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KARNATAKA ELECTRICITY REGULATORY COMMISSION

TARIFF ORDER 2016

OF

HESCOM

ANNUAL PERFORMANCE REVIEW FOR FY15

&

ANNUAL REVENUE REQUIREMENT FOR FY17-19

&

REVISION OF RETAIL SUPPLY

TARIFF FOR FY17

30th

March 2016

6th and 7th Floor, Mahalaxmi Chambers

9/2, M.G. Road, Bengaluru-560 001

Phone: 080-25320213 / 25320214

Fax : 080-25320338

Website: www.karnataka.gov.in/kerc - E-mail: [email protected]

http://www.karnataka.gov.in/kerc

ii

C O N T E N T S

CHAPTER

Page No.

1 Introduction 3

1.0 Hubli Electricity Supply Company Ltd., 3

1.1 HESCOM at a Glance 5

1.2 Number of Consumers, Sales in MU and Revenue

detail of HESCOM

6

2 Summary of Filing and Tariff Determination

Process

7

2.0 Background for Current Filing 7

2.1 Preliminary Observations of the Commission 7

2.2 Public Hearing Process 8

2.3 Consultation with the Advisory Committee of the

Commission

9

3 Public Consultation – Suggestions / Objections

and Replies

10

3.1 List of Persons who filed written objections 10

3.2 List of persons who made oral submission in

public hearing

11

4 Annual Performance Review for FY15 12

4.0 HESCOM’s Application for APR for FY15 12

4.1 HESCOM’s Submission 12

4.2 HESCOM’s Financial Performance as per

Audited Accounts for FY15

13

4.2.1 Sales for FY15 15

4.2.2 Distribution Losses for FY15 20

4.2.3 Power Purchase 22

4.2.4 RPO Compliance by HESCOM for FY15 24

4.2.5 Operation and Maintenance Expenses 25

4.2.6 Depreciation 29

4.2.7 Capital Expenditure for FY15 29

4.2.8 Prudence Check of FY15 33

4.2.9 Interest and Finance Charges 38

4.2.10 Interest on Working Capital 39

4.2.11 Interest on Consumer Deposits 40

4.2.12 Other Interest and Finance Charges 40

4.2.13 Other Debits 41

4.2.14 Net Prior Period Credits / Charges 42

4.2.15 Return on Equity 42

4.2.16 Income Tax 43

4.2.17 Other Income 43

4.2.18 Fund Towards Consumer Relations / Consumer

Education

44

4.3 Abstract of Approved Revised ARR for FY15 44

4.4 Gap In Revenue for FY15 45

5.0 Annual Revenue Requirement for FY17-19 – 46

iii

HESCOM’s Filing

5.1 Annual Performance Review for FY15 & FY16 47

5.2 Annual Revenue Requirement for FY17-19 47

5.2.1 Capital Investments for FY17-19 47

5.2.2 Sales Forecast for FY17-19 53

5.2.3 Distribution Losses for FY17-19 66

5.2.4 Power Purchase for FY17-19 67

5.2.5 Sources of Power 69

5.2.6 HESCOM’s Power Purchase Cost and

Transmission Charges

73

5.2.7 RPO Target for FY17 77

5.2.8 O & M Expenses for FY17-19 78

5.2.9 Depreciation 82

5.2.10 Interest on Capital Loans 84

5.2.11 Interest on Working Capital 87

5.2.12 Interest on Consumer Security Deposit 88

5.2.13 Interest on belated payment of power purchase

cost

89

5.2.14 Other Debits 90

5.2.15 Return on Equity 90

5.2.16 Other Income 92

5.2.17 Fund towards Consumer Relations / Consumer

Education

93

5.3 Treatment of Regulatory Asset 93

5.4 Abstract of ARR for FY16 94

5.5 Segregation of ARR into ARR for Distribution

Business and ARR for Retail Supply Business

95

5.6 Gap in Revenue for FY17 97

5.7 Application for Additional Revenue Requirement

for FY17

98

6 Determination of Tariff for FY17 100

6.0 HESCOM’s Proposal and Commission Analysis for

FY17

100

6.1 Tariff Application 100

6.2 Statutory Provisions Guiding Determination of

Tariff

100

6.3 Consideration for Tariff setting 101

6.4 New Tariff Proposals by HESCOM 102

6.5 Revenue of Existing Tariff and Deficit for FY17 104

6.6 Other Issues 136

6.6.1 Tariff for Green Power 136

6.6.2 Determination of Wheeling Charges 136

6.6.3 Wheeling within HESCOM area 137

6.6.4 Wheeling of Energy using Transmission Network

or network of more than one licensee

139

6.6.5 Charges for Wheeling of energy by RE sources

(non REC route) to Consumers in the State

140

6.6.6 Charges for Wheeling Energy by RE sources

Wheeling energy from the State to a consumer /

other outside the State and for those opting for

140

iv

renewable energy certificate

6.7 Other Tariff Related issues 140

6.8 Cross Subsidy Levels for FY17 145

6.9 Effect of Revised Tariff 145

6.10 Summary of the Tariff Order 146

6.11 Commission’s Order 147

APPENDIX 148

APPENDIX – I 185

v

LIST OF TABLES

Table

No.

