Commission in this Order is
tabulated below:
Table 25: PLF from FY 2010-11 to FY 2012-13

S. FY 2010-11 FY 2011-12
Particulars Last Last Rev.
No Petition Commission Petition Commission
Order Order Sub.
1 Ennore TPS 50.81% 35.42% 35.42% 50.81% 29.04% 25.81% 25.81%
Tuticorin
77.33% 77.33% 79.79%
2 TPS 90.02% 90.02% 84.87% 84.87%
3 Mettur TPS 91.75% 82.42% 82.42% 91.75% 92.70% 92.40% 92.40%
North
Chennai 86.79% 81.74% 81.74% 86.79% 91.70% 87.54% 87.54%
4 TPS

FY 2012-13
S. No Particulars Last
Petition Commission
Order
1 Ennore TPS 50.81% 20.28% 20.28%
2 Tuticorin TPS 90.02% 82.25% 82.43%
3 Mettur TPS 91.75% 89.01% 89.01%
North Chennai
86.79% 86.17% 86.95%
4 TPS

Auxiliary Consumption

4.1.25 The Commission in Previous Tariff Order approved the following auxiliary consumption
for various stations:
Table 26: Auxiliary Consumption approved in Previous Tariff Order

Percentage
S. No Particulars
approved
1 ETPS 8.50%*
2 TTPS 8.50%
3 MTPS 9%
4 NCTPS 8.50%
NCTPS Stage-
5 II 8.50%
6 MTPS Stage- 9%

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Percentage
S. No Particulars
approved
III
* While calculating energy availability in Previous Tariff Order, the Commission considered 14.48% as auxiliary
consumption based upon average of five years.

4.1.26 TANGEDCO in its Petition did not submit the auxiliary consumption for various
Generating Stations. However in the Format-7 annexed along with the Petition,
TANGEDCO submitted the auxiliary consumption in MU for various generating stations.
The auxiliary consumption as submitted in the formats for various Generating Stations is
tabulated below:
Table 27: Auxiliary Consumption submitted in the Petition
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 Ennore TPS 220 155 131
2 Tuticorin TPS 591 638 669
3 Mettur TPS 516 557 579
4 North Chennai TPS 401 414 406

TANGEDCO has clubbed the new generating units during FY 2012-13 (NCTPS (Stage-II Unit-1
and 2) and MTPS (Stage-III)) in the existing units of NCTPS and MTPS in its Form-7 of NCTPS
and MTPS respectively. Therefore auxiliary consumption percentage for new units during FY
2012-13 is not available separately.

Commission’s View:
The Commission observed that in accordance with Regulation-37 (v) of TNERC Tariff
Regulations, 2005 the auxiliary consumption is required to be approved as percentage of Gross
Generation. Regulation-37 (v) of TNERC Tariff Regulations, 2005 states as under:

“37. Norms of Operation


The norms of operation for Thermal Generating Stations shall be as under:

(v) Auxiliary Energy Consumption
(a) Coal based generating station
With Cooling tower Without Cooling tower
(i) 200 MW Series 9.00% 8.50%
(ii) 500 MW Series
Steam driven Boiler Feed Pumps 7.50% 7.00%

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Electrically driven BFPs 9.00% 8.50%
…”

4.1.27 The Commission has calculated the auxiliary consumption percentage from the gross
generation (MU) and auxiliary consumption (MU) submitted by TANGEDCO in the
formats annexed along with the Petition. The auxiliary consumption percentage as
computed by the Commission based on the PLF% and Auxiliary Consumption (MU)
given in the formats annexed along with the Petition is tabulated below:

Table 28: Auxiliary Consumption percentage on the basis of formats submitted by TANGEDCO

FY 2010-11 FY 2011-12
Gross Aux. Aux. Gross Aux. Aux.
S. No Particulars
Gen. Con. Con. Gen. Con. Con.
MU MU % MU MU %
1 Ennore TPS 1396 220 15.78% 1033 155 15.00%
2 Tuticorin TPS 7113 591 8.31% 7656 638 8.33%
3 Mettur TPS 6065 516 8.51% 6791 557 8.20%
4 North Chennai TPS 4511 401 8.89% 5035 414 8.22%

FY 2012-13
S. No Particulars Gross Gen. Aux. Con. Aux. Con.
MU MU %
1 Ennore TPS 799 131 16.39%
2 Tuticorin TPS 7565 669 8.84%
3 Mettur TPS 6550 579 8.84%
4 North Chennai TPS 4756 406 8.54%

4.1.28 As regards Auxiliary Consumption in FY 2010-11, the Commission believes that


TANGEDCO has submitted actual auxiliary consumption for various power stations as
FY 2010-11 is already over. Therefore the Commission has accepted the actual auxiliary
consumption for all Thermal Power Stations for the purpose of energy availability.

4.1.29 As regards FY 2011-12, the Commission in the data gaps asked TANGEDCO to submit
the actual generation up to December 2011 and projections for the next three months, i.e.,
from January to March 2012. TANGEDCO in its reply dated January 25, 2012 submitted

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actual auxiliary consumption% along with the Gross generation up to December 2011
and projections from January to March 2012.

4.1.30 Subsequently, TANGEDCO vide its letter dated March 4, 2012 resubmitted the net
generation for FY 2011-12 for all of its generating stations based upon 10 months actual,
i.e., from April 2011 to January 2012 and 2 months projections, i.e., February 2012 to
March 2012. The Commission observed that the net generation for various Thermal
generating stations resubmitted by TANGEDCO on March 4, 2012, i.e., 18724 MU is
different as compared to the data earlier submitted on January 25, 2012, i.e., 18685 MU.

4.1.31 Since there is difference between the net generation for various Thermal Power Stations
submitted by TANGEDCO, the Commission has considered the latest submission of
TANGEDCO for arriving at net energy availability during FY 2011-12. The Commission
observed that TANGEDCO in its latest submission did not submit gross generation. The
Commission has calculated the auxiliary consumption on the basis of the PLF approved
for various Thermal Power Stations for FY 2011-12 in this Order and the net generation
submitted by TANGEDCO in its latest submission dated March 4, 2012. The auxiliary
consumption as calculated for FY 2011-12 is tabulated below:

Table 29: Auxiliary consumption percentage as computed for FY 2011-12

Gross Net Auxiliary


Auxiliary
Particulars Generation Generation Consumption
Consumption %
(MU) (MU) (MU)
Ennore (ETPS) 1017 851 166 16.32%
Tuticorin (TTPS) 7807 7018 789 10.11%
Mettur (MTPS) 6799 6234 565 8.31%
North Chennai
4831 4621 210 4.35%
(NCTPS)
Total 20454 18724 1730
* On the basis of revised gross generation submitted by TANGEDCO vide letter dated January 25, 2012 and net
generation submitted submitted by TANGEDCO vide letter dated March 4, 2012 However the auxiliary
consumption of North Chennai TPS does not seem to be realistic and TANGEDCO is required to check-up the
details.

4.1.32 As regards FY 2012-13, the Commission has considered the auxiliary consumption for all
Thermal Power Stations (including new stations) except Ennore TPS in accordance with
norms mentioned in Regulation-37 (v) of TNERC Tariff Regulations. For Ennore TPS,
the Commission observed that TANGEDCO submitted that all the Units at Ennore TPS
have already served their lifetime and on completion of major R&M Works, the Units of

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Ennore TPS have served further 5-10 years. TANGEDCO submitted that the Units are
proposed to be de-commissioned by 2015-17 in phased manner. Hence as a special case,
the Commission is approving Auxiliary Consumption of 15% during FY 2012-13. . The
auxiliary consumption for various Thermal Power Stations as considered by the
Commission for FY 2012-13 is tabulated below:
Table 30: Auxiliary Consumption for various TPS in FY 2012-13

S. No Particulars Last Order Petition Commission

1 ETPS 8.50%* 16.39% 15.00%


2 TTPS 8.50% 8.84% 8.50%
3 MTPS 9.00% 8.84% 9.00%
4 NCTPS 8.50% 8.54% 8.50%
5 NCTPS Stage-II** 8.50% 8.54% 8.50%
6 MTPS Stage-III** 9.00% 8.84% 9.00%
* While calculating energy availability in Previous Tariff Order, the Commission considered 14.48% as auxiliary
consumption based upon average of five years.
* *Norm for 600 MW is yet to be fixed. The above figures have been considered provisionally.

Net Generation

4.1.33 On the basis of above discussion, the net generation as submitted by TANGEDCO in its
Petition and that computed by the Commission for Coal based Thermal Power Stations in
this Tariff Order from FY 2010-11 to FY 2012-13 is tabulated below:
Table 31: Net Generation for FY 2010-11 approved by the Commission
(MU)
FY 2010-11
Particulars Revised
S. No Last Year
Petition Submission dated Commission
Order
4/03/2012
A Existing TPS
1 Ennore TPS 1713 1176 1176 1176
2 Tuticorin TPS 7576 6523 6522 6522
3 Mettur TPS 6143 5549 5549 5549
4 North Chennai TPS 4383 4110 4110 4110
5 Total 19815 17357 17357 17357
B New Cap. Addition
NCTPS (Stage-II) (Unit-
1 I) 0 0 0 0
NCTPS (Stage-II) (Unit-
2 2) 0 0 0 0

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FY 2010-11
Particulars Revised
S. No Last Year
Petition Submission dated Commission
Order
4/03/2012
3 MTPS Stage-III 0 0 0 0
4 Total 0 0 0 0
C Total TPS (A-5 + B-4) 19815 17357 17357 17357

Table 32: Net Generation for FY 2011-12 approved by the Commission


(MU)
FY 2011-12
S. No Particulars Last Year Revised Submission
Petition Commission
Order dated 04.03.2012
A Existing TPS
1 Ennore TPS 1713 851 851 851
2 Tuticorin TPS 7576 7018 7018 7018
3 Mettur TPS 6143 6235 6234 6234
4 North Chennai TPS 4383 4621 4621 4621
5 Total 19815 18724 18724 18724
B New Cap. Addition
NCTPS (Stage-II) (Unit-
1 I) 2561 0 0 0
NCTPS (Stage-II) (Unit-
2 2) 1276 0 0 0
3 MTPS Stage-III 2547 259 259
4 Total 6384 259 259 0
C Total TPS (A-5 + B-4) 26199 18983 18983 18724
* TANGEDCO has reported Generation of 259 MU for MTPS (Stage-III) for FY 2011-12. The Unit has not been
synchronized. Therefore, the Commission has not considered the generation from MTPS (Stage-III).

Table 33: Net Generation for FY 2012-13 approved by the Commission


(MU)
FY 2012-13
S. No Particulars
Last Year Order Petition Commission

A Existing TPS
1 Ennore TPS 1713 1361 680
2 Tuticorin TPS 7576 6896 6938
3 Mettur TPS 6143 5971 5960
4 North Chennai TPS 4383 4184 4391
5 Total 19815 18412 17968
B New Cap. Addition

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FY 2012-13
S. No Particulars
Last Year Order Petition Commission

1 NCTPS (Stage-II) (Unit-I) 3848 1760


NCTPS (Stage-II) (Unit- 2130
3030
2 2) 3848
3 MTPS Stage-III 3827 3528 3428
4 Total 11523 5658 8218
C Total TPS (A-5 + B-4) 31338 24070 26186
* The Commission has considered normative Auxiliary consumption due to which net generation is low.

4.1.34 In the letter dated February 28, 2012, TANGEDCO has reported that the Unit-I of
NCTPS (Stage-II) will be commissioned during October 2012, Unit-2 of NCTPS (Stage-
II) during June 2012. In respect of MTPS (Stage-III), the Unit will be synchronized
during March 2012 with the generation of 300 MW and the Unit will reach its full
generation of 600 MW during June 2012. Therefore, the generation of above new
projects has been calculated accordingly. The generation on account of NCTPS (Stage-II)
and MTPS (Stage-III) is tabulated below:
Table 34: Generation on account of NCTPS (Stage-III) and MTPS (Stage-III)
(MU)
Installed
Gross Aux. Net
Particulars Capacity COD Next FY Days PLF
Gen Cons. Gen.
(MW)
NCTPS (Stage-
600 15-Oct-12 03/31/2013 167 80% 1924 8.50% 1760
II) (Unit-I)
NCTPS (Stage-
600 15-Jun-12 03/31/2013 289 80% 3329 8.50% 3030
II) (Unit-2)
MTPS Stage-III 300 31-Mar-12 03/31/2013 365 80% 2102 9.00% 1913
MTPS Stage-III 300 15-Jun-12 03/31/2013 289 80% 1665 9.00% 1515

Gas Turbine Power Stations:


4.1.35 Energy Availability mainly depends upon net generation available from the Power Plants.
The Net Generation is determined on the basis of Plant Load Factor (PLF) and Auxiliary
Consumption which are discussed below:

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Plant Load Factor

4.1.36 Gross Generation of Generating Station depends upon its PLF. The Commission in its
Previous Tariff Order determined the Gross Generation for various Generating Stations
on the basis of PLF which is tabulated as under:

Table 35: Plant Load Factor (PLF) approved in Previous Tariff Order

S. No Particulars MW FY 2010-11 FY 2011-12 FY 2012-13


Tirumakottai GTPS
1 107.88 68.75% 68.75% 68.75%
(Kovilkalappal)
2 Kuttalam GTPS 101 77.08% 77.08% 77.08%
3 Basin Bridge GTPS 120 5.75% 5.75% 5.75%
4 Valuthur Unit-I 95 71.62% 71.62% 71.62%
5 Valuthur Unit-II 92 78.37% 78.37% 78.37%

4.1.37 TANGEDCO in its Petition submitted the actual PLF during FY 2010-11. For FY 2011-
12 and FY 2012-13, TANGEDCO projected the PLF for its various Generating Stations.
The PLF from FY 2010-11 to FY 2012-13 as submitted by TANGEDCO in its Petition is
tabulated as under:
Table 36: Plant Load Factor (PLF) submitted in Petition

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


Tirumakottai GTPS
1 68.74% 69.25% 65.71%
(Kovilkalappal)
2 Kuttalam GTPS 19.29% 46.80% 71.20%
3 Basin Bridge GTPS 4.93% 8.63% 11.60%
4 Valuthur Unit-I 67.54% 77.16% 78.50%
5 Valuthur Unit-II 0.00% 57.20% 78.30%

4.1.38 TANGEDCO submitted the following reasons for lower PLF of various GTPS in its
Petition:
a. Kuttalam GTPS: The Unit was shut down from July 18, 2010 to May 26, 2011 due to
release of Generator Stator for replacement at Valuthur GTPS. Tirumakottai GTPS: The
gas availability was about 70% of the agreed quantity up to May 2011 due to which the
plant was under part load.
b. Valuthur GTPS-II: Valuthur GTPS-II was re-commissioned on May 7, 2011 after long
breakdown from January 9, 2010 due to heavy damages in Gas Turbine rotor. Even after
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re-commissioning, full load could not be reached due to vibration problems. The
vibration problems were sorted by OEM. The unit was operated in full capacity on
August 18, 2011.
Commission’s View:

4.1.39 In Previous Tariff Order dated July 31, 2010, the Commission set target of around 70%
for all GTPS except BBGTPS. The Commission observed that there is significant
difference between the actual PLF achieved by various GTPS of TANGEDCO as
compared to the target PLF set by the Commission in FY 2010-11.

4.1.40 The Commission also observed the justification given by TANGEDCO for lower PLF for
its various GTPS during FY 2010-11. In view of the justification given by TANGEDCO,
the Commission has decided to consider the PLF as submitted by TANGEDCO for
various GTPS in FY 2010-11 in its Petition. However the Commission has allowed the
Capacity charges on Pro-rata basis depending upon the Target PLF set in last Tariff Order
which has been discussed in the Chapter of Generation Tariff.

4.1.41 As regards energy availability from Gas Turbine Power Stations in FY 2011-12, the
Commission in the data gaps asked TANGEDCO to submit the actual generation up to
December 2011 and projections for the next three months, i.e., from January to March
2012. TANGEDCO in its reply submitted actual Gross Generation up to December 2011
and revised projections from January to March 2012 which is tabulated below:
Table 37: Revised Projections submitted by TANGEDCO for FY 2011-12

Projections
Actual Up to FY 2011-12
S. No Particulars January-March
Dec 2011 (MU) (MU)
2012 (MU)
1 Tirumakottai GTPS ( 519 173 692
Kovilkalappal)
2 Kuttalam GTPS 317 173 490
3 Basin Bridge GTPS 29 15 44
4 Valuthur Unit-I 543 164 707
5 Valuthur Unit-II 294 160 454

4.1.42 Based on the above data submitted by TANGEDCO, the PLF for various Generating
Stations is tabulated below:

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Table 38: PLF for Generating Stations

S. No Particulars FY 2011-12
1 Tirumakottai GTPS 64.55%
(Kovilkalappal)
2 Kuttalam GTPS 72.45%
3 Basin Bridge GTPS 5.71%
4 Valuthur Unit-I 67.29%
5 Valuthur Unit-II 55.22%

4.1.43 Since the above figures are based on 9 months actuals and 3 months projections, the
Commission has decided to consider the above PLF for various GTPS of TANGEDCO
during FY 2011-12 for arriving at energy availability.

4.1.44 For FY 2012-13, the Commission observed that the PLF projected by TANGEDCO for
its various GTPS is about 70% except BBGTPS and TGTPS. The Commission has
considered the PLF as projected for FY 2012-13 by TANGEDCO in its Petition for
Kuttalam GTPS and Valuthur-I and Valuthur-II GTPS. The Commission observed that
Basin Bridge GTPS is mainly operated with Naptha (fuel) in order to meet the peak
demand. The Commission observed that TANGEDCO has projected PLF of 11.60% for
BBGTPS in FY 2012-13 whereas the actual PLF during FY 2010-11 was 4.93%.
Therefore the Commission has maintained the PLF of 5.75% as considered for FY 2012-
13 in last Tariff Order.

4.1.45 As regards PLF of TGTPS, the Commission observed that the PLF of TGTPS is in the
range of 65%-70% and TANGEDCO achieved the actual PLF of 68.74% in FY 2010-11.
Therefore, the Commission has considered PLF of 68.75% for TGTPS in FY 2012-13 as
approved in Previous Tariff Order. The Commission has decided to adopt the following
PLF for various GTPS:
Table 39: PLF considered by the Commission for FY 2012-13

S. No Particulars Last Order Petition Commission


1 Kuttalam GTPS 77.08% 71.20% 71.20%
2 Basin Bridge GTPS 5.75% 11.60% 5.75%
3 TGTPS 68.75% 65.71% 68.75%
4 Valuthur GTPS-I 71.62% 78.50% 78.50%
5 Valuthur GTPS-II 78.37% 78.30% 78.30%

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Auxiliary Consumption

4.1.46 The Commission in Previous Tariff Order approved the following auxiliary consumption
for various stations:
Table 40: Auxiliary Consumption approved in Previous Tariff Order

S. Percentage
Particulars
No approved
1 Kuttalam GTPS 6%
Basin Bridge
2 GTPS 1%*
3 TGTPS 6%
4 Valuthur GTPS-I 6%
5 Valuthur GTPS-II 6%
* For the purpose of calculation of energy availability, the auxiliary consumption was taken as 0.58% in Previous
Tariff Order.

4.1.47 TANGEDCO in its Petition did not submit the auxiliary consumption for various
Generating Stations. However in the Format-7 annexed along with the Petition,
TANGEDCO submitted the auxiliary consumption in MU for various generating stations.
The auxiliary consumption as submitted in the formats for various Generating Stations is
tabulated below:
Table 41: Auxiliary Consumption submitted in the Petition
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 Tirumakottai GTPS 40 40 40
(Kovilkalappal)
2 Kuttalam GTPS 12 32 40
3 Basin Bridge GTPS 0.32 0.33 1.22
4 Valuthur Unit-I 31 41 41
5 Valuthur Unit-II 18 40

Commission’s View:

4.1.48 The Commission observed that in accordance with Regulation-37 (v) of TNERC Tariff
Regulations, 2005 the auxiliary consumption is required to be approved as percentage of
Gross Generation. Regulation-37 (v) of TNERC Tariff Regulations, 2005 states as under:
“37. Norms of Operation
The norms of operation for Thermal Generating Stations shall be as under:

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(v) Auxiliary Energy Consumption
...
(b)Gas-based and Naptha based Generating Stations:
(i) Combined Cycle: 3%
(ii) Open Cycle: 1%

…”

4.1.49 However the Commission in its Order dated July 31, 2010 relaxed the norms of auxiliary
consumption and permitted auxiliary consumption at 6% for the purpose of using gas
booster compressor by TANGEDCO from FY 2010-11 to FY 2012-13.

4.1.50 In order to arrive at auxiliary consumption percentage, the Commission relied upon the
gross generation (MU) and auxiliary consumption (MU) submitted by TANGEDCO in
the formats. The auxiliary consumption percentage as computed by the Commission is
tabulated below:
Table 42: Auxiliary Consumption percentage on the basis of formats

FY 2010-11 FY 2011-12
Gross Aux. Aux. Gross Aux. Aux.
S. No Particulars
Gen. Con. Con. Gen. Con. Con.
MU MU % MU MU %
Tirumakottai
1 GTPS 650 40 6.19% 654 40 6.11%
(Kovilkalappal)
2 Kuttalam GTPS 171 12 6.83% 414 32 7.73%
3 Basin Bridge GTPS 52 0.32 0.62% 91 0.33 0.36%
4 Valuthur Unit-I 562 31 5.52% 642 41 6.39%
5 Valuthur Unit-II 0 0 0.00% 462 18 3.90%

FY 2012-13
S. No Particulars Gross Gen. Aux. Con. Aux. Con.
MU MU %
Tirumakottai GTPS
1 621 40 6.44%
(Kovilkalappal)
2 Kuttalam GTPS 630 40 6.35%
3 Basin Bridge GTPS 122 1.22 1.00%
4 Valuthur Unit-I 653 41 6.28%
5 Valuthur Unit-II 632 40 6.33%

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4.1.51 The Commission observed that the auxiliary consumption for TGTPS and KGTPS in FY
2010-11 is more than the norm approved by the Commission in Previous Tariff Order. In
reply to data gaps raised by the Commission regarding justification for high auxiliary
consumption, TANGEDCO submitted the following reasons for high auxiliary
consumption during FY 2010-11:

a. Tirumakottai GTPS: The auxiliary consumption was higher than the norms due to
frequent failure of STG because of failure of condenser tubes during FY 2009-10. The
generation was also lesser due to inadequate gas supply.
b. Kuttalam GTPS: The unit was operated under part load (70-80%) during FY 2011-12.
Hence norms could not be achieved.

4.1.52 Since FY 2010-11 is already over and TANGEDCO has submitted the actual auxiliary
consumption during FY 2010-11 along with the justification for the deviation from the
norms approved in Previous Tariff Order in case of TGTPS and KGTPS, the Commission
has decided to approve the same for FY 2010-11. However the Commission has allowed
the recovery of capacity charges on pro-rata basis as the consumers are already burdened
with the high cost of power purchase due to the energy purchased in place of non-
availability of own generating stations.

4.1.53 As regards FY 2011-12, the Commission in the data gaps asked TANGEDCO to submit
the actual generation up to December 2011 and projections for the next three months, i.e.,
from January to March 2012. TANGEDCO in its reply dated January 25, 2012 submitted
actual auxiliary consumption% along with the Gross generation up to December 2011
and projections from January to March 2012.

4.1.54 Subsequently, TANGEDCO vide its letter dated March 4, 2012 resubmitted the net
generation for FY 2011-12 for all of its generating stations based upon 10 months actual,
i.e., from April 2011 to January 2012 and 2 months projections, i.e., February 2012 to
March 2012. The Commission observed that the net generation for various Gas Turbine
stations resubmitted by TANGEDCO on March 4, 2012 is same as that submitted earlier.

4.1.55 The Commission observed that TANGEDCO in its latest submission did not submit
gross generation. The Commission has calculated the auxiliary consumption on the basis
of the PLF approved for various Gas Turbine Power Stations for FY 2011-12 in this
Order and the net generation submitted by TANGEDCO in its latest submission dated

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March 4, 2012. The auxiliary consumption as calculated for FY 2011-12 is tabulated
below:
Table 43: Auxiliary Consumption computed for FY 2011-12

Gross Net Auxiliary


Auxiliary
Particulars Generation Generation Consumption
Consumption %
(MU) (MU) (MU)
TGTPS 691 650 41 6.00%
KGTPS 490 457 33 6.67%
BBGTPS 44 44 0.13 0.30%
Valuthur Unit-I 707 666 42 5.87%
Valuthur Unit-II 454 428 27 5.84%
Total 2386 2244 142
* On the basis of revised gross generation submitted by TANGEDCO vide letter dated January 25, 2012 and net
generation submitted submitted by TANGEDCO vide letter dated March 4, 2012

4.1.56 As regards Auxiliary Consumption of various GTPS in FY 2012-13, the Commission


observed that TANGEDCO has projected higher auxiliary consumption for all GTPS.
The Commission is of the view that the non-achievement of the targets set by the
Commission in respect of various performance parameters does not fulfil the purpose of
this exercise. Therefore TANGEDCO should attempt to achieve the performance
parameters in accordance with the target set by the Commission. The Commission has
already relaxed the norms for auxiliary consumption up to 6% in Previous Tariff Order.
The Commission has capped the auxiliary consumption for all GTPS except BBGTPS at
6%.

4.1.57 As regards BBGTPS, the Commission observed that TANGEDCO has submitted actual
auxiliary consumption during FY 2010-11 and up to December 2011 is 0.62% and 3.43%
respectively which seems to be incorrect. In absence of any reliable data from
TANGEDCO, the Commission has maintained the auxiliary consumption as 1% in FY
2012-13 as approved in Previous Tariff Order but for the purpose of calculation of energy
availability, auxiliary consumption of 3.43% based upon actual up to December 2011 has
been considered. Though this power station was established as a peaking power station,
in view of prohibitive naptha prices, it is not being operated even during peak hours. The
generation from this station is very limited. In view of this the auxiliary consumption also
cannot be estimated accurately. This station is being operated as synchronous condenser
as facility was available for operating the gas turbines as synchronous condenser. The gas
turbine is started and brought upto full speed after which the unit is synchronized with the
grid. Thereafter the fuel supply is cut off and the gas turbine slows down and finally gets

136 | P a g e
decoupled from the generator through the operation of a clutch. The generator continues
to be in synchronism with the grid but operates as synchronous condenser. In this process
it supplies VAR to system for compensation. It is understood that this kind of operation
of Basin Bridge Gas Turbine Station has resulted in improving the voltage profile in the
surrounding area and also improved the real power generation of North Chennai TPS.
The operation of the Basin Bridge Gas Turbine Station as synchronous condensers will
have to be continued to further optimize the VAR Compensation to the system.

4.1.58 The auxiliary consumption for various Gas Turbine Power Stations as considered by the
Commission for FY 2012-13 is tabulated below:
Table 44: Auxiliary Consumption of GTPS in FY 2012-13

S. No Particulars Last Order Petition Commission

1 Kuttalam GTPS 6% 6.35% 6%


2 Basin Bridge GTPS 0.58% 1.00% 3.43%
3 TGTPS 6% 6.44% 6%
4 Valuthur GTPS-I 6% 6.28% 6%
5 Valuthur GTPS-II 6% 6.33% 6%

Net Generation

4.1.59 On the basis of above discussion, the net generation as submitted by TANGEDCO in its
Petition and that computed by the Commission in this Tariff Order for Gas Turbine
Power Stations from FY 2010-11 to FY 2012-13 is tabulated below:
Table 45: Net Generation for GTPS approved by the Commission in FY 2010-11
(MU)
FY 2010-11
S. No Particulars Last Year Revised Submission
Petition Commission
Order dated 4.03
1 Kuttalan GTPS 641 157 157 157
Basin Bridge
2
GTPS 60 51 52 52
3 TGTPS 610 649 610 610
4 Valuthur GTPS-I 560 531 531 531
5 Valuthur GTPS-II 446 0
6 Total 2317 1388 1349 1349

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Table 46: Net Generation for GTPS approved by the Commission in FY 2011-12
(MU)
FY 2011-12
S. No Particulars Last Year Revised Submission
Petition Commission
Order dated 4.03
1 Kuttalan GTPS 641 382 457 457
Basin Bridge
60 90 44 44
2 GTPS
3 TGTPS 615 654 650 650
4 Valuthur GTPS-I 560 601
1093 1093
5 Valuthur GTPS-II 594 444
6 Total 2470 2172 2244 2244

Table 47: Net Generation for GTPS approved by the Commission in FY 2012-13
(MU)
FY 2012-13
S. No Particulars Last Year Revised Submission
Petition Commission
Order dated 4.03
1 Kuttalan GTPS 641 590 Not submitted 592
Basin Bridge
60 121 Not submitted 58
2 GTPS
3 T GTPS 581 581 Not submitted 611
4 Valuthur GTPS-I 560 611 Not submitted 614
5 Valuthur GTPS-II 594 592 Not submitted 593
6 Total 2436 2495 2469

Hydel Generation:
4.1.60 The Commission in Previous Tariff Order approved the energy availability from hydel
generation by considering 25% PLF in accordance with Regulation 76(2) of TNERC
Tariff Regulations, 2005. The Commission deducted the energy on account of auxiliary
consumption, i.e., 23 MU and consumption by Kadamparai PSHES for pump mode, i.e.,
369 MU for arriving at net availability from hydel generation from FY 2010-11 to FY
2012-13. The hydel generation as approved by the Commission from FY 2010-11 to FY
2012-13 in Previous Tariff Order is tabulated below:
Table 48: Net Hydel Generation approved in Previous Tariff Order

S. No Particulars Units FY 2010-11 FY 2011-12 FY 2012-13


1 Net Hydel Generation MU 4397 4439 4601

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4.1.61 TANGEDCO in its Petition submitted that the Gross Hydel Generation for FY 2010-11 is
5108 MU. However if for reasons beyond control hydel generation is significantly
different then it would affect the overall generation as well as purchase requirements and
consequently the financial position of board.
Table 49: Net Hydel Generation submitted in the Petition

S. No Particulars Units FY 2010-11 FY 2011-12 FY 2012-13


1 Net Hydel Generation MU 5085 5561 6025

Commission’s View:

4.1.62 In reply to data gaps raised by the Commission, TANGEDCO revised the energy
available from various Hydel Stations in FY 2010-11 from 5085 MU to 4474 MU.
Similarly for FY 2011-12, TANGEDCO revised the energy available from various Hydel
Stations in FY 2011-12 from 5561 MU to 4912 MU.

4.1.63 In another data gap raised by the Commission, TANGEDCO submitted actual gross
generation and auxiliary consumption from various Hydro Power Plants from FY 2001-
02 to FY 2011-12. The Commission observed that consumption by Kadamparai PSHES
for pump mode was not excluded from this data. Subsequent to this, the Commission in
various discussions held with TANGEDCO officials asked to submit the data for
Kadamparai PSHES for pump mode and the gross generation from Kadamparai PSHES.
TANGEDCO in reply submitted the data for Kadamparai pump mode from FY 2001-02
to FY 2011-12.

4.1.64 From the details related to Kadamparai PSHES Mode as submitted by TANGEDCO, the
Commission observed that consumption of Kadamparai Pump Mode is more than the net
generation of Kadamparai which is normal in a Pump Storage Power Project. The correct
cost of generation as well as the energy required for pumping in Kadamparai power
house can be done only if the block-wise UI rates is available both for the generation and
pumping of water. In the absence of such data the net energy availability or requirement
will be taken into account and appropriate financial treatment will be given.

139 | P a g e
4.1.65 Therefore the Commission has considered the net energy available on account of
Kadamparai PSHES in FY 2010-11 and FY 2011-12 after adjusting consumption (which
is negative) of Kadamparai Pump mode separately in energy requirement table.

4.1.66 The hydro generation from FY 2010-11 and FY 2011-12 is tabulated below:
Table 50: Hydro Generation (MU) for FY 2010-11 and FY 2011-12

S. No Particulars FY 11 FY 12
Net Hydel Gen. on account
1 of hydro plants excluding 4515 4701
Kadamparai

4.1.67 As regards FY 2012-13, the Commission feels that 6025 MU as submitted by


TANGEDCO in its Petition is very high. For calculation of net generation from Hydro
Power Plants, the Commission has relied upon previous years data. The Commission has
observed the previous ten years trend. The Commission observed that the net generation
during FY 2002-03 and FY 2003-04 is abnormal as these were draught years having less
rainfall, Hence, the Commission has taken last 8 years average, i.e., from FY 2004-05 to
FY 2011-12 and considered the same as net hydel generation during FY 2012-13. The net
hydel generation on account of existing capacity is tabulated below:
Table 51: Net Hydel Generation

(MU)

Net Hydro Generation


Financial
S. No on account of hydro
Years
plants exc. Kadamparai
1 FY 2004-05 4153
2 FY 2005-06 5531
3 FY 2006-07 5849
4 FY 2007-08 5971
5 FY 2008-09 5040
6 FY 2009-10 5122
7 FY 2010-11 4515
8 FY 2011-12 4701
Average
9 hydro 5110
generation

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4.1.68 The Commission observed that TANGEDCO has not projected the hydro generation
accurately. Therefore the Commission directs TANGEDCO to project the hydro
generation accurately and submit the same within 3 months of the issuance of this Order.

4.1.69 In reply to data gaps, TANGEDCO submitted the list of new hydel projects to be
commissioned during FY 2012-13 along with the Commissioning dates. The Commission
has considered PLF of 25% and auxiliary consumption of 1% for projecting energy
availability from new hydel projects. The energy available from the new hydel projects to
be commissioned during FY 2012-13 is shown as under:
Table 52: Energy Available from New Hydel Projects

Installed
Particulars COD Next FY Days PLF Aux. Con. Net Gen.
Capacity
MW % % MU
Periyar-II 2.5 01-Apr-12 01/31/2013 305 25% 1% 4.53
Periyar-III 4 01-Jul-12 01/31/2013 214 25% 1% 5.08
Periayr-IV 2.5 01-Jun-12 01/31/2013 244 25% 1% 3.62
BhavaniBarrage-I 10 01-Nov-12 01/31/2013 91 25% 1% 5.41
BhavaniBarrage-
01-Jul-12 01/31/2013 214 25% 1% 12.71
II 10
Bhavani Kattalai-
01-Nov-11* 01/31/2012 365 25% 1% 65.04
II 30
Bhavani Kattalai-
01-Jul-12 01/31/2013 214 25% 19.07
III (Unit-I) 15 1%
Bhavani Kattalai-
01-Aug-12 01/31/2013 183 25% 16.31
III (Unit-II) 15 1%
Total 89 131.77

* It has been assumed that the energy available during FY 12 for this hydel project has been considered by
TANGEDCO in revised submission of FY 12.

The energy availability from Hydel Generation as approved by the Commission from FY 2010-
11 to FY 2012-13 is tabulated below:

Table 53: Net Hydel Generation approved by the Commission in FY 2010-11

(MU)

FY 2010-11
S. No Particulars Revised
Last Year
Petition Submission Commission
Order
dated 4.03.12
A Existing Hydro 4397 5085 4474 4515

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Table 54: Net Hydel Generation approved by the Commission in FY 2011-12

(MU)

FY 2011-12
S. No Particulars Revised
Last Year
Petition Submission Commission
Order
dated 4.03.12
A Existing Hydro 4439 5561 4912 4701

Table 55: Net Hydel Generation approved by the Commission in FY 2012-13

(MU)

FY 2012-13
S. No Particulars Revised
Last Year
Petition Submission Commission
Order
dated 4.03.12
A Existing Hydro 4601 6025 Not Submitted 5110
B New Cap. Addition 0 0 Not Submitted 132
Total Hydro (A +
C 4601 6025 5242
B)

Wind Generation:
4.1.70 The Commission in Previous Tariff Order approved net generation of 10 MU
corresponding to 17.55 MW installed capacity of wind mills owned by TNEB.

4.1.71 TANGEDCO in its Petition submitted that it has an installed capacity of 17.55 MW
which was commissioned during 1990s. The net available energy from Wind Mills from
FY 2010-11 as submitted by TANGEDCO is tabulated below:
Table 56: Net energy available from Wind from FY 2010-11 to FY 2012-13

S. No Particulars Unit FY 2010-11 FY 2011-12 FY 2012-13


A Wind Generation MU 13 20 21

142 | P a g e
Commission’s View:

4.1.72 In reply to data gaps raised by the Commission, TANGEDCO submitted the actual
energy available from Wind Mills during FY 2010-11 and FY 2011-12 as 12.675 MU
and 11.314 MU respectively.

4.1.73 For FY 2010-11 and FY 2011-12, the Commission has considered the revised submission
of TANGEDCO.

4.1.74 As regards energy availability from wind mills during FY 2012-13, the Commission has
considered the same energy as actually available in FY 2011-12. The energy from wind
mills as approved by the Commission from FY 2010-11 to FY 2012-13 in this Tariff
Order is tabulated below:
Table 57: Energy available from Wind Mills in FY 2010-11
(MU)
FY 2010-11
S. No Particulars Last Year
Petition Revised Submission Commission
Order
Wind
A 10 13 13 13
Generation

Table 58: Energy available from Wind Mills in FY 2011-12


(MU)
FY 2011-12
S. No Particulars Last Year
Petition Revised Submission Commission
Order
Wind
A 10 20 11 11
Generation

Table 59: Energy available from Wind Mills in FY 2012-13


(MU)
FY 2012-13
S. No Particulars Last Year Revised Submission
Petition Commission
Order dated 4.03
Wind
A 10 21 Not Submitted 11
Generation

143 | P a g e
Energy Available from Other Sources:
4.1.75 TANGEDCO in its Petition has included power purchase quantum from the following
sources:
1. Central Generating Stations (CGS)
2. Independent Power Producers (IPPs)
3. Captive/Cogeneration and Non-Conventional energy sources

4.1.76 The energy availability from the above mentioned sources as submitted by TANGEDCO
and approved by the Commission in this Tariff Order has been discussed in detail.
Central Generating Stations:

4.1.77 The Commission in Previous Tariff Order approved the energy from Central Generating
Stations (CGS) on the basis of the allocated share to TANGEDCO. The Commission
considered 85% Plant Availability Factor for all CGS and Joint ventures and 70% for the
proposed addition from Kaiga APS and Kalpakkam APS. The power purchase quantum
from CGS from FY 2010-11 to FY 2012-13 as approved by the Commission in Previous
Tariff Order is tabulated below:
Table 60: Energy Available from CGS approved by the Commission in Previous Tariff Order

S. No Particulars Unit FY 2010-11 FY 2011-12 FY 2012-13


Energy Available
1 MU 21348 27333 35723
from CGS

4.1.78 TANGEDCO in its Petition submitted that the energy availability from existing Central
Generating Stations has been assumed to remain unchanged in the ensuing financial
years. The Commissioning schedule has been taken into account while formulating the
projection of the power purchase from new CGS.

4.1.79 TANGEDCO in its Petition projected the energy availability from FY 2010-11 to FY
2012-13 from Central Generating Stations which is tabulated below:
Table 61: Energy Available from CGS as submitted by TANGEDCO

S. No Particulars Unit FY 2010-11 FY 2011-12 FY 2012-13


Energy Available
1 MU 21633 23297 30710
from CGS

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Commission’s View:

4.1.80 The Commission observed that TANGEDCO has submitted the power purchase quantum
from various CGS during FY 2010-11 which includes UI also. Since TANGEDCO in its
Petition has submitted actual quantum purchased from CGS during FY 2010-11, the
Commission has considered the same for FY 2010-11.

4.1.81 As regards power purchase quantum from CGS during FY 2011-12, the Commission
asked TANGEDCO to submit the actual power purchased till December 2011 and revised
projections for next three months, i.e., from January 2012 to March 2012. In reply
TANGEDCO submitted the revised projection on the basis of actual power purchased
from CGS till December 2011.

4.1.82 The Commission observed that TANGEDCO in its revised submission has reduced the
power purchase quantum from NTPC-Kayamkulam, Kudankulam APS and NLC-TS-II
Expansion during FY 2011-12. The Commission has considered the power purchase
quantum from CGS during FY 2011-12 as per the revised submission of TANGEDCO.

4.1.83 For FY 2012-13, the Commission observed that TANGEDCO has submitted power
purchase quantum from existing CGS on the basis of capacity allocation to TANGEDCO.
The Commission has accepted the projection of power purchase quantum on account of
existing CGS as submitted by TANGEDCO in the Petition. The Commission further
observed that TANGEDCO has also projected 145 MU on account of UI along with
CGS. The Commission is of the view that UI is not a source of power purchase and hence
cannot be considered at the time of advance estimation of availability of power

4.1.84 In case of new capacity addition in CGS during FY 2012-13, TANGEDCO has furnished
revised COD along with installed capacity and its’ share in net availability for upcoming
CGS in FY 2012-13. The Commission has also obtained COD details from NLC and
NTPC for their upcoming Units. Based on the CODs furnished by TANGEDCO, NLC
and NTPC, the Commission has calculated the net energy available from new CGS
pertaining to TANGEDCO’s share during FY 2012-13.
Table 62: Energy available from upcoming Power Stations during FY 2012-13

Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
NLC TS
Expansion-II 250 31-Mar-12 03/31/2013 365 97.75 2190 856
(Unit-I)

145 | P a g e
Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
NLC TS
Expansion-II 250 15-Sep-12 03/31/2013 197 97.75 1182 462
(Unit-II)
Total 500 195.50 3372 1318

Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
Kudankulam
1000 15-May-12 03/31/2013 320 392.70 7680 3016
(Unit-I)
Kudankulam
1000 15-Feb-13 03/31/2013 44 393.60 1056 416
(Unit-II)
Total 2000 786.30 8736 3432
Considered
1716
50%

Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
Simhadri (Unit-
500 16-Sep-11 03/31/2013 365 80.75 4380 707
III)
Simhadri (Unit-
500 03/31/2013 365 80.75 4380 707
IV) 31-Mar-12
Total 1000 161.50 8760 1414

Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
NTPC-TNEB
500 31-Mar-12 03/31/2013 365 295 4380 2584
(Unit-I)
NTPC-TNEB
500 03/31/2013 44 295 528 312
(Unit-II) 15-Feb-13
Total 1000 590 4908 2896

Installed Total
TANGEDCO TANGEDCO
Particulars Capacity COD Next FY Days Gen
Share (MW) Share (MU)
(MW) (MU)
MAPS Addl. 500 31-May-12 03/31/2013 304 142 3648 1036
Considered
518
50%

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4.1.85 As regards Kudankulam APS and MAPS Additional, the Commission has considered the
energy availability as 50% from these two Power Stations in view of uncertainties in the
Commercial date of Operation.

4.1.86 The Power Purchase Quantum as approved by the Commission from FY 2010-11 to FY
2012-13 is tabulated below:
Table 63: Energy Available from CGS in FY 2010-11 as approved by the Commission
(MU)
FY 2010-11
S. No Particulars Rev. sub. Dated
Petition Commission
4.03
1 NLC-TS-I 3066 3066 3066
2 NLC-TS-II (Stage-I) 1214 1214
3042
NLC-TS-II (Stage-II) 1828 1828
3 NLC-TS-I Expansion 1509 1509 1509
4 NTPC SR (I & II) 4039 4039 4039
5 NTPC SR (III) 1024 1024 1024
6 NTPC ER 735 735 735
7 NTPC - Talcher II 3664 3664 3664
8 Kayankulam 854 854 854
9 MAPS 1398 1399 1399
10 KAIGA 860 860 860
11 Simahadri 0 0 0
12 Kudankulam 0 0
13 NLC-TS-IIExpansion 0 0
14 MAPC (Addl.) 0 0
15 NTPC-TNEB (JV) 0 0
16 UI 1441 1441 1441
17 Total 21633 21633 21633

Table 64: Energy Available from CGS in FY 2011-12 as approved by the Commission
(MU)
FY 2011-12
S. No Particulars Rev. sub.
Petition Commission
Dated 4.03
1 NLC-TS-I 3066 3066 3066
2 NLC-TS-II (Stage-I) 1503 1503
3242
NLC-TS-II (Stage-II) 1739 1739
3 NLC-TS-I Expansion 1609 1609 1609

147 | P a g e
FY 2011-12
S. No Particulars Rev. sub.
Petition Commission
Dated 4.03
4 NTPC SR (I & II) 4139 4139 4139
5 NTPC SR (III) 1105 1105 1105
6 NTPC ER 885 885 885
7 NTPC - Talcher II 3690 3690 3690
8 Kayankulam 250 205 205
9 MAPS 1498 1499 1499
10 KAIGA 1107 1107 1107
11 Simahadri 328 328 328
12 Kudankulam 333
13 NLC-TS-II Expansion 1295
14 MAPS (Addl.) 0
15 NTPC-TNEB (JV) 0
16 UI 750 750 750
17 Total 23297 21625 21625

Table 65: Energy Available from CGS in FY 2012-13 as approved by the Commission
(MU)
FY 2012-13
S. No Particulars
Petition Commission

1 NLC-TS-I 3066 3066


2 NLC-TS-II (Stage-I)
3272 3272
NLC-TS-II (Stage-II)
3 NLC-TS-I Expansion 1624 1624
4 NTPC SR (I & II) 4164 4164
5 NTPC SR (III) 1125 1125
6 NTPC ER 897 897
7 NTPC - Talcher II 3705 3705
8 Kayankulam 0 0
9 MAPS 1508 1508
10 KAIGA 1178 1178
11 Simahadri 925 1415
12 Kudankulam 3245 1716
13 NLC-TS-II Expansion 2135 1318
14 MAPS (Addl.) 256 518
15 NTPC-TNEB (JV) 3465 2896

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FY 2012-13
S. No Particulars
Petition Commission

16 UI 145
17 Total 30710 28402

Independent Power Producers (IPPs):

4.1.87 The Commission in Previous Tariff Order approved the energy from Independent Power
Producers (IPPs) at 85% of the installed capacity (MW). The Commission approved total
power purchase quantum on the basis of Merit Order Despatch.

4.1.88 TANGEDCO in its Petition has submitted that it has entered into Power Purchase
Agreements with several Independent Power Producers for procuring electricity. It
further submitted that the power purchase price from these sources is governed by the
applicable power purchase agreements entered into with these projects. TANGEDCO
projected the following quantum of Power Purchase from FY 2010-11 to FY 2012-13
from IPPs in its Petition:
Table 66: Energy Available from IPPS as submitted in the Petition
(MU)
Installed
S. No Particulars Capacity (MW) FY 2010-11 FY 2011-12 FY 2012-13
1 GMR 196 875 795 495
2 Samalpatti 105.66 378 575 575
3 PPN 330.5 2494 2375 2395
4 Madurai 106 353 575 575
5 ST-CMS 250 1652 1780 1795
6 ABAN 113.2 820 801 810
7 Penna 52.8 370 365 375
8 Total 1154.16 6942 7266 7020

Commission’s View:

4.1.89 In its reply dated March 4, 2012, TANGEDCO revised the quantum of power purchase
from IPPs during FY 2010-11 from 6942 MU to 6945 MU. The Commission has
considered the revised submission of Petitioner TANGEDCO regarding IPPs during FY
2010-11.

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4.1.90 As regards FY 2011-12, TANGEDCO revised the power purchase quantum purchased
from IPPs during FY 2011-12 from 7266 MU to 5982 MU on the basis of 9 months
actual data available up to December 2011. The Commission asked TANGEDCO the
reasons for purchasing costlier power from GMR as compared to the cheaper power
available from Penna, Aban and PPN. In reply TANGEDCO submitted that these power
plants were not able to provide energy due to shutdown and non-availability of fuel. The
Commission has considered the revised submission of TANGEDCO regarding Power
Purchase Quantum from IPPs.

4.1.91 For FY 2012-13, the Commission observed that TANGEDCO has projected less energy
availability from GMR PCL as compared to Samalpatti PPCL and Madurai PPCL. The
Commission has considered the power purchase quantum as submitted by TANGEDCO
in the Petition. However the Commission notes that the energy available from all the
three stations is much higher if PLF corresponding to full cost recovery is considered.
During advanced operation, interse Merit Order Despatch shall be followed for
despatching the stations. The Commission has allowed the power to be purchased from
IPPs on the basis of Merit Order Despatch for FY 2012-13. The Power Purchase quantum
from IPPs from FY 2010-11 to FY 2012-13 is tabulated below:
Table 67: Energy Available for FY 2010-11 as approved by the Commission
(MU)
FY 2010-11
Particulars Last Year Revised
Petition Commission
Order Submission
GMR 1300 875 875 875
Samalpatti 300 378 378 378
PPN 2259 2494 2496 2496
Madurai 540 353 353 353
ST-CMS 1809 1652 1653 1653
ABAN 850 820 820 820
Penna 400 370 370 370
Total
Quantum 7458 6942 6945 6945

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Table 68: Energy Available for FY 2011-12 as approved by the Commission
(MU)
FY 2011-12
Particulars Last Year Revised
Petition Commission
Order Submission
GMR 300 795 962 962
Samalpatti 150 575 351 351
PPN 1406 2375 1483 1483
Madurai 179 575 333 333
ST-CMS 1574 1780 1711 1711
ABAN 850 801 776 776
Penna 400 365 366 366
Total
4859 7266 5982 5982
Quantum

Table 69: Energy Available for FY 2012-13 as approved by the Commission

(MU)

FY 2012-13
Particulars Last Year
Petition Commission
Order
GMR 300 495 495
Samalpatti 150 575 575
PPN 1441 2395 2395
Madurai 151 575 575
ST-CMS 1574 1795 1795
ABAN 850 810 810
Penna 400 375 375
Total Quantum 4866 7020 7020

Captive/ Cogeneration and Non-Conventional energy sources:

4.1.92 The Commission in Previous Tariff Order approved the purchase from Captive Power
Plants in accordance with the Power Purchase quantum projected by TANGEDCO in its
Petition.

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4.1.93 As regards power purchase quantum from Bagasse based Cogeneration Power Plants, the
Commission in Previous Tariff Order approved power purchase quantum at the available
capacity level as the purchase from these sources fall outside the Merit Order Despatch.

4.1.94 For projection of quantum available from private wind mills in the Previous Tariff Order,
the Commission calculated the quantum by considering the Capacity Utilization Factor of
19.57% based on last three years average.

4.1.95 The quantum of power approved by the Commission from Non-Conventional Energy
Sources in the last Order is tabulated below:
Table 70: Quantum of energy approved in Previous Tariff Order
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 CPP 671 571 371
2 Cogeneration 810 1038 1276
3 Biomass 111 111 111
Private Wind
4 Mills 9458 9973 10487
5 Total 11050 11693 12245

4.1.96 TANGEDCO in its Petition submitted that it has entered into agreements with some of
the private energy generators owning captive generating sources and cogeneration
sources, which pump their surplus power into the Grid. TANGEDCO further submitted
that the power purchase quantum has been estimated on the basis of quantity of power
likely to be made available for sale based on prevailing trends. The Power Purchase
Quantum projected from various sources from FY 2010-11 to FY 2012-13 is tabulated
below:
Table 71: Quantum of energy submitted in the Petition
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 CPP 460 575 580
2 Solar 2 10 11
3 Wind 8707 9245 9988
4 Cogeneration 997 1135 1469
5 Biomass 110 115 120
6 Total 10276 11080 12168

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Commission’s View:

4.1.97 During the discussion held with TANGEDCO Officials, it was communicated that the
wheeled energy of Open Access Consumers are booked under power purchase as well as
Sale of power. TANGEDCO submitted the details of energy wheeled from Wind,
Biomass, Cogen and Captive Generators.

4.1.98 The details submitted by TANGEDCO from FY 2010-11 to FY 2012-13 are tabulated
below:
Table 72: Details of Energy wheeled from FY 2010-11 to FY 2012-13

Power Wheeled
Particulars
Purchase (MU) Energy (MU)

Wind
FY 2010-11 5263 3169
FY 2011-12 5130 3942
FY 2012-13 5408 4141

Cogeneration
FY 2010-11 997 351
FY 2011-12 1135 400
FY 2012-13 1202 456

Biomass
FY 2010-11 110 0
FY 2011-12 115 0
FY 2012-13 56 0

CPP
FY 2010-11 460 595
FY 2011-12 575 673
FY 2012-13 582 762

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4.1.99 The Commission is of the view that the inclusion of energy on account of captive
consumption through wheeling in sales and power purchase is not correct and should be
treated in kind. Therefore, the Commission has not considered the energy wheeled on
account of wind, CPP, Cogeneration and Biomass in the sales as well as power purchase.

4.1.100The Commission has considered only the energy directly purchased from Wind, CPP,
Cogeneration and Biomass for calculating energy availability from FY 2010-11 to FY
2012-13 in accordance with the break-up submitted by TANGEDCO.

4.1.101As regards Solar Power Plants, the Commission has considered the energy availability as
submitted by TANGEDCO from FY 2010-11 to FY 2012-13 in the Petition.

4.1.102The quantum of energy available as approved by the Commission from FY 2010-11 to


FY 2012-13 is tabulated below:
Table 73: Quantum of energy available during FY 2010-11
(MU)

FY 2010-11
S. Revised
Particulars Last Year
No Petition Submission Commission
Order
dated 24.02
1 CPP 671 460 460 460
2 Solar 0 2 2 2
3 Wind 9458 8707 8707 5263
4 Cogeneration 810 997 997 997
5 Biomass 111 110 110 110
Total
11050 10276 10276 6833
6 Quantum

Table 74: Quantum of energy available during FY 2011-12


(MU)
FY 2011-12
S. Revised
Particulars Last Year
No Petition Submission Commission
Order
dated 4.03
1 CPP 571 575 575 575
2 Solar 0 10.27 10 10
3 Wind 9973 9245 9245 5130
4 Cogeneration 1038 1135 1135 1135
5 Biomass 111 115 115 115
6 Total 11693 11080 11081 6965

154 | P a g e
FY 2011-12
S. Revised
Particulars Last Year
No Petition Submission Commission
Order
dated 4.03
Quantum

Table 75: Quantum of energy available during FY 2012-13


(MU)
FY 2012-13
S.
Particulars Last Year
No Petition Commission
Order
1 CPP 371 580 582
2 Solar 0 11 11
3 Wind 10487 9988 5408
4 Cogeneration 1276 1469 1202
5 Biomass 111 120 56
Total
12245 12168 7258
6 Quantum

Renewable Purchase Obligation (RPO):

4.1.103In Para 8.18.4 of the comprehensive tariff order on wind energy (Order No.1 of 2009,
dated 20-03-2009), the Commission has fixed the Renewable Purchase Obligation (RPO)
at a minimum of 14% for 2010-11.

4.1.104As regards FY 2011-12, the Commission in first Amendment in Renewable Energy


Purchase Obligation Regulations, 2010 has fixed the RPO of 9% for all sources of
Renewable Energy put together and 0.05% for Solar separately.

4.1.105As regards target of RPO for future years, Tamil Nadu Electricity Regulatory
Commission (Renewable Energy Purchase Obligation) Regulations, 2010 states as under:

“2.If the RPO for any of the year is not specified by the Commission, the RPO
specified for the previous year shall be continued beyond the period till any
revision is effected by the Commission in this regard.”

4.1.106For FY 2012-13, the Commission has not prescribed any RPO Target. Therefore, the
Commission has considered same RPO Obligations as prescribed for FY 2011-12 till
determination of RPO Target for FY 2012-13.

155 | P a g e
4.1.107Accordingly, the Commission has calculated the quantum to be purchased through RPO.
The details of power purchase quantum in FY 2010-11 and FY 2011-12 is tabulated
below:

4.1.108The Commission has applied the above mentioned percentages of RPO from FY 2010-11
to FY 2012-13 on the energy required determined for respective years in this Order.
Table 76: RPO Obligation
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 Energy Requirement 68770 69240 70784
Purchase from
2 9628 6232 6371
Renewable

3 RPO% for all Sources 9% 9%


14%
4 RPO% for solar 0.05% 0.05%

4.1.109As discussed earlier the Commission in this Order has allowed only direct purchased
quantum on account of wind energy from FY 2010-11 to FY 2012-13. The Commission
has given the appropriate treatment in the energy sales also and reduced the quantum of
wheeled energy included in sales.

4.1.110The actual energy purchased through Renewable Energy sources during FY 2010-11 and
projected to be purchased from FY 2011-12 to FY 2012-13 on the basis of quantum of
energy approved through various sources in this Order is tabulated below:
Table 77: Renewable Energy Purchase from FY 2010-11 to FY 2012-13
(MU)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 Wind 5263 5130 5408
2 Small Hydro 212 207 262
3 Cogeneration 997 1135 1202
4 Biomass 110 115 56
5 Own wind generation 13 11 11
6 Total except solar 6596 6598 6938
7 Solar 2 10 11
8 Total including solar 6598 6609 6949
RPO % actually
9 achieved for all sources 9.59% 9.53% 9.80%
except solar
10 Solar 0.0030% 0.02% 0.02%

156 | P a g e
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
11 RPO% actually 9.59% 9.54% 9.82%
achieved for all sources

4.1.111The Commission observed that TANGEDCO has met the target of RPO, i.e., 14% in FY
2010-11 based on the total Renewable energy utilised in the area of the licensee. .

4.1.112As regards FY 2011-12 and FY 2012-13, the Commission observed that for all RE
sources put together, TANGEDCO will achieve the target of 9% during FY 2011-12 and
FY 2012-13.

4.1.113As against the target of 0.05% in case of Solar, TANGEDCO has projected the
achievement of 0.02% during FY 2011-12 and FY 2012-13. Also TANGEDCO has not
requested the Commission to provide waiver for the same. The Commission in this Order
has provisionally considered the power purchase from Solar as submitted by
TANGEDCO for FY 2011-12 and FY 2012-13. However TANGEDCO is expected to
fulfil the RPO Target in terms of Solar also. The Commission will consider the actual
quantum purchased on account of Solar during FY 2011-12 during truing-up in next
Tariff determination exercise.

Traders :

4.1.114The Commission in Previous Tariff Order considered the following quantum on account
of purchase from Traders from FY 2010-11 to FY 2012-13:
Table 78: Energy on account of Traders from FY 2010-11 to FY 2012-13
(MU)
Particulars FY 2010-11 FY 2011-12 FY 2012-13
Traders 4538 2000 2000

4.1.115TANGEDCO submitted the energy quantum on account of Traders from FY 2010-11 to


FY 2012-13 in the Petition which is tabulated below:
Table 79: Energy on account of Traders from FY 2010-11 to FY 2012-13
(MU)
Particulars FY 2010-11 FY 2011-12 FY 2012-13
Traders 10483 12500 5365

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Commission’s View:

4.1.116The Commission observed that TANGEDCO has purchased considerable quantum of


energy from Traders during FY 2010-11 and FY 2011-12 in order to meet its energy
requirement. The Commission has considered the quantum on account of Traders
according to the latest submission of TANGEDCO for respective years. The average cost
of power purchased from Traders during FY 2010-11 and FY 2011-12 as submitted by
TANGEDCO in the revised submission is Rs. 5.32/ kWh and Rs. 6.82/ kWh. However
the Commission has capped the average rate of power purchase rate of Rs. 5.32/ kWh
during FY 2010-11 and FY 2011-12. For FY 2012-13, the Commission has considered
2000 MU on account of Traders as considered in last Tariff Order. The energy considered
on account of Traders is tabulated below:
Table 80: Energy approved on account of Traders from FY 2010-11 to FY 2012-13
(MU)
FY 2010-11 FY 2011-12
Particulars Revised Revised
Petition Commission Petition Commission
Submission Submission
Traders 10483 10540 10540 12500 9400 9400

FY 2012-13
Particulars
Petition Commission

Traders 5365 2000

4.1.117The Commission directed TANGEDCO to follow the Government of India (GoI)


guidelines under Section-63 for power purchase for less than 1 year which is under
finalisation. The Commission also directs TANGEDCO to take prior approval before
purchasing the energy from Traders higher than the quantum and rate specified by the
Commission in this Tariff Order.

Total energy available from all Sources:

4.1.118Based upon the above discussion in respect of individual sources, the total energy
available from all sources as submitted in the Petition and as approved in the Order is
tabulated below:

158 | P a g e
Table 81: Total Energy Available from all Sources
(MU)
FY 2010-11 FY 2011-12
Particulars Revised Revised
Petition Commission Petition Commission
Submission Submission
Own Generation
ETPS 1176 1176 1176 851 851 851
TTPS 6523 6522 6522 7018 7018 7018
MTPS 5549 5549 5549 6235 6234 6234
NCTPS 4110 4110 4110 4621 4621 4621
NCTPS (Stage-II)
(Unit-I)
NCTPS (Stage-II)
(Unit-2)
MTPS Stage-III 259 259 0
Subtotal-Thermal 17358 17357 17357 18984 18983 18724

Gas Turbine
Stations
Kuttalam 157 157 157 382 457 457
Basin Bridge 52 52 52 90 44 44
TGTPS 649 610 610 654 650 650
Valuthur -I 531 531 531 601 629
1093
Valuthur-II 444 465
Subtotal-Gas 1389 1349 1349 2172 2244 2244

Hydro Stations
Erode HEP 767 846
Kadamparai HEP 1303 1279
4515 4701
Kundah HEP 2155 2497
Tirunelveli HEP 860 939
New Hydro addition
Subtotal-Hydro 5085 4474 4515 5561 4912 4701

Wind
Tirunelveli &
13 13 13 20 20 11
Udmalpet

Total-Own
23845 23192 23233 26737 26159 25680
Generation

Sources other than

159 | P a g e
FY 2010-11 FY 2011-12
Particulars Revised Revised
Petition Commission Petition Commission
Submission Submission
own generation
IPPs
GMR 875 875 875 795 962 962
Samalpatti 378 378 378 575 351 351
PPN 2494 2496 2496 2375 1483 1483
Madurai 353 353 353 575 333 333
ST-CMS 1652 1653 1653 1780 1711 1711
ABAN 820 820 820 801 776 776
Penna 370 370 370 365 366 366
Sub-total-IPPs 6942 6945 6945 7266 5982 5982

NCES & CPP


CPP 460 460 460 575 575 575
Solar 2 2 2 10 10 10
Wind 8707 8707 5263 9245 9245 5130
Cogeneration 997 997 997 1135 1135 1135
Biomass 110 110 110 115 115 115
Sub-total-NCES &
10276 10276 6833 11080 11081 6965
CPP

CGS
NLC-TS-I 3066 3066 3066 3066 3066 3066
NLC-TS-II (Stage-I) 1214 1214 1503 1503
3042 3242
NLC-TS-II (Stage-II) 1828 1828 1739 1739
NLC-TS-I Expansion 1509 1509 1509 1609 1609 1609
NTPC SR (I & II) 4039 4039 4039 4139 4139 4139
NTPC SR (III) 1024 1024 1024 1105 1105 1105
NTPC ER 735 735 735 885 885 885
NTPC - Talcher II 3664 3664 3664 3690 3690 3690
Kayankulam 854 854 854 250 205 205
MAPS 1398 1399 1399 1498 1499 1499
KAIGA 860 860 860 1107 1107 1107
Simahadri 0 0 0 328 328 328
Kudankulam 0 0 0 333 0 0
NLC-TS-II Expansion 0 0 0 1295 0 0
MAPS (Addl.) 0 0 0 0 0 0
NTPC-TNEB (JV) 0 0 0 0 0 0
PGCIL-SR & ER
UI 1441 1441 1441 750 750 750

160 | P a g e
FY 2010-11 FY 2011-12
Particulars Revised Revised
Petition Commission Petition Commission
Submission Submission
Subtotal-CGS 21633 21633 21633 23297 21625 21625

Traders 10483 10540 10540 12500 9400 9400

Wheeling on account
of cogeneration, 968 1327
biomass, CPP etc.

Grand Total 73180 73555 69183 80880 75574 69653

FY 2012-13
Particulars
Petition Commission
Own Generation
ETPS 1361 680
TTPS 6896 6938
MTPS 5971 5960
NCTPS 4184 4391
NCTPS (Stage-II) (Unit-
1760
I)
2130
NCTPS (Stage-II) (Unit-
3030
2)
MTPS Stage-III ( 300
MW available from 1913
March 12)
3528
MTPS Stage-III ( Rest
300 MW available from 1515
June 12)
Subtotal-Thermal 24070 26186

Gas Turbine Stations


Kuttalam 590 592
Basin Bridge 121 58
TGTPS 581 611
Valuthur -I 611 614
Valuthur-II 592 593
Subtotal-Gas 2495 2469

Hydro Stations

161 | P a g e
FY 2012-13
Particulars
Petition Commission
Erode HEP 916
Kadamparai HEP 1385
5110
Kundah HEP 2706
Tirunelveli HEP 1018
New Hydro addition 132
Subtotal-Hydro 6025 5242

Wind
Tirunelveli &
21 11
Udmalpet

Total-Own Generation 32611 33908

Sources other own


generation
IPPs
GMR 495 495
Samalpatti 575 575
PPN 2395 2395
Madurai 575 575
ST-CMS 1795 1795
ABAN 810 810
Penna 375 375
Sub-total-IPPs 7020 7020

NCES & CPP


CPP 580 582
Solar 11 11
Wind 9988 5408
Cogeneration 1469 1202
Biomass 120 56
Sub-total-NCES &
12168 7258
IPPs

CGS
NLC-TS-I 3066 3066
NLC-TS-II (Stage-I)
3272 3272
NLC-TS-II (Stage-II)
NLC-TS-I Expansion 1624 1624
NTPC SR (I & II) 4164 4164

162 | P a g e
FY 2012-13
Particulars
Petition Commission
NTPC SR (III) 1125 1125
NTPC ER 897 897
NTPC - Talcher II 3705 3705
Kayankulam 0 0
MAPS 1508 1508
KAIGA 1178 1178
Simahadri 925 1415
Kudankulam 3245 1716
NLC-TS-II Expansion 2135 1318
MAPS (Addl.) 256 518
NTPC-TNEB (JV) 3465 2896
PGCIL-SR & ER
UI 145 0
Subtotal-CGS 30710 28402

Traders 5365 2000

Wheeling on account of
cogeneration, biomass,
CPP etc.

Grand Total 87874 78588

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5 FIXED COST

Capital Expenditure and Capitalisation


5.1 Segregation of Fixed Assets

5.1.1 TANGEDCO submitted that segregation of fixed assets for FY 2009-10 is done based on:
a) For the financial year 2009-10, the opening balance of fixed assets are segregated to
the three companies based on the segregation notified by Government of Tamil Nadu
in the Transfer Scheme vide G.O. Ms. 100 dated 19-10-2010.

b) During the year, additions and deductions for the transmission assets at distribution
circles (i.e. Plant and Machinery and Lines & Cables), a ratio of 55:45 is adopted for
segregation between Transmission and Distribution, which has been the overall ratio
of transmission and distribution assets as per provisional transfer scheme notified
vide G.O. Ms. 100 dated 19-10-2010.

5.1.2 TANGEDCO submitted that segregation of fixed assets for FY 2010-11 is done based on:
a) During the year, additions and deductions up to 31-10-2010 for the transmission
assets at distribution circles (i.e. Plant and Machinery and Lines & Cables) a ratio of
55:45 is adopted for segregation between Transmission and Distribution, which has
been the overall ratio of transmission and distribution assets as per provisional
transfer scheme notified vide G.O. Ms. 100 dated 1910-2010.
b) The actual addition and deduction to the assets of transmission circles from
November 2010 to March 2011 are segregated based on the monthly accounts of
November 2010 to March 2011 of TANTRANSCO circles.

5.1.3 TANGEDCO submitted that segregation of fixed assets for FY 2011-12 and 2012-13 is
as follows:
a) The additions to assets are based on capital expenditure to be undertaken and its
proportion of completion in each financial year taking the past trend.

b) The additions to depreciation are based on the previous year proportion of


depreciation to fixed assets.

164 | P a g e
5.2 Capital Expenditure and Capitalisation

5.2.1 Regulation 17 (5) of the Tariff Regulations, 2005 and Regulation 3 (v) of the Tariff
Regulation under MYT framework specifies that the licensee shall get the capital
investment plan approved by the Commission before filing ARR and Application for
determination of Tariff. The TANGEDCO has not complied with this provision.

5.2.2 The TANGEDCO submitted the capital investment plan for 2010-11 to 2012-13 vide its
letter dated 19.8.2011 without capitalization schedule. This will be examined and further
action will be taken separately.

5.2.3 TANGEDCO in its Petition has submitted Power Plant wise Gross Fixed Assets for its
Own Generation Stations, which is as under:
Table 82: GFA submitted by TANGEDCO (in Rs Crore)

TANGEDCO
Stations
FY 11 FY 12 FY 13
ETPS 1069 1153 1859
NCTPS 2060 2222 3582
MTPS 1011 1091 1758
TTPS 1916 2066 3331
NCTPS II
MTPS II
Total Thermal 6056 6531 10530
BBGTPS 553 596 961
KGTPS 354 382 616
TGTPS 462 498 803
VGTPS 859 927 1494
Total Gas 2228 2403 3874
Erode 672 724 1168
Kadamparai 358 386 622
Kundah 952 1027 1656
Tirunelveli 347 374 604
Total Hydro 2329 2511 4049
Tirunelveli - Wind 143 155 249
Udumalpet - Wind 208 224 362
Total Wind 351 379 611
Total Generation 10964 11824 19064

165 | P a g e
5.2.4 TANGEDCO in its Petition has submitted Gross Fixed Assets and capitalisation for its
distribution function as under:

Table 83: Capitalisation submitted by TANGEDCO for Distribution function (in Rs Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Gross Block at the beginning of FY 7810.53 8407.54 9488.48
2 Gross Block at the end of FY 8407.54 9488.48 10596.10
3 Capitalisation as per Form 11 681.69 1080.94 1107.61

5.2.5 TANGEDCO in reply to the deficiency raised by the Commission has submitted
following capital expenditure:
Table 84: Capital Expenditure submitted by TANGEDCO (in Rs Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13


GENERATION SCHEMES
HYDRO 21.87 48.85 63.85
THERMAL 55.75 96.78 270.08
GAS 54.37 89.13 64.25
WIND 1.16 0.00 0.00
SUB-TOTAL - GENERATION SCHEMES (A) 133.15 234.76 398.18
PROJECTS
A. Thermal :
NCTPS STAGE II 659.57 731.87 799.34
MTPP STAGE III 1447.38 872.25 1146.57
Ennore Annexe 0.51 10.00
Ennore SEZ TPS (Kattupalli) 1.86 10.00
TTPS Annexe (Stage - IV) 0.00 10.00
Ennore Replacement of ETPS 0.00 10.00
NCTPS Stage III 0.00 10.00
Udangudi Expansion 0.00 10.00

B. HYDRO :

BK BARRAGE II 96.97 43.93 0.00


BK BARRAGE III 161.02 49.92 15.24
PERIYAR VAIGAI SMALL HEP I 2.47 8.19 0.00

166 | P a g e
Particulars FY 2010-11 FY 2011-12 FY 2012-13
PERIYAR VAIGAI II 12.73 12.61 1.15
PERIYAR VAIGAI III 16.52 23.20 7.11
PERIYAR VAIGAI IV 11.23 17.77 2.35
PERIYAR VAIGAI V 0.00 12.50
PERIYAR VAIGAI VI 0.00 12.50
Bhavani Barrage - I HEP 41.29 11.86 20.50
Bhavani Barrage - II HEP 39.37 19.67 3.99
Kollimalai HEP 3.30 10.00
Kundah Pumped Storage 3.32 28.28
SUB-TOTAL –PROJECTS (B) 2488.55 1800.26 2119.53
DISTRIBUTION
33 KV LINES 0.00 39.45 285.41
33 KV SUBSTATIONS 78.63 157.11 245.50
OTHER CONSTRUCTIONS SCHEMES 399.68 329.93 245.25
GENERAL IMPROVEMENT SCHEMES 399.32 365.23 244.24
APDRP works 1.57 0.00 0.00
Rural Electrification works 162.25 301.25 123.92
RGGVY 115.14 18.84 0.00
R-APDRP 27.85 32.84 110.00
Co-operative sugar mill generation 225.17 160.00 40.00
OTHERS - survey, investigation, computerisation, etc 214.15 1.40 11.54
SUB-TOTAL-Distribution ( C) 1623.76 1406.06 1305.86
SUB TOTAL (A+B+C=D) 4245.46 3441.08 3823.57
Joint Ventures
with NTPC 0.00 313.00 500.00
with NLC 0.00 0.00 200.00
Others 0.00 5.00 100.00
SUB-TOTAL (E)- Joint Ventures 0.00 318.00 800.00

TOTAL Outlay (F=D+E) 4245.46 3759.08 4623.57

Commission’s View:

5.2.6 The Commission in its data deficiency sought for Capital Expenditure and Capitalisation
schedule along with its Cost Benefit Analysis. In response TANGEDCO submitted the
details. However on perusal of the same, the Commission noted that the data quality and
iteration that went through the Capitalisation schedule along with its GFA schedule
needed to be substantially improved.

167 | P a g e
5.2.7 TANGEDCO in reply dated 15-03-2012 to the deficiency raised by the Commission has
submitted Power Plant wise Gross Fixed Assets for its Own Generation Stations, which is
as under:
Table 85: Revised Closing GFA submitted by TANGEDCO (in Rs Crore)

Approved
Stations
FY 11 FY 12 FY 13
ETPS 1062 1064 1089
NCTPS 2047 2083 2118
MTPS 1061 1080 1126
TTPS 1903 1976 2141
NCTPS II 4074
MTPS II 2810
Total Thermal 6073 6203 13357
BBGTPS 549 549 551
KGTPS 352 378 394
TGTPS 459 465 476
VGTPS 854 910 943
Total Gas 2213 2303 2363
Erode 668 1169 1871
Kadamparai 355 389 409
Kundah 943 978 996
Tirunelveli 414 450 541
Total Hydro 2380 2986 3818
Tirunelveli - Wind 18 18 18
Udumalpet - Wind 3 3 3
Total Wind 21 21 21
Total Generation 10686 11513 19559

5.2.8 In the submission of TANGEDCO, the Commission noted that the TANGEDCO has
shown capitalisation in Wind schemes and sought clarification for the same. During the
discussion with TANGEDCO in the meeting held in the Commission’s Office on 14-03-
2012 to seek clarifications on discrepancies in the WIP statement, GFA schedule; and
Depreciation and Interest expenses, the TANGEDCO confirmed the following
observations of the Commission:

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5.2.8.1 Wind Generation Schemes: No capitalisation will be undertaken and it is by
mistake that it was shown separately. This capitalization is to be added to
Thermal Generation Schemes.

5.2.8.2 Capital expenditure shown under Joint Venture Schemes is in the form of Equity
infusion by TANGEDCO and hence, interest expenses on this head cannot be
allowed.

5.2.8.3 TANGEDCO was asked to confirm whether Capital Expenditure and


capitalisation shown under Cooperative Sugar Mills head would be treated as an
asset in the Fixed Asset Register of TANGEDCO. TANGEDCO confirmed this
vide their letter dated 15-03-2012.

5.2.8.4 Since details of Capital Expenditure plan and Capitalisation shown for
Distribution Schemes are not submitted along with Cost benefit Analysis,
TANGEDCO was asked to confirm that Capital Expenditure and capitalisation
shown under Distribution head would be treated as an asset in the Fixed Asset
Register of TANGEDCO. TANGEDCO confirmed this vide letter dated 15-03-
2012.

5.2.8.5 In the Depreciation schedule, under the Asset class “Vehicles”, depreciation is
beyond 90% for FY 2010-11 and FY 2011-12. Therefore, depreciation shall not
be allowed for this asset class for respective years for Generation and
Distribution Function.