Content Page

No.

4.1 Revised ARR for FY15 – HESCOM’s Submission 12

4.2 Financial Performance of HESCOM for FY15 14

4.3 HESCOM’s Accumulated Profit / Losses 14

4.4 Approved and Actual Sales - FY15 20

4.5 Incentive for loss reduction for FY15 21

4.6 HESCOM’s Power Purchase for FY15 22

4.7 RPO Compliance as submitted by HESCOM for FY15 24

4.8 O & M Expenses for FY15 – HESCOM’s Submission 25

4.9 Approved O & M Expenses as per Tariff Order dated

12.05.2014

26

4.10 O & M Expenses of HESCOM as per Annual Audited

Accounts for FY15

26

4.11 Allowable O & M expenses for FY15 28

4.12 Capital Expenditure for FY15 30

4.13 Approved Vs Actual Capital Investment 33

4.14 Gist of Prudence check findings for FY15 34

4.15 Summary of Works having cost overrun 35

4.16 Summary of Works having Time overrun 35

4.17 Details of Amounts disallowed in APR FY15 36

4.18 Allowable Interest on Loans – FY15 38

4.19 Allowable Interest on Working Capital for FY15 40

4.20 Allowable Interest on Finance Charges 41

4.21 Allowable Other Debits 41

4.22 Allowable Return on Equity 43

4.23 Approved Revised ARR for FY15 as per APR 44

5.1 Proposed ARR for FY17-19 46

5.2 Proposed Capex for the control period 49

5.3 Category wise Approved number of Installations 64

5.4 Category wise approved energy sales 65

5.5 Projected Distribution Losses – FY17-19 – HESCOM’s

Submission

66

5.6 Approved & Actual Distribution Losses – FY10 to FY16 66

5.7 Approved Distribution Losses for FY17-19 67

5.8 Requirement of Electricity as filed by Licensees 68

5.9 Energy Requirement as filed by HESCOM 68

5.10 Power Purchase requirement approved for the

Control Period FY17 to FY19

69

5.11 Consolidated Power Purchases requirement for FY17 70



5.14 Abstract of Power Purchase allowed for ESCOMs for

the control period FY17 to FY19

73

5.15 Power Purchase Cost of HESCOM for FY17 75

vi



5.18 O & M Expenses for FY17-19 – HESCOM’s Proposal 79

5.19 Computation of Inflation Index for FY17 81

5.20 Approved O & M expenses for FY17-19 82

5.21 Depreciation – FY17-19 – HESCOM’s Proposal 83

5.22 Approved Depreciation for FY17-19 84

5.23 Interest on Capital Loans – HESCOM’s Proposal 85

5.24 Approved Interest on Capital Loans for FY17-19 86

5.25 Interest on Working Capital – HESCOM’s Submission 87

5.26 Approved Interest on Working Capital Loans for FY17-

19

88

5.27 Interest on Consumer Security Deposits for FY17-19 –

HESCOM’s Proposal

88

5.28 Approved Interest on Consumer Security Deposit for

FY17-19

89

5.29 Approved Interest and finance charges for FY17-19 90

5.30 Status of Debt Equity Ratio for FY17-19 91

5.31 Approved Return on Equity for FY17-19 92

5.32 Other Income for FY17-19 – HESCOM’s Proposal 92

5.33 Approved Other Income for FY17-19 93

5.34 Approved ARR for FY17-19 95

5.35 Approved Segregation of ARR – FY17-19 96

5.36 Approved Revised ARR for Distribution Business – FY17-

19

96

5.37 Approved ARR for Retail Supply Business – FY17-19 97

5.38 Revenue Gap for FY17 97

6.1 Revenue Deficit for FY17 105

6.2 Wheeling Charges 137

vii

LIST OF ANNEXURES

SL.NO. DETAILS OF ANNEXURES Page

No.