5.2.8.6 TANGEDCO submitted that Wind assets claimed include substation assets and
submitted following segregation of Wind Assets:
Table 86: GFA pertaining to Wind-TANGEDCO Submission (In Rs Crore)

S. No Particulars Installed Capacity Amount (Rs. Crore)


(MW)
1 Wind Generating Stations 17.5 20.86
Wind Sub-stations (Capacity Rating at 110 kV
2 322
and above)
3 Total 342.86

169 | P a g e
5.2.8.7 The Commission for the purpose of segregation of GFA among circles has use
pro-rata method, which is as under:

Table 87: GFA pertaining to Wind considered by the Commission (In Rs Crore)

S. No Particulars Installed Capacity (MW) Amount (Rs. Crore)


1 Udumalpet Wind Generation Circle 2.5 2.98
2 Tirunelveli Generation Circle 15 17.88
3 Wind Generating Stations-Total 17.5 20.86

5.2.9 Regulation 6 (7) (i) (a) of the TNERC Tariff Regulations, 2005 specifies the following:

“A generation company or a licensee may make an application as per Appendix –


I to these Regulations, for determination of provisional tariff in advance of the
anticipated date of completion of the project, based on the capital expenditure
actually incurred up to the date of making of the application or a date prior to
making of the application, duly audited and certified by the statutory auditors,
and the provisional tariff shall be charged from the date of commercial operation
of the respective units of the generation station or the line or sub-station of the
transmission system.”

5.2.10 The Commission observed that there are number of new generating stations for which
TANGEDCO had neither sought prior approval of their capital investment plan nor
applied for determination of tariff in advance for the new generating stations. However,
the Commission is required to determine tariff for the new generating stations under
Regulation 43 and hence, the capital costs of these projects are also required to be
ascertained by the Commission. Hence, the Commission directs the TANGEDCO to file
the petitions based on TNERC Regulations, within 90 days of issuance of this Order.

5.2.11 The TANGEDCO plan requires further analysis and explanation from TANGEDCO
before according approval of cost proposed by TANGEDCO. Pending approval, the
Commission provisionally adopts the Capital Expenditure submitted by the petitioner.

5.2.12 Capital expenditure and capitalisation considered by the Commission is as under:

170 | P a g e
Table 88: Capital Expenditure and Capitalisation of Assets for Generation and
Distribution (in Rs Crore)

Particulars Capital Expenditure Capitalisation


FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
GENERATION SCHEMES
HYDRO 21.87 48.85 63.85 85.86 102.00 58.25
THERMAL 56.91 96.78 270.08 177.24 130.50 270.95
GAS 54.37 89.13 64.25 321.66 89.50 60.58
WIND 0.00 0.00 0.00 0.00 0.00 0.00
SUB-TOTAL (A) 133.15 234.76 398.18 584.76 322.0 389.78
PROJECTS
A. Thermal :
NCTPS STAGE II 659.57 731.87 799.34 0.00 0.00 2809.66
MTPP STAGE III 1447.38 872.25 1146.57 0.00 0.00 4073.77
Ennore Annexe 0.00 0.51 10.00 0.00 0.00 0.00
Ennore SEZ TPS (Kattupalli) 0.00 1.86 10.00 0.00 0.00 0.00
TTPS Annexe (Stage - IV) 0.00 0.00 10.00 0.00 0.00 0.00
Ennore Replacement of ETPS 0.00 0.00 10.00 0.00 0.00 0.00
NCTPS Stage III 0.00 0.00 10.00 0.00 0.00 0.00
Udangudi Expansion 0.00 0.00 10.00 0.00 0.00 0.00

B. HYDRO :

BK BARRAGE II 96.97 43.93 0.00 0.00 484.37 0.00


BK BARRAGE III 161.02 49.92 15.24 0.00 0.00 408.08
PERIYAR VAIGAI SMALL HEP I 2.47 8.19 0.00 10.91 20.15 0.00
PERIYAR VAIGAI II 12.73 12.61 1.15 10.20 0.00 18.72
PERIYAR VAIGAI III 16.52 23.20 7.11 18.61 0.00 34.80
PERIYAR VAIGAI IV 11.23 17.77 2.35 11.69 0.00 25.40
PERIYAR VAIGAI V 0.00 0.00 12.50 0.00 0.00 0.00
PERIYAR VAIGAI VI 0.00 0.00 12.50 0.00 0.00 0.00
Bhavani Barrage - I HEP 41.29 11.86 20.50 0.00 0.00 149.08
Bhavani Barrage - II HEP 39.37 19.67 3.99 0.00 0.00 137.30
Kollimalai HEP 0.00 3.30 10.00 0.00 0.00 0.00
Kundah Pumped Storage 0.00 3.32 28.28 0.00 0.00 0.00
SUB-TOTAL (B) 2488.55 1800.26 2119.53 51.41 504.52 7656.81
DISTRIBUTION
33 KV LINES 0.00 39.45 285.41 0.00 25.41 176.16
33 KV SUBSTATIONS 78.63 157.11 245.50 35.81 195.39 287.24

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Particulars Capital Expenditure Capitalisation
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
OTHER CONSTRUCTIONS 399.68 329.93 245.25 167.78 433.98 457.56
SCHEMES
GENERAL IMPROVEMENT 399.32 365.23 244.24 215.83 454.22 466.25
SCHEMES
APDRP works 1.57 0.00 0.00 4.55 23.41 0.00
Rural Electrification works 162.25 301.25 123.92 70.53 447.90 123.92
RGGVY 115.14 18.84 0.00 83.01 108.80 0.00
R-APDRP 27.85 32.84 110.00 0.27 0.00 0.00
Co-operative sugar mill generation 225.17 160.00 40.00 20.23 94.94 310.00
OTHERS - survey, investigation, 214.15 1.40 11.54 83.68 197.52 11.54
computerisation, etc
SUB-TOTAL (c) 1623.76 1406.06 1305.86 681.69 1981.57 1792.66
GRAND TOTAL (A to C) 4245.46 3441.08 3823.57 1317.86 2808.09 9839.25

5.2.13 Capital expenditure and capitalisation considered by the Commission for distribution
function of TANGEDCO is as under:
Table 89: GFA and Capitalisation of Assets as Approved by the Commission (in Rs Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Gross Block at the beginning of FY 7810.53 8407.54 9488.48
2 Gross Block at the end of FY 8407.54 9488.48 10596.10
3 Capex as per WIP Statement 1623.76 1406.06 1305.86
4 Capitalisation as per WIP Statement 681.69 1981.57 1792.66
5 Capitalisation as per Form 11 681.69 1080.94 1107.61

Note: TANGEDCO in the discussion with the Commission on 15.3.2012 accepted that the asset
capitalisation shown in form-11 of the Petition needs to be considered for purpose of the calculation of
Capital expenditure related heads in Aggregate Revenue Requirement.

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5.3 Interest on Loan Capital:

5.3.1 The Commission in the last Tariff Order considered the outstanding loan and interest at
the beginning of FY 2009-10. The Commission obtained the actual borrowings and
repayment during FY 2009-10 and revised the outstanding loans at the end of FY 2009-
10. The Commission accepted the Interest on Consumer Security Deposit as submitted by
TNEB in the Petition.

5.3.2 As regards interest on GPF, the Commission fixed the same after considering the salary
hike on implementation of wage agreement. The Commission projected the other
interests by considering an escalation of 4% over the actual in FY 2008-09. The
Commission did not consider the claim of Hydro Balancing Fund as the same cannot be
passed on to the Consumers.

5.3.3 The Commission further accepted the capitalisation of interest as submitted by TNEB and
calculated the net interest for all functions of TNEB from FY 2009-10 to FY 2012-13 and
then allocated the total interest on loan capital among different functions of TNEB on the
basis of Net Fixed Assets which is as under:
Table 90: Interest on Loan Capital as allowed by the Commission in last Tariff Order (Rs.
Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 ETPS 78.41 64.99 61.84
2 NCTPS 104.17 83.13 75.6
3 MTPS 45.85 36.06 32.19
4 TTPS 109.75 88.86 82.26
5 NCTPS-II 216.18 216.18
6 MTPS-II 182.3 182
I Total Thermal 338.18 671.52 650.37

1 BBGTPS 20.13 15.29 13.02


2 KGTPS 37.23 31.37 30.41
3 TGTPS 32.16 26.75 25.57
4 VGTPS 102.39 86.99 85.08
II Total Gas 191.91 160.4 154.08

1 Erode 86.23 141.79 119.2


2 Kadamparai 30.51 25.41 24.31
3 Kundah 108.16 91.59 89.27

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S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
4 Tirunelveli 42.13 34.13 32.08
III Total Hydro 267.03 292.92 264.86

1 Tirunelveli-Wind 15.21 12.8 12.39


2 Udumalpet-Wind 12.33 10.5 10.3
IV Total -Wind 27.54 23.3 22.69
Total Generation 824.66 1148.14 1091.98
Transmission 1023.39 1094.49 1158.59
Distribution 1428.07 1324.72 1475.21
Total 3276.11 3567.34 3725.79

5.3.4 TANGEDCO submitted the following basis of segregation of Loans between


TANGEDCO and TANTRANSCO:
a) REC and PFC loans are apportioned between TANGEDCO and TANTRANSCO as
per the provision Balance Sheet mentioned in the G.O. Ms. No. 100, dated 19-10-
2010.

b) Generic loans (i.e.) loans availed from Banks, TNPFC, LIC, HUDCO and funds
raised through Private placement of bonds are apportioned between TANGEDCO and
TANTRANSCO in the ratio of 40 : 60.
c) Due to non-revision of tariff, there is a huge accumulated loss and huge borrowing.
TANGEDCO has to repay the interest on loan and repayment of principal has been
considerably increased. In order to meet out the huge repayment of loan by
TANGEDCO, the borrowings have been increased to that extent.
d) Interests are being calculated at the average rate of interest for the previous year
outstanding balance and for the current year borrowing. Interests are being calculated
at the rate of 11.75% p.a. for six months for the FY 2011-12 and FY 2012-13 in
respect of REC, PFC, TNPFC, Commercial Bank Loans and other loans interest are
calculated on actual basis.

e) Interests are being calculated at the average rate of interest for the previous year
outstanding balance and for the current year borrowing interest are being calculated at
the rate of 12.00%, 10.00% p.a., 11.75% p.a. and 10.50% p.a. for six months for the
financial year 2012-13 in respect of TNEB Bonds, REC, PFC, TNPFC, and
Commercial Bank Loans. Interest on LIC loan and HUDCO are being worked at
actual basis.

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f) The erstwhile TNEB/ now TANGEDCO’s entire programmed capital expenditures,
repayment of loan, and payment of interest and also part of the other revenue
expenses are to be met out through borrowed funds in view of the non-availability of
internal source of funds due to non-rationalization of tariff.

Rural Electrification Corporation Ltd.

g) TANGEDCO (then TNEB) has been availing loan from REC from the year 1970-
1971 onwards to implement the project system improvement and extension of
electricity for energisation of pumpsets under P : SI (Systems improvements)
category and SPA : PE pumpset energisation Category. Further REC has also
sanctioned loan for establishment of Power Projects. In addition to this, TANGEDCO
has also availed Short term loan for a period of one year to three years to meet Power
Purchase expenditure. The REC interest rate is applicable as on the date of
disbursement of loan and not on the date of the sanction of loan. The period of
repayment of principal is 13 years (including moratorium period of 3 years). The loan
drawl period is 3 years for the distribution scheme and will be extended up to one
year at the request of the borrower. Each and every reimbursement of claim on each
scheme loan is treated as separate loan since the rate of interest is different.

Power Finance Corporation Ltd.

h) Power Finance Corporation Ltd. is also extending financial assistance for specific
Transmission and Distribution Schemes and also power projects. In addition to this,
short term loan for a period of six months to one year has also been availed to meet
Power purchase.

HUDCO

i) HUDCO is providing financial assistance for a period of 15 years. The repayment of


loan is to be made in 56 quarterly installments. The present, rate of interest is 13%
p.a. floating. As and when the interest rate increases/ reduces, the same effect will be
reflected in the rate of interest.

Life Insurance Corporation of India:

j) TANGEDCO (then TNEB) has availed loan from Life Insurance Corporation of
India. The period of loan is 15 years. The repayment of loan is equal annual/semi
annual installments.

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Commercial Banks:

k) TANGEDCO is availing Medium term loans from commercial banks for the purpose
of meeting the capital expenditure and short term loan for meeting the mismatch of
the cash flow. The loans availed from the banks are being utilized for meeting power
purchase, payment commitments, repayment of principal, payment of interest and
other inevitable payments. The short term and medium term loans carry an interest
rate of more than 12.00% p.a.

5.3.5 TANGEDCO in its Petition has not discussed the loan amount and the interest on loan for
its generating stations. TANGEDCO has submitted the loan amount and the interest on
loan pertaining to its generation business in form-13 of each station annexed along with
the Petition. However in form-13, TANGEDCO has not submitted the details of the loan
raised from FY 2010-11 to FY 2012-13 for its Generating Function. The interest on loan
as claimed by TANGEDCO is tabulated below:
Table 91: Interest on loan (Rs. Crore) as claimed by TANGEDCO in the Petition for its
Generation Function

TANGEDCO
Stations
FY 11 FY 12 FY 13
ETPS 12 58 91
NCTPS 23 111 176
MTPS 11 54 87
TTPS 22 103 164
NCTPS II
MTPS II
Total Thermal 69 326 518
BBGTPS 6 30 47
Kuttalam 4 19 30
Kovilkalappal 5 25 40
Valuthur 10 46 74
Total Gas 25 120 191
Erode 8 36 57
Kadamparai 4 19 31
Kundah 11 51 81
Tirunelveli 4 16 22
Total Hydro 26 123 191
Tirunelveli - Wind 2 12 18
Udumalpet - Wind 2 8 12
Total Wind 4 20 30

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TANGEDCO
Stations
FY 11 FY 12 FY 13
Total Generation 124 588 930

5.3.6 TANGEDCO submitted the Interest on loan for Distribution Function from FY 2010-11
to FY 2012-13 which is tabulated below:
Table 92: Interest on Loan (Rs. Crore) for Distribution Business

Particulars FY 2010-11 FY 2011-12 FY 2012-13


Interest on Loan 1651.35 3150.2 3354.59

Commission’s View:

5.4 Diversion of Capital Funds for Revenue Expenditure:

5.4.1 In page no. 40 of Policy Notes-FY 2011-12, Energy Department, Government of Tamil
Nadu has noted that:

“The Board’s borrowings are being utilized to meet Capital Expenditure, Loan
repayments and managing revenue deficit”

5.4.2 The Commission has observed in many places in this Order that there is a mix up
between the capital account and the revenue account. Equity as well as capital
borrowings have been diverted from time to time to meet the revenue expenses. Equity
being the owner’s investment, the Commission has taken a view that the return on equity
shall not be permitted if equity has been diverted for meeting revenue expenses. Further,
borrowings are also more than the investment shown for capital expenditure. This clearly
brings out the fact that capital borrowings have also been diverted for revenue
expenditure. This is also recognized by the policy paper which has been published in the
Government of Tamil Nadu Website.

5.4.3 The Regulations of the Commission are for normal situations and does not cover a
situation which is encountered now. Therefore, the Commission has to take a practical
view on this issue. The option available to the Commission is to disallow the interest
costs on the entire borrowings in excess of capital works which will be in line with the
Regulation but such a move would create a lot of confusion and may also affect the
borrowing ability of the TANGEDCO / TANTRANSCO. The proposal regarding

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revaluation of assets in the two Transfer Schemes already issued by the Government of
Tamil Nadu may address the balance sheet problems but will not generate additional cash
to repay the existing loans which were borrowed. Loans would be carried forward for
final settlement. The accumulated losses of some of Utilities is under consideration by
two committees constituted by the Government of India Viz., Shunglu Comiittee and
Chaturvedi Committee. Shunglu Committee has already submitted its report which is
available in the website of Planning Commission. The report of the Chaturvedi
Committee is not available in public domain yet. Under these circumstances,
Commission is allowing the interest on entire borrowing duly considerin the loans shown
in the Transfer Schemes and provisionally allows such interest, subject to final
adjustment when the audited accounts are made available. This is also further subject to
the actions taken by the appropriate authorities as well as the TANGEDCO /
TANTRANSCO with regard to handling of the past liabilities based on the outcome of
the above referred two reports and implementation thereof.

5.4.4 The Commission is of the opinion that rise in borrowing towards revenue expenditure is a
clear indication of deteriorating financial health of the Utility. Hence, the Commission
directs the Utility to file their Tariff Petition on a timely basis every year.

5.4.5 In the reply to query raised by the Commission about details of borrowings to meet
revenue expenditure, the TANGEDCO has cited its precarious financial position and
reiterated that it has no other option than to resort to borrowing to meet its daily revenue
expenditure, in absence of any tariff increase in past so many years.

5.4.6 The Commission further notes that Regulation 21 of TNERC Tariff Regulations, 2005
clearly provides for funding only to the extent of capitalisation of the asset added during
the year. However, considering the financial crisis that TANGEDCO is presently going
through, if only the interest expenditure is allowed to the extent of capital expenditure, it
may lead to the further difficulty for TANGEDCO to borrow funds from the market.
Even if TANGEDCO is able to raise funds, it may be at very high interest rates.

5.4.7 The Commission is of the opinion that interest expenses disallowed would only
contribute to postponement of the problem to be solved, which may not be in the interests
of any of the stakeholders.

5.4.8 During scrutiny of interest expenses, the Commission observed that interest expenses of
new thermal power stations have been apportioned to all the existing stations by

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TANGEDCO. The Commission sought clarification and asked TANGEDCO to resubmit
the Capital expenditure for its Generation function.

5.4.9 In reply to datagaps, TANGEDCO after incorporating the comments of the Commission
resubmitted its Interest expenses on 18-3-2012. Interest expenses approved by the
Commission are as under:
Table 93: Interest expenses approved by the Commission for Generation function (in Rs
Crore)

Commission
Stations
FY 11 FY 12 FY 13
ETPS 8 9 8
NCTPS 15 16 16
MTPS 8 9 9
TTPS 14 15 16
NCTPS II 0 0 174
MTPS II 0 0 293
Total Thermal 46 49 516
BBGTPS 4 4 4
Kuttalam 3 3 3
Kovilkalappal 3 4 4
Valuthur 4 7 7
Total Gas 15 18 18
Erode 5 5 9
Kadamparai 3 3 3
Kundah 7 8 8
Tirunelveli 2 3 4
Total Hydro 17 19 24
Tirunelveli - Wind 0 0 0
Udumalpet - Wind 0 0 0
Total Wind 0 0 0
Total Generation 78 86 558

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5.4.10 TANGEDCO has included the funding of equity for its Joint Ventures projects in the
Loan borrowing for the distribution function. The Commission is of the opinion that free
equity infused for Joint Venture projects will attract return on equity and since, these
Joint Ventures Projects come under the purview of CERC, the Commission for the
purpose of computing interest expenses has not considered the equity involved in these
projects.

5.4.11 The Commission based on revised submission by TANGEDCO on Wind Generation


Plants, notes that these wind assets have already lived their useful life and have
depreciated upto 90% of the asset value. Hence, the loan borrowing, if any towards these
assets would already be over. Hence, no interest expenses have been considered for Wind
Generation Plants.

5.4.12 The Commission has accepted the interest during construction submitted by
TANGEDCO.

5.4.13 Interest expenses approved by the Commission for distribution function are as under:
Table 94: Interest expenses approved by the Commission for Distribution function (in Rs
Crore)

TANGEDCO Approved
Particulars FY 2010- FY 2011- FY 2012- FY 2010- FY 2011- FY 2012-
11 12 13 11 12 13
Opening Loan balance 16471 24057 29954 16471 24057 29954
Addition in Loan 16628 15153 13510 16628 15153 13510
Repayment 9035 9256 4639 9035 9256 4639
Closing Loan Balance 24057 29954 38825 24057 29954 38825
Interest Expenses 1865 3364 3569 1865 3364 3569
IDC 214 214 214 214 214 214
Net Interest Expenses 1651 3150 3355 1651 3150 3355

5.5 Depreciation:

5.5.1 The Commission in the last Tariff Order allowed 3.31% as the rate of depreciation on
existing assets of TNEB based upon the annual statement of accounts of TNEB for FY
2008-09. 3.56% was the rate of depreciation allowed on new assets to be added by TNEB
from FY 2010-11 to FY 2012-13 based upon the weighted average rate of depreciation
arrived after excluding the cost of land. The Commission further allocated the approved
amount of depreciation among Generation, Transmission and Distribution function of
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TNEB. The depreciation allowed by the Commission for various Generating Stations of
TANGEDCO in last Tariff Order is tabulated below:
Table 95: Depreciation allowed by the Commission from FY 2010-11 to FY 2012-13 (Rs.
Crore)

Last Tariff Order


Stations
2010-11 2011-12 2012-13
ETPS 32 32 32
NCTPS 65 65 65
MTPS 33 33 33
TTPS 60 60 60
NCTPS II 128 200
MTPS II 87 122
Total Thermal 189 404 512
BBGTPS 18 18 18
Kuttalam 11 11 11
Kovilkalappal 12 12 12
Valuthur 26 26 26
Total Gas 68 68 68
Erode 22 35 37
Kadamparai 12 12 12
Kundah 30 30 30
Tirunelveli 10 11 11
Total Hydro 74 88 90
Tirunelveli -
5 5 5
Wind
Udumalpet -
3 3 3
Wind
Total Wind 8 8 8
Total
339 568 679
Generation
Transmission 268 311 352
Distribution 349 393 434
Total 956 1272 1464

5.5.2 TANGEDCO in its Petition has not discussed the depreciation and rates of depreciation
applied on the GFA for calculating depreciation for its generating stations in the Petition.
TANGEDCO has submitted the depreciation along with the Opening and Closing balance
of depreciation pertaining to its generation business in Form-11 of each station annexed
along with the Petition. TANGEDCO has also submitted the rates applied on various

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assets along with segregation of assets in Form-12. The Station-wise depreciation on the
GFA as claimed by TANGEDCO is tabulated below:
Table 96: Depreciation (Rs. Crore) as claimed by TANGEDCO in Form-11

TANGEDCO
Stations
2010-11 2011-12 2012-13
ETPS 34 36 39
NCTPS 66 69 75
MTPS 32 34 37
TTPS 61 64 70
NCTPS II
MTPS II
Total Thermal 193 204 220
BBGTPS 18 19 20
Kuttalam 11 12 13
Kovilkalappal 15 16 17
Valuthur 27 29 31
Total Gas 71 75 81
Erode 21 23 24
Kadamparai 11 12 13
Kundah 30 32 35
Tirunelveli 11 12 13
Total Hydro 74 78 85
Tirunelveli -
7 7 8
Wind
Udumalpet -
5 5 5
Wind
Total Wind 11 12 13
Total
349 369 398
Generation

5.5.3 TANGEDCO submitted the details of depreciation on account of assets pertaining to


Distribution Business in Form-11 annexed along with the Petition. The depreciation
claimed by TANGEDCO for its distribution business is tabulated as under:
Table 97: Depreciation for Distribution Function (Rs. Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13


Depreciation during FY 278.26 307.43 351.61

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Commission’s View:

5.5.4 The Commission based on revised submission by TANGEDCO on Wind Generation


Plants, notes that these wind assets have already lived their useful life and have
depreciated upto 90% of the asset value. Hence, no depreciation has been allowed on
these Assets.

5.5.5 The Commission also observed that vehicles asset class has been depreciated beyond
90% for distribution function for FY 2010-11 and FY 2011-12. Hence, the Commission
has not allowed depreciation for this asset class for above mentioned years.

5.5.6 The Commission has accepted revised submission of depreciation by TANGEDCO


except mentioned above, which is as under:
Table 98: Depreciation approved by the Commission for Generation function (Rs. Crore)

TNERC Approval
Stations
FY 11 FY 12 FY 13
ETPS 61 61 61
NCTPS 61 63 64
MTPS 38 40 40
TTPS 53 54 56
NCTPS II
MTPS II
Total Thermal 213 218 222
BBGTPS 30 30 30
Kuttalam 16 16 17
Kovilkalappal 20 21 21
Valuthur 27 43 46
Total Gas 93 110 114
Erode 14 14 25
Kadamparai 9 9 10
Kundah 22 22 23
Tirunelveli 7 9 10
Total Hydro 52 55 68
Tirunelveli - Wind 0 0 0
Udumalpet - Wind 0 0 0
Total Wind 0 0 0
Total Generation 358 383 404

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5.5.7 The Commission observed that average depreciation rates submitted by TANGEDCO for
its distribution function in its Petition was different from the rates specified in TNERC
Tariff Regulations. In response to queries raised by the Commission, TANGEDCO
resubmitted following depreciation rates to be applied for purpose of calculation of
depreciation. The submission of TANGEDCO has been accepted by the Commission, as
the same is in line with the Tariff Regulations which is as under:
Table 99: Depreciation rates for Distribution Function as submitted by TANGEDCO (Rs.
Crore)

TANGEDCO
Particulars Petition Revised Submission
Land and Land Rights 0.00% 0.00%
Buildings 1.8% 1.80%
Hydraulic Works 1.8% 3.09%
Other Civil Works 1.8% 1.80%
Plant & Machinery 6% 3.60%
Lines& Cable Network 3.6% 2.61%
Vehicles 18% 18.00%
Furniture 6% 6.00%
Office Equipment 6% 6.00%

5.5.8 The Commission also observed that vehicles asset class has been depreciated beyond
90% and no proper justification was provided to explain the same. Hence, the
Commission has not allowed depreciation for this asset class for above mentioned years.

5.5.9 Depreciation approved by the Commission for Distribution function is as under:


Table 100: Depreciation for Distribution Function approved by the Commission (Rs.
Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Gross Block at the beginning of FY 7810.53 8407.54 9488.48
2 Gross Block at the end of FY 8407.54 9488.48 10596.10
3 Depreciation submitted by
278.26 307.43 351.61
TANGEDCO
4 Depreciation approved by the
229.01 254.05 287.05
Commission

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5.6 Return on Equity:

5.6.1 The Commission in the last Tariff Order considered Rs. 100 Crore as the equity addition
each year from FY 2010-11 to FY 2012-13 based upon the actual equity infused by the
Government of Tamil Nadu in FY 2009-10. The Commission further applied rate of 14%
in accordance with Regulation-22 of TNERC Tariff Regulations, 2005 on the closing
base of equity allowed from FY 2010-11 to FY 2012-13 in the previous Tariff Order. The
Commission allocated the total Return on Equity calculated for TNEB among
Generation, Transmission and Distribution Function in the ratio of GFA allowed to the
various Generating Stations, Transmission and Distribution Function of TNEB in the last
Tariff Order. The Return on Equity as calculated by the Commission from FY 2010-11 to
FY 2012-13 is tabulated below:
Table 101: Return on Equity allowed by the Commission in last Tariff Order (Rs. Crore)

Last Tariff Order


Stations
FY 11 FY 12 FY 13
ETPS 12 8 8
NCTPS 24 17 17
MTPS 12 8 8
TTPS 22 16 15
NCTPS II 52 52
MTPS II 32 32
Total Thermal 68 134 133
BBGTPS 7 5 5
Kuttalam 4 3 3
Kovilkalappal 4 3 3
Valuthur 10 7 7
Total Gas 25 18 18
Erode 9 10 10
Kadamparai 4 3 3
Kundah 11 8 8
Tirunelveli 4 3 3
Total Hydro 28 24 23
Tirunelveli -
2 1 1
Wind
Udumalpet -
1 1 1
Wind
Total Wind 3 2 2
Total
124 177 176
Generation
Transmission 102 89 95

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Last Tariff Order
Stations
FY 11 FY 12 FY 13
Distribution 134 108 117
Total 360 374 388

5.6.2 TANGEDCO in its Petition has not discussed the equity base and rate applied on the
equity base for calculating Return on Equity for its generating stations. TANGEDCO has
submitted the closing balance of equity pertaining to its generation business along with
the Return on Equity from FY 2009-10 to FY 2012-13 in Form-11 of each station
annexed along with the Petition. The Station-wise Return on Equity as claimed by
TANGEDCO is tabulated below:
Table 102: Return on Equity (Rs. Crore) claimed by TANGEDCO

TANGEDCO Petition
Stations
FY 11 FY 12 FY 13
ETPS 19 24 36
NCTPS 37 47 70
MTPS 18 23 34
TTPS 35 43 65
NCTPS II
MTPS II
Total Thermal 110 137 207
BBGTPS 10 12 19
Kuttalam 6 8 12
Kovilkalappal 8 10 16
Valuthur 16 19 29
Total Gas 41 50 76
Erode 12 15 23
Kadamparai 7 8 12
Kundah 17 22 32
Tirunelveli 6 8 12
Total Hydro 42 53 79
Tirunelveli -
4 5 7
Wind
Udumalpet -
3 3 5
Wind
Total Wind 6 8 12
Total
199 248 374
Generation

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5.6.3 TANGEDCO submitted that it has calculated the equity pertaining to Distribution
Business on the basis of Gross Fixed Assets. TANGEDCO has further considered rate of
14% to calculate Return on Equity. The Return on Equity as claimed by TANGEDCO in
the petition from FY 2009-10 to FY 2012-13 is tabulated below:
Table 103: Return on Equity from FY 2010-11 to FY 2012-13 for Distribution Business of
TANGEDCO (Rs Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13


Equity 1091.85 1421.39 1484.90
Return on Equity 152.86 199.00 207.89

Commission’s View:

5.6.4 The Commission has discussed return on equity for its own generating station in Chapter-
6.

5.6.5 Regulation 21 of TNERC Tariff Regulations states as under:


“21. Debt-Equity Ratio

For the purpose of determination of tariff, debt-equity ratio as on the date of


commercial operation of Generating Station and transmission projects, sub-station,
distribution lines or capacity expanded after the notification of these Regulations
shall be 70:30. Where equity employed is more than 30% the amount of equity shall
be limited to 30% and the balance amount shall be considered as loans, advanced at
the weighted average rate of interest and for weighted average tenor of the long term
debt component of the investment.
Provided that in case of a Generating Company or other licensees, where actual
equity employed is less than 30%, the actual debt and equity shall be considered for
determination of return on equity in tariff computation.” Emphasis Supplied

5.6.6 The Commission observed that the TANGEDCO has computed Return on Equity on the
closing equity. The Commission is of the opinion that for equity infused during the year,
the return should be on pro-rata basis, based on commissioning date of assets. However,
it is difficult to track asset wise equity infusion based on commissioning dates. Therefore,
the average of opening and closing equity has to be considered for computation of Return
on Equity.

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Table 104: Funding of Capitalisation (in Rs Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Capitalisation as per WIP Statement 682 1982 1793
2 Capitalisation as per Form 11 682 1081 1108
3 Loan Borrowing during the year 16628 15153 13510

5.6.7 It is clear from the above table that the equity infused, if any, is utilised for revenue
expenditure, since entire capitalisation requirement is met through loan borrowings. The
Commission is of the view that equity if infused as a part of capitalisation can only attract
return on Equity. Hence, the Commission has disallowed return on equity as claimed for
Distribution function of TANGEDCO.

5.7 Operation and Maintenance Expenses- Distribution:

5.7.1 The Operation and Maintenance Expenses comprises of the following:


a. Repair and Maintenance Expenses
b. Employee Expenses
c. Administration and Generation Expenses

TANGEDCO’s Submission: Employee Expenses- Distribution

5.7.2 TANGEDCO in its Petition has projected employee costs by considering the employee
strength and salary profile of the employees. While estimating the costs under this head,
the average cost for previous 5 years and actual trend in the year 2009-10 have been
considered. On an average, 4% hike is proposed for most of the account heads in the
current year 2011-12 & for the ensuing year 2012-13.

5.7.3 Terminal benefits mainly include Gratuity & Commuted pension paid to the retiring
employees. TANGEDCO submitted that Terminal benefits have been growing over the
past 5 years due to higher number of retiring personnel. Thus terminal benefits expenses
are estimated to show an increasing trend over the years.

5.7.4 TANGEDCO submitted that it incurs expenses towards terminal benefits in the form of
Pension and Gratuity. It creates a provision of 3.742% of the Basic Salary, Grade pay and
Dearness Allowance during every financial year as reserve. TANGEDCO further
submitted that the reserve so created is insufficient to meet the actual expenditure on

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pension. Hence, it has assessed the actual commitment on account of pension and booked
the same in the employees cost, instead of charging to the pension reserve account.

A&G Expenses- Distribution

5.7.5 Administration expenses mainly comprises of rent, telephone charges, Legal &
professional charges, conveyance and travelling, Vehicle related expenses, etc.

5.7.6 While estimating the costs under Administration & General expenses , the average cost
for previous 5 years and actual trend in the year 2009-10 have been taken into account.
On an average, 4% hike is proposed for most of the expenses in the current year 2011-12
and for the ensuing year 2012-13.

R&M Expenses- Distribution

5.7.7 Repairs and maintenance (R&M) expenses are routine in nature and being incurred in all
the wings viz., Distribution, Generation. Though the quantum of expenditure in
Generation stations are more, there are certain portions of Repairs & Maintenance
expenses incurred in Distribution network i.e. on Transformers, lines & cables, office
equipments, etc., in order to maintain the uninterrupted and quality power supply.

5.7.8 TANGEDCO has submitted that it has estimated the R&M expenses for the current
financial year 2011-12 & ensuing financial year 2012-13. based on the value of Gross
Fixed Assets of the Distribution wing.

5.7.9 The O&M expenses as submitted by TANGEDCO for its Distribution function are as
under:
Table 105: O&M Expenses- Distribution- Past Trend (in Rs Crore)

Actuals for previous 5 years Average


S.No. Details
of 5
2005-06 2006-07 2007-08 2008-09 2009-10
years
1 Net R&M Expenses 23.43 29.87 29.95 32.46 34.78 30.10
2 Net Employees Cost 1170.91 1363.51 1497.79 1864.81 2122.35 1603.87
3 Net A&G Expenses 57.53 64.12 81.46 69.65 69.76 68.51
4 Total O&M expenses 1251.87 1457.51 1609.20 1966.92 2226.89 1702.48

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Table 106: O&M Expenses- TANGEDCO Submission (in Rs Crore)

TANGEDCO Submission in
Average Petition
S.No. Details Last Tariff Order
of 5
FY FY FY FY FY FY
years
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
1 Net R&M Expenses 30.10 32.74 34.05 35.41 41.36 43.01 44.73
2 Net Employees Cost 1603.87 2761.59 2964.93 3179.06 2525.15 2626.16 2731.21
3 Net A&G Expenses 68.51 129.07 131.32 141.58 56.55 58.81 61.17
4 Total O&M expenses 1702.48 2923.40 3130.30 3356.05 2623.06 2727.99 2837.11

Commission’s View:

5.7.10 O&M expenses pertaining to Own Generating Station has been discussed in Chapter-6

5.7.11 The Commission has been guided by Regulation-25 of TNERC Tariff Regulations while
determining Operation and Maintenance Expenses. Regulation-25 of TNERC Tariff
Regulations states as under:
“25. Operation and Maintenance Expenses
1. The operation and maintenance expenses shall be derived on the basis of actual
operation and maintenance expenses for the past five years previous to current year
based on the audited Annual Accounts excluding abnormal operation and
maintenance expenses, if any, after prudence check by the Commission. The
Commission may, if considered necessary engage Consultant / Auditors in the
process of prudence check for correctness.
2. The average of such normative operation and maintenance expenses after prudence
check shall be escalated at the rate of 4% per annum to arrive at operation and
maintenance expenses for current year i.e. base year and ensuing year.
3. The base operation and maintenance expenses so determined shall be escalated
further at the rate of 4% per annum to arrive at permissible operation and
maintenance expenses for the relevant years of tariff period.
…”

5.7.12 The Commission observed that TANGEDCO has submitted component-wise O&M
Expenses for previous 6 years, i.e., FY 2005-06 to FY 2010-11. The Commission also
observed that employee R&M and A&G Expense are within the limit approved by the
Commission in its last Tariff Order and also the projection of FY 2011-12 and FY 2012-
13 is consistent with Regulation 25 of TNERC Tariff Regulations. Hence, the

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Commission has approved the Employee expenses, R&M expenses and A&G expenses
as sought by the TANGEDCO for its Distribution function.

5.7.13 The summary of O&M expenses approved by the Commission is as under:


Table 107: O&M Expenses (Distribution) approved by the Commission (in Rs Crore)

Petition Approved
S.No. Details
FY FY FY FY 2010- FY 2011- FY 2012-
2010-11 2011-12 2012-13 11 12 13
1 Net R&M Expenses 41.36 43.01 44.73 41.36 43.01 44.73
2 Net Employees Cost 2525.15 2626.16 2731.21 2525.15 2626.16 2731.21
3 Net A&G Expenses 56.55 58.81 61.17 56.55 58.81 61.17
4 Total O&M expenses 2623.06 2727.99 2837.11 2623.06 2727.99 2837.11

5.8 Other debits- Distribution

5.8.1 The Commission in the last Tariff Order approved the amount claimed on account of
other debits except Hydro Balancing Funds as the Commission projected the generation
from Hydro Power Station by considering the Capacity Utilisation Factor of 25%. The
Commission reduced the capitalization in the same ratio as was submitted by TNEB in
the Petition. The other debits as approved by the Commission are tabulated below:
Table 108: Other Debits as in Previous Tariff Order (Rs. Crore)

Particulars FY 2010-11 FY 2011-12 FY 2012-13


Other Debits 9.56 7.31 7.46

5.8.2 TANGEDCO in its present Petition submitted that the expenses like material cost
variance, bad and doubtful debts, extraordinary expenses etc. are accounted under this
head. Out of this material cost variance and miscellaneous losses have been allocated to
all the three functions and the remaining functions are allocated to Distribution Business.
The expenses on account of other debits as claimed by TANGEDCO are tabulated below:

Table 109: Other Debits (Distribution)- TANGEDCO submission (Rs. Crore)

S.
Particulars FY 2010-11 FY 2011-12 FY 2012-13
No.
Research & Development
1 0.11 0.11 0.11
expenses

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S.
Particulars FY 2010-11 FY 2011-12 FY 2012-13
No.
Bad & Doubtful debts
2 26.38 26.91 27.45
written off
Miscellaneous losses and
3 2.30 2.34 2.39
written off/provided for
4 Material cost variance 0.46 0.47 0.48
5 Sundry expenses 0 0 0
6 Extra ordinary debits 0.11 0.11 0.11
Total 29.36 29.95 30.55
Less: Capitalisation 1.34 1.37 1.40
Net expenses 28.02 28.58 29.15

Commission’s View:

5.8.3 Regulation 29 of TNERC Tariff Regulations states as under:


“29. Bad and Doubtful Debt
The Commission may consider and allow a provision upto 0.25% of receivables for
writing off of bad and doubtful debts. The licensee or Generating Company shall write off
the Bad and Doubtful debts as per the procedure laid down by them.”

5.8.4 The Commission observed that provision of writing off bad and doubtful debt as
submitted by TANGEDCO is within the permissible limit of 0.25% of receivable from
sale of power at existing tariff. Hence, the Commission has approved the same.

5.8.5 The Commission is also of the opinion that all other expense subheads under ‘Other
debits’ are also within reasonable limits. Hence, the Commission has approved the same.
Table 110: Other Debits (Distribution) - TANGEDCO submission (Rs. Crore)

Petition Approved
S.
Particulars FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
No.
Research &
1 Development 0.11 0.11 0.11 0.11 0.11 0.11
expenses
Bad & Doubtful
2 debts written 26.38 26.91 27.45 26.38 26.91 27.45
off
Miscellaneous
losses and
3 2.30 2.34 2.39 2.30 2.34 2.39
written
off/provided for
4 Material cost 0.46 0.47 0.48 0.46 0.47 0.48

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Petition Approved
S.
Particulars FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
No.
variance
Sundry
5 0 0 0 0 0 0
expenses
Extra ordinary
6 0.11 0.11 0.11 0.11 0.11 0.11
debits
Total 29.36 29.95 30.55 29.36 29.95 30.55
Less:
1.34 1.37 1.40 1.34 1.37 1.40
Capitalisation
Net expenses 28.02 28.58 29.15 28.02 28.58 29.15

5.9 Prior Period Debit/(Credit) charges:

5.9.1 TANGEDCO in its Petition submitted that the expenses pertaining to prior period like
short provision of power purchase, Material related expenses, employee cost, Interest and
finance charges and Other Charges are accounted under this head. The expenses on
account of other debits as claimed by TANGEDCO are tabulated below:
Table 111: Prior Period Debit/(Credit) charges (Distribution)- TANGEDCO submission
(Rs. Crore)

S.
Particulars 2010-11 2011-12 2012-13
No.
Income relating to previous
1 348.46 0.00 0.00
year
2 Prior Period expenses /losses
Short provision for power
a 0.00
purchase 1003.40 236.29
b Material related expenses 0.01
c Employees cost 67.66
d Interest & Finance charges 2.06
e Other charges 7.17
Total 1080.30 236.29 0.00
Net prior period/credit 731.85 236.29 0.00

Commission’s View:

5.9.2 The Commission observed that debits and credits pertaining to prior period for FY 2010-
11 actually pertains to FY 2009-10 and is of the opinion that prior period charges should
be addressed in the financial restructuring plan by TANGEDCO. The Commission is also
allowing entire expenditure for Power purchase, employee cost, Interest and finance
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charges, etc, based on prudence check. Hence, the Commission is of the opinion that
allowing these expenses again under this head would be a double accounting of these
expenses. Hence, the Commission is not allowing expenses as claimed by TANGEDCO
under his head for FY 2010-11 and FY 2011-12.

5.9.3 If there is any variation between various expense heads approved by the Commission and
actual expenses, TANGEDCO can approach the Commission with appropriate
justification for truing up based on Audited Accounts and the Commission would revisit
the expenses based on prudence check.

5.10 Demand Side Management

5.10.1 The Commission in its previous Tariff Order had provisionally allowed Rs.10 Crores in
the ARR for the purpose of carrying out the activities of Energy Conservation and
Demand Side Management (DSM).

5.10.2 However, the TANGEDCO in its Petition has not claimed any expenses towards DSM
for the Control Period.

5.10.3 The Commission is of the opinion that since FY 2010-11 and FY 2011-12 are already
over and there is no expense claimed towards DSM by TANGEDCO, the Commission is
not allowing the same for above mentioned period. However, the Commission retains Rs
10 Crore approval for FY 2012-13.

5.11 Summary of fixed Cost approved for Distribution function


Table 112: Summary of Fixed Cost – Distribution Function approved by the Commission
(Rs. Crore)

Last Tariff Order Petition Approved


Particulars FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13
Operation and Maintenance
Expenses 2923 3130 3356 2623 2728 2837 2623 2728 2837
Depreciation 349 393 434 278 307 352 229 254 287
Interest on Long term loan 1428 1325 1475 1651 3150 3355 1651 3150 3355
Other Debits & extra ordinary
items 10 7 7 28 29 29 28 29 29
Prior Period Debit/(Credit)
Charges 0 0 0 732 236 0 0 0 0
Reasonable Return / Return on 134 108 117 153 199 208 0 0 0

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Last Tariff Order Petition Approved
Particulars FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13
Equity
Demand Side Management 10 10 10 0 0 0 0 0 10
Total 4854 4973 5399 5465 6649 6780 4531 6161 6518

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6 Expenses on account of Generation

In this Section, the Commission in accordance with TNERC (Terms and Conditions for
determination of Tariff) Regulations, 2005 has analysed the expenses on account of Generation
business of TANGEDCO from FY 2010-11 to FY 2012-13 with reference to the Tariff Order
dated July 31, 2010.
In respect of components of Tariff for Generating Stations, Regulation-36 of TNERC Tariff
Regulations, 2005 states as under:

“36. Components of Tariff


1. The tariff for sale of power by the Generating Companies shall be of two part namely
the Fixed Charges (recovery of annual capacity charges) and variable (energy)
charges.
2. The Fixed (annual capacity) charges shall consist of the following elements:
a. Interest on Loan Capital;
b. Depreciation
c. Return on Equity;
d. Operation and Maintenance expenses; and
e. Interest on Working Capital:
3. The energy (variable) charges shall cover fuel cost.”

Therefore the cost for Thermal Power Stations comprises of two components, i.e., Fixed Cost
and Variable Cost. This Section has been organised in the following manner:
a. Part-I: Fixed Cost: Expenses on account of various expenses of fixed cost for all generating
stations have been discussed.
b. Part-II: Variable Cost: Variable Cost in respect of various Thermal Power Stations, Gas
Turbine Power Stations and Primary energy charges of Hydro Generating Stations have
been discussed.

Part-I: Fixed Cost:


6.1.1 In absence of segregation of expenses, the Commission in the Previous Tariff Order
allocated the expenses on account of various elements of fixed cost as detailed in
Regulation-37 of TNERC Tariff Regulations, 2005 among Generation, Transmission and
Distribution function on the basis of certain assumptions. For the purpose of

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determination of GFA for each Generating station, Transmission Function and
Distribution Function, the Commission referred to the balance sheet of the generating
stations, Audited Accounts for FY 2007-08 and preliminary accounts for FY 2008-09.

6.1.2 TANGEDCO in its Petition has not discussed the fixed cost of various Thermal Power
Stations. However in the formats attached along with the Petition, TANGEDCO has
submitted the expenses on account of various heads of fixed cost from FY 2010-11 to FY
2012-13.

6.1.3 The fixed cost mainly comprises of the following elements:


a. Interest on Loan Capital
b. Depreciation
c. Return on Equity
d. Operation and Maintenance Expenses
e. Interest on Working Capital

6.1.4 In accordance with Order No.3 dated 15-05-2006, the Commission has determined a
tariff of Rs. 2.75 / unit for the wind power projects commissioned, and to be
commissioned based on agreements executed prior to 15-05-2006. Therefore the
Commission has not calculated the fixed cost for Wind Power Projects.

6.1.5 The Commission has discussed all the components of fixed cost except Return on Equity
and Operation and Maintenance expenses pertaining to Generation function of
TANGEDCO in detail in the Chapter of expenditure. The Commission has provided the
Station-wise break-up of GFA, Depreciation and Interest on Loan in the chapter of
Capital expenditure. Return on Equity and Operation and Maintenance expenses in
respect of each Generating Station have been explained below:

Return on Equity:
6.1.6 The Commission in the Previous Tariff Order considered Rs. 100 Crore as the equity
addition each year from FY 2010-11 to FY 2012-13 based upon the actual equity infused
by the Government of Tamil Nadu in FY 2009-10. The Commission further applied rate
of 14% in accordance with Regulation-22 of TNERC Tariff Regulations, 2005 on the
closing base of equity allowed from FY 2010-11 to FY 2012-13 in the previous Tariff
Order. The Commission allocated the total Return on Equity calculated for TNEB among
Generation, Transmission and Distribution Function in the ratio of GFA allowed to the
various Generating Stations, Transmission and Distribution Function of TNEB in the

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Previous Tariff Order. The Return on Equity as calculated by the Commission from FY
2010-11 to FY 2012-13 in the previous Tariff Order is tabulated below:
Table 113: Return on Equity allowed by the Commission in Previous Tariff Order
(Rs. Crore)
Previous Tariff Order
Stations
FY 11 FY 12 FY 13
ETPS 12 8 8
NCTPS 24 17 17
MTPS 12 8 8
TTPS 22 16 15
NCTPS II 52 52
MTPS II 32 32
Total Thermal 68 134 133
BBGTPS 7 5 5
Kuttalam 4 3 3
Kovilkalappal 4 3 3
Valuthur 10 7 7
Total Gas 25 18 18
Erode 9 10 10
Kadamparai 4 3 3
Kundah 11 8 8
Tirunelveli 4 3 3
Total Hydro 28 24 23
Tirunelveli -
2 1 1
Wind
Udumalpet -
1 1 1
Wind
Total Wind 3 2 2
Total
124 178 176
Generation

6.1.7 TANGEDCO in its Petition has not discussed the equity base and rate applied on the
equity base for calculating Return on Equity for its generating stations in the Petition.
TANGEDCO has submitted the closing balance of equity pertaining to its generation
business along with the Return on Equity from FY 2009-10 to FY 2012-13 in Form-11 of
each station attached along with the Petition. The Station-wise Return on Equity as
claimed by TANGEDCO is tabulated below:

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Table 114: Return on Equity claimed by TANGEDCO
(Rs. Crore)
TANGEDCO Petition
Stations
FY 11 FY 12 FY 13
ETPS 19 24 36
NCTPS 37 47 70
MTPS 18 23 34
TTPS 35 43 65
NCTPS II
MTPS II
Total Thermal 110 137 207
BBGTPS 10 12 19
Kuttalam 6 8 12
Kovilkalappal 8 10 16
Valuthur 16 19 29
Total Gas 41 50 76
Erode 12 15 23
Kadamparai 7 8 12
Kundah 17 22 32
Tirunelveli 6 8 12
Total Hydro 42 53 79
Tirunelveli -
4 5 7
Wind
Udumalpet -
3 3 5
Wind
Total Wind 6 8 12
Total
199 248 374
Generation

Commission’s View:

6.1.8 The Commission has been guided by Regulation-22 of TNERC Tariff Regulations, 2005
while calculating Return on Equity on the equity base of TANGEDCO from FY 2010-11
to FY 2012-13. Regulation-22 of TNERC Tariff Regulations, 2005 states as under:

“22. Return on Equity


Return on equity shall be computed on the equity base determined in accordance
with Regulation 21 @14% per annum. The return shall be allowed post tax.”

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6.1.9 TANGEDCO in reply to data gaps revised the equity base for its various generating
stations and Return on Equity from FY 2010-11 to FY 2012-13 which is tabulated below:
Table 115: Equity base as submitted by TANGEDCO in Revised submission
(Rs. Crore)
Stations FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14
ETPS 84 145 171 240
NCTPS 184 272 329 470
MTPS 92 137 171 244
TTPS 169 256 306 446
NCTPS II
MTPS II
Total Thermal 528 809 977 1400
BBGTPS 51 75 88 124
Kuttalam 32 48 57 85
TGTPS 35 62 74 105
Valuthur 49 74 137 205
Total Gas 167 259 356 520
Erode 62 91 107 264
Kadamparai 32 48 57 88
Kundah 85 129 152 222
Tirunelveli 24 41 67 102
Total Hydro 203 309 384 675
Tirunelveli - Wind 19 19 19 19
Udumalpet - Wind 10 10 10 10
Total Wind 30 30 30 30
Total Generation 928 1406 1746 2624

Table 116: Return on Equity Revised Submission of TANGEDCO


(Rs. Crore)
Revised Submission
Stations
FY 11 FY 12 FY 13
ETPS 20 24 34
NCTPS 38 46 66
MTPS 19 24 34
TTPS 36 43 62
NCTPS II
MTPS II
Total Thermal 113 137 196

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Revised Submission
Stations
FY 11 FY 12 FY 13
BBGTPS 11 12 17
Kuttalam 7 8 12
TGTPS 9 10 15
Valuthur 10 19 29
Total Gas 37 50 73
Erode 13 15 37
Kadamparai 7 8 12
Kundah 18 21 31
Tirunelveli 6 9 14
Total Hydro 44 54 95
Tirunelveli - Wind 4 5 7
Udumalpet - Wind 3 3 4
Total Wind 7 8 11
Total Generation 201 250 375

6.1.10 The Commission observed that TANGEDCO has submitted substantial increase in equity
base each year from FY 2010-11 to FY 2012-13. The Commission is of the view that
equity addition can be allowed in a Financial Year only if there is additional
capitalisation during that particular year. Regulation-19 of TNERC Tariff Regulations,
2005 states as under:

“19. Additional Capitalization


1. The capital expenditure within the original scope of work actually incurred in
respect of the following items after the date of commencement of operation and
upto the cut off date may be admitted by the Commission, subject to prudence
check.
i. Deferred liabilities
ii. Works deferred for execution
iii. Procurement of initial spares subject to the ceiling specified in Regulation
18.5.
iv. Liabilities to meet award of arbitration or for compliance of the order or
decree of a court.

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v. On account of change of law
vi. Any additional works / services which have become necessary for efficient
and successful operation of the Generating Station, but not included in the
original project cost.
2. Any expenditure on minor items / assets like normal tools and tackles, personal
computers, furniture, air conditioners, etc. bought after the cut off date shall not
be considered for additional capitalisation for determination of tariff.
3. The impact of additional capitalisation in tariff revision may be considered by the
Commission twice in a tariff period, including revision of tariff after the cut off
date.”

6.1.11 TANGEDCO has not taken approval from the Commission for additional capitalisation
from FY 2010-11 to FY 2012-13. Therefore the Commission in this Order is
provisionally considering the revised submission of TANGEDCO for the purpose of
calculation of Return on Equity.

6.1.12 The Commission has calculated the Return on Equity on average of Opening and Closing
balance of equity base from FY 2010-11 to FY 2012-13 as submitted by TANGEDCO in
its revised submission. The Commission has assumed that the equity infusion during the
respective years will be at the mid of the year. The Commission has further applied rate
of 14% in accordance with Regulation-22 of TNERC Tariff Regulations, 2005 for
calculating Return on Equity. The Return on equity calculated by the Commission from
FY 2010-11 to FY 2012-13 is tabulated below:
Table 117: Return on Equity from FY 2010-11 to FY 2012-13
(Rs. Crore)
TANGEDCO
Previous Tariff TANGEDCO
Revised Commission
Order Petition
Stations Submission
FY FY FY FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13 11 12 13
ETPS 12 8 8 19 24 36 20 24 34 16 22 29
NCTPS 24 17 17 37 47 70 38 46 66 32 42 56
MTPS 12 8 8 18 23 34 19 24 34 16 22 29
TTPS 22 16 15 35 43 65 36 43 62 30 39 53
NCTPS II 52 52
MTPS II 32 32
Total 70 134 133 110 137 207 113 137 196 94 125 166

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TANGEDCO
Previous Tariff TANGEDCO
Revised Commission
Order Petition
Stations Submission
FY FY FY FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13 11 12 13
Thermal
BBGTPS 7 5 5 10 12 19 11 12 17 9 11 15
Kuttalam 4 3 3 6 8 12 7 8 12 6 7 10
Kovilkalappal 4 3 3 8 10 16 9 10 15 7 9 13
Valuthur 10 7 7 16 19 29 10 19 29 9 15 24
Total Gas 25 18 18 41 50 76 37 50 73 30 43 61
Erode 9 10 10 12 15 23 13 15 37 11 14 26
Kadamparai 4 3 3 7 8 12 7 8 12 6 7 10
Kundah 11 8 8 17 22 32 18 21 31 15 20 26
Tirunelveli 4 3 3 6 8 12 6 9 14 5 8 12
Total Hydro 28 24 23 42 53 79 44 54 95 36 48 74
Tirunelveli -
2 1 1 4 5 7 4 5 7 0 0 0
Wind
Udumalpet -
1 1 1 3 3 5 3 3 4 0 0 0
Wind
Total Wind 3 2 2 6 8 12 7 8 11 0 0 0
Total
124 177 176 199 248 374 201 250 375 159 216 301
Generation

6.1.13 The Commission directs TANGEDCO to submit separate Petition for approval of
additional capitalisation along with all details within three months of the date of issuance
of this Order.

Operation and Maintenance Expenses:


6.1.14 The Operation and Maintenance Expenses comprises of the following:
a. Repair and Maintenance Expenses
b. Employee Expenses
c. Administration and General Expenses

6.1.15 In the Previous Tariff Order based upon the detailed scrutiny and additional information
submitted by TNEB, the Commission approved the following O&M Expenses from FY
2010-11 to FY 2012-13:

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Table 118: O&M Expenses approved in the Previous Tariff Order

(Rs. Crore)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13


1 Net Repair & 237.67 247.23 257.12
Maintenance Expenses
2 Net Employees Cost 3577.98 3841.46 4119.05

3 Net Admn. & General 252.8 257.82 272.15


Expneses
4 Total Operation and 4068.45 4346.51 4648.32
Maintenance expenses

6.1.16 The Commission further allocated the O&M Expenses among Generation, Transmission
and Distribution Functions. The O&M Expenses as approved by the Commission from
FY 2010-11 to FY 2012-13 in its Previous Tariff Order is tabulated below:
Table 119: O&M Expenses (excluding Operating Charges) - Station-wise

(Rs. Crore)

Previous Tariff Order


Stations
FY 11 FY 12 FY 13
ETPS 113 119 126
NCTPS 132 138 145
MTPS 87 92 97
TTPS 120 127 134
Total Thermal 451 476 502
BBGTPS 10 11 11
Kuttalam 13 14 14
Kovilkalappal 10 10 11
Valuthur 13 14 14
Total Gas 47 49 51
Erode 35 38 40
Kadamparai 30 32 34
Kundah 48 50 53
Tirunelveli 35 38 41
Total Hydro 149 158 168
Tirunelveli -
8 9 10
Wind
Udumalpet -
3 4 4
Wind
Total Wind 12 13 14

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Previous Tariff Order
Stations
FY 11 FY 12 FY 13
Total
658 695 734
Generation

6.1.17 TANGEDCO in its Petition has not discussed the O&M Expenses for its generation
business. TANGEDCO has submitted the O&M Expenses from FY 2009-10 to FY 2012-
13 in Form-19 of each station attached along with the Petition. TANGEDCO has also
submitted the component-wise break-up of Employee expenses, R&M Expenses and
A&G Expenses in Form- 17, Form-16 and Form-18 respectively. The O&M Expenses
submitted by TANGEDCO in the Petition are tabulated below:
Table 120: O&M Expenses as submitted by TANGEDCO

(Rs. Crore)

TANGEDCO Petition
Stations
FY 11 FY 12 FY 13
ETPS 95 140 146
NCTPS 121 149 155
MTPS 117 90 93
TTPS 147 124 129
Total Thermal 480 503 523
BBGTPS 6 10 10
Kuttalam 21 17 18
Kovilkalappal 7 11 12
Valuthur 11 10 10
Total Gas 45 47 49
Erode 34 27 28
Kadamparai 19 21 21
Kundah 39 37 39
Tirunelveli 23 28 29
Total Hydro 116 113 117
Tirunelveli -
4 4 4
Wind
Udumalpet -
3 3 3
Wind
Total Wind 7 7 7*
Total
648 670 696
Generation
* While GFA for wind and associated Transmission has been separated, the O&M expenses could not be
separated.

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Commission’s View:

6.1.18 The Commission has been guided by Regulation-25 of TNERC Tariff Regulations while
determining Operation and Maintenance Expenses. Regulation-25 of TNERC Tariff
Regulations states as under:
“25. Operation and Maintenance Expenses
1. The operation and maintenance expenses shall be derived on the basis of
actual operation and maintenance expenses for the past five years previous to
current year based on the audited Annual Accounts excluding abnormal
operation and maintenance expenses, if any, after prudence check by the
Commission. The Commission may, if considered necessary engage
Consultant / Auditors in the process of prudence check for correctness.
2. The average of such normative operation and maintenance expenses after
prudence check shall be escalated at the rate of 4% per annum to arrive at
operation and maintenance expenses for current year i.e. base year and
ensuing year.
3. The base operation and maintenance expenses so determined shall be
escalated further at the rate of 4% per annum to arrive at permissible
operation and maintenance expenses for the relevant years of tariff period.
…”

6.1.19 The Commission observed that TANGEDCO has submitted component-wise O&M
Expenses for previous 6 years, i.e., FY 2005-06 to FY 2010-11. The Commission also
observed that O&M Expenses for various Stations of TANGEDCO have uneven pattern.
The basis for approval of O&M Expenses for various Stations of TANGEDCO is detailed
as under:
Thermal Power Stations:

6.1.20 For Ennore TPS, the Commission observed that TANGEDCO has submitted O&M
Expenses data for previous 5 years only, i.e., from FY 2006-07 to FY 2010-11. The
Commission has accepted the O&M Expenses as submitted by TANGEDCO for FY
2010-11. However the Commission is of the view that the employee expenses of ETPS
are very high. The Commission understands that ETPS is going to be decommissioned by
FY 2016-17. Therefore, TANGEDCO may consider re-deployment of Manpower in case
of ETPS so as to have efficient utilization of resources.

206 | P a g e
6.1.21 For FY 2011-12 and FY 2012-13, the Commission has considered 4% increase on year-
on-year basis considering FY 2010-11 as the base year. The O&M expenses for Ennore
TPS are tabulated below:
Table 121: O&M Expenses for Ennore TPS
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M
3207 3207 7298 3336 7590 3469
Expenses
Employees
5411 5411 5534 5627 5756 5852
Expenses
A&G Expenses 892 892 1203 928 1252 965
Total O&M
9510 9510 14036 9891 14598 10286
Expenses

6.1.22 For TTPS, the Commission observed that from FY 2005-06 to FY 2007-08, the O&M
expenses varied in between Rs. 8500 Lakh and Rs. 9500 Lakh. In FY 2008-09, there was
an abnormal increase of Rs. 4200 Lakh due to which O&M expenses rose to Rs.
13527.20 Lakh. In FY 2009-10, the O&M expenses are Rs. 12556.40 Lakh which means
reduction by Rs. 1000 Lakh. As regards FY 2010-11, TANGEDCO has submitted actual
expenses of Rs. 14664.32 Lakh during FY 2010-11 which is again an abnormal increase
of Rs. 2100 Lakh. Therefore, the Commission has relied on average of 5 years, i.e., from
FY 2005-06 to FY 2009-10 for calculation of O&M Expenses in FY 2010-11. The
Commission has further considered an escalation of 4% on year on year basis for
projecting O&M expenses in FY 2011-12 and FY 2012-13 on approved O&M expenses
of FY 2010-11.
Table 122: O&M Expenses for TTPS
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M
5860 3182 4012 3309 4173 3442
Expenses
Employee
7254 5588 6305 5812 6557 6044
Expenses
A&G
1550 1958 2059 2036 2141 2118
Expenses
Total O&M
14664 10728 12376 11157 12871 11603
Expenses

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6.1.23 For MTPS, the Commission observed that there is an abnormal increase of Rs. 6000 Lakh
in FY 2008-09 and reduction by Rs. 3000 Lakh in FY 2009-10. Therefore the
Commission has followed the same methodology as detailed in case of TTPS.
Table 123: O&M Expenses for MTPS

(Rs. Lakh)

FY 2010-11 FY 2011-12 FY 2012-13


Particulars
Petition Commission Petition Commission Petition Commission
R&M
3274 2617 2249 2722 2339 2831
Expenses
Employees
6744 4558 5450 4740 5668 4930
Expenses
A&G
1640 1107 1266 1151 1316 1197
Expenses
Total O&M
11657 8282 8965 8613 9324 8957
Expenses

6.1.24 For NCTPS, the Commission feels that the O&M expenses during FY 2010-11 as
submitted by TANGEDCO are reasonable. The Commission has approved the same for
FY 2010-11. For FY 2011-12 and FY 2012-13, the Commission has considered 4%
increase on year-on-year basis considering FY 2010-11 as the base year.
Table 124: O&M Expenses for NCTPS

(Rs. Lakh)

FY 2010-11 FY 2011-12 FY 2012-13


Particulars
Petition Commission Petition Commission Petition Commission
R&M
5418 5418 9204 5635 9572 5861
Expenses
Employees
5682 5682 4429 5909 4606 6145
Expenses
A&G
1039 1039 1279 1080 1330 1124
Expenses
Total O&M
12139 12139 14911 12624 15508 13129
Expenses

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Gas Turbine Power Stations:

6.1.25 In case of Gas Turbine Power Stations, the Commission has accepted the submission of
TANGEDCO towards O&M expenses in FY 2010-11 for all GTPS except VGTPS.

6.1.26 In case of VGTPS, the Commission observed that TANGEDCO has submitted the
employee expenses as negative. The Commission is of the view that the employee
expenses cannot be negative. Hence, the Commission has taken 4 years average of past 4
years, i.e., from FY 2005-06 to FY 2007-08 and FY 2009-10. Since FY 2008-09 has
negative figures, the Commission has not considered the same for calculation of O&M
Expenses.

6.1.27 The Commission found many discrepancies in the data submitted by TANGEDCO. The
Commission directs TANGEDCO to properly submit the data in next Tariff Petition.

6.1.28 As regards FY 2011-12 and FY 2012-13, the Commission has taken 4% escalation
considering FY 2010-11 as the base year.
Table 125: O&M Expenses for BBGTPS
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 78 78 306 82 318 85
Employee
368 368 370 383 385 398
Expenses
A&G Expenses 152 152 293 158 305 164
O&M Expenses 598 598 969 622 1008 647

Table 126: O&M Expenses for KGTPS


(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 1557 1557 1229 1229 1278 1278
Employee
320 320 160 160 166 166
Expenses
A&G Expenses 189 189 315 315 328 328
O&M Expenses 2066 2066 1704 1704 1772 1772

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Table 127: O&M Expenses for TGTPS
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 154 154 571 160 594 166
Employee
359 359 283 373 294 388
Expenses
A&G Expenses 232 232 270 242 281 251
O&M Expenses 745 745 1125 774 1170 805

Table 128: O&M Expenses for VGTPS


(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 1039 192 360 200 374 208
Employee
-364 130 114 135 119 140
Expenses
A&G Expenses 402 506 499 527 519 548
O&M Expenses 1076 828 974 862 1012 896

Hydro Generating Stations:


6.1.29 For Hydro Generating Stations, the Commission opines that the O&M expenses
submitted by TANGEDCO for FY 2010-11 are reasonable. Therefore, the Commission
has accepted the submission of TANGEDCO towards FY 2010-11. As regards FY 2011-
12 and FY 2012-13, the Commission has taken 4% escalation considering FY 2010-11 as
the base year.
Table 129: Erode Generation Circle
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 104 104 161 109 167 113
Employees
2865 2865 1777 2979 1848 3099
Expenses
A & G Expneses 472 472 748 491 778 510
Total O&M
3441 3441 2686 3579 2793 3722
Expenses

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Table 130: Kundah Generation Circle
(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 316 316 223 223 232 232
Employee
2227 2227 1996 1996 2075 2075
Expenses
A&G Expenses 1327 1327 1515 1515 1576 1576
Total O&M
3870 3870 3734 3734 3883 3883
Expenses

Table 131: Kadamparai Generation Circle


(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 183 183 263 191 274 198
Employee
1470 1470 1260 1529 1311 1590
Expenses
A&G Expenses 272 272 538 283 560 295
Total O&M
1926 1926 2062 2003 2144 2083
Expenses

Table 132: Tirunelveli Generation Circle


(Rs. Lakh)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars
Petition Commission Petition Commission Petition Commission
R&M Expenses 171 171 643 178 669 185
Employee
1833 1833 1550 1906 1612 1982
Expenses
A&G Expenses 325 325 559 338 582 351
Total O&M
2329 2329 2752 2422 2862 2519
Expenses

Other debts and Miscellaneous Income:


6.1.30 The Commission observed that other debts are within the limits approved by the
Commission in Previous Tariff Order. The Commission has considered other debts and
miscellaneous income as the same as submitted by TANGEDCO in the Petition.

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6.1.31 Based upon the above discussion, the fixed charges for various Generating Stations are
tabulated below:
Table 133: Fixed Charges for Ennore TPS
(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 34.0 35.9 38.8 61.0 61.3 61.4 60.9 61.2 61.4
Interest on Loan 12.1 57.5 91.5 8.2 8.5 8.4 8.2 8.5 8.4
Return on Equity 19.4 24.2 36.5 20.2 23.9 33.6 16.0 22.1 28.8
O&M Expenses 95.1 140.4 146.0 95.1 140.4 146.0 95.1 98.9 102.9
Other Debts 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Less: Misc Income 4.1 6.0 6.0 4.1 6.0 6.0 4.1 6.0 6.0
Total 156.7 252.1 306.9 180.6 228.3 243.6 176.3 184.9 195.6

Table 134: Fixed Charges for TTPS


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 60.9 64.4 69.6 52.9 53.9 55.9 52.9 53.9 55.9
Interest on Loan 21.7 103.1 163.9 14.5 15.3 15.6 14.5 15.3 15.6
Return on Equity 34.8 43.3 65.4 35.8 42.9 62.4 29.7 39.3 52.6
O&M Expenses 146.6 123.8 128.7 146.6 123.8 128.7 107.3 111.6 116.0
Other Debts 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Less: Misc Income 18.8 13.9 13.9 18.8 13.9 13.9 18.8 13.9 13.9
Total 245.6 321.0 414.0 231.4 222.3 249 185.9 206.5 226.6

Table 135: Fixed Charges for MTPS


(Rs. Crore)

Petition 2011 Revised Submission TNERC Approval


Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 32.2 34.0 36.7 37.6 39.8 40.5 37.6 39.7 40.5
Interest on Loan 11.4 54.4 86.5 7.8 8.5 8.5 7.8 8.5 8.5
Return on Equity 18.4 22.9 34.5 19.2 23.9 34.1 16.0 21.6 29.0
O&M Expenses 116.6 89.6 93.2 116.6 89.6 93.2 82.8 86.1 89.6
Other Debts 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Less: Misc Income 21.8 14.1 14.1 21.8 14.1 14.1 21.8 14.1 14.1
Total 156.9 187.0 237.0 159.6 147.9 162.4 122.6 142.0 153.6

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Table 136: Fixed Charges for NCTPS
(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 65.5 69.3 74.8 61.5 63.3 64.4 61.5 63.3 64.4
Interest on Loan 23.3 110.8 176.3 15.4 16.5 16.4 15.4 16.5 16.4
Return on Equity 37.5 46.6 70.3 38.1 46.1 65.8 31.9 42.1 55.9
O&M Expenses 121.4 149.1 155.1 121.4 149.1 155.1 121.4 126.2 131.3
Other Debts 0.3 0.4 0.4 0.3 0.4 0.4 0.3 0.4 0.4
Less: Misc Income 14.2 10.7 10.7 14.2 10.7 10.7 14.2 10.7 10.7
Total 233.9 365.5 466.1 222.5 264.7 291.40 216.3 237.8 257.8

Table 137: Fixed Charges for KGTPS


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 11.26 11.90 12.86 15.83 15.86 17.06 15.83 15.86 17.06
Interest on Loan 4.01 19.05 30.30 2.72 2.83 2.98 2.72 2.83 2.98
Return on Equity 6.44 8.01 12.08 6.72 7.92 11.95 5.63 7.32 9.94
O&M Expenses 20.66 17.06 17.75 20.66 17.04 17.72 20.66 17.04 17.72
Other Debts 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06 0.06
Less: Misc Income 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01
Total 42.4 56.1 73.0 46.0 43.7 49.76 44.9 43.1 47.8

Table 138: Fixed Charges for BBGTPS


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 17.6 18.6 20.1 30.0 30.0 30.0 30.0 30.0 30.0
Interest on Loan 6.3 29.7 47.3 4.2 4.4 4.3 4.2 4.4 4.3
Return on Equity 10.0 12.5 18.9 10.5 12.4 17.3 8.8 11.4 14.9
O&M Expenses 6.0 9.7 10.1 6.0 9.7 10.1 6.0 6.2 6.5
Other Debts 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Less: Misc Income 0.0 0.1 0.1 0.0 0.1 0.1 0.0 0.1 0.1
Total 39.9 70.4 96.2 50.8 56.5 61.7 49.2 52.1 55.6

Table 139: Fixed Charges for TGTPS


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 14.7 15.5 16.8 20.3 20.6 20.9 20.2 20.6 20.9

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Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Interest on Loan 5.2 24.8 39.5 3.5 3.7 3.7 3.5 3.7 3.7
Return on Equity 8.4 10.4 15.8 8.6 10.3 14.7 6.8 9.5 12.5
O&M Expenses 7.4 11.2 11.7 7.4 11.2 11.7 7.4 7.7 8.1
Other Debts 0.08 0.08 0.08 0.08 0.08 0.08 0.1 0.1 0.1
Less: Misc Income 0.05 0.11 0.11 0.05 0.11 0.11 0.0 0.1 0.1
Total 35.8 62.0 83.7 39.8 45.8 50.97 38.0 41.5 45.1

Table 140: Fixed Charges for VGTPS


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 27.3 28.9 31.2 27.3 43.1 46.0 27.3 43.1 46.0
Interest on Loan 9.7 46.2 73.5 4.2 6.9 7.2 4.2 6.9 7.2
Return on Equity 15.6 19.4 29.3 10.4 19.2 28.8 8.6 14.8 24.0
O&M Expenses 10.8 9.7 10.1 10.8 9.7 10.1 7.9 8.2 8.5
Other Debts 0.1 0.1 0.2 0.1 0.2 0.2 0.1 0.2 0.2
Less: Misc Income 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Total 63.5 104.3 144.2 52.7 79 92.2 48.1 73.1 85.7

Table 141: Fixed Charges for Erode Generation Circle

(Rs. Crore)

Petition 2011 Revised Submission TNERC Approval


Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 21.35 22.58 24.39 14.08 14.12 24.69 14.07 14.11 24.69
Interest on Loan 7.60 36.13 57.46 5.16 5.37 9.21 5.16 5.37 9.21
Return on Equity 12.21 15.19 22.91 12.76 15.04 36.92 10.70 13.90 25.98
O&M Expenses 34.41 26.86 27.93 34.41 26.86 27.93 34.41 35.79 37.22
Other Debts 0.11 0.12 0.12 0.11 0.12 0.12 0.11 0.12 0.12
Less: Misc Income 0.09 0.42 0.42 0.09 0.42 0.42 0.09 0.42 0.42
Total 75.60 100.45 132.39 66.4 61.09 98.45 64.36 68.86 96.80

Table 142: Fixed Charges for Kadamparai Generation Circle


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 11.4 12.0 13.0 8.9 9.0 9.8 8.9 8.9 9.8
Interest on Loan 4.0 19.2 30.6 2.7 2.9 3.1 2.7 2.9 3.1

214 | P a g e
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Return on Equity 6.5 8.1 12.2 6.8 8.0 12.3 5.6 7.4 10.1
O&M Expenses 19.3 20.6 21.4 19.3 20.6 21.4 19.3 20.0 20.8
Other Debts 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Less: Misc Income 0.2 0.3 0.3 0.2 0.3 0.3 0.2 0.3 0.3
Total 41.0 59.7 77.0 37.6 40.3 46.4 36.4 39.0 43.7

Table 143: Fixed Charges for Kundah Generation Circle


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 30.3 32.0 34.6 22.4 22.5 23.3 22.4 22.5 23.3
Interest on Loan 10.8 51.2 81.5 7.3 7.6 7.8 7.3 7.6 7.8
Return on Equity 17.3 21.5 32.5 18.0 21.3 31.1 14.9 19.7 26.2
O&M Expenses 38.7 37.3 38.8 38.7 37.3 38.8 38.7 37.3 38.8
Other Debts 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Less: Misc Income 0.8 1.0 1.0 0.8 1.0 1.0 0.8 1.0 1.0
Total 96.4 141.3 186.5 85.8 88 100.4 82.7 86.3 95.3

Table 144: Fixed Charges for Tirunelveli Generation Circle


(Rs. Crore)
Petition 2011 Revised Submission TNERC Approval
Components/Year
2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13
Depreciation 11.0 11.7 12.6 6.8 9.4 10.3 6.8 9.4 10.3
Interest on Loan 3.9 15.9 21.8 2.3 3.3 3.5 2.3 3.3 3.5
Return on Equity 6.3 7.9 11.8 5.7 9.3 14.2 4.5 7.5 11.8
O&M Expenses 23.3 27.5 28.6 23.3 27.5 28.6 23.3 24.2 25.2
Other Debts 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Less: Misc Income 1.2 1.7 1.7 1.2 1.7 1.7 1.2 1.7 1.7
Total 43.4 61.3 73.2 36.9 47.9 55 35.7 42.8 49.1

6.1.32 Regulation-42 of TNERC Tariff Regulations, 2005 states as under:


“42. Recovery of Capacity Charges
1. Full capacity charges (Fixed Charges) shall be recoverable at target availability
specified in clause (1) of Regulation 37.
2. Recovery of capacity charges below the level of target availability will be on pro
rata basis. At zero availability, no capacity charges shall be payable.
…”

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6.1.33 The above capacity charges as determined by the Commission are to be recovered when
TANGEDCO is able to meet the target in terms of PLF set by the Commission in
Previous Tariff Order. The Commission observed that during FY 2010-11 TANGEDCO
was not able to achieve the Target PLF in respect of following generating Stations:
Years for which capacity
S. No Power Stations
charges fully not recovered
1 ETPS FY 11 and FY 12
2 TTPS FY 11
3 KGTPS FY 11
4 VGTPS FY 11 and FY 12

6.1.34 The Commission is of the view that these Stations fall outside the Merit Order Despatch.
The non-availability of these Power Stations leads to costly power purchase which gets
reflected in power purchase cost in the ARR. Therefore, the Commission has decided to
allow the capacity charges on Pro-rata basis. For Ennore TPS, the target PLF was 50%
whereas for Kuttalam GTPS and Valuthur GTPS, the target PLF was 70%. The Capacity
charges as allowed by the Commission are tabulated below:
Table 145: Capacity charges allowed for FY 2010-11
(Rs. Crore)
FY 2010-11
S. No Power Stations Target Capacity Actual Allowable
PLF charges PLF Capacity Charges
I Thermal
1 ETPS 50% 176.3 35.42% 124.9
2 TTPS 80% 185.9 77.33% 179.7

II Gas Turbine
1 KGTPS 70% 44.9 19.29% 12.4
2 VGTPS 70% 48.1 67.54% 46.4

Table 146: Capacity Charges allowed for FY 2011-12


(Rs. Crore)
FY 2011-12
S. No Power Stations Allowable
Target PLF Capacity charges Actual PLF
Capacity Charges
I Thermal
1 ETPS 50% 184.9 26% 95.5

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FY 2011-12
S. No Power Stations Allowable
Target PLF Capacity charges Actual PLF
Capacity Charges

II Gas Turbine
1 TGTPS 69% 41.5 65% 39.0
2 VGTPS 70% 73.1 67% 70.2

Part-II: Variable Cost:


6.1.35 The Commission has worked out the variable cost for various generating stations on the
basis of data submitted in the petition and the subsequent submission of TANGEDCO
vide replies to the datagaps raised by the Commission. The variable cost as determined
by the Commission in respect of various generating stations of TANGEDCO is detailed
as under:
Thermal Power Stations:

6.1.36 As per Regulation 43 (ii) of the Tarff Regulation, the Energy (Variable) charges shall be
worked out on the basis of ex-bus energy delivered / sent out from the generating station.
Rate of energy charges is based on the following elements:
a. Price of primary fuel
b. Quantum of primary fuel (coal) in kg required for generation of one kWh of
electricity at generator terminals, which shall be computed on the basis of Gross
Station Heat Rate (less heat contributed by secondary fuel oil) and gross calorific
value of coal.
c. Price of secondary fuel oil
d. Normative quantity of secondary fuel
e. Normative auxiliary consumption

The above elements have been discussed in detail as under:

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a. Price of Primary Fuel:

6.1.37 The Commission in previous year calculated the weighted average cost of coal on the
basis of quantity as per allocation. The Commission arrived at the following weighted
average prices for various Thermal Power Stations:
Table 147: Price of Primary Fuel approved by the Commission in previous Tariff Order
(Rs./ MT)
S. No Particulars FY 11 FY 12 FY 13
1 Ennore TPS 1938 1957 1957
2 TTPS 3063 3094 3125
3 MTPS 2722 2749 2777
4 NCTPS 2298 2321 2344

6.1.38 TANGEDCO in its Petition submitted that the projections of price of coal have been
based on inflationary trends year over year. The price of primary fuel (both Indian and
Imported) in respect of each of the stations is tabulated below
Table 148: Price of Indian and Imported Coal in respected of Individual Stations
(Rs./ MT)
Sources FY 2010-11 FY 2011-12 FY 2012-13
ETPS 2278 2112 2217
TTPS (Indian) 2658 3180 3340
TTPS (Imported) 4970 6188 6497
MTPS (Indian) 2700 2480 2603
MTPS (Imported) 5532 6567 6895
NCTPS (Indian) 2208 2040 2141
NCTPS(Imported) 5113 6127 6433

Commission’s View:

6.1.39 The Commission in order to determine the weighted average price of coal asked
TANGEDCO to submit the month-wise consumption of Indian and Imported coal plant-
wise along with the price of coal. TANGEDCO in reply to the datagaps raised by the
Commission submitted the month-wise consumption of Indian and Imported coal along
with prices.