I Total Approved Power Purchase Quantum and Cost

of all ESCOMs for FY17

206

II Approved Power Purchase quantum and cost of

HESCOM for FY17

212

III Proposed and approved Revenue for FY17 218

IV Electricity Tariff – 2017 219

viii

ABBREVIATIONS

AAD Advance Against Depreciation

AEH All Electric Home

ABT Availability Based Tariff

A & G Administrative & General Expenses

ARR Annual Revenue Requirement

ATE Appellate Tribunal for Electricity

BBMP Bruhut Bangalore Mahanagara Palike

BDA Bangalore Development Authority

BESCOM Bangalore Electricity Supply Company

BMP Bangalore Mahanagara Palike

BST Bulk Supply Tariff

BWSSB Bangalore Water Supply & Sewerage Board

CAPEX Capital Expenditure

CCS Consumer Care Society

CERC Central Electricity Regulatory Commission

CEA Central Electricity Authority

CESC Chamundeshwari Electricity Supply Corporation

CPI Consumer Price Index

CWIP Capital Work in Progress

DA Dearness Allowance

DCB Demand Collection & Balance

DPR Detailed Project Report

EA Electricity Act

EC Energy Charges

ERC Expected Revenue From Charges

ESAAR Electricity Supply Annual Accounting Rules

ESCOMs Electricity Supply Companies

FA Financial Adviser

FKCCI Federation of Karnataka Chamber of Commerce & Industry

FR Feasibility Report

FoR Forum of Regulators

FY Financial Year

GESCOM Gulbarga Electricity Supply Company

GFA Gross Fixed Assets

GoI Government Of India

GoK Government Of Karnataka

GRIDCO Grid Corporation

HESCOM Hubli Electricity Supply Company

HP Horse Power

HRIS Human Resource Information System

ICAI Institute of Chartered Accountants of India

IFC Interest and Finance Charges

IW Industrial Worker

ix

IP SETS Irrigation Pump Sets

KASSIA Karnataka Small Scale Industries Association

KEB Karnataka Electricity Board

KER Act Karnataka Electricity Reform Act

KERC Karnataka Electricity Regulatory Commission

KM/Km Kilometre

KPCL Karnataka Power Corporation Limited

KPTCL Karnataka Power Transmission Corporation Limited

KV Kilo Volts

KVA Kilo Volt Ampere

KW Kilo Watt

KWH Kilo Watt Hour

LDC Load Despatch Centre

MAT Minimum Alternate Tax

MD Managing Director

MESCOM Mangalore Electricity Supply Company

MFA Miscellaneous First Appeal

MIS Management Information System

MoP Ministry of Power

MU Million Units

MVA Mega Volt Ampere

MW Mega Watt

MYT Multi Year Tariff

NFA Net Fixed Assets

NLC Neyveli Lignite Corporation

NCP Non Coincident Peak

NTP National Tariff Policy

O&M Operation & Maintenance

P & L Profit & Loss Account

PLR Prime Lending Rate

PPA Power Purchase Agreement

PRDC Power Research & Development Consultants

REL Reliance Energy Limited

R & M Repairs and Maintenance

ROE Return on Equity

ROR Rate of Return

ROW Right of Way

RPO Renewable Purchase Obligation

SBI State Bank of India

SCADA Supervisory Control and Data Acquisition System

SERCs State Electricity Regulatory Commissions

SLDC State Load Despatch Centre

SRLDC Southern Regional Load Dispatch Centre

STU State Transmission Utility

TAC Technical Advisory Committee

TCC Total Contracted Capacity

x

T&D Transmission & Distribution

TCs Transformer Centres

TR Transmission Rate

VVNL Visvesvaraya Vidyuth Nigama Limited

WPI Wholesale Price Index

WC Working Capital

xi

KARNATAKA ELECTRICITY REGULATORY COMMISSION,

BENGALURU - 560 001

Dated this 30th day of March, 2016

Order on HESCOM’s Annual Performance Review for FY15 & Annual

Revenue

Requirement for FY17-19 & Revision of

Retail Supply Tariff for FY17

In the matter of:

Application of HESCOM in respect of the Annual Performance Review for FY15,

Annual Revenue Requirement for FY17-19 and Revision of Retail Supply Tariff

for FY17, under Multi Year Tariff framework.

Present: Shri M.K.Shankaralinge Gowda Chairman

Shri H.D.Arun Kumar Member

Shri D.B.Manival Raju Member

O R D E R

The Hubli Electricity Supply Company Ltd., (hereinafter referred to

as HESCOM) is a Distribution Licensee under the provisions of the

Electricity Act 2003, and has, on 05.12.2015, filed the following

applications for consideration and orders:

a) Review of Annual Performance for FY15 and approval of

revised ARR thereon.

b) Approval of ARR for FY17-19

xii

c) Approval for revision of Retail Supply Tariff, for the financial

year 2016-17 (FY17)

In exercise of the powers conferred under Sections 62, 64 and other

provisions of the Electricity Act, 2003, read with KERC (Terms and

conditions for Determination of Tariff for Distribution and Retail Sale of

Electricity) Regulations 2006, and other enabling Regulations, the

Commission has considered the applications and the views and

objections submitted by the consumers and other stakeholders. The

Commission’s decisions are given in this order, Chapter wise.

xiii

CHAPTER – 1

INTRODUCTION

1.0 Hubli Electricity Supply Company Ltd.,:

Hubli Electricity Supply Company Ltd., (HESCOM) is a Distribution

Licensee under Section 14 of the Electricity Act, 2003 (hereinafter

referred to as the Act). HESCOM is responsible for purchase of power,

distribution and retail supply of electricity to its consumers and also

providing infrastructure for open access, Wheeling and Banking in its

area of operation which includes seven Districts of the State as

indicated below:

HESCOM is a registered company under the Companies Act, 1956,

incorporated on 30th April, 2002. HESCOM commenced its operations

on 1st June, 2002.

1. Bagalkot

2. Belgaum

3. Bijapur

4. Dharwad

5. Gadag

6. Haveri

7. Uttara Kannada

xiv

O&M Zones O&M Circles O&M Divisions

Hubli Zone

Hubli Circle

Hubli Urban

Hubli Rural

Dharwad Urban

Dharwad Rural

Gadag

Haveri Circle

Haveri

Ranebennur

Sirsi Circle

Sirsi

Karwar

BelgaumZone

Belgaum Circle

Belgaum Urban

Belgaum Rural

Bailahongal

Ghataprabha

Chikkodi Circle

Chikkodi

Athani

Raibagh

Bijapur Circle

Bijapur

Indi

Jamakandi

Bagalkot Circle

Bagalkot

Basavana Bagewadi

Mudhol

xv

The O & M divisions of HESCOM are further divided into seventy eight

sub-divisions. These sub-divisions are further divided into 255 O & M

section offices.

Section offices are the base level offices looking into the operation

and maintenance of the distribution system in order to provide reliable

and quality power supply to HESCOM’s consumers.

1.1 HESCOM at a glance:

The profile of the HESCOM is as indicated below:

Source: HESCOM Website/ Tariff Application / Audited Accounts for FY15

Sl.

No. Particulars Statistics

1. Area Sq. km. 54513

2. Districts Nos. 7

3. Taluks Nos. 49

4. Population Lakhs 166

5. Consumers as on

31.01.2016

Lakhs 42.16

6. Energy Sales for FY15 MU 9208.39

7. Zone Nos. 2

8. DTCs as on 31.01.2016 Nos. 144482

9. Assets as on 31.03.2015 Rs. in Crores 6431.24

10. HT lines as on 31.01.2016 Ckt. kms 65383

11. LT lines as on 31.01.2016 Ckt. kms 114051

12. Total employees strength:

A Sanctioned Nos. 15938

B Working Nos. 7868

13. Revenue Demand Rs. in Crores 4851.58

14. Revenue Collection Rs. in Crores 4179.27

xvi

1.2 Number of Consumers, Sales in MU and Revenue details of HESCOM in

FY15 is as follows:

CATEGORY

HESCOM

No. of

Installation

Sales in

MU

Revenue in

Rs.Crs.

Domestic 2993380 1407.28 606.86

Commercial 303582 485.66 391.11

Industrial 97442 1241.88 786.26

Agriculture 603172 5422.17 2567.51

Others 92476 651.4 553.51

Total 4090052 9208.39 4905.25

HRECS is one of the distribution licensees purchasing power from HESCOM as

per the bulk supply tariff determined by the Commission. HRECS has filed

separate application for approval of ARR and retail supply tariff for its

distribution and supply area for the control period FY17 - 19.

HESCOM has filed its application for approval of Annual Performance Review

for FY15, Annual Revenue Requirement (ARR) for FY17-19 and revision of

Retail Supply Tariff for FY17.

HESCOM’s application, the objections / views of stakeholders thereon and the

Commission’s decisions on the approval of Annual Performance Review for

FY15, ARR for FY17-19 and revision of Retail Supply Tariff for FY17 are

discussed in detail in the subsequent Chapters of this Order.

xvii

CHAPTER – 2

SUMMARY OF FILING & TARIFF DETERMINATION PROCESS

2.0 Background for Current Filing:

The Commission in its Tariff Order dated 6th May, 2013 had approved

the ERC for FY14 to FY16 and the Retail Supply Tariff of HESCOM for

FY14 under MYT principles for the control period of FY14 to FY16.

HESCOM in its present application filed on 15th December, 2015 has

sought approval for the Annual Performance Review (APR) for FY15

based on the audited accounts, ARR for the fourth control period i.e.