6.1.40 The Commission worked out the weighted average price of coal on the basis of the data
submitted by TANGEDCO. The Commission observed that the weighted average price of
coal was different as compared to the figures submitted in the Form-7 attached along with

218 | P a g e
the Petition. The Commission believes that for FY 2010-11, the figures submitted in the
Petition are actual figures and has decided to adopt the figures as given in Form-7 of the
Petition.

6.1.41 As regards FY 2011-12, TANGEDCO submitted actual month-wise consumption of


Indian and Imported Coal along with prices up to the month of November 2011. The
Commission calculated the weighted average price of coal on the basis of data submitted
by TANGEDCO up to November 2011 and adopted the same as landed price of coal for
FY 2011-12 and FY 2012-13.

6.1.42 Based upon the actual data submitted by TANGEDCO, the blending ratio for various
Thermal Power Stations as considered by the Commission is tabulated below:
Table 149: Blending Ratio for various Thermal Power Stations

Thermal Stations Blending Ratio


TTPS 76:24
MTPS 80:20
NCTPS 81:19

6.1.43 The landed price of coal as approved by the Commission for different Thermal Power
Stations taking into account the blendin ratio as discussed above is tabulated below:
Table 150: Landed Price of Coal approved by the Commission
(Rs. / MT)
FY 2010-11 FY 2011-12
S. No Particulars Last Last
Petition Commission Petition Commission
Order Order
1 ETPS 1938 2278 2278 1957 2112 2261
TTPS-Indian 2658 3180
2 3063 3130 3094 3814
Imported 4970 6188
MTPS-Indian 2700 2480
3 2722 3084 2749 3395
Imported 5532 6567
NCTPS-Indian 2208 2040
4 2298 2559 2321 2939
Imported 5113 6127

FY 2012-13
S. No Particulars Last
Petition Commission
Order
1 ETPS 1977 2217 2261
2 TTPS-Indian 3125 3340 3814

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FY 2012-13
S. No Particulars Last
Petition Commission
Order
Imported 6497
MTPS-Indian 2603
3 2777 3395
Imported 6895
NCTPS-Indian 2141
4 2344 2939
Imported 6433

b. Gross Station Heat Rate:

6.1.44 The Commission in Previous Tariff Order relaxed the norms for Station Heat Rate of
TTPS and NCTPS for FY 2010-11.The Commission allowed the following Station Heat
Rate for various Thermal Power Stations:
Table 151: Heat Rate allowed by the Commission
(Kcal/ kWh)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 ETPS 3200 3200 3200
2 TTPS 2500 2500 2500
3 MTPS 2500 2500 2500
4 NCTPS 2466 2466 2466

6.1.45 The Gross Station Heat Rate (SHR) for various Thermal Power Stations as submitted by
TANGEDCO in Form-7 attached along with the Petition is tabulated below:
Table 152: Heat Rate as submitted by TANGEDCO
(Kcal/ kWh)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 ETPS 3504 3600 3600
2 TTPS 2611 2651 2651
3 MTPS 2519 2532 2532
4 NCTPS 2533 2485 2485

Commission’s View:

6.1.46 In reply to data gaps raised by the Commission, TANGECO submitted the actual SHR
achieved till December 2011 and projections up to March 2011. The Commission
observed that the SHR submitted by TANGEDCO till December 2011 was almost same

220 | P a g e
for all Thermal Power Stations except Ennore TPS as approved by the Commission in
Previous Tariff Order

6.1.47 The Commission in the Previous Tariff Order relaxed the norm for SHR for TTPS and
NCTPS only for FY 2010-11. The relaxed norms for SHR for various Thermal Power
Stations as approved by the Commission in FY 2010-11 in Previous Tariff Order and
specified Regulation-37 (iii) of TNERC Tariff Regulations, 2005 are tabulated below:

Table 153: SHR for various Thermal Power Stations as per the Regulations and Previous
Tariff Order in FY 2010-11
(Kcal/ kWh)
As per Previous Tariff
Thermal Stations As per Regulations
Order
TTPS 2453 2500
MTPS 2500 2500
NCTPS 2393 2466
ETPS 3200 3200

6.1.48 For FY 2010-11, the Commission has allowed the SHR for various Thermal Power
Stations in accordance with the relaxed norms approved in the Previous Tariff Order.

6.1.49 As regards SHR in FY 2011-12 and FY 2012-13, the Commission has allowed the SHR
for various Thermal Power Stations in accordance with the norms specified in
Regulation-37 (iii) of the TNERC Tariff Regulations, 2005.

6.1.50 The SHR as accepted by the Commission for different Thermal Power Station is
tabulated below:
Table 154: SHR for various Thermal Power Stations as accepted by the Commission
(Kcal/ kWh)
FY 2010-11 FY 2011-12
S.
Particulars
No Last Order Petition Commission Last Order Petition Commission

1 ETPS 3200 3504 3200 3200 3600 3200


2 TTPS 2500 2611 2500 2500 2651 2453
3 MTPS 2500 2519 2500 2500 2532 2500
4 NCTPS 2466 2533 2466 2466 2485 2393

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FY 2012-13
Particulars Last
Petition Commission
Order
ETPS 3200 3600 3200
TTPS 2500 2651 2453
MTPS 2500 2532 2500
NCTPS 2466 2485 2393

c. Gross Calorific value of coal:

6.1.51 The Commission in Previous Tariff Order calculated the weighted average calorific value
of coal according to the blending ratio as per the allocated quantity for different types of
coal. The gross calorific value of coal as approved by the Commission in Previous Tariff
Order is tabulated below:
Table 155: Gross Calorific value of coal approved in Previous Tariff Order
(kcal/ kg)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13

1 ETPS 4323 4323 4323


2 TTPS 4306 4306 4306
3 MTPS 4219 4219 4219
4 NCTPS 4346 4346 4346

6.1.52 TANGEDCO in its Petition submitted the weighted average price of coal from FY 2010-
11 to FY 2012-13 which is tabulated below:
Table 156: Gross Calorific Value of coal as submitted in the Petition
(kcal/ kg)

S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13

1 ETPS 2979 2986 & 3200-3500 3200-3500


2 TTPS 3255 3483, 3200-3500 3200-3500
3 MTPS 3363 3648, 3200-3800 3200-3800
4 NCTPS 3466 3807, 3200-3800 3200-3800

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Commission’s View:

6.1.53 In reply to data gaps raised by the Commission, TANGEDCO vide its letter dated
January 25, 2012 submitted the actual Gross calorific value of coal (Kcal/ Kg) up to
December 2011 which is tabulated below:
Table 157: Gross Calorific Value upto December 2011
(kcal/ kg)

FY 2011-12
S. No Particulars
Actuals upto Dec. 2011
1 ETPS 3120
2 TTPS 3487
3 MTPS 3570
4 NCTPS 3761

6.1.54 The Commission further asked TANGEDCO to submit the consumption of coal along
with the GCV of Indian and Imported coal so as to understand the mix of coal used. In
reply to the above query, TANGEDCO submitted the GCV of Indian and Imported coal
along with the quantity of coal during FY 2010-11 and actual up to January 2012.
TANGEDCO further vide its letter dated February 1, 2012 requested to consider the
relaxed norms for Gross Calorific Value (GCV) in respect of four Thermal Power
Stations owned by them. TANGEDCO vide further correspondences in this matter
submitted the actual weighted average of GCV of coal based on the blending ratio
adopted between the Indian and Imported Coal. The Commission has taken note of the
submission of TANGEDCO in relation to GCV of various Thermal Power Stations. The
Commission has decided to allow the actual GCV figures as submitted by TANGEDCO
on the basis of data submitted from January 2011 to January 2012.

6.1.55 The GCV from FY 2010-11 to FY 2012-13 as allowed by the Commission in this Tariff
Order is tabulated below:
Table 158: Weighted average calorific value of coal approved by the Commission
(kcal/ kg)
FY 2010-11 FY 2011-12
Particulars Actuals Actuals
Last Last
Petition Commission Petition upto dec. upto Commission
Order Order
2011 Jan.2011
2986 &
ETPS 4323 2979 3088 4323 3120 3153 3088
3200-3500

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FY 2010-11 FY 2011-12
Particulars Actuals Actuals
Last Last
Petition Commission Petition upto dec. upto Commission
Order Order
2011 Jan.2011
3483,
TTPS 4306 3255 3485 4306 3487 3647 3485
3200-3500
3648,
MTPS 4219 3363 3525 4219 3570 3554 3525
3200-3800
3807,
NCTPS 4346 3466 3728 4346 3761 3768 3728
3200-3800

S. FY 2012-13
Particulars
No Last Order Petition Commission
1 ETPS 4323 3200-3500 3088
2 TTPS 4306 3200-3500 3485
3 MTPS 4219 3200-3800 3525
4 NCTPS 4346 3200-3800 3728

d. Specific Fuel Oil Consumption:

6.1.56 The Commission in Previous Tariff Order approved the following as the Specific fuel oil
consumption from FY 2010-11 to FY 2012-13:
Table 159: Specific Fuel Oil Consumption
(ml/ kWh)
S. No Particulars Quantity
1 ETPS 6
2 TTPS 2
3 MTPS 2
4 NCTPS 2

6.1.57 TANGEDCO in the Petition submitted the following Specific Fuel Oil Consumption
from FY 2010-11 to FY 2012-13:
Table 160: Specific Fuel Oil Consumption
(ml/ kWh)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 ETPS 12 10 10
2 TTPS 5 2 2
3 MTPS 1 0.55 1.89
4 NCTPS 0.98 0.44 0.44

224 | P a g e
Commission’s View:

6.1.58 The Commission observed that following normative secondary fuel oil consumption per
kWh has been specified in the Tariff Regulations:
(a) Coal based generating stations except ETPS - 2 ml / kWh
(b) ETPS -12 ml / kWh

6.1.59 The Commission observed that for ETPS, TANGEDCO has claimed secondary fuel oil
consumption of 12 ml/ kWh. The Commission has decided to approve the same since it is
within limits specified in the Regulations. As regard TTPS, the Commission observed
that TANGEDCO has claimed 5ml/ kWh as specific fuel oil consumption in FY 2010-11.
In reply to data gaps regarding the higher specific oil consumption, TANGEDCO
submitted that the ID fan impellers in Unit-III are getting eroded frequently and need
replacement due to non-availability of 7 ESP fields since January 2009 resulting in partial
load operations and Unit tripping which in turn increases furnace oil consumption.
TANGEDCO further submitted that during the month of July 2010 to December 2010 the
coal received was very wet, sticky and slushy which forced the use of oil for boiler flame
stability in order to avoid trippings. If oil was not used, Unit-I, II and III would have
tripped because of trapezoidal design of bunkers.

6.1.60 The Commission is of the view that TANGEDCO has the responsibility to inspect and
ensure that the coal received should be of right quality. The Commission has allowed
higher landed price of coal on the basis of data submitted in the Petition. Accordingly,
the Commission has decided to allow the specific fuel oil consumption as per the norms
specified in the Regulations.

6.1.61 For MTPS and NCTPS, the Commission observed that the specific fuel oil consumption
as claimed by TANGEDCO in the Petition is within approved limits. Therefore the
Commission has decided to adopt the norms as specified in the Regulations. The specific
fuel oil consumption as approved by the Commission is tabulated below:
Table 161: Specific fuel oil consumption
(ml/ kWh)
FY 2010-11 FY 2011-12
Particulars
Last Order Petition Commission Last Order Petition Commission

ETPS 6 12 12 6 10 10
TTPS 2 5 2 2 2 2

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FY 2010-11 FY 2011-12
Particulars
Last Order Petition Commission Last Order Petition Commission

MTPS 2 1 2 2 0.55 2
NCTPS 2 0.98 2 2 0.44 2

FY 2012-13
Particulars
Last Order Petition Commission

ETPS 6 10 10
TTPS 2 2 2
MTPS 2 1.89 2
NCTPS 2 0.44 2.00

e. Price of Secondary Fuel Oil:


6.1.62 The Commission in Previous Tariff Order approved the following as the price of
Secondary fuel oil from FY 2010-11 to FY 2012-13 on the basis of prevailing prices as
communicated by the oil suppliers with an escalation of 5% for FY 2011-12 and FY
2012-13.
Table 162: Price of Secondary Fuel Oil
(Rs./ Kl)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 ETPS 34751 36594 38423
2 TTPS 34835 36576 38405
3 MTPS 35588 37367 39235
4 NCTPS 34751 36594 38423

6.1.63 TANGEDCO in its Petition submitted the price of Secondary fuel oil from FY 2010-11 to
FY 2012-13 which is tabulated below:
Table 163: Price of Secondary Fuel Oil
(Rs/ Kl)
S. No Particulars FY 2010-11 FY 2011-12 FY 2012-13
1 ETPS 30174 39650 41633
2 TTPS 29839 39309 41274
3 MTPS 28988 37330 31959
4 NCTPS 29753 39423 41394

Commission’s View:

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6.1.64 As regards FY 2010-11, the Commission has accepted the price of secondary fuel oil as
submitted by TANGEDCO in the Petition as the same is within the approved limit
specified by the Commission in Previous Tariff Order. For FY 2011-12 and FY 2012-13,
the Commission asked TANGEDCO to submit the price of HSD and LDO used in
various Thermal Power Stations along with the consumption. In reply to datagaps,
TANGEDCO submitted the actual month-wise consumption and the price of LDO and
HSD upto the month of November 2011. The Commission has calculated the weighted
average and adopted the same as price of secondary fuel oil in FY 2011-12 and FY 2012-
13.

6.1.65 The price of secondary fuel oil as approved by the Commission from FY 2010-11 to FY
2012-12 is tabulated below:
Table 164: Price of Secondary Fuel Oil
(Rs./ Kl)
FY 2010-11 FY 2011-12
Particulars
Last Order Petition Commission Last Order Petition Commission

ETPS 34751 30174 30174 36594 39650 40361


TTPS 34835 29839 29839 36576 39309 37653
MTPS 35588 28988 28988 37367 37330 36900
NCTPS 34751 29753 29753 36594 39423 39997

FY 2012-13
Particulars
Last Order Petition Commission

ETPS 38423 41633 40361


TTPS 38405 41274 37653
MTPS 39235 31959 36900
NCTPS 38423 41394 39997

f. Variable Cost for Thermal Power Stations:

6.1.66 On the basis of above discussion, the Commission has calculated the variable cost for
various Thermal Power Stations of TANGEDCO which is tabulated as under:

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Ennore TPS:
Table 165: Variable Cost for Ennore Thermal Power Stations

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 450 450 450
2 Gross Station Heat Rate Kcal/kWh 3200 3200 3200
3 Specific fuel oil consumption ml/kWh 12 10 10
4 Average calorific value of oil Kcal/l 10491 10491 10491
Average calorific value of
5 Kcal/Kg 3088 3088 3088
Coal
6 Weighted average price of oil Rs./Kl 30174 40361 40361
7 Average landed cost of coal Rs./MT 2278 2261 2261
8 Rate energy charges from Oil Paisa/kWh 35.15 41.69 41.69
9 Heat contributed from Oil Kcal/kWh 122.22 108.37 108.37
10 Heat contributed from Coal Kcal/kWh 3077.78 3091.63 3091.63
11 Specific consumption of coal Kg/kWh 1.00 1.00 1.00
12 Rate of energy from Coal Paisa/kWh 269.58 270.71 266.36
13 Variable Cost Paisa/kWh 304.73 312.40 308.05
14 Previous Tariff Order Paisa/kWh 189.17 192.08 195.07

Mettur TPS:
Table 166: Variable Cost for Mettur TPS

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 840 840 840
2 Gross Station Heat Rate Kcal/kWh 2500 2500 2500
3 Specific fuel oil consumption ml/kWh 2.0 2.00 2.00
4 Average calorific value of oil Kcal/l 10544 10544 10544
Average calorific value of
5 Kcal/Kg 3525 3525 3525
Coal
6 Weighted average price of oil Rs./Kl 28988 36900 36900
7 Average landed cost of coal Rs./MT 3084 3395 3395
8 Rate energy charges from Oil Paisa/kWh 5.80 7.38 7.38
9 Heat contributed from Oil Kcal/kWh 21.09 21.09 21.09
10 Heat contributed from Coal Kcal/kWh 2478.91 2478.91 2478.91
11 Specific consumption of coal Kg/kWh 0.70 0.70 0.70
12 Rate of energy from Coal Paisa/kWh 237.04 260.38 262.36
13 Variable Cost Paisa/kWh 242.83 267.76 269.74
14 Previous Tariff Order Paisa/kWh 183.73 185.88 188.07

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Tuticorin TPS:
Table 167: Variable Cost for Tuticorin TPS

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 1050 1050 1050
2 Gross Station Heat Rate Kcal/kWh 2500 2453 2453
3 Specific fuel oil consumption ml/kWh 2 2 2
4 Average calorific value of oil Kcal/l 10547 10547 10547
Average calorific value of
5 Kcal/Kg 3485 3485 3485
Coal
6 Weighted average price of oil Rs./Kl 29839 37653 37653
7 Average landed cost of coal Rs./MT 3130 3814 3814
8 Rate energy charges from Oil Paisa/kWh 5.97 7.53 7.53
9 Heat contributed from Oil Kcal/kWh 21.09 21.09 21.09
10 Heat contributed from Coal Kcal/kWh 2478.91 2431.91 2431.91
11 Specific consumption of coal Kg/kWh 0.71 0.70 0.70
12 Rate of energy from Coal Paisa/kWh 242.78 296.04 290.85
13 Variable Cost Paisa/kWh 248.75 303.57 298.39
14 Previous Tariff Order Paisa/kWh 200.52 202.83 205.18

North Chennai TPS:


Table 168: Variable Cost for North Chennai TPS

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 630 630 630
2 Gross Station Heat Rate Kcal/kWh 2466 2393 2393
3 Specific fuel oil consumption ml/kWh 2 2 2
4 Average calorific value of oil Kcal/l 10340.60 10340.60 10340.60
Average calorific value of
5 Kcal/Kg 3728 3728 3728
Coal
6 Weighted average price of oil Rs./Kl 29753 39997 39997
7 Average landed cost of coal Rs./MT 2559 2939 2939
8 Rate energy charges from Oil Paisa/kWh 5.95 8.00 8.00
9 Heat contributed from Oil Kcal/kWh 20.68 20.68 20.68
10 Heat contributed from Coal Kcal/kWh 2445.32 2372.32 2372.32
11 Specific consumption of coal Kg/kWh 0.66 0.64 0.64
12 Rate of energy from Coal Paisa/kWh 184.21 195.51 204.37
13 Variable Cost Paisa/kWh 190.16 203.51 212.37
14 Previous Tariff Order Paisa/kWh 148.99 150.81 152.63

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Provisional Tariff for New Thermal Power Stations:
6.1.67 The Commission in Previous Tariff Order approved the Provisional Tariff for NCTPS-
Stage-II Unit-1 & 2 and MTPS Stage-III. The Tariff approved by the Commission is
tabulated below:
Table 169: Provisional Tariff approved for New Thermal Power Stations
(Rs./ kWh)
S. No Stations FY 2011-12 FY 2012-13
1 NCTPS (Stage-II) 2.52 2.22
2 MTPS (Stage-III) 2.96 2.68

6.1.68 The Commission observed that TANGEDCO in its Petition has not submitted the cost on
account of New Thermal Power Stations. However in reply to datagaps raised by the
Commission, TANGEDCO submitted the net energy generated and cost incurred on
account of new generating stations during FY 2011-12 and FY 2012-13. As discussed in
Chapter of Energy Availability (Chapter-4), none of the new Thermal Power Stations
have been commissioned as on date, the Commission has considered the energy rates for
both NCTPS (Stage-II) and MTPS (Stage-III) in accordance with the rates approved for
FY 2011-12 in Previous Tariff Order considering FY 2012-13 as first year of operation.

6.1.69 The Commission directs TANGEDCO to submit separate Petition for approval of Capital
Cost and Generation Tariff for new Generating Stations.

Variable cost for Gas Turbine Power Stations:


a. Heat Rate:

6.1.70 The Commission in Previous Tariff Order approved the heat rate for all Gas Turbine
Stations except BBGTPS as per the norms specified in the TNERC Tariff Regulations,
2005, i.e., 1850 kcal/ kWh. For BBGTPS, the Commission accepted the Heat Rate
proposed by TNEB, i.e., 3230 kcal/ kWh.

6.1.71 TANGEDCO in its Petition has submitted the following Station Heat Rate for Gas
Turbine Power Stations:
Table 170: Heat rate for various Stations as submitted by TANGEDCO
(Kcal/ kWh)
S. No Stations FY 11 FY 12 FY 13
1 KGTPS 1880 1850 1850
2 TGTPS 1845 1850 1850

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S. No Stations FY 11 FY 12 FY 13
3 BBGTPS 3436 3219 3219
4 VGTPS-I 1790 1850 1850
5 VGTPS-II 1850 1850

Commission’s View:

6.1.72 The Commission observed that, TANGEDCO has submitted higher heat rate for KGTPS
and BBGTPS in its Petition. The Commission already relaxed the norm for BBGTPS in
previous Tariff Order. Therefore, the Commission has allowed the heat rate for KGTPS
and BBGTPS for FY 2010-11 according to the norms approved by the Commission in
Previous Tariff Order.

6.1.73 As regards TGTPS and VGTPS-I, the Commission observed that the actual Station Heat
Rate in FY 2010-11 as submitted in the Petition is within the approved limits specified by
the Commission in Previous Tariff Order. Hence the Commission has approved the same
for TGTPS and VGTPS-I.

6.1.74 In FY 2011-12 and FY 2012-13, TANGEDCO has proposed the SHR as per the norms
specified in the Regulations. For BBGTPS, TANGEDCO has proposed 3219 kcal/ kWh
which is acceptable by the Commission.

6.1.75 The Station Heat Rate as approved by the Commission in this Order is tabulated below:
Table 171: Station Heat Rate
(Kcal/ kWh)
FY 2010-11 FY 2011-12
Stations Previous
Previous
Petition Commission Tariff Petition Commission
Tariff Order
Order
KGTPS 1850 1880 1850 1850 1850 1850
TGTPS 1850 1845 1845 1850 1850 1850
BBGTPS 3230 3436 3230 3230 3219 3219
VGTPS-I 1850 1790 1790 1850 1850 1850
VGTPS-II 1850 1850 1850

FY 2012-13
Stations Previous Tariff
Petition Commission
Order
KGTPS 1850 1850 1850
TGTPS 1850 1850 1850

231 | P a g e
FY 2012-13
Stations Previous Tariff
Petition Commission
Order
BBGTPS 3230 3219 3219
VGTPS-I 1850 1850 1850
VGTPS-II 1850 1850 1850

b. Gross Calorific Value:

6.1.76 The Commission in the Previous Tariff Order approved the calorific value of Gas as
10000 Kcal/SCM whereas for Naptha used in BBGTPS, the Commission approved the
Calorific value of 10572 kcal/ kg.

6.1.77 TANGEDCO has submitted Naptha as the main fuel and HSD as the start-up fuel used in
BBGTPS. In other stations only gas is being used as fuel. TANGEDCO has submitted the
following calorific value for the usage of gas and Naptha in its Stations:
Table 172: Calorific Value as submitted by TANGEDCO in the Petition

Sl. No. Station Fuel used Unit 2010-11 2011-12 2012-13


1 TGTPSl Gas Kcal/ SCM 9590 9271 10000
2 Kuttalam Gas Kcal/ SCM 9498 9630 10000
3 Valuthur I Gas Kcal/ SCM 8765 9179 10000
4 Valuthur II Gas Kcal/ SCM 0 8186 10000
Naptha Kcal/ Kg 10572 10572 10572
5 BBGTPS
HSD Kcal/ Kg 10249 10249 10249

Commission’s View:

6.1.78 The Commission in the last Tariff Order observed that in respect of gas fired generating
station, the TNEB make payment at the rate for 1000 SCM for 10000 Kcal / SCM and
whenever the GCV is less than 10000 Kcal / SCM, proportionate rebate is allowed.
Therefore, the Commission has considered GCV as 10000 Kcal/ SCM for arriving at the
quantity of coal consumed from FY 2010-11 to FY 2012-13.

6.1.79 The Calorific value as approved by the Commission for various stations is as under:

232 | P a g e
Table 173: Calorific Value from FY 2010-11 to FY 2012-13

Fuel 2010-11 2011-12


Station Unit Last Last
Used Petition Approved Petition Approved
TO TO
Kcal/ 10000
TGTPS Gas 10000 9590 10000 10000 9271
SCM
Kcal/ 10000 10000
Kuttalam Gas 10000 9498 10000 9630
SCM
Kcal/ 10000 10000
Valuthur I Gas 10000 8765 10000 9179
SCM
Valuthur Kcal/ 10000
Gas 10000 0 0 10000 8186
II SCM
Kcal/
Naptha 10572 10572 10572 10572 10572 10572
Kg
BBGTPS
Kcal/
HSD 10249 10249 10249 10249
Kg

Fuel 2012-13
Station Unit
Used Last TO Petition Approved
Kovilkappal Kcal/ SCM Gas 10000 10000 10000
Kuttalam Kcal/ SCM Gas 10000 10000 10000
Valuthur I Kcal/ SCM Gas 10000 10000 10000
Valuthur II Kcal/ SCM Gas 10000 10000 10000
Kcal/ Kg Naptha 10572 10572 10572
BBGTPS
Kcal/ Kg HSD 10249 10249

c. Price of fuel:

6.1.80 The Commission in the Previous Tariff Order approved the following prices of fuel:
Table 174: Price of fuel approved by the Commission

S. No Stations Units FY 2010-11 FY 2011-12 FY 2012-13


1 KGTPS Rs./ SCM 7.92 8.77 8.77
2 TGTPS Rs./ SCM 7.92 8.77 8.77
3 BBGTPS Rs./ kg 47.92 50.32 52.83
4 VGTPS-I Rs./ SCM 8.78 8.79 8.79
5 VGTPS-II Rs./ SCM 7.76 8.79 8.79

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6.1.81 TANGEDCO has submitted the following prices of fuel from FY 2010-11 to FY 2012-
13:
Table 175: Price of fuel as submitted by TANGEDCO

Stations Fuel Used Units FY 2010-11 FY 2011-12 FY 2012-13


KGTPS Gas Rs./ SCM 8.55 8.55 8.55
TGTPS Gas Rs./ SCM 8.55 8.55 8.55
Naptha Rs./ kg 33.44 40.44 40.44
BBGTPS
HSD Rs./ Kg 37.60 82.47 43.10
VGTPS-I Gas Rs./ SCM 8.55 8.93 8.93
VGTPS-II Gas Rs./ SCM 8.93 8.93

Commission’s View:
6.1.82 As regards FY 2010-11, TANGEDCO has submitted the actual price of fuel consumed
during FY 2010-11. The Commission has considered the same for all GTPS. For
BBGTPS, Naptha is used as the fuel and HSD is used in order to meet the technical
requirement of the power plant. The Commission has considered the weighted average
cost on the basis of consumption and the price of Naptha and HSD. Though this power
station was established as a peaking power station, in view of prohibitive naptha prices, it
is not being operated even during peak hours. The generation from this station is very
limited. In view of this the auxiliary consumption also cannot be estimated accurately.
This station is being operated as synchronous condenser as facility was available for
operating the gas turbines as synchronous condenser. The gas turbines is started and
brought upto full speed after which the unit is synchronized with the grid. Thereafter the
fuel supply is cut off and the gas turbine slows down and finally gets decoupled from the
generator through the operation of a clutch. The generator continues to be in synchronism
with the grid but operates as synchronized condenser. In this process it supplies VAR to
system for compensation. It is understood that this kind of operation of Basin Bridge Gas
Turbine Station has resulted in improving the voltage profile in the surrounding area and
also improved the real power generation of North Chennai TPS. The operation of the
Basin Bridge Gas Turbine Station as synchronous condensers will have to be continued
to further optimize the VAR Compensation to the system.

6.1.83 As regards FY 2011-12 and FY 2012-13, the Commission has considered the submission
of TANGEDCO for all Gas Turbine Power Stations.

234 | P a g e
6.1.84 The Price of fuel as approved by the Commission is tabulated below:
Table 176: Price of fuel approved by the Commission

FY 2010-11 FY 2011-12
Stations Fuel Used Units Previous Previous
Tariff Petition Commission Tariff Petition Commission
Order Order
Rs./
KGTPS Gas 7.92 8.55 8.55 8.77 8.55 8.55
SCM
Rs./
TGTPS Gas 7.92 8.55 8.55 8.77 8.55 8.55
SCM
Naptha Rs./ kg 47.92 33.44 33.44 50.32 40.44 40.44
BBGTPS
HSD Rs./ Kg 37.60 37.60 82.50 82.50
Rs./
VGTPS-I Gas 8.78 8.55 8.55 8.79 8.93 8.93
SCM
VGTPS- Rs./
Gas 7.76 8.79 8.93 8.93
II SCM

FY 2012-13
Stations Fuel Used Units Previous
Petition Commission
Tariff Order
KGTPS Gas Rs./ SCM 8.77 8.55 8.55
TGTPS Gas Rs./ SCM 8.77 8.55 8.55
Naptha Rs./ kg 52.83 40.44 40.44
BBGTPS
HSD Rs./ Kg 43.10 43.10
VGTPS-I Gas Rs./ SCM 8.79 8.93 8.93
VGTPS-II Gas Rs./ SCM 8.79 8.93 8.93

d. Variable cost for various GTPS:

6.1.85 Based upon the above discussion, the variable cost as approved for various Gas Turbine
Stations is tabulated as under:
Table 177: Variable Cost for KGTPS

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 101 101 101
2 Gross Station Heat Rate Kcal/kWh 1850 1850 1850
3 Average calorific value of gas Kcal/SCM 10000 10000 10000
4 Average Cost of Gas Rs./ SCM 8.55 8.55 8.55
5 Rate of energy from Gas Ps/ kWh 171.44 169.42 168.21
6 Net Generation MU 157 457 592

235 | P a g e
S. No Description Unit 2010-11 2011-12 2012-13
Total Cost excluding
7 Rs. Crore 26.99 77.48 99.61
Transportation
8 Transportation Cost Rs. Crore 7.11 7.11 7.11
9 Total Cost Rs. Crore 34.09 84.59 106.71
10 Variable Cost Ps/ kWh 216.59 184.97 180.21

Table 178: Variable Cost for TGTPS

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 107.88 107.88 107.88
2 Gross Station Heat Rate Kcal/kWh 1845 1850 1850
3 Average calorific value of gas Kcal/SCM 10000 10000 10000
4 Average Cost of Gas Rs./ SCM 8.55 8.55 8.55
5 Rate of energy from Gas Ps/ kWh 168.07 168.28 160.77
6 Net Generation MU 610 650 611
Total Cost excluding
7 Rs. Crore 102.44 109.31 102.73
Transportation
8 Transportation Cost Rs. Crore 4.83 4.83 4.83
9 Total Cost Rs. Crore 107.27 114.14 107.56
10 Variable Cost Ps/ kWh 175.99 175.72 176.12

Table 179: Variable Cost for Valuthur-I

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 95 95 95
2 Gross Station Heat Rate Kcal/kWh 1790 1850 1850
3 Average calorific value of gas Kcal/SCM 10000 10000 10000
4 Average Cost of Gas Rs./ SCM 8.55 8.93 8.93
5 Rate of energy from Gas Ps/ kWh 162.03 185.77 167.06
6 Net Generation MU 531 629 614
Total Cost excluding
7 Rs. Crore 85.99 116.81 107.33
Transportation
8 Transportation Cost Rs. Crore 1.79 1.79 1.79
9 Total Cost Rs. Crore 87.78 118.60 109.12
10 Variable Cost Ps/ kWh 165.40 188.62 177.70

Table 180: Variable Cost for Valuthur-II

S. No Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 92.2 92.2

236 | P a g e
S. No Description Unit 2010-11 2011-12 2012-13
2 Gross Station Heat Rate Kcal/kWh 1850 1850
3 Average calorific value of gas Kcal/SCM 10000 10000
4 Average Cost of Gas Rs./ SCM 8.93 8.93
5 Rate of energy from Gas Ps/ kWh 161.57 176.13
6 Net Generation MU 465 593
Total Cost excluding
7 Rs. Crore 75.08 104.25
Transportation
8 Transportation Cost Rs. Crore 1.79 1.79
9 Total Cost Rs. Crore 76.86 106.04
10 Variable Cost Ps/ kWh 165.42 178.77

Table 181: Variable Cost for BBGTPS

S.No. Description Unit 2010-11 2011-12 2012-13


1 Capacity MW 120 120 120
kcal/
2 Gross Station Heat Rate 3230 3219 3219
kWh
3 Average calorific value of gas kcal/ kg 10569 10566 10564
4 Average Cost of Naptha Rs./ kg 33 41 41
5 Rate of energy from Naptha Ps/ kWh 1028.58 1262.00 1278.15
6 Net Generation MU 52 44 58
7 Total Variable Cost Rs. Crore 53 55 75
* Please refer to the detailed paragraph for BBGTPS given above

Hydro Generating Stations:


6.1.86 The Commission in Previous Tariff Order determined the Primary Energy charges for
hydro generating stations on account of water charges, lubricants etc.. The Primary
energy charges as allowed by the Commission in the Previous Tariff Order for various
Hydro generating circles are tabulated as under:
Table 182: Primary Energy allowed by the Commission in Previous Tariff Order
(Rs. Crore)
Generation
S. No FY 2010-11 FY 2011-12 FY 2012-13
Circles
1 Erode 0.13 0.13 0.13
2 Kundah 0.01 0.01 0.01
3 Kadamparai 0.16 0.16 0.16
4 Tirunelveli 0.21 0.21 0.22

237 | P a g e
6.1.87 TANGEDCO has not discussed the Primary energy charges on account of hydro
generating circles in the Petition. However in the formats, TANGEDCO has submitted
the Primary Energy Charges which are tabulated below:
Table 183: Primary Energy Charges submitted by TANGEDCO
(Rs. Crore)
Generation
S. No FY 2010-11 FY 2011-12 FY 2012-13
Circles
1 Erode 0.03 0.04 0.04
2 Kundah 0.22 0.22 0.23
3 Kadamparai 0.00 0.00 0.00
4 Tirunelveli 0.25 0.25 0.26

Commission’s View:

6.1.88 The Commission observed that the total Primary Energy Charges as submitted by
TANGEDCO are almost same as that approved by the Commission in Previous Tariff
Order. Therefore the Commission has decided to allow Primary charges towards Hydro
generating circles as submitted by TANGEDCO in the Petition. The Primary Energy
Charges as allowed by the Commission in this Order are tabulated below:
Table 184: Primary Energy Charges approved by the Commission
(Rs. Crore)
FY 2010-11 FY 2011-12
Generation
S. No Last
Circles Petition Commission Last Order Petition Commission
Order
1 Erode 0.13 0.03 0.03 0.13 0.04 0.04
2 Kundah 0.01 0.22 0.22 0.01 0.22 0.22
3 Kadamparai 0.16 0.00 0.00 0.16 0.00 0.00
4 Tirunelveli 0.21 0.25 0.25 0.21 0.25 0.25

FY 2012-13
Generation
S. No Last
Circles Petition Commission
Order
1 Erode 0.13 0.04 0.04
2 Kundah 0.01 0.23 0.23
3 Kadamparai 0.16 0.00 0.00
4 Tirunelveli 0.22 0.26 0.26

238 | P a g e
Provisional Tariff for New Hydro Generating Stations:
6.1.89 TANGEDCO has not proposed any Tariff on account of new hydro generating stations.
The Commission for the purpose of calculating the cost on account of energy available
from new hydro generating stations has considered Rs. 3.00 per kWh..