FY17-19 and revision of Retail Supply Tariff for FY17.

2.1 Preliminary Observations of the Commission

After a preliminary scrutiny of applications the Commission had

communicated its observations to HESCOM on 1st January, 2016. The

preliminary observations were mainly on the following points:

Capital Expenditure

Sales Forecast

Assessment of IP set consumption

Power Purchase

Issues pertaining to items of revenue and expenditure

Other new proposals

Compliance to Directives

In response HESCOM has furnished its replies on 11th January, 2016. The

replies furnished by HESCOM are considered in the respective Chapters of

this Order. Further, the Commission also held a validation meeting to discuss

the proposals of HESCOM on 10th February, 2016.

xviii

2.2 Public Hearing Process:

As per the Karnataka Electricity Regulatory Commission (Terms and

Conditions for Determination of Tariff for Distribution and Retail Sale of

Electricity) Regulations, 2006, read with the KERC Tariff Regulations,

2000, and KERC (General and Conduct of Proceedings) Regulations

2000, the Commission vide its letter dated 1st January, 2016 treated the

application of HESCOM as petition and directed HESCOM to publish

the summary of its ARR and Tariff proposals in the newspapers calling

for objections, if any, from interested persons.

Accordingly, HESCOM has published the same in the following

newspapers:

Name of the News Paper Language Date of Publication

INDIAN EXPRESS English 17/1/2016

&

18/1/2016

TIMES OF INDIA

PRAJAVANI Kannada

VIJAYAVANI

HESCOM’s application on APR of FY15, ARR for FY17-19 and revision of

retail supply tariff for FY17 were also hosted on the web sites of HESCOM

and the Commission for the ready reference and information of the general

public.

In response to the application of HESCOM, the Commission has received ten

statements / letters of objections. HESCOM has furnished its replies to all

these objections. The Commission has held a Public Hearing on 3rd March,

2016 at Dharwad. The details of the written / oral submissions made by

various stake holders and the responses from HESCOM thereon and

Commissions’ views have been discussed in Chapter - 3 / Appendix to this

Order.

2.3 Consultation with the Advisory Committee of the Commission:

xix

The Commission has also discussed the proposals of KPTCL and all

ESCOMs in the State Advisory Committee meeting held on 10th March, 2016.

During the meeting the following important issues were also discussed:

Performance of KPTCL / ESCOMs during FY15

Major items of expenditure of KPTCL / ESCOMs for FY17-19

Members of the Committee have offered valuable suggestions on the

proposals. The Commission has taken note of these suggestions while

passing the order.

xx

CHAPTER – 3

PUBLIC CONSULTATION

SUGGESTIONS / OBJECTIONS & REPLIES

3.1 In pursuance of the provisions of section 64 of the Electricity Act, 2003,

the Commission undertook the process of public consultation in order

to obtain suggestions/views/objections from the interested stake-

holders on the application for APR for FY15 and ERC, ARR and Retail

supply Tariff for FY 17, FY18 and FY19 under the MYT Principles filed by

HESCOM. In the written submissions as well as during the public

hearing some Stake-holders and public have raised several objections

to the Tariff Applications filed by HESCOM. The names of the persons

who have filed written objections and made oral submissions are given

below:

List of persons who filed written objections:-

Sl.

No

Applicatio

n No. Name & Address of Objectors

1 HB-01 Sri Yagnanarayana M.N, General Secretary, Laghu

Udyog Bharati – Karnataka, Bengaluru.

2 HB-02 Sri G.G. Hedge, President Balakedarara

Hitharakshaka Sangha, Sirsi.

3 HA-01 Sri S.K Hedge, Kumta Taluk Vidhyuth Balakedarara

Hitharakshana Samithi, Kumta

4 HA-02 Sri Siddheshwar G Kammar, Hon. Gen. Secretary,

Karnataka Chamber of Commerce & Industry,

Hubballi.

5 HA-03 Shri R.K. Rangrej, Ex-President, Chairman, Electricity

Sub- Committee, Gadag District Chamber of

Commerce & Industry, Gadag.

6 HA-04 Shri. Shantilal Mostawal, Hon. Secretary, Karnataka

Cotton Association, Hubballi

7 HA-05 Sri G.G. Hegde Kadekodi, President, Uttara

Kannada District Chamber of Commerce and

Agriculture, Sirsi.

8 HA-06 Sri Aravind K Pai, Kumta.

9 HA-07 Sri K.B. Arasappa, Hon. Gen. Secretary, KASSIA,

Bengaluru.

10 HA-08 Sri Lokaraj, Secretary, Federation of Karnataka

Chambers of Commerce and Industry, Bengaluru

11 AE-01 Sri P.N. Karanth, Kundapura.

xxi

12 AE-02 Sri Praveen Sood, IPS, Additional Director General of

Police, Administration, Bengaluru

3.2 List of the persons, who made oral submissions during the Public

Hearing, held on 03.03.2016.

SL.No. Names & Addresses of Objectors

1 Sri G.G. Hedge Kadekodi for FKCCI, North Kanara District

Chamber Sirsi, Consumer Protection Society, Sirsi & Karnataka

Electricity Governance Network

2 Sri R.G. Joshi, Kumta

3 Sri Prabhakar Nagarmunchi, KASSIA, Bangalore.

4 Sri Aravind K Pai, Kumta

5 Sri S. K. Hedge, Kumta

6 Sri Siddeshwar Kammar & Sri A.S. Kulkarni, Karnataka Chamber

of Commerce, Hubballi.

7 Sri Pramod Shanbhag, Shreyas Papers, Dandeli

8 Sri Basavaraj Ingalagi, Belagavu (Hosur Village).

9 Sri R.K. Rangrej, Gadag District Chamber of Commerce.

10 Sri Chethan Jain, I Ex.

11 Sri A.A. Thargar, Dharwad.

3.3 The gist of the objections, Replies by HESCOM and the Commission’s

Views is appended to this order in Appendix-1

xxii

CHAPTER – 4

ANNUAL PERFORMANCE REVIEW FOR FY15

4.0 HESCOM’s Application for APR for FY15:

The HESCOM, in its application dated 15th December, 2015, has sought

approval of revised ARR in the Annual Performance Review (APR) for

FY15, based on the Audited Accounts.

The Commission in its letter dated 1st January, 2016 had communicated

its preliminary observations. The HESCOM, in its letter dated

11thJanuary, 2016 has furnished its repliesto the preliminary observations

of the Commission.

The Commission in its Multi Year Tariff (MYT) Order dated 6th May, 2013

had approved the HESCOM’s Annual Revenue Requirement (ARR) for

FY14 – FY16. Further, in its Tariff Order dated 12th May, 2014, the

Commission had approved the APR for FY13 and had revised the ARR

for FY15 along with Retail Supply Tariff for FY15.

The Annual Performance Review for FY15 based on the HESCOM’s

Audited Accounts is discussed in this Chapter.

4.1 HESCOM’s Submission:

The HESCOM has submitted its proposals for revision of ARR for FY15

based on the Audited Accounts as follows:

TABLE – 4.1

Revised ARR for FY15 – HESCOM’s Submission Amount in Rs. Crores

Sl.

No Particulars As Filed

1 Energy @ Gen Bus in MU 11513.19

2 Energy @ Interface in MU 11059.81

3 Distribution Losses in % 16.74%

Sales in MU

4 Sales to other than IP & BJ/KJ 3849.77

5 Sales to IP & BJ/KJ 5358.62

Total Sales in MU 9208.39

Revenue at existing tariff in Rs Crs

xxiii

6 Revenue from tariff and Misc. Charges 2292.12

7 RE Subsidy 2559.46

Total Revenue 4851.58

Expenditure in Rs Crs

8 Power Purchase Cost 3330.10

9 Transmission charges of KPTCL 445.54

10 SLDC Charges 9.94

Power Purchase Cost including cost of

transmission 3785.58

11 Employee Cost

12 Repairs & Maintenance

13 Admin. & General Expenses

Total O&M Expenses 580.95

14 Depreciation 99.05

Interest & Finance charges

15 Interest on Loans 180.75

16 Interest on Working capital 18.43

17 Interest on consumer deposits 44.64

18 Other Interest & Finance charges 2.47

19

Less interest & other expenses

capitalised 0.00

Total Interest & Finance charges 246.29

20 Other Debits (0.78)

21 Net Prior Period Debit/Credit 0.00

22 Return on Equity 0.00

23 Provision for taxation 0.00

24 Other Income (8.08)

Net ARR 4719.17

Considering the revenue of Rs.4851.58 Crores against a net ARR of

Rs.4719.17 Crores, the HESCOM has reported surplus in revenue of

Rs.132.41 Crores for FY15.

4.2 HESCOM’s Financial Performance as per Audited Accounts for FY15:

An overview of the financial performance of the HESCOM for FY15 as

per their Audited Accounts is given below:

xxiv

TABLE – 4.2

Financial Performance of HESCOM for FY15

Amount in Rs.Crores

Sl.