6.1.90 The Commission directs TANGEDCO to submit separate Petition for approval of Capital
Cost and determination of Tariff for New Hydro Generating Stations before next Tariff
determination exercise.

Wind Generating Stations:


6.1.91 The Commission in Previous Tariff Order ruled that in the order No.3 dated 15-05-2006,
the Commission has determined a tariff of Rs.2.75 / unit for the wind power projects
commissioned, and to be commissioned based on agreements executed prior to May 15,
2006. Accordingly the Commission allowed the rate of Rs. 2.75/ Unit in Previous Tariff
Order.

6.1.92 TANGEDCO in its Petition has not discussed the energy charges on account of wind
energy. Also in the formats attached along with the Petition, TANGEDCO has submitted
only capacity charges.
Commission’s View:

6.1.93 . The wind mills of TANGEDCO were installed in between 1986 and 1993.Therefore rate
of Rs. 2.75 per Unit is applicable for TANGEDCO owned Wind Mills. .

6.1.94 The Commission is of the view that since the TANGEDCO owned Wind Mills are not
operating properly and the cost of generation is very high, TANGEDCO should either
shutdown the Wind Mills or re-power the machines. The high cost of generation on
account of usage of old machines cannot be passed on to the consumers.

239 | P a g e
Summary for Own Generation:

Table 185: Summary for Own Generation in FY 2010-11

FY 2010-11
Petition Commission
S. No Particulars Fixed Variable Variable Fixed Variable Variable
Quantum Total Cost Quantum Total Cost
Cost Cost Cost Cost Cost Cost
Rs. Rs.
MU Rs./ kWh Rs. Crore Rs. Crore MU Rs./ kWh Rs. Crore Rs. Crore
Crore Crore
1 ETPS 1176 157 3.61 425 581 1176 125 3.05 358 483
2 TTPS 6523 246 2.86 1865 2110 6523 180 2.49 1622 1802
3 MTPS 5549 157 2.55 1414 1571 5549 123 2.43 1347 1470
4 NCTPS 4110 234 2.10 864 1098 4110 216 1.90 782 998
Subtotal-
I 17358 793 4568 5361 17358 644 4110 4753
Thermal

5 KGTPS 157 42 1.99 31 74 157 12 2.17 34 46


6 BBGTPS 52 40 15.24 79 118 52 49 10.29 53 102
7 TGTPS 649 36 1.51 98 134 610 38 1.76 107 145
8 Valuthur -I 531 64 1.70 90 154 531 46 1.65 88 134
9 Valuthur-II 0
II Subtotal-Gas 1389 182 298 480 1349 146 282 428

10 Erode HEP 767 76 0.00 0 76 64 0 64


11 Kadamparai HEP 1303 41 0.00 0 41 36 0 36
4515
12 Kundah HEP 2155 96 0.00 0 97 83 0 83
13 Tirunelveli HEP 860 43 0.00 0 44 36 0 36
III Subtotal-Hydro 5085 257 0.00 1 257 4515 219 0 1 220
240
FY 2010-11
Petition Commission
S. No Particulars Fixed Variable Variable Fixed Variable Variable
Quantum Total Cost Quantum Total Cost
Cost Cost Cost Cost Cost Cost
Rs. Rs.
MU Rs./ kWh Rs. Crore Rs. Crore MU Rs./ kWh Rs. Crore Rs. Crore
Crore Crore

Tirunelveli &
14 13 15.15 20 20 13 0 2.75 3 3
Udmalpet
IV Subtotal-Wind 13 20 20 13 0 3 3
Total
15 23845 1231 4887 6118 23233 1009 4396 5404
Generation

Table 186: Summary for Own Generation in FY 2011-12

FY 2011-12
Petition Commission
S. No Particulars Fixed Variable Variable Total Fixed Variable Variable Total
Quantum Quantum
Cost Cost Cost Cost Cost Cost Cost Cost
Rs./ Rs.
MU Rs. Crore Rs. Crore MU Rs. Crore Rs./ kWh Rs. Crore Rs. Crore
kWh Crore
1 ETPS 851 252 3.56 303 555 851 95 3.12 266 361
2 TTPS 7018 321 3.19 2236 2557 7018 207 3.04 2130 2337
3 MTPS 6235 187 2.51 1562 1749 6235 142 2.68 1669 1811
4 NCTPS 4621 365 2.05 946 1312 4621 238 2.04 940 1178
5 MTPS (Stage-III) 259 2.81 73 73
Subtotal-
I 18984 1126 5120 6245 18724 682 5006 5688
Thermal

6 KGTPS 382 56 1.93 74 130 457 43 1.85 85 128


7 BBGTPS 90 70 17.50 157 228 44 52 12.62 55 107
241
FY 2011-12
Petition Commission
S. No Particulars Fixed Variable Variable Total Fixed Variable Variable Total
Quantum Quantum
Cost Cost Cost Cost Cost Cost Cost Cost
Rs./ Rs.
MU Rs. Crore Rs. Crore MU Rs. Crore Rs./ kWh Rs. Crore Rs. Crore
kWh Crore
8 TGTPS 654 62 1.67 110 172 650 39 1.76 114 153
9 Valuthur -I 601 629 70 1.89 119 189
104 3.25 195 300
10 Valuthur-II 444 465 0 1.65 77 77
II Subtotal-Gas 2172 293 536 829 2244 204 450 654

11 Erode HEP 846 100 0.00 0.04 100 69 0 69


12 Kadamparai HEP 1279 60 0.00 0.00 60 39 0 39
4701
13 Kundah HEP 2497 141 0.00 0.22 142 86 0 87
14 Tirunelveli HEP 939 61 0.00 0.25 62 43 0 43
III Subtotal-Hydro 5561 363 0.51 363 4700.9431 237 1 237

Tirunelveli &
15 20 0 17.78 36 36 11.31 0 2.75 3 3
Udmalpet
IV Subtotal-Wind 20 0 36 36 11 0 3 3
Total-Own
16 26737 1781 5692 7473 25680 1123 5459 6582
Generation

242
Table 187: Summary for Own Generation in FY 2012-13

FY 2012-13
Petition Commission
S. No Particulars Fixed Variable Variable Total Fixed Variable Variable Total
Quantum Quantum
Cost Cost Cost Cost Cost Cost Cost Cost
Rs./ Rs.
MU Rs. Crore Rs. Crore MU Rs. Crore Rs./ kWh Rs. Crore Rs. Crore
kWh Crore
1 ETPS 1361 307 3.44 468 775 680 196 3.08 209 405
2 TTPS 6896 414 3.45 2379 2793 6938 227 2.98 2070 2297
3 MTPS 5971 237 2.76 1647 1884 5960 154 2.70 1608 1761
4 NCTPS 4184 466 2.22 927 1393 4391 258 2.12 932 1190
NCTPS (Stage-
5 1760 2.52 444 444
II) (Unit-I)
2130 3.33 709 709
NCTPS (Stage-
6 3030 2.52 763 763
II) (Unit-2)
7 MTPS Stage-III 1913 2.96 566 566
3528 3.16 1113 1113
8 MTPS Stage-III 1515 2.96 448 448
Subtotal-
I 24070 1424 7244 8668 26186 834 7041 7875
Thermal

9 Kuttalam 590 73 1.81 107 180 592 48 1.80 107 154


10 Basin 121 96 17.92 217 313 58 56 12.78 75 130
11 TGTPS 581 84 1.72 100 184 611 43 1.76 108 151
12 Valuthur -I 611 614 86 1.78 109 195
144 3.53 216 360
13 Valuthur-II 592 593 0 1.79 106 106
II Subtotal-Gas 2495 397 640 1037 2469 232 504 736

14 Erode HEP 916 132 0.00 0 132 97 0 97


5110
15 Kadamparai HEP 1385 77 0.00 0 77 44 0 44

243
FY 2012-13
Petition Commission
S. No Particulars Fixed Variable Variable Total Fixed Variable Variable Total
Quantum Quantum
Cost Cost Cost Cost Cost Cost Cost Cost
Rs./ Rs.
MU Rs. Crore Rs. Crore MU Rs. Crore Rs./ kWh Rs. Crore Rs. Crore
kWh Crore
16 Kundah HEP 2706 186 0.00 0 186 95 0 96
17 Tirunelveli HEP 1018 73 0.00 0 73 49 0 49
New Hydro
18 132 3.00 40 40
addition
III Subtotal-Hydro 6025 469 1 469 5242 285 40 325

Tirunelveli &
19 21 0 24.66 52 52 11.31 2.75 3 3
Udmalpet
IV Subtotal-Wind 21 0 52 52 11 0 3 3 3
Total-Own
20 32611 2290 7936 10226 33908 1351 7589 8939
Generation

244
7 POWER PURCHASE COST FROM OTHER SOURCES

Merit Order Ranking:


7.1.1 The Commission in accordance with Regulation 75 (1) of TNERC (Terms and
Conditions for Determination of Tariff) Regulations, 2005 has determined the power
purchase cost for various sources from which energy is available in FY 2012-13.
Regulation 75(1) of the TNERC (Terms and Condition for Determination of Tariff)
Regulation, 2005 states as under:
“75. Cost of Power Purchase
1. The Distribution Licensee shall procure power on least cost basis and strictly on
Merit Order Despatch and shall have flexibility to procure power from any
source in the country”.

7.1.2 For the purpose of determination of power purchase cost, the Commission has followed
the methodology given below:
a. Firstly, the total energy calculated by the Commission in this Order has been
considered for Must-Run Power Plants. The total energy available from Must-Run
Power Plants is given below:

Table 188: Energy available from Must-Run Power Plants during FY 2012-13
(MU)
Name of Power
Petition Commission
Plant
Kaiga 1178 1178
MAPS 1508 1508
Additions
Kaiga APS 0 0
Kudankulam 3245 1716
MAPS
Additional 256 518
Total 6187 4920

b. Secondly, the total energy calculated by the Commission in this Order has been
considered for TANGEDCO’s own generating stations in FY 2012-13 whichis
tabulated below:

245
Table 189: Energy available from TANGEDCO’s own generating stations during
FY 2012-13
(MU)
Power Stations Petition Commission
Thermal Power
24070 26186
Stations
Gas Turbine
2495 2469
Power Stations
Hydel
6025 5242
Generation
Wind Mills 21 11
Total 32611 33908

c. Thirdly, the Commission has considered the energy available from CPP and Non-
Conventional Energy Sources such as Private Wind Mills, Solar, Hydro,
Cogeneration etc. The total energy available from various Non–conventional energy
sources have been given below:

Table 190: Energy available from NCES and CPP during FY 2012-13
(MU)
FY 2012-13
S. No Power Plant Last Year
Petition Commission
Order
1 CPP 371 580 582
2 Solar 0 11 11
3 Wind 10487 9988 5408
4 Cogeneration 1276 1469 1202
5 Biomass 111 120 56
6 Total Quantum 12245 12168 7258

d. After factoring in the energy available from all the above listed sources, the
Commission has allowed the remaining energy to be purchased as per the energy
requirement calculated by the Commission on Merit Order Ranking basis. The
energy required to be purchased on Merit Order Despatch basis is given below:

246
Table 191: Balance energy required to be purchased through Merit Order Ranking
for FY 2012-13

Particulars Energy (MU)


Energy requirement 70784
Less: Energy available through 4920
Must-Run Plants
Less: Net Energy Available 33908
through own generation
Energy to be purchased in MU 31957
Less: Energy available through
7258
NCES and CPP
Energy required to be
purchased through Merit 24698
Order Ranking

e. The Commission has prepared the Merit Order Despatch on the basis of variable cost
of various power plants. The Commission has considered Merit Order Despatch upto
the 24698 MU on the basis of calculation shown above. The power plants will be
scheduled in accordance with the increasing trend of variable cost. On the basis of
variable cost, following power plants will get despatched in accordance with Merit
Order Ranking:
Table 192: Merit Order Ranking for available sources

Energy to be Cumulative
Variable Cost Energy Cumulative purchase as Energy as
S. No Other Plants
(Rs./ kWh) Available (MU) Energy (MU) per MOD per MOD
(MU) (MU)
Power Plants required to be desptached as per MOD
NTPC SR (I
1 & II) 1.68 4164 4164 4164 4164
2 NLC-TS-I 1.73 3066 7230 3066 7230
3 Penna 1.84 375 7605 375 7605
4 ABAN 1.86 810 8415 810 8415
NLC-TS-I
5 Expansion 1.91 1624 10039 1624 10039
NTPC SR
6 (III) 1.92 1125 11164 1125 11164
NLC-TS-II
7 (Stage-I) 1.95 3272 14436 3272 14436

247
Energy to be Cumulative
Variable Cost Energy Cumulative purchase as Energy as
S. No Other Plants
(Rs./ kWh) Available (MU) Energy (MU) per MOD per MOD
(MU) (MU)
NLC-TS-II
8 Expansion 2.00 1318 15754 1318 15754
9 Simahadri 2.33 1415 17169 1415 17169
NTPC -
10 Talcher II 2.38 3705 20874 3705 20874
11 ST-CMS 2.52 1795 22669 1795 22669
NTPC-TNEB
12 (JV) 2.90 2896 25565 2029 24698

f. The fixed cost has been allowed for the Power Plants which are not scheduled as per
Merit Order Despatch shown above. These Power Plants are listed below:
i. NTPC-Eastern Region (NTPC-ER)
ii. PPN
iii. GMR
iv. Samalpatti
v. Madurai
g. The Merit Order Despatch shown above has been considered assuming an idealistic
scenario in which the energy is available from all the Power Plants listed in the Merit
Order Ranking throughout the year. However due to corridor constraints, power flow
from other regions may become difficult and other power plants may also get dispatched.
Also with lifting of R&C, the demand may increase and go beyond the estimates
resulting in dispatch of other available sources. TANGEDCO shall follow the MOD and
try to optimize the power purchase cost on the basis of Merit Order Ranking shown
above. For traders, TANGEDCO is directed to take prior approval of the Commission
before purchasing energy beyond the quantum and rate specified by the Commission for
FY 2012-13 in this Tariff Order.

Power Purchase Cost:


7.1.3 The Commission in accordance with Regulation 75 of TNERC (Terms and Conditions
for Determination of Tariff) Regulations, 2005 has determined the power purchase cost
for various sources from which energy is available in FY 2012-13. Regulation 75 of the
TNERC (Terms and Condition for Determination of Tariff) Regulation, 2005 states as
under:

248
“75. Cost of Power Purchase

3. The cost of power purchased from Central Generating Company shall be worked
out based on tariff determined by the Central Electricity Regulatory Commission.
4. The cost of power purchased from IPPs shall be considered based on Power
Purchase Agreement.
5. In case of power purchased from Captive Generators and other non conventional
energy sources, the cost shall be worked out as per the policy approved by the
Commission”.

Power Purchase from Central Generating Stations:

7.1.4 The Commission in the previous Tariff Order adopted the tariff proposed by NTPC in its
Tariff Petitions before the CERC with 5% escalation on the energy charges to take care
of fuel cost adjustments for the purpose of estimating power from various CGS Stations
(except nuclear stations). The Commission also estimated the Transmission charges
payable to PGCIL with reference to the Petition submitted before CERC. For upcoming
power projects the Commission referred to the similar capacity stations at same locations.
For new nuclear projects, the Commission assumed tariff at the rate of Rs. 3.50/ Unit.
The Power Purchase cost as allowed by the Commission in Previous Tariff Order has
been tabulated below:

Table 193: Power Purchase Quantum and Cost as approved by the Commission in
Previous Tariff Order
2010-11 2011-12 2012-13
S. No Stations Quantum Cost Quantum Cost Quantum Cost
Rs. Rs. Rs.
MU MU MU
Crore Crore Crore
CGS
Neyveli TS-
1 3250 998.96 2996 1007.51 2996 1143.62
I
Neyveli TS-
2 2842 713.07 2842 751.87 2842 760.2
II
3 Neyveli TS- 1434 416.63 1434 461.06 1434 474.9
Expansion
NTPC SR I
4 3913 807.72 3913 818.08 3913 824.68
& II

249
2010-11 2011-12 2012-13
S. No Stations Quantum Cost Quantum Cost Quantum Cost
Rs. Rs. Rs.
MU MU MU
Crore Crore Crore
NTPC SR
5 965 201.92 965 202.19 965 201.62
III
6 NTPC – 3636 723.94 3577 719.03 3577 720
Talcher-II
NTPC – ER
7 & Spl 743 169.71 743 170.63 743 171.69
allotment
8 NTPC – 1076 796.29 926 703.78 926 683.02
Kayankulam
9 Maps 1431 276.34 1431 276.34 1431 276.34
10 Kaiga 911 291.68 911 291.68 911 291.68
CGS
Additions
11 NLC TS II 299 91.19 1750 565.59 1750 596.59
Expansion
NTPC
12 0 0 872 284.86 1026 320.14
Simhadri
NTPC -
13 TNEB JV at 0 0 1615 397.29 6510 1601.46
Vallur
NLC -
14 TNEB JV at 0 0 0 0 1688 492.9
Tuticorin
15 Kaiga APS 0 0 221 77.35 221 77.35
Kudankulam
16 848 296.8 3137 1097.95 3766 1318.1
APS
Kalpakkam
17 0 0 0 0 1024 358.4
PFBR
18 Power Grid 0 512 0 538 0 564.9
Total CGS 21348 6296.26 27333 8363.21 35723 10877.6

7.1.5 TANGEDCO in its Petition submitted that the power purchase expenditure for FY 2010-
11 is based upon the actual expenditure during the year. TANGEDCO further submitted
that the projection of power purchase cost during the current year has been made based
on the availability of power during FY 2010-11 from these stations. TANGEDCO also
submitted that the energy forecast plan for FY 2011-12 and FY 2012-13 has been based
250
on detailed station-wise analysis of monthly energy sent out and the consequent energy
availability from generating stations during that period. TANGEDCO has referred to its
share from the CGS as notified by GOI for calculating energy availability. The power
purchase cost for the Central Generating Stations as projected by TANGEDCO is
tabulated below:
Table 194: Power Purchase Quantum and Cost as submitted by TANGEDCO in the
Petition
FY 2010-11 FY 2011-12 FY 2012-13

Quantum Cost Quantum Cost Quantum Cost


S. No Particulars
Rs. Rs.
MU MU MU Rs. Crore
Crore Crore
1 NLC-TS-I 3066 630 3066 676 3066 692
NLC-TS-II
2 (Stage-I)
3042 532 3242 679 3272 708
NLC-TS-II
(Stage-II)
NLC-TS-I
3 Expansion 1509 453 1609 484 1624 494
NTPC SR (I &
4 II) 4039 806 4139 897 4164 932
5 NTPC SR (III) 1024 262 1105 302 1125 311
6 NTPC ER 735 224 885 323 897 340
NTPC - Talcher
7 II 3664 909 3690 1045 3705 1061
8 Kayankulam 854 786 250 369 0 0
9 MAPS 1398 277 1498 306 1508 321
10 KAIGA 860 263 1107 347 1178 364
11 Simahadri 0 0 328 95 925 268
12 Kudankulam 0 0 333 100 3245 1022
NLC-TS-II
13 Expansion 0 0 1295 259 2135 427
14 MAPS (Addl.) 0 0 0 0 256 77
15 PGCIL SR&ER 0 457 0 480 0 504
NTPC-TNEB
16 (JV) 0 0 0 0 3465 1005
17 UI 1441 472 750 270 145 60
17 Total 21632 6071 23297 6632 30710 8586

251
Commission’s View:

7.1.6 As regards FY 2010-11, the Commission has considered the expenses on account of
power purchase from CGS as submitted by TANGEDCO in the petition. The
Commission for the purpose of determination of power purchase cost from CGS has
referred to the Final Tariff Orders and Provisional Tariff Orders issued by Central
Electricity Regulatory Commission for various Central Generating Stations. The
Commission observed that TANGEDCO has submitted its share in MW out of the total
capacity (MW) of various Central Generating Stations vide its letter dated February 2,
2012. The total share as submitted by TANGEDCO is tabulated below:
Table 195: Share of TANGEDCO submitted in the Petition
(MW)
Share from
Stations Total Capacity Firm Share
unallocated capacity
NLC TS - I 600 475 0
NLC TS - II 1470 441 32
NLC TS I -
Expn. 420 193 33
NTPC SR (I &
II) 2100 470 73
NTPC ER 3440 135.12 0
NTPC SR (III) 500 118 18
NTPC - Talcher
II 2000 477 26
Kayankulam 360 0 0
MAPS 440 327 4
Kaiga 880 195.5 32
Simahadri 1000 99 18
Kudankulam 2000 925 0
NLC TS-II 500 230 0
MAPS Addl. 500 167 0

7.1.7 CERC has issued provisional orders and final orders for the Second Control Period, i.e.,
from FY 2009-10 to FY 2013-14 for some Central Generating Stations whereas some are
still pending. The relevant details from the latest Order from FY 2009-10 to FY 2013-14
available on the website of CERC are tabulated below:

252
Table 196: Capacity charges for CGS as per CERC Orders
(Rs. Crore)
Capacity
Particulars Order FY 2011-12 FY 2012-13
(MW)
NLC-II (Stage-I) 630 T.O. dated 27.06.2011 214.75 229.86
NLC-II (Stage-II) 840 T.O. dated 27.06.2011 298.74 306.13
NLC TS-I
420 T.O. dated 31.08.2010 382.48 371.17
Expansion
NTPC (SR)-
Ramagundam (I & 2100 T.O. dated 6.7.2011 771.06 808.99
II)
NTPC-SR Stage-III 500 T.O. dated 6.7.2011 328.01 326.05
NTPC Kayankulam 360 T.O. dated 6.7.2011 250.59 210.20
NTPC Talcher
2000 T.O. dated 29.12.2011 983.61 983.61
Stage-II
Provisional T.O. dated
1000 567.06 567.06
Simhadri 29.09.2011

7.1.8 In its revised submission dated February 1, 2012, TANGEDCO revised the capacity
charges and variable charges on account of CGS Stations. The Commission has
considered the same for further calculations. For approval of capacity charges for FY
2011-12 and FY 2012-13, the Commission has referred to the capacity charges from
those CERC Orders in respect of the stations where CERC has issued provisional orders
or final orders. For other stations, the Commission has approved the capacity charges for
FY 2011-12 as submitted by TANGEDCO in its revised submission based on 9 months
actuals and 3 months projections. Similarly for FY 2012-13, the Commission has
approved the capacity charges as submitted by TANGEDCO in the Petition for those
stations where no latest orders of CERC are available.

7.1.9 As regards variable charges, the Commission has considered the variable charges
submitted by TANGEDCO in its revised submission dated February 1, 2012. The
Commission has further considered an escalation of 5% over the variable charges
approved during FY 2011-12.

7.1.10 For new stations, the Commission observed that TANGEDCO has not submitted any
capacity charges. The Commission has considered the variable charges as submitted by
TANGEDCO in its Petition for new stations during FY 2011-12 and FY 2012-13.

253
7.1.11 For NTPC-ER, the Commission has considered only the fixed cost in FY 2012-13 in
accordance with Merit Order Ranking.

7.1.12 The power purchase cost approved by the Commission for various CGS Stations is
tabulated below:
Table 197: Total Power Purchase Cost in FY 2010-11 as approved by the Commission

Petition Commission
S. Capacity Energy Total Capacity Energy Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU MU
Crore kWh Crore Crore kWh Crore
1 NLC-TS-I 3066 152 1.56 630 3066 152 1.56 630
NLC-TS-II
2 (Stage-I)
3042 106 1.40 532 3042 106 1.40 532
NLC-TS-II
3 (Stage-II)
NLC-TS-I
4 Expansion 1509 189 1.75 453 1509 189 1.75 453
NTPC SR (I
5 & II) 4039 151 1.62 806 4039 151 1.62 806
NTPC SR
6 (III) 1024 91 1.67 262 1024 91 1.67 262
7 NTPC ER 735 47 2.40 224 735 47 2.40 224
NTPC -
8 Talcher II 3664 270 1.75 909 3664 270 1.75 909
9 Kayankulam 854 117 7.83 786 854 117 7.83 786
10 MAPS 1398 0 1.98 277 1399 0 1.98 277
11 KAIGA 860 0 3.06 263 860 0 3.06 263
12 UI 1441 0 3.27 472 1441 0 3.27 472
13 Total 21633 1123 5613 21633 1123 5613

Table 198: Total Power Purchase Cost in FY 2011-12 as approved by the Commission
Petition Commission
S. Capacity Energy Total Capacity Energy Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU MU
Crore kWh Crore Crore kWh Crore
1 NLC-TS-I 3066 140 1.75 676 3066 151 1.64 655
NLC-TS-II
2 (Stage-I)
3242 105 1.77 679 3242 165 1.86 769
NLC-TS-II
3 (Stage-II)
254
Petition Commission
S. Capacity Energy Total Capacity Energy Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU MU
Crore kWh Crore Crore kWh Crore
NLC-TS-I
4 Expansion 1609 184 1.86 484 1609 211 1.82 505
NTPC SR (I
5 & II) 4139 149 1.81 897 4139 199 1.60 504
NTPC SR
6 (III) 1105 89 1.92 302 1105 89 1.83 862
7 NTPC ER 885 49 3.10 323 885 76 2.81 291
NTPC -
8 Talcher II 3690 243 2.17 1045 3690 247 2.26 324
9 Kayankulam 250 110 10.34 369 205 64 9.87 1082
10 MAPS 1498 0 2.04 306 1499 0 2.03 267
11 KAIGA 1107 0 3.13 347 1107 0 3.16 304
12 Simahadri 328 0 2.90 95 328 33 2.22 349
13 Kudankulam 333 0 3.00 100 0 0 0.00 106
NLC-TS-
14 IIExpansion 1295 0 2.00 259 0 0 0.00 0
15 UI 750 0 3.60 270 750 0 3.60 0
16 Total 23297 6152 21625 5784

Table 199: Total Power Purchase Cost in FY 2012-13 as approved by the Commission

Petition Commission
S. Capacity Energy Total Capacity Energy Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU MU
Crore kWh Crore Crore kWh Crore
1 NLC-TS-I 3066 129 1.84 692 3066 129 1.73 658
NLC-TS-II
2 (Stage-I)
3272 105 1.84 708 3272 172 1.95 812
NLC-TS-II
3 (Stage-II)
NLC-TS-I
4 Expansion 1624 179 1.94 494 1624 205 1.91 516
NTPC SR (I
5 & II) 4164 147 1.89 932 4164 209 1.68 909
NTPC SR
6 (III) 1125 88 1.98 311 1125 89 1.92 305
7 NTPC ER 897 52 3.21 340 52 52
255
Petition Commission
S. Capacity Energy Total Capacity Energy Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU MU
Crore kWh Crore Crore kWh Crore
NTPC -
8 Talcher II 3705 218 2.27 1061 3705 247 2.38 1127
9 Kayankulam 0 0 0.00 0 0 0 0.00 0
10 MAPS 1508 0 2.13 321 1508 0 2.13 321
11 KAIGA 1178 0 3.09 364 1178 0 3.31 390
12 Simahadri 925 0 2.90 268 1415 0 2.33 330
13 Kudankulam 3245 0 3.15 1022 1716 0 3.15 540
NLC-TS-II
14 Expansion 2135 0 2.00 427 1318 0 2.00 264
MAPS
15 (Addl.) 256 0 3.00 77 518 0 3.00 155
NTPC-TNEB
16 (JV) 3465 0 2.90 1005 2029 0 2.90 588
17 UI 145 0 4.14 60 0 0 0.00 04
18 Total 30710 8082 26638 7473

7.1.13 As regards PGCIL cost, the Commission has considered the same in accordance with the
submission of TANGEDCO from FY 2010-11 to FY 2012-13. The PGCIL Cost as
approved by the Commission from FY 2010-11 to FY 2012-13 in this Order is tabulated
below:
Table 200: PGCIL Cost approved by the Commission
(Rs. Crore)
FY 2010-11 FY 2011-12 FY 2012-13
Particulars Revised Revised
Petition Approved Petition Approved Petition Approved
Submission Submission
PGCIL
457 457 457 480 480 480 504 504
Cost

Power Purchase from Independent Power Producers:

7.1.14 The Commission in the Previous Tariff Order estimated the cost from IPPs with reference
to PPAs. The Power Purchase Cost corresponding to the Power Purchase Quantum of
IPPs as approved by the Commission is tabulated below:

256
Table 201: Power Purchase Quantum and Cost from Independent Power Producers as per
Previous Tariff Order
FY 2010-11
S. Variable
Particulars Quantum Fixed Charges Cost
No Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 1300 173 6.58 1028.45
b Samalpatti 300 100 7.04 310.64
c PPN 2259 297 3.13 1003.59
d Madurai 540 108 6.17 440.86
e ST-CMS 1809 259 1.48 526.06
f ABAN 850 0 2.26 192.1
g Penna 400 0 2.74 109.6
h Total 7458 936 3611

S. FY 2011-12
Particulars
No Fixed Variable
Quantum Cost
Charges Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 300 174 6.91 382
b Samalpatti 150 99 7.39 210
c PPN 1406 293 3.28 755
d Madurai 179 105 6.48 221
e ST-CMS 1574 250 1.55 494
f ABAN 850 2.37 202
g Penna 400 2.88 115
h Total 4859 921 2379

S. FY 2012-13
Particulars
No
Variable
Quantum Fixed Charges Cost
Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 300 176 7.26 394
b Samalpatti 150 99 7.76 215
c PPN 1441 293 3.45 788
d Madurai 151 105 6.80 208
e ST-CMS 1574 241 1.63 498
f ABAN 850 2.44 208
g Penna 400 2.96 119
257
S. FY 2012-13
Particulars
No
Variable
Quantum Fixed Charges Cost
Charges
MU Rs. Crore Rs./ kWh Rs. Crore
h Total 4866 914 2430

7.1.15 TANGEDCO submitted in its Petition that it has entered into Power Purchase
Agreements with several Independent Power Producers for purchasing electricity. It
further submitted that the procurement from various sources is expected to be lower in
the wake of planned procurement from the less expensive sources such as Talcher,
Southern Region and Eastern Region. The Power Purchase cost as submitted by
TANGEDCO in its Petition from FY 2010-11 to FY 2012-13 is tabulated below:

Table 202: Power Purchase Quantum and Cost as submitted by TANGEDCO in the
Petition
FY 2010-11
S. Variable
Particulars Quantum Fixed Charges Total Cost
No Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 875 153 7.15 779
b Samalpatti 378 100 7.54 385
c PPN 2494 336 3.47 1202
d Madurai 353 107 7.46 370
e ST-CMS 1652 303 2.00 633
f ABAN 820 116 1.58 246
g Penna 370 59 1.59 118
h Total 6942 1174 3732

FY 2011-12
S. Variable
Particulars Quantum Fixed Charges Total Cost
No Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 795 146 9.52 902
b Samalpatti 575 117 9.74 678

258
FY 2011-12
S. Variable
Particulars Quantum Fixed Charges Total Cost
No Charges
MU Rs. Crore Rs./ kWh Rs. Crore
c PPN 2375 328 6.10 1777
d Madurai 575 132 10.02 708
e ST-CMS 1780 310 2.19 700
f ABAN 801 115 1.77 256
g Penna 365 61 1.75 125
h Total 7266 1209 5146

FY 2012-13
S. Variable
Particulars Quantum Fixed Charges Total Cost
No Charges
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 495 154 10.86 692
b Samalpatti 575 94 11.21 738
c PPN 2395 309 8.20 2273
d Madurai 575 140 12.02 831
e ST-CMS 1795 317 2.52 769
f ABAN 810 110 1.86 261
g Penna 375 60 1.84 128
h Total 7020 1183 5692

Commission’s View:

7.1.16 As regards FY 2010-11, TANGEDCO has submitted the actual power purchase cost
corresponding to the quantum purchased from Independent Power Producers. Since
TANGEDCO has submitted the actual expenses, the Commission has allowed the power
purchase cost corresponding to the quantum purchased from IPPs.

7.1.17 As regards the projection of power purchase cost of various IPPs in FY 2011-12 and FY
2012-13, the Commission asked TANGEDCO to submit the basis of projection.
TANGEDCO in its reply submitted the different assumptions made in respect of power to
be purchased from various IPPs. As regards variable cost, TANGEDCO submitted that it
has considered an escalation of 15-20% in the projection of variable cost for FY 2012-13.

259
7.1.18 TANGEDCO revised the cost of power purchase from various IPPs in FY 2010-11 and
FY 2011-12. The revised data submitted by TANGEDCO is tabulated below:
Table 203: Revised data submitted by TANGEDCO
FY 2010-11 FY 2011-12
S. Fixed Variable Total Fixed Variable Total
Particulars Quantum Quantum
No Charges Charges Cost Charges Charges Cost
Rs. Rs./ Rs. Rs. Rs./ Rs.
MU Crore kWh Crore MU Crore kWh Crore
a GMR 875 153 7.15 779 962 146 9.52 1062
b Samalpatti 378 100 7.54 385 351 117 9.74 459
c PPN 2496 336 3.47 1202 1483 328 6.10 1233
d Madurai 353 107 7.46 370 333 132 10.02 466
e ST-CMS 1653 303 2.00 633 1711 310 2.19 684
f ABAN 820 116 1.58 246 776 115 1.77 252
g Penna 370 59 1.59 118 366 61 1.75 125
h Total 6945 1173 3732 5982 1209 4281

7.1.19 The variable cost for various IPPs as observed from the power purchase bills is tabulated
below:
Table 204: Variable Cost as observed from the bills
Variable Cost
S. No Particulars
Range (Rs./ kWh)
1 Madurai PPCL 8.66-10.58
2 Lanco Tanjore-ABAN 1.69-1.90
3 Penna 1.69-1.95
4 ST-CMS 1.82-2.12
5 GMR 7.94-9.80
6 Samalpatti 8.36-10.46
7 PPN 4.21-7.29

7.1.20 In view of the above, the Commission feels that the fixed and variable cost claimed by
TANGEDCO in respect of various IPPs is considered for FY 2011-12 and FY 2012-13.
Further the Commission has allowed only fixed cost for those IPPs which do not get
scheduled as per Merit Order Despatch discussed in earlier section. Wherever the Power
Stations are to despatched outside Merit Order, TANGEDCO shall obtain approval of the
Commission in advance by furnishing reasons for such action. In case of emergencies

260
TANGEDCO is permitted to resort to such a practice but will approach the Commission
within a week of such action along with the reasons for such action. The Power Purchase
Cost allowed by the Commission during FY 2011-12 and FY 2012-13 is tabulated below:

Table 205: Total Cost as considered by the Commission


FY 2010-11
Variable
S. Quantum Fixed Charges Total Cost
Particulars Charges
No
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 875 153 7.15 779
b Samalpatti 378 100 7.54 385
c PPN 2494 336 3.47 1202
d Madurai 353 107 7.46 370
e ST-CMS 1652 303 2.00 633
f ABAN 820 116 1.58 246
g Penna 370 59 1.59 118
h Total 6942 1174 3732

FY 2011-12
S. Variable
Particulars
No Quantum Fixed Charges Charges Total Cost
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 962 146 9.52 1062
b Samalpatti 351 117 9.74 459
c PPN 1483 328 6.10 1233
d Madurai 333 132 10.02 466
e ST-CMS 1711 310 2.19 684
f ABAN 776 115 1.77 252
g Penna 366 61 1.75 125
h Total 5982 1209 4281

FY 2012-13
S. Variable
Particulars
No Quantum Fixed Charges Charges Total Cost
MU Rs. Crore Rs./ kWh Rs. Crore
a GMR 154 154
b Samalpatti 94 94
261
FY 2012-13
S. Variable
Particulars
No Quantum Fixed Charges Charges Total Cost
MU Rs. Crore Rs./ kWh Rs. Crore
c PPN 309 309
d Madurai 140 140
e ST-CMS 1795 317 2.52 769
f ABAN 810 110 1.86 261
g Penna 375 60 1.84 128
h Total 2980 1183 1855

Power Purchase from NCES and Captive Power Plants:

7.1.21 The Commission in the Previous Tariff Order for TNEB estimated the cost from NCES
sources in accordance with the respective Tariff Orders issued by the Commission. The
Power Purchase Cost corresponding to the Power Purchase Quantum of NCES and
Captive Power Plants as approved by the Commission is tabulated below:
Table 206: Power Purchase Cost approved by the Commission in Previous Tariff Order
FY 2010-11
S. No Particulars Quantum Variable Cost Total Cost
MU Rs./ kWh Rs. Crore
1 CPP 671 3.84 258
2 Solar 0 0 0
3 Wind 9458 3.59 3399
4 Cogeneration 810 3.92 318
5 Biomass 111 4.66 52
6 Total 11050 4027

FY 2011-12
Quantum Variable Cost Total Cost
S. No Particulars
MU Rs./ kWh Rs. Crore

1 CPP 571 3.84 219.26


2 Solar 0 0 0.00
3 Wind 9973 3.59 3584.30
4 Cogeneration 1038 4.91 509.66
5 Biomass 111 4.80 53.31

262
FY 2011-12
Quantum Variable Cost Total Cost
S. No Particulars
MU Rs./ kWh Rs. Crore

6 Total 11693 4367

FY 2012-13
S. No Particulars Quantum Variable Cost Total Cost
MU Rs./ kWh Rs. Crore
1 CPP 371 3.84 142.46
2 Solar 0 0 0.00
3 Wind 10487 3.59 3769.03
4 Cogeneration 1276 4.91 626.52
5 Biomass 111 4.80 53.31
6 Total 12245 4591.32

7.1.22 TANGEDCO submitted that it has entered into agreements with a few private energy
generators owning captive generating sources and cogeneration sources, which pump
their surplus power into the Grid. In addition, private wind power producers also sell
power to TANGEDCO based on the options exercised by them. The estimation of the
quantity of power likely to be made available for sale is based on prevailing trends. The
Power Purchase Cost as submitted by TANGEDCO in the Petition towards NCES is
tabulated below:
Table 207: Power Purchase Quantum and Cost towards NCES Sources as submitted by
TANGEDCO in the Petition

FY 2010-11
MU Rs./ kWh Rs. Crore
S. No Particulars
Quantum Variable Cost Total Cost

1 CPP 460 3.50 161


2 Solar 2 4.49 1
3 Wind 8707 3.38 2944
4 Cogeneration 997 3.52 351
5 Biomass 110 4.47 49

263
FY 2010-11
MU Rs./ kWh Rs. Crore
S. No Particulars
Quantum Variable Cost Total Cost

6 Total 10276 3506

FY 2011-12
MU Rs./ kWh Rs. Crore
S. No Particulars
Quantum Variable Cost Total Cost

1 CPP 575 4.23 243


2 Solar 10 4.74 5
3 Wind 9245 3.38 3125
4 Cogeneration 1135 3.60 409
5 Biomass 115 4.54 52
6 Total 11080 3834

FY 2012-13
MU Rs./ kWh Rs. Crore
S. No Particulars
Quantum Variable Cost Total Cost

1 CPP 580 4.44 258


2 Solar 11 4.77 5
3 Wind 9988 3.38 3376
4 Cogeneration 1469 3.78 555
5 Biomass 120 4.77 57
6 Total 12168 4251

Commission’s View:

7.1.23 As regards FY 2010-11, TANGEDCO has submitted the actual power purchase cost
corresponding to the quantum purchased on account of NCES and Captive Power Plants.
Since TANGEDCO has submitted actual expenses pertaining to NCES and CPPs, the
Commission has allowed the power purchase cost corresponding to the quantum
purchased from NCES and CPPs.

264
7.1.24 For projection of power purchase cost in FY 2011-12 and FY 2012-13, the Commission
asked TANGEDCO to submit the basis of power purchase cost in FY 2011-12 and FY
2012-13. In reply TANGEDCO submitted the following:
a. Projection of CPP, Cogeneration and Biomass Power Plants: 5% escalation has been
taken for projection of power purchase cost in FY 2011-12 (Second Half-H2) considering
actual in first six months of FY 2011-12 as the base and further 5% escalation on total of
FY 2011-12 to arrive at power purchase cost in FY 2012-13.
b. Solar Power under RPSSP Scheme of National Solar Mission: Rs. 6.21/ Unit as the base
rate in FY 2011-12 and further 3% escalation on base rate of Rs. 6.21/ Unit in FY 2012-
13
c. Solar Plant: Rs. 4.50 per Unit as determined by the Commission in Order 6-1 dated
September 22, 2009.
d. Wind energy: Since wind is infirm power, an incremental increase of 6% in FY 2011-12
considering FY 2010-11 as the base and further 15% increase in FY 2012-13 considering
FY 2011-12 as the base.

7.1.25 As regards Power purchase cost from CPP and NCES Sources other than Solar,
TANGEDCO submitted revised cost on account of power purchased and energy wheeled
from FY 2010-11 to FY 2012-13 which is tabulated below:
Table 208: Revised Submission for Wheeled Energy from FY 2010-11 to FY 2012-13
Cost for wheeled
Power PP Cost (Rs. Wheeled
Particulars energy (Rs.
Purchase (MU) Crore) Energy (MU)
Crore)
Wind
FY 2010-11 5263 1585 3169 1267
FY 2011-12 5130 1545 3942 1577
FY 2012-13 5408 1629 4141 1657

Cogeneration
FY 2010-11 997 351 351 140
FY 2011-12 1135 409 400 160
FY 2012-13 1202 430 456 182

Biomass
FY 2010-11 110 49 0 0
FY 2011-12 115 52 0 0

265
Cost for wheeled
Power PP Cost (Rs. Wheeled
Particulars energy (Rs.
Purchase (MU) Crore) Energy (MU)
Crore)
FY 2012-13 56 25 0 0

CPP
FY 2010-11 460 161 595 238
FY 2011-12 575 243 673 269
FY 2012-13 582 258 762 305

7.1.26 The Commission has considered the above data submitted by TANGEDCO for
calculation of Power Purchase Cost from all NCES Sources except Solar and CPP.

7.1.27 As regards cost of energy wheeled in case of Captive Power Plants and other sources, the
Commission is of the view that it is not correct to include the same in power purchase
cost and it should be treated separately.

7.1.28 For power purchase cost on account of solar energy sources, the Commission is of the
view that the escalation rates and the methodology adopted by TANGEDCO in projection
of power purchase cost from Solar units are reasonable. Therefore the Commission has
considered the same for allowing the Power Purchase Cost on account of Solar Power
Plants.
Table 209: Power Purchase Cost approved by the Commission for various NCES Sources

FY 2010-11
Particulars Quantum Cost (Rs. Rate (Rs./
(MU) Crore) kWh)
CPP 460 161 3.50
Solar 2.07 0.93 4.50
Wind 5263 1585 3.01
Cogeneration 997 351 3.52
Biomass 110 49 4.47
Sub-total-NCES 6833 2147 3.14

266
FY 2011-12
Particulars Quantum Cost (Rs. Rate (Rs./
(MU) Crore) kWh)
CPP 575 243 4.23
Solar 10.44 4.87 4.67
Wind 5130 1545 3.01
Cogeneration 1135 409 3.60
Biomass 115 52 4.54
Sub-total-NCES 6965 2254 3.24

FY 2012-13
Particulars Quantum Cost (Rs. Rate (Rs./
(MU) Crore) kWh)
CPP 582 258 4.43
Solar 10.78 5.14 4.77
Wind 5408 1629 3.01
Cogeneration 1202 430 3.58
Biomass 56 25 4.54
Sub-total-NCES 7258 2347 3.23

Traders:

7.1.29 In the Previous Tariff Order, the Commission approved the power purchase on account of
traders at an average rate of Rs. 5 per kWh. The Power Purchase quantum and cost
approved by the Commission in the previous tariff Order from FY 2010-11 to FY 2012-
13 is tabulated below:
Table 210: Power Purchase on account of Traders approved in Previous Tariff Order
FY 2010-11 FY 2011-12 FY 2012-13
S. No Particulars Quantum Cost (Rs. Quantum Cost (Rs. Quantum Cost (Rs.
(MU) Crore) (MU) Crore) (MU) Crore)
1 Traders 4538 2269 2000 1000 2000 1000

7.1.30 TANGEDCO has not offered any explanations on its purchases from Power traders in its
Petition. However TANGEDCO has submitted the quantum and corresponding cost to be

267
purchased from Traders during FY 2010-11 and FY 2011-12 in their Petition which is
tabulated below:
Table 211: Power Purchase Cost on account of Traders as submitted by TANGEDCO in
the Petition
FY 2010-11 FY 2011-12 FY 2012-13
S. No Particulars Petition Petition Petition
Quantum Cost (Rs. Quantum Cost (Rs. Quantum Cost (Rs.
(MU) Crore) (MU) Crore) (MU) Crore)
1 Traders 10483 5528 12500 6789 5365 3060

Commission’s View:

7.1.31 The Commission observed that TANGEDCO has included the quantum and amount of
power purchased from Traders in purchase of power from CGS. Power purchase from
Traders does not fall under CGS. Hence the Commission is allowing it separately.

7.1.32 The Commission observed that TANGEDCO in its subsequent submissions has changed
the cost on account of Traders multiple times. TANGEDCO has also revised the actual
cost on account of power purchased from traders in FY 2010-11. It is observed from the
latest submission of TANGEDCO that the average rate of power purchase from traders in
FY 2010-11 was Rs. 5.32 per kWh. The Commission has considered the power purchase
quantum and cost from traders as submitted by TANGEDCO in its revised submission.

7.1.33 Similarly for FY 2011-12, TANGEDCO has submitted an even higher rate of power
purchased from traders, i.e., Rs. 6.82/ kWh. Therefore the Commission has capped the
power purchase rate on the power purchased from Traders in FY 2011-12 at Rs 5.32 per
kWh.

7.1.34 As regards quantum to be purchased from Traders in FY 2012-13, energy from Traders is
not going to be scheduled under Merit Order Despatch made by the Commission. The
Commission observed that the energy is available from other sources in order to meet the
energy requirement. However in order to provide flexibility and to set the benchmark, the
Commission has considered the purchase from traders at 2000 MU at an average rate of
Rs. 4.00/ kWh in FY 2012-13.

268
7.1.35 The Commission further directs that TANGEDCO shall take prior approval from the
Commission in case power purchase from traders in FY 2012-13 exceeds the quantum
and rate specified in this Tariff Order.

7.1.36 The power purchase cost on account of traders as approved by the Commission in this
Order is tabulated below:
Table 212: Power Purchase Cost on account of Traders approved by the Commission
FY 2010-11
Previous Tariff Order Petition Commission
Particulars Cost Cost
Quantum Quantum Quantum Cost (Rs.
(Rs. (Rs.
(MU) (MU) (MU) Crore)
Crore) Crore)
Traders 4538 2269 10540 5607 10540 5607

FY 2011-12
Previous Tariff Order Petition Revised Submission Commission
Particulars Cost Cost Cost
Quantum Cost (Rs. Quantum Quantum Quantum
(Rs. (Rs. (Rs.
(MU) Crore) (MU) (MU) (MU)
Crore) Crore) Crore)
Traders 2000 1000 12500 6789 9400 6413 9400 5000

FY 2012-13
Particulars Previous Tariff Order Petition Commission
Quantum Cost Quantum Cost Quantum Cost
(MU) (Rs. Crore) (MU) (Rs. Crore) (MU) (Rs. Crore)
Traders 2000 1000 5365 3060 2000 800

269
Power Purchase Summary:

7.1.37 Based on the above discussions, the power purchase summary from FY 2010-11 to FY
2012-13 from all the above sources is tabulated below:
Table 213: Power Purchase Summary from FY 2010-11 to FY 2012-13
FY 2010-11

FY 2010-11
Revised Submission dated
Petition 14.03.2012 Commission
Particulars Average Average Average
Quantum Cost Rate Quantum Cost Rate Quantum Cost Rate
Rs. Rs./ Rs. Rs./ Rs. Rs./
MU Crore kWh MU Crore kWh MU Crore kWh
Other Sources
IPPs
GMR 875 779 8.91 875 779 8.90 875 779 8.90
Samalpatti 378 385 10.19 378 385 10.18 378 385 10.18
PPN 2494 1202 4.82 2496 1202 4.81 2496 1202 4.82
Madurai 353 370 10.48 353 370 10.49 353 370 10.49
ST-CMS 1652 633 3.83 1653 633 3.83 1653 633 3.83
ABAN 820 246 3.00 820 246 3.00 820 246 3.00
Penna 370 118 3.20 370 118 3.20 370 118 3.20
Sub-total-IPPs 6942 3732 5.38 6945 3732 5.37 6945 3732 5.37

NCES
CPP 460 161 3.50 460 161 3.50 460 161 3.50
Solar 2.07 0.93 4.49 2.07 0.93 4.50 2.07 0.93 4.50
Wind 8707 2944 3.38 8707 2944 3.38 5263 1585 3.01
Cogeneration 997 351 3.52 997 351 3.52 997 351 3.52
Biomass 110 49 4.47 110 49 4.47 110 49 4.47
Sub-total-
10276 3506 3.41 10276 3506 3.41 6833 2147 3.14
NCES

CGS
NLC-TS-I 3066 630 2.05 3066 630 2.05 3066 630 2.05
NLC-TS-II
1214 246 2.02 2.02
(Stage-I)
3042 532 1.75 3042 533
NLC-TS-II
1828 287 1.57 1.57
(Stage-II)
NLC-TS-I
1509 453 3.00 1509 489 3.24 1509 453 3.00
Expansion

270
FY 2010-11
Revised Submission dated
Petition 14.03.2012 Commission
Particulars Average Average Average
Quantum Cost Rate Quantum Cost Rate Quantum Cost Rate
Rs. Rs./ Rs. Rs./ Rs. Rs./
MU Crore kWh MU Crore kWh MU Crore kWh
NTPC SR (I &
4039 806 2.00 4039 806 2.00 4039 806 2.00
II)
NTPC SR (III) 1024 262 2.56 1024 262 2.56 1024 262 2.56
NTPC ER 735 224 3.04 735 224 3.04 735 224 3.04
NTPC -
3664 909 2.48 3664 909 2.48 3664 909 2.48
Talcher II
Kayankulam 854 786 9.20 854 786 9.20 854 786 9.20
MAPS 1398 277 1.98 1399 277 1.98 1399 277 1.98
KAIGA 860 263 3.06 860 263 3.06 860 263 3.06
Simahadri 0 0 0.00 0 0 0.00 0 0 0.00
Kudankulam 0 0 0.00 0 0 0.00 0 0 0.00
NLC-TS-
0 0 0.00 0 0 0.00 0 0 0.00
IIExpansion
MAPC (Addl.) 0 0 0.00 0 0 0.00 0 0 0.00
NTPC-TNEB
0 0 0.00 0 0 0.00 0 0 0.00
(JV)
PGCIL-SR &
0 457 0.00 0 457 0.00 0 457 0.00
ER
UI 1441 472 3.27 1441 472 3.28 1441 472 3.28
Subtotal-CGS 21633 6070 2.81 21633 6108 2.82 21633 6072 2.81

Traders 10483 5528 5.27 10540 5607 5.32 10540 5607 5.32

Wheeling on
account of
Biomass,
387 968 387 4.00
Cogen and
Captive Power
Plants

Total 49335 19224 3.90 50362 19339 3.84 45950 17556 3.82

271
FY 2011-12

FY 2011-12
Revised Submission dated
Petition 14.03.2012 Commission
Particulars Average Average Average
Quantum Cost Rate Quantum Cost Rate Quantum Cost Rate
Rs. Rs./ Rs. Rs./ Rs. Rs./
MU Crore kWh MU Crore kWh MU Crore kWh
Other Sources
IPPs
GMR 795 902 11.35 962 1062 11.04 962 1062 11.04
Samalpatti 575 678 11.79 351 460 13.09 351 459 13.08
PPN 2375 1777 7.48 1483 1233 8.31 1483 1233 8.31
Madurai 575 708 12.32 333 466 14.00 333 466 13.99
ST-CMS 1780 699 3.93 1711 684 4.00 1711 684 4.00
ABAN 801 256 3.20 776 252 3.25 776 252 3.25
Penna 365 125 3.42 366 125 3.42 366 125 3.42
Sub-total-IPPs 7266 5146 7.08 5982 4282 7.16 5982 4281 7.16

NCES
CPP 575 243 4.23 575 243 4.23 575 243 4.23
Solar 10 5 4.74 10 5 4.67 10 5 4.67
Wind 9245 3125 3.38 9245 3125 3.38 5130 1545 3.01
Cogeneration 1135 409 3.60 1135 409 3.60 1135 409 3.60
Biomass 115 52 4.54 115 52 4.54 115 52 4.54
Sub-total-
11080 3834 3.46 11081 3834 3.46 6965 2254 3.24
NCES

CGS
NLC-TS-I 3066 676 2.21 3066 655 2.14 3066 655 2.14
NLC-TS-II
(Stage-I) 1503 432 2.87 1503
3242 679 2.10 769 2.37
NLC-TS-II
(Stage-II) 1739 472 2.72 1739
NLC-TS-I
Expansion 1609 484 3.01 1609 526 3.27 1609 504 3.14
NTPC SR (I &
II) 4139 897 2.17 4139 877 2.12 4139 862 2.08
NTPC SR (III) 1105 302 2.73 1105 294 2.66 1105 291 2.64
NTPC ER 885 323 3.65 885 324 3.67 885 324 3.66
NTPC -
Talcher II 3690 1045 2.83 3690 1204 3.26 3690 1082 2.93

272
FY 2011-12
Revised Submission dated
Petition 14.03.2012 Commission
Particulars Average Average Average
Quantum Cost Rate Quantum Cost Rate Quantum Cost Rate
Rs. Rs./ Rs. Rs./ Rs. Rs./
MU Crore kWh MU Crore kWh MU Crore kWh
Kayankulam 250 369 14.75 205 247 12.03 205 267 13.00
MAPS 1498 306 2.04 1499 304 2.03 1499 304 2.03
KAIGA 1107 347 3.13 1107 349 3.16 1107 349 3.16
Simahadri 328 95 2.90 328 117 3.57 328 106 3.22
Kudankulam 333 100 3.00 0 0 0.00 0 0 0.00
NLC-TS-
IIExpansion 1295 259 2.00 0 0 0.00 0 0 0.00
MAPC (Addl.) 0 0 0.00 0 0 0.00 0 0 0.00
NTPC-TNEB
(JV) 0 0 0.00 0 0 0.00 0 0 0.00
PGCIL-SR &
ER 0 480 0.00 0 480 0.00 0 480 0.00
UI 750 270 3.60 750 270 3.60 750 270 3.60
Subtotal-CGS 23297 6632 2.85 21625 6553 3.03 21625 6264 2.90

Traders 12500 6789 5.43 9400 6413 6.82 9400 5000 5.32

Wheeling
charges 531 1327 531 4.00

Total 54143 22932 4.24 49415 21612 4.37 43973 17800 4.05

FY 2012-13

FY 2012-13
Petition Commission
Particulars Quantum Cost Average Rate Quantum Cost Average Rate
Rs. Rs.
MU Crore Rs./ kWh MU Crore Rs./ kWh
Other Sources
IPPs
GMR 495 692 13.98 0 154 0
Samalpatti 575 738 12.84 0 94 0
PPN 2395 2273 9.49 0 309 0
Madurai 575 831 14.46 0 140 0

273
FY 2012-13
Petition Commission
Particulars Quantum Cost Average Rate Quantum Cost Average Rate
Rs. Rs.
MU Crore Rs./ kWh MU Crore Rs./ kWh
ST-CMS 1795 769 4.28 1795 769 4.28
ABAN 810 261 3.22 810 261 3.22
Penna 375 128 3.43 375 128 3.43
Sub-total-IPPs 7020 5692 8.11 2980 1855 6.22

NCES
CPP 580 258 4.44 582 258 4.43
Solar 10.78 5.14 4.77 10.78 5.14 4.77
Wind 9988 3376 3.38 5408 1629 3.01
Cogeneration 1469 555 3.78 1202 430 3.58
Biomass 120 57 4.77 56 25 4.54
Sub-total-NCES 12168 4251 3.49 7258 2347 3.23

CGS
NLC-TS-I 3066 692 2.26 3066 658 2.15
NLC-TS-II (Stage-I)
3272 708 2.16 3272 812 2.48
NLC-TS-II (Stage-II)
NLC-TS-I Expansion 1624 494 3.04 1624 516 3.18
NTPC SR (I & II) 4164 932 2.24 4164 909 2.18
NTPC SR (III) 1125 311 2.76 1125 305 2.71
NTPC ER 897 340 3.79 52
NTPC - Talcher II 3705 1061 2.86 3705 1127 3.04
Kayankulam 0 0 0.00 0 0 0.00
MAPS 1508 321 2.13 1508 321 2.13
KAIGA 1178 364 3.09 1178 390 3.31
Simahadri 925 268 2.90 1415 330 2.33
Kudankulam 3245 1022 3.15 1716 540 3.15
NLC-TS-IIExpansion 2135 427 2.00 1318 264 2.00
MAPC (Addl.) 256 77 3.00 518 155 3.00
NTPC-TNEB (JV) 3465 1005 2.90 2029 588 2.90
PGCIL-SR & ER 0 504 0.00 0 504 0.00
UI 145 60 4.14 0 0 0.00
Subtotal-CGS 30710 8586 2.80 26638 7473 2.81

Traders 5365 3060 5.70 0 0 0.00

274
FY 2012-13
Petition Commission
Particulars Quantum Cost Average Rate Quantum Cost Average Rate
Rs. Rs.
MU Crore Rs./ kWh MU Crore Rs./ kWh

Wheeling charges 727

Total 55263 22316 4.04 36876 11675 3.17

275
8 Aggregate Revenue Requirement of TANGEDCO

Regulatory Framework
8.1.1 Regulation 68 of the TNERC Tariff Regulations specifies the following:
“68 Component of tariff for supply of electricity
(1) The charges for the electricity supplied by the Distribution licensee may include:-
(a) a fixed charges / Demand Charges;
(b) Charges for actual electricity supplied;
(c) a rent or other charge in respect of meter or electrical plant provided by the
Distribution licensee;
(2) Rent for meter provided by the licensee and other charges are treated as non tariff
charges and shall be determined by the Commission in accordance with the provision of
Tamil Nadu Electricity Supply Code and Tamil Nadu Electricity Distribution Code.
(3) Charges for actual electricity supplied and fixed charges are tariff related charges
and the Commission shall determine these charges on an application from the
Distribution licensee.”

8.1.2 Regulation 69 (1) of the Tariff Regulation 2005, specifies that the Distribution licensee
shall file application for retail distribution of electricity along with Aggregate Revenue
Requirement (ARR).

8.1.3 Regulation 70 of the Tariff Regulations 2005 specifies the following:


“70. The Aggregate Revenue Requirement of Distribution licensee
The Aggregate Revenue Requirement of Distribution licensee consists of the following:-
(i) Cost of Power Purchase
(ii) Operation and Maintenance expenses
(iii) Depreciation
(iv) Interest and cost of finance
(v) Income Tax
(vi) Provision for Bad and Doubtful Debts
(vii) Provision for Insurance
(viii) Provision for contingency reserve
(ix) other expenses
(x) Return on equity / Reasonable rate of return”

276
Fixed Cost:
8.1.4 The Commission in Chapter-5 of this Order has approved fixed cost pertaining to
Distribution function of TANGEDCO, which is under:
Table 214: Fixed Cost approved by the Commission in Chapter 5 (in Rs Crore)

Petition Approved
Particulars
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
Operation and Maintenance Expenses 2623 2728 2837 2623 2728 2837
Depreciation 278 307 352 229 254 287
Interest on Long term loan 1651 3150 3355 1651 3150 3355
Other Debits & extra ordinary items 28 29 29 28 29 29
Prior Period Debit/(Credit) Charges 732 236 0 0 0 0
Reasonable Return / Return on Equity 153 199 208 0 0 0
Demand Side Management 0 0 0 0 0 10
Total 5465 6649 6780 4531 6161 6518

Own Generation and Power Purchase Cost:


8.1.5 The Commission in Chapter 6 and 7 of this Order has approved cost pertaining to own
generating plants and Power purchase from other sources of TANGEDCO, which is
under:
Table 215: Power Purchase Cost approved by the Commission (in Rs Crore)

FY 2010-11
Revised Submission dated
Particulars Petition Commission
14.03.2012
Quant Average Quant Average Quant Averag
Cost Cost Cost
um Rate um Rate um e Rate
Rs Rs Rs Rs/kW
MU Rs/kWh MU Rs/kWh MU
Crore Crore Crore h
Own
23845 6118 2.57 23192 6118 2.64 23233 5404 2.33
Generation
Power
Purchase-
49335 19224 3.90 50362 19339 3.84 45950 17556 3.82
Other
Sources
Total 73180 25342 3.46 73555 25457 3.46 69183 22961 3.32

277
FY 2011-12
Revised Submission dated
Petition Commission
14.03.2012
Particulars
Avera
Quant Average Quantu Average Quan
Cost Cost Cost ge
um Rate m Rate tum
Rate
Rs
Rs Rs Rs/kW
MU Cror Rs/kWh MU Rs/kWh MU
Crore Crore h
e
Own
Generation 26737 7473* 2.80 26159 7392 2.83 25680 6582 2.56
Power
Purchase-
54143 22932 4.24 49415 21612 4.37 43973 17800 4.05
Other
Sources
Total 80880 30405 3.76 75574 29005 3.84 69653 24382 3.50
Note:*Rs 7473 Crore is Own Generation cost submitted by TANGEDCO formats along with the Petition. However
for the purpose of Revenue gap calculation in page no. 125 of their petition, TANGEDCO has considered Rs 7467
Crore towards cost of Own generation. The Commission for the purpose of comparison has considered the
submission of TANGEDCO at various places in this Order.

FY 2012-13
Petition Commission
Particulars
Average Average
Quantum Cost Quantum Cost
Rate Rate
Rs Rs
MU Rs/kWh MU Rs/kWh
Crore Crore
Own Generation 32611 10226 3.14 33908 8939 2.64
Power Purchase-Other
55263 22316 4.04 36876 11675 3.17
Sources
Total 87874 32543 3.70 70784 20614 2.91

Intra-State Transmission Charges:


8.1.6 The Intra-State transmission charges approved by the Commission in last Tariff Order are
as below:
Table 216: Intra-State Transmission Charges approved by the Commission in Last Tariff Order
(in Rs Crore)

Last Tariff Order


Particulars
FY 11 FY 12 FY 13
Annual Transmission Charges payable to TANTRANSCO 1786 1917 2062

278
8.1.7 The Commission noted that the TANTRANSCO has sought retrospective revision of
Intra-State Transmission Charges for FY 2010-11 and FY 2011-12. Regulation (vii) of
TNERC (Terms and Conditions for Determination of Tariff for Intra state Transmission
/ Distribution of Electricity under MYT Framework) Regulations, 2009, states as under:

“vii).True up of variations in revenue and cost The variations on account of


controllable factors like sales and power purchase shall be reviewed at the end of
each year of the control period based on audited accounts of the licensee and
prudence checks by the Commission.”

8.1.8 The Commission notes that the FY 2010-11 and FY 2011-12 are already over and the
transmission charges approved by the Commission in last Tariff Order would be payable
by TANGEDCO, for FY 2010-11 and FY 2011-12. Truing up requirement for FY 2010-
11 and FY 2012-13, if any, based on prudence check of the Commission would be
carried forward to FY 2012-13 and would be recoverable from Transmission tariff of FY
2012-13.

8.1.9 The transmission charge approved by the Commission in Order for TANTRANSCO is as
under:
Table 217: Intra-State Transmission Charges approved by the Commission (in Rs Crore)

Petition Approved
Particulars
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
Annual Transmission Charges
2333 2608 2782 1786 1917 3076
payable to TANTRANSCO

Non Tariff and Other Income


8.1.10 The Commission has accepted the submission of TANGEDCO pertaining to Non Tariff
Income and Other Income, except income from Trading, as same has not been
considered as a part of Sales. Non tariff Income and Other Income approved by the
Commission is as under:

279
Table 218: Non Tariff Income and Other Income approved by the Commission (in Rs Crore)

Petition Approved
Particulars
FY 11 FY 12 FY 13 FY 11 FY 12 FY 13
(i) Non Tariff Revenue 522 624 746 522 624 746
(ii) Other Income 275 289 57 275 289 57
(iii)Other Income for Generation 70 59 59 70 59 59
(iv) Income from Trading 71 0 0 0 0 0

Sharing of Gain and Losses


8.1.11 Regulation (ix) of TNERC (Terms and Conditions for Determination of Tariff for Intra
state Transmission / Distribution of Electricity under MYT Framework) Regulations,
2009, states as under:

“ix). Mechanism for sharing approved gains or losses arising out of controllable
factors. The financial loss, if any, due to failure to achieve the target for the
controllable costs in any of the years in the control period shall be borne by the
licensees and the gains, if any, shall be shared with the beneficiaries at 50: 50.”

8.1.12 The Commission notes that the due to higher T&D loss vis-a-vis approved by the
Commission in its last tariff Order, additional power purchase cost incurred by
TANGEDCO is as under:
Table 219: Additional power Purchase on account of Higher T&D loss (in Rs Crore)

Particulars Reference FY 2010-11 FY 2011-12


Sales A 53829 53916
T&D Loss B 21.73% 22.13%
Energy Requirement C=A/(1-B) 68770 69240
Target T&D Loss D 17.60% 17.20%
Energy Requirement as per Target E=A/(1-D) 65326 65116
Extra Power Purchased F=C-E 3444 4124
Average Power Purchase Cost approved Rs/kWh 3.32 3.50
Additional Power Purchase on account of higher T&D loss Rs Crore 1143 1444

280
8.1.13 Regulation (vii) of TNERC (Terms and Conditions for Determination of Tariff for Intra
state Transmission / Distribution of Electricity under MYT Framework) Regulations,
2009, states as under:

“vii).True up of variations in revenue and cost The variations on account of


controllable factors like sales and power purchase shall be reviewed at the end of
each year of the control period based on audited accounts of the licensee and
prudence checks by the Commission.”

8.1.14 Hence, the above mentioned Regulations provides for true-up based on Audited accounts
and same will be revisited by the Commission in final truing up of FY 2010-11 and FY
2011-12, based on Audited Accounts.

8.1.15 The Commission proposes to deal with the disallowance of additional power purchase on
account of higher T&D loss for FY 2010-11 and FY 2011-12 at the time of final truing
up, based on Audited Accounts.

8.1.16 The Commission is also not doing provisional truing up on account of AT&C losses, as
same can only be undertaken based on Audited accounts. The Commission will examine
this ascpect in final truing up of respective years.

Aggregate Revenue Requirement of TANGEDCO


8.1.17 Aggregate Revenue Requirement of TANGEDCO approved by the Commission is as
under:
Table 220: ARR approved by the Commission (in Rs Crore)

Last Tariff Order Petition Approved


Particulars FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13
Expenses in respect of
5999 7765 8717 6118 7467 10207 5358 6582 8939
Generation
Power Purchase Cost 16203 13836 11372 19224 22932 22316 17556 17800 11675
Annual Transmission
Charges payable to 1786 1917 2062 2333 2608 2782 1786 1917 3076
TANTRANSCO
Operation and
2923 3130 3356 2623 2728 2837 2623 2728 2837
Maintenance Expenses
281
Last Tariff Order Petition Approved
Particulars FY FY FY FY FY FY FY FY FY
11 12 13 11 12 13 11 12 13
Depreciation 349 393 434 278 307 352 229 254 287
Interest on Long term
1428 1325 1475 1651 3150 3355 1651 3150 3355
loan
Other Debits & extra
10 7 7 28 29 29 28 29 29
ordinary items
Prior Period
0 0 0 732 236 0 0 0 0
Debit/(Credit) Charges
Reasonable Return /
134 108 117 153 199 208 0 0 0
Return on Equity
Demand Side
10 10 10 0 0 0 0 0 10
Management
Aggregate Revenue
28841 28491 27550 33140 39656 42085 29231 32459 30208
Requirement
Less:
(i) Non Tariff Revenue 514 637 789 522 624 746 522 624 746
(ii) Other Income 381 399 417 275 289 57 275 289 57
(iii)Other Income for
0 0 0 70 59 59 70 59 59
Generation
(iv) Income from Trading 0 0 0 71 0 0 0 0 0
Net Revenue
27946 27455 26344 32202 38684 41223 28364 31488 29346
Requirement

282
9 TARIFF PHILOSOPHY AND CATEGORY-WISE TARIFFS FOR FY
2010-11
9.1 Applicability of Revised Tariffs

9.1.1 The revised tariffs will be applicable from April 1, 2012. In cases where there is a billing
cycle difference for a consumer with respect to the date of applicability of the revised
tariffs, then the revised tariff should be made applicable on a pro-rata basis for the
consumption. The bills for the respective periods as per existing tariff and revised tariffs
shall be calculated based on the pro-rata consumption (units consumed during respective
period arrived at on the basis of average unit consumption per day multiplied by number
of days in the respective period falling under the billing cycle).

9.2 Revenue Gap and Regulatory Asset

9.2.1 TANGEDCO in its Petition has projected revenue gap at existing tariff for the Control
Period as under:
Table 221: Revenue Gap at Existing Tariff from FY 2010-11 to FY 2012-13 (Rs Crore)

Petition
Particulars
FY 11 FY 12 FY 13
Aggregate Revenue Requirement 33140 39656 42085
Less:
(i) Non Tariff Revenue 522 624 746
(ii) Other Income 275 289 57
(iii)Other Income for Generation 70 59 59
(iv) Income from Trading 71 0 0
Net Revenue Requirement 32202 38684 41223

Less: Revenue from Sale of Power at Existing Tariff including Tariff Subsidy 20469 24188 26676

Revenue Gap at Existing Tariff 11733 14497 14547

283
9.2.2 TANGEDCO in Page 59 of its petition has also submitted that the revenue gap pertaining
to period starting from April 1, 2010 to October 31, 2010, is Rs 6273.21 Crore and that it
has to be addressed through financial restructuring. The Commission accepts this
submission of the Petitioner.

9.2.3 The Commission for the purpose of revenue receipts for FY 2010-11 and FY 2011-12,
asked TANGEDCO to submit their actual revenue receipts by way of direct sales to its
consumers in Form-19, after removing the deemed revenue considered in their book of
accounts on account of wheeling of power.

9.2.4 TANGEDCO submitted revised Form-19 vide its email dated 18.3.2012. The
Commission has accepted Rs 18362 Crore and Rs 18076 Crore for FY 2010-11 and FY
2012-13, as revenue from sale of power at existing tariff, after removing revenue from
sale of power towards Puducherry, as the same has not been considered either in Power
purchase or in sales.

9.2.5 The Commission has re-computed the gap for FY 2010-11 to FY 2012-13. The revenue
gap estimated for the Control Period is as under:
Table 222: Revenue Gap at Existing Tariff from FY 2010-11 to FY 2012-13 (Rs Crore)

Approved
Particulars
FY 11 FY 12 FY 13
Net Revenue Requirement 28364 31488 29346

Less: Revenue from Sale of Power at Existing Tariff including subsidy 18362 18076 21472

Revenue Gap at Existing Tariff 10002 13411 7874

9.2.6 The Commission has further re-computed the approved gap pertaining to the period from
November 1, 2010 to March 31, 2011, on pro-rata basis of the submission of
TANGEDCO, which is as under:
Table 223: Revenue Gap at Existing Tariff for November 1, 2010 to March 31, 2011 (Rs Crore)

FY 2010-11
Particulars
Petition Approved
Revenue Gap At Existing Tariff 11733 10002
Carrying Cost for 2 years @ 11 % per Annum 1650
Total Revenue Gap 11733 11653
Gap pertaining from 1-4-2010 to 31-10-10 6273 6230
284
FY 2010-11
Particulars
Petition Approved
Gap pertaining from 1-4-2010 to 31-10-10 (%) 53% 53%
Net Revenue Gap for November 1, 2010 to March 31, 2011 recoverable from Tariff 5460 5422

9.2.7 The Commission has approved the gap pertaining to FY 2011-12 along with carrying cost
which is computed as under:
Table 224: Revenue Gap at Existing Tariff from FY 2011-12 (Rs Crore)

FY 2011-12
Particulars
Petition Approved
Revenue Gap At Existing Tariff 14497 13411
Carrying Cost for 1 year @ 11 % per Annum 738
Total Revenue Gap 14497 14149

9.2.8 The revenue gap approved by the Commission for the period from November 2010 to
March 31, 2013, is as under:

Table 225: Revenue Gap at Existing Tariff from FY 2010-11 to FY 2012-13 (Rs Crore)

FY 2010-11 FY 2011-12 FY 2012-13


Particulars Petitio Approv Petiti Appr Petitio Appro
n ed on oved n ved
Revenue Gap at Existing Tariff including
5460 5422 14497 14149 14547 7874
Carrying Cost at 11% per annum
Cumulative Revenue Gap 34503 27445

285
9.3 Tariff Philosophy

9.3.1 TANGEDCO Submission

9.3.1.1 In its tariff proposal, TANGEDCO submitted as under:

9.3.1.2 Substantial revision of tariff for LT consumers under I-A (Domestic) (Consumption
below 600 units), I-B (hut), II-A (Street light & water works), II-C (Places of worship),
IIIA (2) (Power loom weavers) and IV (Agricultural consumers) for whom tariff has not
been revised for the past 8 years (from the year 2003).

9.3.1.3 Domestic consumers under LT Tariff IC (Bulk supply) and LT tariff VI (Temporary
supply); Tariff revision for these categories has not been proposed owing to their
existing higher tariff.

9.3.1.4 Separate tariff rate for cinema theatres and cinema studios under LT Tariff IIB (2) higher
than private educational institutions in the same category is proposed in this petition.

9.3.1.5 It is proposed to introduce separate tariff for LT CT services with higher fixed charges,
considering the cost involved for the development of their infrastructure facilities.
Accordingly the tariff rates for the HT services, LT services , LTCT Services has been
progressively increased considering their cost to serve and infrastructure cost.

9.3.1.6 In case of HT consumers, uniform demand charge and appropriate tariff increase for all
categories of HT consumers are proposed and after proposed tariff revision all categories
of HT consumers except HT commercial and HT lift irrigation will be plus or minus of
the 20 percent of average cost of supply.

9.3.2 Revenue Receipts from existing and proposed tariff

9.3.2.1 TANGEDCO in its tariff proposal has proposed an overall tariff increase of 37%. The
category wise increase proposed by TANGEDCO is shown in the table below:

286
Table 226: Revenue from sale of Power at Existing Tariff and Proposed Tariff for FY 2012-13 (Rs
Crore)

ENSUING YEAR 2012-13


Existing Proposed Increase /

Consumption (MU)
Tariff Tariff Decrease

Revenue (Rs.

% of increase
Revenue (Rs.

Revenue (Rs.
Realisation

Realisation
S.
Consumer category Tariff

Rs/kwh

Rs/kwh
Rate of

Rate of
Crore)

Crore)

Crore)
No.