No. Particulars FY15

Receipts

1 Revenue from Tariff and misc.charges 2297.20

2 Tariff Subsidy 2554.38


Expenditure



5 SLDC Charges 9.94

Power Purchase Cost including cost of transmission 3785.10

6 O&M Expenses 580.96






11 Interest on belated payment of power purchase cost 102.15



13 Other Debits (0.78)


15 Other income 26.58

Net ARR 4821.32

As per the Audited Accounts, the HESCOM has earned a profit of

Rs.30.26 Crores for FY15. The profits / losses reported by the HESCOM in

its audited accounts in the previous years are as follows:

TABLE – 4.3

HESCOM’s Accumulated Profits / Losses

Particulars

Amount in

Rs. Crs

Accumulated losses as at the end of FY10 (659.08)

Losses incurred in FY11 (64.70)

Profit earned in FY12 39.75

Profit earned in FY13 40.69

xxv

Losses incurred in FY14 (576.25)

Profits earned in FY15 30.26

Accumulated losses as at the end of FY15 (1189.33)

As seen from the above table, the accumulated losses are Rs.1189.33

Crores as at the end of FY15.

Commission’s analysis and decisions:

The Annual Performance Review for FY15 has been taken up duly

considering the actual expenditure as per the Audited Accounts

against the expenditure approved by the Commission in its Tariff Order

dated 12th May, 2014. The item wise review of expenditure and the

decisions of the Commission thereon are as discussed in the following

paragraphs:

4.2.1 Sales for FY15:

a) Sales- other than IP Sets:

The Commission in its Tariff order dated 12.05.2014, had approved total

sales to various consumer categories at 8855.09 MU as against the

HESCOM’s proposal of 9115.70 MU. The Actual sale of HESCOM as per

the current APR filing [FORMAT D-2] is 9208.39 MU, indicating an

increase in sale to an extent of 353.30 MU, as compared to the

approved sales (as also to its own projected sale). There is an increase

in sales to LT consumers by 543.47 MU and there is a reduction in sale to

an extent of 190.18 MU in HT-categories.

The Commission notes that, as against approved sales of 4073.43 MU to

categories other than BJ/KJ and IP sets [excluding HRECS sales and

supply to the SEZ MU], the actual sales achieved by HESCOM is 3849.77

MU, resulting in the reduction of sales to these categories by 223.66 MU.

Further, the HESCOM has sold 5358.62 MU to BJ/KJ and IP categories

against approved sales of 4781.67 MU, resulting in increased sales to

these categories by 576.95 MU.

xxvi

The actual share of sales to categories other than BJ/KJ and IP sets is

41.81% as against the estimated share of 46.00% resulting in 4.09

percentage point reduction in share to these categories, while the

actual share of sales to BJ/KJ and IP sets has increased by the same

percentage point.

The Commission notes that the major category contributing to the

reduction in sales with respect to the estimates are HT industries (179.53

MU), and LT- 2a (31.14 MU). Further, the sales to IP sets have increased

by 570.24 MU.

In response to the preliminary observations, the HESCOM in its reply has

stated that, HT sales have decreased due to reduction in sales to

categories other than HT-2c as compared to the estimated sales to

these categories. Further, it is stated that the reduction in sale to HT

category is due to HT consumers drawing power under Open Access.

HESCOM has also stated that there is increased sales in LT-1, LT4 (a) &

(c), LT5 and LT6 categories.

The Commission notes that as per the information furnished by the

HESCOM, there is considerable increase in open access sales from

97.37 MU in FY13 to 252.36 MU in FY15.

b) Sales to IP Sets:

In its Tariff Order dated 6th May, 2013, the Commission had approved

specific consumption of IP sets at 8,244 units/installation/annum for the

entire control period of the FY14 to the FY16, whereas, as per the IP sets

consumption reported by the HESCOM in its tariff filing, the specific

consumption works out to 8,996 units /installation/annum for the FY15,

which indicates a huge increase in the specific consumption by 752

units/installation/annum. The total IP sets consumption reported by the

HESCOM for the FY15 was 5,266.70 MU as against 4,696.46 MU sales

quantum approved by the Commission. The difference in IP sets

consumption between the approved and the actual for the FY15 is

570.24 MU.Thus, the specific consumption has increased by 752 units

xxvii

/installation/annum with the corresponding increase in sales also by a

huge quantum of 570.24 MU to that of the approved quantum by the

Commission for the FY15. It is noted that the specific consumption

reported for the FY15 has increased by about 9 per cent which is very

huge compared to the specific consumption achieved by the

HESCOM for the previous years. It is also noted that the specific

consumption should not increase over the years as it remains fairly

constant given that the 11 kV feeders are segregated as rural &

agricultural feeders and power supply to agricultural feeders is

regulated. Further, the consumption of the IP sets can also be

measured accurately on the basis of energy meters’ data of

agricultural feeders at the substations which was not possible earlier.