I HIGH TENSION
Industries IA 21645 5.38 11650 6.38 13814 2164 19%
Railway Traction IB 549 5.20 286 6.36 349 64 22%
Government Education
IIA 929 4.76 442 5.58 519 76 17%
Intuitions, etc.
Private Education Institution,
IIB-1 88 5.87 52 7.09 62 11 20%
etc.
Cinema Theatre II B-2 75 5.87 44 7.41 56 12 27%
Places of Pub. Worship II C 3 4.05 1 6.45 2 1 59%
Commercial III 2498 6.99 1746 7.59 1897 151 9%
Lift Irrigation Societies IV 8 0.56 0.5 3.50 3 2 522%
Others V 425 3.73 159 3.73 159 0 0%
Total HT 26220 5.48 14380 6.43 16860 2480 17%
II LOW TENSION

Domestic IA 18603 2.59 4818 3.68 6843 2025 42%


Huts IB 424 0.55 23 2.76 117 94 400%
Bulk supply IC 11 4.00 4 4.00 4 0 0%
Street Light & Water Supply II-A 1829 3.52 643 5.24 1017 374 58%
Government Education
II-B 223 4.85 108 5.54 124 15 14%
Intuitions, etc.
Private Education Institution, II-B
82 5.64 46 7.43 61 15 32%
etc. (1)
II-B
Cinema Theatre 70 5.60 39 8.36 58 19 49%
(2)
Place of Worship II-C 114 3.09 35 5.39 62 26 74%

Cottage and Tiny Industries IIIA 1 128 2.82 36 5.08 65 29 80%

Power Looms IIIA 2 925 2.35 217 5.39 499 282 130%

Industries IIIB 4891 5.13 2512 8.72 4266 1754 70%

287
ENSUING YEAR 2012-13
Existing Proposed Increase /

Consumption (MU)
Tariff Tariff Decrease

Revenue (Rs.

% of increase
Revenue (Rs.

Revenue (Rs.
Realisation

Realisation
S.
Consumer category Tariff

Rs/kwh

Rs/kwh
Rate of

Rate of
Crore)

Crore)

Crore)
No.

Agriculture IV 11546 0.25 294 1.75 2025 1731 589%

Commercial V 5258 6.66 3501 8.36 4395 895 26%

Temporary supply VI 18 10.65 19 23.66 21 2 11%

Total LT 44121 12297 19557 7261 59%

Grand Total 70342 26676 36417 9741 37%

9.4 Commission’s View

9.4.1 Tariff Rationalisation

9.4.1.1 The Commission has created one new category by the name HT V applicable to HT
consumers availing temporary supply, to simplify releasing of connections for temporary
supply for construction and other purpose.

9.4.1.2 The Commission has merged HT II A and II C, for the purpose of simplification of
billing and overall approach of the Commission to reduce the number of sub categories
and rationalisation of tariff categories, wherever possible.

9.4.2 Retail Tariff Design

9.4.2.1 The Commission has accepted other suggestions of TANGEDCO with regards to Energy
Charges, Demand Charges and Fixed Charges, except mentioned below:

288
Proposed Tariff Approved Tariff

Energy
S. Demand Energy Demand
Category Tariff Charge Fixed Charges
No Charges Fixed Charges Charge Charges
s Rs/KW/Mont
Rs./KVA Rs/KW/Month s Rs./KVA
Rs./kw h
/ Month Rs./kwh / Month
h

HIGH
I
TENSION
Industries IA 5.00 300 0 5.50 300 0
Railway
IB 5.00 300 0 5.50 250 0
Traction
Commercial III 6.80 300 0 7.00 300 0
HT Temporary
9.50 300
Supply
LOW
II IA
TENSION
LT Domestic IA
For consumers who consume up to 50 units per month or 100 units bi monthly
0-50 units per
20 Rs/ 10 Rs/
month or 0-
3.00 0 Connection/ 2.60 0 Connection/
100 units bi
Month Month
monthly
For consumers who consume from 51 units to 100 units per month or 101 to 200 units bi monthly
From 0-100
units per month 20 Rs/ 10 Rs/
or 0 to 200 3.00 0 Connection/ 2.80 0 Connection/
units for two Month Month
months
For consumers who consume from 101 units to 250 units per month or 201 to 500 units bi monthly
From 0-100
units per month 20 Rs/ 15 Rs/
or 0 to 200 3.00 0 Connection/ 3.00 0 Connection/
units for two Month Month
months
From 101 to
250 units per 20 Rs/ 15 Rs/
month or 201 4.00 0 Connection/ 4.00 0 Connection/
to 500 units for Month Month
two months
LT Bulk 40 Rs./
supply IC 4.00 0 0 4.00 0 Connection/
Month
LT Industries 100 30
IIIB 5.50 5.50
Rs/kw/Month Rs/kw/Month
L.T.
V
Commercial
0-100 units 7.00 100 4.30 60
289
Proposed Tariff Approved Tariff

Energy
S. Demand Energy Demand
Category Tariff Charge Fixed Charges
No Charges Fixed Charges Charge Charges
s Rs/KW/Mont
Rs./KVA Rs/KW/Month s Rs./KVA
Rs./kw h
/ Month Rs./kwh / Month
h
only Rs/kw/Month Rs/kw/Month
Consumers
consuming
above 100
100 60
units 7.00 7.00
Rs/kw/Month Rs/kw/Month
permonth or
200 units
bimonthly

9.4.3 Detailed tariff Schedule has been provided at the end of this chapter.

9.4.4 Separate tariff for LTCT services

9.4.4.1 TANGEDCO has proposed separate tariff for LTCT services with higher fixed charges,
based on the rationale that the cost involved for the development of their infrastructure
facilities. Accordingly LTCT has been proposed to be increased for the tariff rates for the
HT services, LT services. While determining the tariff, the Commission is guided by
Section 62 (3) of Electricity Act 2003, which specifies as under:

“(3) The Appropriate Commission shall not, while determining the tariff under this Act,
show undue preference to any consumer of electricity but may differentiate
according to the consumer's load factor, power factor, voltage, total consumption
of electricity during any specified period or the time at which the supply is required
or the geographical position of any area, the nature of supply and the purpose for
which the supply is required.”

9.4.4.2 The Commission cannot differentiate between same class of consumers and hence, the
proposal of charging LTCT services a higher Tariff stands rejected.

9.4.5 Revenue from the Approved tariff

9.4.5.1 The Commission has computed the Revenue at Approved Tariff rates as below:

290
Table 227: Revenue from sale of Power at Existing Tariff and Approved Tariff for FY 2012-
13 (Rs Crore)

Existing Tariff Approved Tariff


S. %
Category Tariff Total Total
No. Sales ABR ABR Increase
Revenue Revenue
Rs Rs
MU Rs/kWh Rs/kWh %
Crore Crore
I HIGH TENSION
Industries IA 13545 7882 5.82 9914 7.32 26%
Railway Traction IB 726 370 5.10 479 6.60 29%
Govt. and Govt.
aided educational IIA 882 426 4.82 503 5.71 18%
Instns. Etc.
Private Educational
IIB(1) 131 72 5.47 91 6.91 26%
Institution
Cinema Theatre and
IIB(2) 112 61 5.48 92 8.20 50%
Studio
Places of Pub.
IIC 5 2 3.55 3 5.87 65%
Worship
Commercial III 1908 1548 8.12 1777 9.32 15%
Lift Irrigation IV 6 0 0.53 2 3.53 571%
HT Temporary V 5 5 10.50 5 10.45 0%
Total HT 17320 10366 5.98 12866 7.43 24%
II LOW TENSION
LT Domestic Total IA 18252 4522 2.48 6315 3.46 40%
Hut IB 617 18 0.29 154 2.50 755%
Bulk supply IC 11 4 4.00 4 4.00 0%
Public Lighting and
Water Supply IIA 1018 346 3.40 560 5.50 62%
(village panchayat)
Public Lighting and
Water Supply (Town II A 217 76 3.50 119 5.50 57%
panchayat)
Public Lighting and
Water Supply
IIA 390 136 3.50 214 5.50 57%
(Municiapality/
Corporation)
Govt and Govt aides
Educational Instns. IIB (1) 127 61 4.80 73 5.74 20%
Etc.

291
Existing Tariff Approved Tariff
S. %
Category Tariff Total Total
No. Sales ABR ABR Increase
Revenue Revenue
Rs Rs
MU Rs/kWh Rs/kWh %
Crore Crore

Private Educational IIB (2)


137 78 5.71 94 6.84 20%
Ins. (i)

Cinema Theatre and IIB (2)


117 66 5.65 87 7.40 31%
Studio (ii)

Places of Pub.
IIC 102 32 3.17 43 4.18 32%
Worship
Cottage and Tiny
126 36 2.82 53 4.19 49%
Industries
Power Looms IIIA 2 730 158 2.17 385 5.27 143%
Industries III B 4015 1982 4.94 2541 6.33 28%
L.T. Agriculture (till
installation of
IV 10601 281 0.27 1950 1.84 593%
Energy meter)
Rs./HP/Annum
L.T. Commercial V 5066 3291 6.50 3872 7.64 18%

L.T Temporary VI 15 16 10.50 16 10.50 0%

LT Total 41541 11105 2.67 16481 3.97 48%


Total 58861 21472 3.65 29347 4.99 37%

9.4.6 Fuel and Power Purchase Cost Adjustment (FPCA)

9.4.6.1 TANGEDCO in its petition has prayed for approving Fuel and Power Purchase Cost
Adjustment mechanism to enable TANGEDCO to pass through the cost associated with
the Fuel and Power Purchase variation.

292
9.4.6.2 TANGEDCO submitted that Section 62 (4) of the Electricity Act 2003 which states
that “no tariff or part of any tariff may ordinarily be amended more frequently, than once
in a financial year, except in respect of any changes expressly permitted under the terms
of any fuel surcharge formula as may be specified.”

9.4.6.3 TANGEDCO also submitted that provision 5.3(h) (4) of the Tariff policy provides as
follows:

“Uncontrollable costs should be recovered speedily to ensure that future


consumers are not burdened with past costs. Uncontrollable costs would include
(but not limited to) fuel costs, costs on account of inflation, taxes and cess,
variations in power purchase unit costs including on account of hydro thermal
mix in case of adverse natural events,”

9.4.6.4 TANGEDCO submitted that the Fuel Price Adjustment Charge may be recovered on a
quarterly basis by including it in the bill of current consumption charges. Fuel Price
Adjustment charges can be collected from all categories of consumers including
subsidized consumers and this amount can be included in the subsidy to be collected from
GOTN.

9.4.6.5 TANGEDCO proposed the following formula for Fuel Price Adjustment and
adjustment for Power Purchase Cost as given below:

“Qa X (ARC – APRC) + Qo (ARO-APRO) + PP (AR – APR) / E

Where,

a) Qa – Actual quantity of fuel consumed during the period of adjustment;

b) ARC – Actual weighted average rate of the fuel used during the period of
adjustment.

c) APRC – Weighted average rate of the fuel approved by the Commission.

d) Qo – Quantity of oil used during the adjustment period (Gross generation X


specific oil consumption approved by the Commission).

e) ARO - Actual weighted average rate of the oil.

293
f) APRO – Weighted average rate of the oil approved by the Commission.

g) PP – Units purchased during the period of adjustment.

h) AR – Actual Average rate of power purchased during the period of adjustment.

i) APR – Average rate of power purchase approved by the Commission.

j) E – Energy billed for retail sale during the period.

Note: The station heat rate as approved by the Commission is to be adopted for arriving
at the consumption of fuel.

It is submitted that above formula or any other suitable formula deemed to fit may kindly
be approved after making necessary amendments in the Tariff Regulations and hearing
views from the stake holders.”

9.4.6.6 The Commission is of the opinion that the Fuel Price Adjustment charge formula would
enable the TANGEDCO to recover the actual cost of the fuel incurred and the actual cost
of the power purchase, if the same is at variance from the figures approved by the
Commission in this Tariff Order.

9.4.6.7 Section 62 (4) of the Electricity Act 2003 also mandates that the Commission to
provide for mechanism to pass through of variation of Fuel and Power Purchase cost by
specifying the Fuel surcharge formula.

9.4.6.8 In most of the comparable States like Maharashtra, Gujarat, Andhra Pradesh, Kerala,
etc, FPCA mechanism is in place.

9.4.6.9 The Commission in this Order is approving FPAC formulae to reflect change in fuel
cost for TANGEDCO’s own Thermal Stations and Power Purchase from other sources
which are due to reasons beyond the control of TANGEDCO, the following is approved
by the Commission:
(1) Adjustment Amount
A= CVC.GEN + CVC.pp
A= Adjustment Amount (during this quarter)

CVC.GEN = Change in Variable Cost of TANGEDCO’s thermal stations.


294
CVC.pp = Change in Power Purchase cost from other sources excluding own generation.

(2) Chargeable FPCA from the consumers


Metered Category
FPCAM= AM / UM

Un-Metered Category
FPCAHP= AHP / LHP

AM and AHP are to be arrived at by apportioning A on the basis of consumption of


metered and un-metered category.

UM is the number of units billed to metered consumers during quarter under


consideration

LHP is sum of the connected load of un-metered consumers at the end of each month for
the quarter under consideration.

(3) The approved formula is subject to the following:


i. Commission can review the formula at any stage.
ii. For levy of FPCA surcharge, petition containing the basis of
calculations/authenticated data shall be submitted by TANGEDCO by August,
November, February and May end each year for the FCA increases for the 1st, 2nd,
3rd and 4th quarter, respectively, of each year.
iii. The FPCA amount shall be calculated on the basis of norms fixed by the
Commission for various parameters including SHR, Transit loss of coal, Auxiliary
consumption at the thermal plants, T&D losses or any other parameter as may be
specified by the Commission.
iv. The FPCA for the first quarter of a financial year, i.e., from April to June shall be
worked out by TANGEDCO and submitted to the Commission by end of August
of the year and approved by the Commission by the end of September of the same
year so that FPCA is charged from October onwards. Similarly, FPCA for 2nd
quarter of a financial year, i.e., from July to September shall be worked out by
TANGEDCO and submitted to the Commission by November of that year and
approved by the Commission by December of the same year, so that Fuel and
Power Purchase Cost Adjustment is charged from January onwards. Similar
schedule shall be followed for charging FCA for third and fourth quarters.

295
v. Any under recovery/over recovery in cost pertaining to FPCA would be trued up
based on the Audited accounts as a part of truing up exercise in the tariff
determination process.

9.5 The Commission inprincipally approves the implementation of FPCA mechanism in the
State of Tamil Nadu. However, the Commission directs to TANGEDCO to submit its
preparedness, implementation plan and sample FPCA calculations for the last quarter, for
which data is available, to the Commission for approval, within 30 days of issuance of
this Order.

9.6 Cost to Serve, Average Cost of Supply and Cross Subsidy:

9.6.1 These are inter-related issues. The provisions regarding these three issues are extensively
covered in the Order of Hon’ble Appellate Tribunal of Electricity dated 11th June 2012 in
Appeal Nos. 57 of 2008, 155 of of 2007, 125 of 2008, 45 of 2010, 40 of 2010, 196 of
2009, 199 of 2009, 163 of 2010, 6 of 2011 and 144 of 2010. Para 40 of the said order is
relevant and is extracted below.
“17. Section 61(g) of the 2003 Act stipulates that the tariff should progressively
reflect the cost of supply and cross subsidies should be reduced within the time
period specified by the State Commission. The Tariff Policy stipulates the target
for achieving this objective latest by the end of year 2010-11, such that the tariffs
are within ± 20% of the average cost of supply. In this connection, it would be
worthwhile to examine the original provision of the Section 61(g). The original
provision of Section 61(g) “the tariff progressively reflects the cost of supply of
electricity and also, reduces and eliminates cross subsidies within the period to be
specified by the Appropriate Commission” was replaced by “the tariff
progressively reflects the cost of supply of electricity and also reduces cross
subsidies in the manner specified by the Appropriate Commission” by an
amendment under Electricity (Amendment) Act, 2007 w.e.f. 15.6.2007. Thus the
intention of the Parliament in amending the above provisions of the Act by
removing provision for elimination of cross subsidies appears to be that the cross
subsidies may be reduced but may not have to be eliminated. The tariff should
progressively reflect the cost of supply but at the same time the cross subsidy,
though may be reduced, may not be eliminated. If strict commercial principles are
followed, then the tariffs have to be based on the cost to supply a consumer

296
category. However, it is not the intent of the Act after the amendment in the year
2007 (Act 26 of 2007) that the tariff should be the mirror image of the cost of
supply of electricity to a category of consumer.
18. Section 62(2) provides for the factors on which the tariffs of the various
consumers can be differentiated. Some of these factors like load factor, power
factor, voltage, total electricity consumption during any specified period or time
or geographical position also affects the cost of supply to the consumer. Due
weightage can be given in the tariffs to these factor to differentiate the tariffs.
19. The National Electricity Policy provides for reducing the cross subsidies
progressively and gradually. The gradual reduction is envisaged to avoid tariff
shock to the subsidized categories of consumers. It also provides for subsidized
tariff for consumers below poverty line for minimum level of support. Cross
subsidy for such categories of consumers has to be necessarily provided by the
subsidizing consumers.
20. The Tariff Policy clearly stipulates that for achieving the objective, the State
Commission has not been able to establish that the tariff progressively reflects the
cost of supply of electricity, latest by the end of the year 2010-11, the tariffs
should be within ±20% of the average cost of supply, for which the State
Commission would notify a road-map. The road map would also have
intermediate milestones for reduction of cross subsidy.
21. According to the Tariff Regulation 7 (c) (iii) of the State Commission the cross
subsidy has to be computed as difference between cost-to-serve a category of
consumer and average tariff realization of that category.
22. after cogent reading of all the above provisions of the Act, the Policy and the
Regulations we infer the following:

i) The cross subsidy for a consumer category is the difference between cost to
serve that category of consumers and average tariff realization of that
category of consumers. While the cross-subsidies have to be reduced
progressively and gradually to avoid tariff shock to the subsidized categories,
the cross-subsidies may not be eliminated.

ii) The tariff for different categories of consumer may progressively reflect the
cost of electricity to the consumer category but may not be a mirror image of
cost to supply to the respective consumer categories.
297
iii) Tariff for consumers below the poverty line will be at least 50% of the average
cost of supply.

iv) The tariffs should be within ±20% of the average cost of supply by the end of
2010-11 to achieve the objective that the tariff progressively reflects the cost
of supply of electricity.

v) The cross subsidies may gradually be reduced but should not be increased for a
category of subsidizing consumer.

vi) The tariffs can be differentiated according to the consumer’s load factor,
power factor, voltage, total consumption of electricity during specified period
or the time or the geographical location, the nature of supply and the purpose
for which electricity is required.
Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer
category is not increased but reduced gradually, the tariff of consumer categories
is within ±20% of the average cost of supply except the consumers below the
poverty line, tariffs of different categories of consumers are differentiated only
according to the factors given in Section 62(3) and there is no tariff shock to any
category of consumer, no prejudice would have been caused to any category of
consumers with regard to the issues of cross subsidy and cost of supply raised in
this appeal.”
“29. The State Commission has indicated in the impugned order that the voltage-
wise cost determination is the first step in determining the consumer-wise cost of
supply but has expressed difficulties in determination of voltage-wise cost of
supply due to non-segregation of costs incurred by the licensee related to different
voltage levels and determination of technical and commercial losses at different
voltage levels due to non-availability of meters. The State Commission has also
noted that the data submitted by the distribution licensee does not have technical
or commercial data support.
30. It is regretted that even after six years of formation of the Regulations data for
the distribution losses. The position of metering in the distribution system of
respondent no. 2 is pathetic. Only about 1/4th of 11 KV feeders have been
metered and very small numbers of transformers have been provided with meters.
298
Only 68% of the consumer meters are functional in the distribution system as
indicated in Table-37 of the impugned order. It is also noticed that a large
number of meters are old electro mechanical meter which are not functioning.
This is in contravention to Section 55 of the Act. Section 55(1) specifies that no
licensee shall supply electricity after the expiry of two years from the appointed
data, except through installation of a correct meter in accordance with the
Regulations of the Central Electricity Authority. According to Section 55(2)
meters have to be provided for the purpose of accounting and audit. According to
Section 8.2.1 (2) of the Tariff Policy, the State Commission has to undertake
independent assessment of baseline data for various parameters for every
distribution circle of the licensee and this exercise should be completed by March,
2007. In our opinion the State Commission can not be a silent spectator to the
violation of the provisions of the Act. In view of large scale installation of meters,
the State Commission should immediately direct the distribution licensee to
submit a capital scheme for installation of consumer and energy audit meters
including replacement of defective energy meters with the correct meters within a
reasonable time schedule to be decided by the State Commission. The State
Commission may ensure that the meters are installed by the distribution licensee
according to the approved metering scheme and the specified schedule. In the
meantime, the State Commission should institute system studies for the
distribution system with the available load data to assess the technical
distribution losses at different voltage levels.
31. We appreciate that the determination of cost of supply to different categories
of consumers is a difficult exercise in view of non-availability of metering data
and segregation of the network costs. However, it will not be prudent to wait
indefinitely for availability of the entire data and it would be advisable to initiate
a simple formulation which could take into account the major cost element to a
great extent reflect the cost of supply. There is no need to make distinction
between the distribution charges of identical consumers connected at different
nodes in the distribution network. It would be adequate to determine the voltage-
wise cost of supply taking into account the major cost element which would be
applicable to all the categories of consumers connected to the same voltage level
at different locations in the distribution system. Since the State Commission has
expressed difficulties in determining voltage wise cost of supply, we would like to
give necessary directions in this regard.
299
32. Ideally, the network costs can be split into the partial costs of the different
voltage level and the cost of supply at a particular voltage level is the cost at that
voltage level and upstream network. However, in the absence of segregated
network costs, it would be prudent to work out the voltage-wise cost of supply
taking into account the distribution losses at different voltage levels as a first
major step in the right direction. As power purchase cost is a major component of
the tariff, apportioning the power purchase cost at different voltage levels taking
into account the distribution losses at the relevant voltage level and the upstream
system will facilitate determination of voltage wise cost of supply, though not very
accurate, but a simple and practical method to reflect the actual cost of supply.
33. The technical distribution system losses in the distribution network can be
assessed by carrying out system studies based on the available load data. Some
difficulty might be faced in reflecting the entire distribution system at 11 KV and
0.4 KV due to vastness of data. This could be simplified by carrying out field
studies with representative feeders of the various consumer mix prevailing in the
distribution system. However, the actual distribution losses allowed in the ARR
which include the commercial losses will be more than the technical losses
determined by the system studies. Therefore, the difference between the losses
allowed in the ARR and that determined by the system studies may have to be
apportioned to different voltage levels in proportion to the annual gross energy
consumption at the respective voltage level. The annual gross energy
consumption at a voltage level will be the sum of energy consumption of all
consumer categories connected at that voltage plus the technical distribution
losses corresponding to that voltage level as worked out by system studies. In this
manner, the total losses allowed in the ARR can be apportioned to different
voltage levels including the EHT consumers directly connected to the
transmission system of GRIDCO. The cost of supply of the appellant’s category
who are connected to the 220/132 KV voltage may have zero technical losses but
will have a component of apportioned distribution losses due to difference
between the loss level allowed in ARR (which includes commercial losses) and the
technical losses determined by the system studies, which they have to bear as
consumers of the distribution licensee.
34. Thus Power Purchase Cost which is the major component of tariff can be
segregated for different voltage levels taking into account the transmission and
distribution losses, both commercial and technical, for the relevant voltage level
300
and upstream system. As segregated network costs are not available, all the other
costs such as Return on Equity, Interest on Loan, depreciation, interest on
working capital and O&M costs can be pooled and apportioned equitably, on
pro-rata basis, to all the voltage levels including the appellant’s category to
determine the cost of supply. Segregating Power Purchase cost taking into
account voltage-wise transmission and distribution losses will be a major step in
the right direction for determining the actual cost of supply to various consumer
categories. All consumer categories connected to the same voltage will have the
same cost of supply. Further, refinements in formulation for cost of supply can be
done gradually when more data is available.”

9.6.2 Cost to Serve, Average Cost of Supply and Cross Subsidy are also discussed extensively
in the above referred Order of the Hon’ble Appellate Tribunal of Electricity in
paragraphs, 36, 37, 38 and 39. The Hon’ble Appellate Tribunal of Electricity had
expressed the opinion that consequent to the Electricity (Amendment) Act 2003 with
effect from 15-6-2007 elimination of cross subsidy has been omitted which implies that
the tariff for a particular category of consumers need not be the mirror image of cost to
serve. Provisions of Tariff policy envisage that the tariff for various categories of
consumers shall be within +/- 20% of the average cost of service. A conjoint reading of
the Electricity Act 2003 after the amendment in the year 2007 with the other provisions
of the Act as well as the Tariff Policy, the intent of the Act seems to be that the tariff
need not be the mirror image of the cost of supply of electricity to a category of
consumers. The applicable portion of the Judgment which is contained in para 22 of the
decision of the Hon’ble Appellate Tribunal of Electricity in Appeals No. 102, 103 and
112 of 2010 rendered on 30th May 2011 is extracted below:
“ 22. After cogent reading of all the above provisions of the Act, the Policy and
the Regulations we infer the following:
i. The cross subsidy for a consumer category is the difference
between cost to serve that category of consumers and average
tariff realization of that category of consumers. While the cross-
subsidies have to be reduced progressively and gradually to avoid
tariff shock to the subsidized categories, the cross-subsidies may
not be eliminated.
ii. The tariff for different categories of consumer may progressively
reflect the cost of electricity to the consumer category but may not
be a mirror image of cost to supply to the respective consumer
categories.

301
iii. Tariff for consumers below the poverty line will be at least 50% of
the average cost of supply.
iv. The tariffs should be within ±20% of the average cost of supply by
the end of 2010-11 to achieve the objective that the tariff
progressively reflects the cost of supply of electricity.
v. The cross subsidies may gradually be reduced but should not be
increased for a category of subsidizing consumer.
vi. The tariffs can be differentiated according to the consumer’s load
factor, power factor, voltage, total consumption of electricity
during specified period or the time or the geographical location,
the nature of supply and the purpose for which electricity is
required.
Thus, if the cross subsidy calculated on the basis of cost of supply to the
consumer category is not increased but reduced gradually, the tariff of
consumer categories is within ±20% of the average cost of supply except
the consumers below the poverty line, tariffs of different categories of
consumers are differentiated only according to the factors given in Section
62(3) and there is no tariff shock to any category of consumer, no
prejudice would have been caused to any category of consumers with
regard to the issues of cross subsidy and cost of supply raised in this
appeal.

“29. The State Commission has indicated in the impugned order that the
voltage-wise cost determination is the first step in determining the
consumer-wise cost of supply but has expressed difficulties in
determination of voltage-wise cost of supply due to non-segregation of
costs incurred by the licensee related to different voltage levels and
determination of technical and commercial losses at different voltage
levels due to non-availability of meters. The State Commission has also
noted that the data submitted by the distribution licensee does not have
technical or commercial data support.”

From the above it can be seen that the following are the tests for deciding the tariff in
compliance of the Electricity Act, Tariff Policy and Regulations of the Commission.

1. As a first major step in the right direction, the voltage wise cost of supply shall be
calculated based on available data.
2. The Cost of service for each category of consumer will have to be worked out
separately.
3. The cross subsidy should be going down from year to year.

302
4. The tariff fixed for various categories should be within +/- 20% of the average cost of
service.
5. Tariff may be a mirror image of cost to supply to the respective consumer categories.
6. Tariff for different categories of consumers are differentiated only according to the
factors given in Section 62(3).
7. There is no tariff shock to any category of consumers.

9.6.3 If the above are carried out and the tariff decided accordingly, no prejudice would have
been caused to any category of consumers with regard to the issues of cross-subsidy and
cost of supply. The TANGEDCO has not submitted the voltage-wise cost of supply of
service calculations.

9.6.4 The Commission noted that sufficient data is not available for metering and segregation
of the network costs for determination of cost of supply for different categories of
consumers. However, the Commission is of the view that it would be advisable to initiate
a simple formulation which could take into account the major cost element to reflect the
cost of supply.

9.6.5 The Commission in this Order has estimated the voltage-wise cost of supply taking into
account the major cost element which would be applicable to all the categories of
consumers connected to the same voltage level at different locations in the distribution
system. The method has been allocated based on the following steps:
Step-1: The Commission has segregated the network costs into the partial costs of the
different voltage level. The cost of supply at a particular voltage level is the cost at that
voltage level and upstream network. However, in the absence of segregated network
costs, the Commission has to work out the voltage-wise network costs based on the
Network Details provided by the TANGEDCO and applied cost benchmarks data
provided in the Study Report on “Capital Costs Benchmarks for Distribution Business”
published by Forum of Regulator prepared by Administrative Staff College of India
(ASCI) for purpose of estimation of contribution of each voltage level in the Aggregate
revenue requirement of TANGEDCO. The following data has been used for purpose for
estimation of Voltage wise contribution:

303
Table 228: Network Details of TANGEDCO and Cost benchmarks

Line Length ASCI Report 33 KV Substation ASCI Report


Voltage Ratings Rs Lakh per
Ckt-km Rs lakh/km Nos.
Substation
33 kV OH* 6845 3.6 516 240
33 kV UG** 884 30
22 kV OH 40430 3.6
22 kV UG 19 30
11 kV OH 103559 2.5
11 kV UG 3085 20
LT OH 554077 2.4
LT kV UG 10743 5
*Overhead Line **Underground Line

Table 229: Distribution Sub-Stations details

Number of Benchmark
Voltage Capacity
Transformer Cost
Levels
Rs Lakh/
Nos. kVA
Substation
11 kV 7454 3727000 8.00
22 KV 1103 551500 8.00
11 kV 25910 6477500 3.20
22 KV 987 246750 3.20
11 kV 496 99200 3.20
22 KV 10917 2183400 3.20
11 kV 488 73200 2.20
22 KV 200 30000 2.20
11 kV 78976 7897600 2.20
22 KV 31285 3128500 2.20
11 kV 2083 156225 2.00
22 KV 1214 91050 2.00
11 kV 26529 1671327 2.00
22 KV 9840 619920 2.00
11 kV 2671 133550 2.00
22 KV 1562 78100 2.00
11 kV 6230 138784 1.40
22 KV 2126 55895 1.40
11 kV 150837 20374386
22 KV 59234 6985115
Total 210071 27359501

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The Commission has applied reasonable engineering estimation based on its experience
to arrive at voltage wise cost allocation shown in the table below:
Table 230: Estimated Voltage wise Cost allocation

Voltage Level Allocation of Network Cost


33 kV and above 9%
11 kV 7%
LT 84%

Step-2: The Commission has considered the allocation of power purchase cost by
apportioning the power purchase cost at different voltage levels taking into account the
distribution losses at the relevant voltage level and the upstream system. The
Commission has computed the power purchase requirement at particular voltage level by
grossing up energy consumption of all consumer categories connected at that voltage plus
the technical distribution losses corresponding to that voltage level. The Commission has
estimated T&D loss at various voltage level based on reasonable assumption on the
voltage wise T&D loss in its Petition. In the absence of voltage wise sales, Sales at
various voltage levels have been allocated to various voltage level based on reasonable
assumptions.
Table 231: Voltage wise T&D loss

Voltage Level TANGEDCO Commission


230 kV 0.95% 0.95%
110kV 1.50% 1.00%
33 kV 1.50% 1.10%
22 kV 2.50% 2.50%
11 kV 3.00% 4.50%
LT 7.35% 14.91%

Based on above data, the Commission has computed voltage wise cost to serve which is
as under:

Table 232: Voltage wise Cost to serve

Power Energy
Assumed Average Power Purchase Cost
Sales Purchase related
Voltage Level Loss Level PP Cost Apportionment
requirement Cost
% MU MU Rs/kWh Rs Crore Rs/kWh
33 kV and above 1.10% 12943 13344 2.91 3886 3.00
11 kV 4.50% 4372 4721 2.91 1375 3.14
LT 14.91% 41547 52719 2.91 15353 3.70
16.8% 58861 70784 20614

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Allocation
Energy
of Demand related Voltage wise Cost
Sales related
Network Cost to Serve
Voltage Level Cost
Cost
Rs Rs
MU % Rs/kWh Rs/kWh Rs/kWh
Crore Crore
33 kV and above 12943 9% 794 0.61 3.00 4680 3.62
11 kV 4372 7% 644 1.47 3.14 2019 4.62
LT 41547 84% 7294 1.76 3.70 22647 5.45
58861 100% 8732 29346 4.99

9.6.6 The Commission recognizes that this method is not very accurate, but this is a simple and
practical method to reflect the actual cost of supply, in absence of requisite data to
calculate the accurate cost of supply for each category of consumer. However, the
Commission recognises the importance of carrying out such an exercise in detail and
enables itself with a tool to test the retail tariff.

9.6.7 The Commission is also of the opinion that such an exercise will require selection of a
implementable methodology out of various options of working out Cost to Serve, viz.,
embedded, average, marginal etc., with various options of choice of system peak, i.e.,
single coincident peak-method, 12-coincident peak method, average excess method, etc.
The methodology for allocating costs attributed especially to ‘demand’ would also have
to be examined from different methods like coincident peak method, energy weightment
method, etc., with various options. Selection of peak will largely depend on the
TANGEDCO’s annual load curve including analysis of peak hours. Energy allocation
factor is required to be worked out using allocators based on peak energy consumption
and off-peak energy consumption factor. Extensive data collection exercise has to carried
out which will include in a ideal scenario, a 12-month load profile information of each
consumer category measured at consumer premises whereas the non-ideal solution could
be to profile the load on pre-dominantly domestic (mixed) 11kV feeders. Gathering of
load data will require appropriate statistical selection procedure so that the data is
representative of the population at large. It will be imperative to first determine the
criteria for selection of sample data for existing data as well as ideal data.

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9.6.8 Since, the exercise requires extensive data collection exercise for computing accurate cost
of supply, the Commission directs TANGEDCO to submit a study report on computation
of consumer category wise and voltage wise ‘cost to serve’ (CoS) along with the basis of
allocation of different costs and losses to various consumer categories at various voltage
levels. The costs for this purpose shall be Demand Related Costs, Energy Related Costs,
Service Related Costs, and Allocation of Residual Costs etc., which shall be examined by
the Commission and approved with such modifications as it may deem necessary or
consider an alternate computation. The Commission also directs TANGEDCO to submit
the action taken report within 45 days of the issuance of this report.

9.7 Average Cost of Supply and Cross subsidy reduction

9.7.1 The prevailing cross-subsidy and the reduction in cross-subsidy considered by the
Commission are given in the Table below:
Table 233: Average Cost of Supply and Cross subsidy reduction

Tariff as Ratio of Average Billing Rate to


Average Average Cost of Supply
per
Average Billing
Tariff Existing Revised
Categories Cost of Rate- Last
Order Tariff to Tariff to
Supply Approve Tariff
dated Current Current
Tariff Order
31.7.2010 ACOS ACOS
HIGH TENSION
Industries including railway
4.99 5.82 7.32 104% 117% 147%
traction
Railway Traction 4.99 5.10 6.60 101% 102% 132%
Government and aided
4.99 4.82 5.71 97% 97% 114%
educational institution
Private educational
4.99 5.47 6.91 111% 110% 139%
institutions
Cinema Theatre & Studios 4.99 5.48 8.20 111% 110% 165%
Places of Pub. Worship 4.99 3.55 5.87 69% 71% 118%
Commercial 4.99 8.12 9.32 147% 163% 187%
Lift Irrigation 4.99 0.53 3.53 10% 11% 71%
HT Total 4.99 5.98 7.43 108% 120% 149%

LOW TENSION
Domestic 4.99 2.48 3.46 51% 50% 69%

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Tariff as Ratio of Average Billing Rate to
Average Average Cost of Supply
per
Average Billing
Tariff Existing Revised
Categories Cost of Rate- Last
Order Tariff to Tariff to
Supply Approve Tariff
dated Current Current
Tariff Order
31.7.2010 ACOS ACOS
Huts 4.99 0.29 2.50 8% 6% 50%
Bulk Supply 4.99 4.00 4.00 84% 80% 80%
Public Lighting 4.99 3.44 5.50 72% 69% 110%
Government and aided
4.99 4.80 5.74 102% 96% 115%
educational institution
Private educational
4.99 5.71 6.84 116% 115% 137%
institutions
Cinema Theatre & Studios 4.99 5.65 7.40 116% 113% 148%
Places of Pub. Worship 4.99 3.17 4.18 66% 64% 84%
Cottage and Tiny Industries 4.99 2.82 4.19 57% 57% 84%
Power Loom 4.99 2.17 5.27 43% 43% 106%
Industries 4.99 4.94 6.33 103% 99% 127%
Agriculture 4.99 0.27 1.84 5% 5% 37%
Commercial 4.99 6.50 7.64 141% 130% 153%
Temporary Supply 4.99 10.50 10.50 220% 211% 211%
Total LT 4.99 2.67 3.97 54% 54% 80%
Total HT and LT 4.99 3.65 4.99 72% 73% 100%

9.7.2 The Commission notes that the present level of cross subsidisation of LT category
consumers has been brought down from 46% to 20%, which is a huge shift towards the
final goal of +20% of Average Cost of Supply.

9.7.3 Retail Tariff in State of Tamil Nadu was not revised for a period from FY 2003-04 to FY
2009-10, on account of non filing of the tariff petition by erstwhile TNEB. Increase in
average cost of supply has been sought by TANGEDCO, in this Tariff Petition. Cross-
subsidy has been in existence historically even in the period where there was no tariff
revision. The Commission also observes that tariff that was charged to most of the
categories of consumers was below average cost of supply. Hence, now when the
TANGEDCO has sought actual pass through of revenue gap in the form of Tariff
Increase and Regulatory Asset, the impact on each category of consumers is significant.
The Commission has attempted to reduce the cross-subsidy between the consumer
categories in this Order, by rationalising the tariff for subsidised categories and suitably

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adjusting the tariff for subsidising categories, vis-à-vis the prevailing average cost of
supply, while at the same time, trying to ensure that there is no tariff shock to any
consumer category. However, since the average cost of supply has been increasing
steadily, the average tariff increase required to meet the revenue gap is also increasing,
and hence, the subsidising consumers have not been able to experience tariff reduction in
absolute terms.

9.7.4 The Commission also noted that the sales towards wheeling were not considered while
approving sales of HT category consumers, which had a negative impact on consumption
mix and thereby reduced the scope for further reduction of cross-subsidy as it may have
to led to a tariff shock in the subsidised categories.

9.7.5 While the tariffs have been determined such that the revenue gap considered for the year
is met entirely through the revision in tariffs, it is possible that the actual revenue earned
by TANGEDCO may be higher or lower than that considered by the Commission, on
account of the re-categorisation and creation of new consumer categories/sub-categories,
etc. The revenue shortfall/surplus, if any, will be trued up at the time o