Moreover, the Commission had approved 5,72,306 as number of

installations, likely to be serviced in the FY15; whereas the actual

number of installations serviced, as reported by the HESCOM, was

6,01,939, an increase by 29,633 numbers. This indicates that, the

increase in number is about 5 per cent of installations serviced during

the FY15, as compared to the approved number of installations by the

Commission. It is noted that the increase in sales can be partly

attributed to increase in number of IP set installations serviced under

regularization scheme as compared to the projected number of

installations for the FY15.

The Commission in its Tariff Order dated 12th May, 2014 had directed

the HESCOM to submit to the Commission every month, the IP sets

consumption based on the feeder energy meters’ data, of agriculture

feeders segregated under NJY, duly deducting the energy losses in the

distribution system. But, the HESCOM has not submitted the metered

consumption data of agricultural feeders every month regularly to the

Commission. The HESCOM in its tariff application has also not submitted

such data of IP sets for the period from April 2014 to March 2015 as

required by the Commission.

xxviii

The Commission in its preliminary observations on the HESCOM’s APR

for the FY15, had directed the HESCOM to justify its claims of IP sets

consumption of 5,266.70 MU considered for the FY15, with necessary

data in support of the same and the methodology adopted to arrive

at the energy loss figures in the 11 kV distribution system for the FY15.

The HESCOM was also directed to furnish whether the total IP sets

consumption for the FY15 has been computed by considering the

specific consumption of agricultural feeders segregated under NJY as

directed or on the basis of readings obtained from the meters fixed to

sample DTCs feeding predominantly IP set loads. However, the

HESCOM, in its reply on the preliminary observations made by the

Commission, has stated that it has analyzed 142 numbers of

agricultural feeders segregated under NJY from April, 2015 onwards

only. It is submitted that, as per the analysis, the IP set consumption in

the river bed areas is ranging from 900 units to 1,667 units, whereas in

other areas the consumption is ranging from 378 units to 1,003 units and

the average consumption is only 603 units per installation per month.

Further, it is also submitted that in some of the feeders, bifurcation of IP

set loads is under progress and wherever exclusive agricultural feeders

are not available, the IP set consumption has been assessed on the

basis of the metered data of sample DTCs feeding predominantly IP

set loads. The HESCOM has requested the Commission to consider the

specific consumption at 727 units per installation per month as filed in

its tariff application.

The Commission notes that, the HESCOM has not submitted the IP sets

consumption details on the basis of meter readings obtained from the

agricultural feeders segregated under NJY, despite achieving

significant progress in commissioning of feeders under NJY, instead, it

has considered the metered data of sample DTCs feeding

predominantly IP set loads as per the methodology approved by the

Commission up to the FY14. It is noted that the HESCOM has not

submitted these details for the FY15. It is also not clear as to how the

HESCOM has computed the total IP set consumption of 5,266.70 MU for

xxix

the FY15 without any basis for arriving at the net IP sets consumption.

Further, the HESCOM has also not submitted the necessary data to

justify its claim in respect of IP sets consumption considered for the

FY15. The result of the analysis made by the HESCOM from April, 2015

onwards cannot be a basis for arriving at the total consumption of IP

sets for the previous period, i.e., FY15. It is clear that the HESCOM has

not complied with the Commission’s direction to it to submit the

metered data, despite segregating a large numbers of 11 kV feeders

as rural and agricultural feeders under NJY, wherein it was possible to

compute the total IP set consumption accurately on the basis of

feeder energy meter readings.

Further, the Commission, during the validation meeting held on

10.02.2016, had also directed the HESCOM to submit the IP sets

consumption on the basis of energy meter readings of 11 kV

agricultural feeders which have been segregated under NJY. In

response, the HESCOM has submitted the details of IP sets consumption

based on the meter data in respect of DTCs feeding predominantly IP

loads, in support of its claims in respect of total IP sales to an extent of

5,266.70 MU for the FY15. The HESCOM has stated that the bifurcation

of loads on segregated agricultural feeders was not fully effected in

the field and for that reason, the consumption on the basis of

agricultural feeders for the FY15 could not be furnished to the

Commission and has requested the Commission to approve the sales

of 5,266.70 MU made to IP sets.

The Commission notes that, due to field issues in transferring of loads

from agricultural feeders on to the NJY feeders, the HESCOM has

assessed the IP set consumption for the FY15 based on the readings

from the meters provided to DTCs feeding predominantly IP set loads.

The HESCOM should have addressed these field issues while

commissioning of feeders to ensure that loads on the respective

feeders were transferred to enable taking accurate consumption of IP

sets. Further, the Commission notes that the increase in sales to IP sets

xxx

for the FY15 can only be partly attributed to the fact that the HESCOM

has serviced 29,633 number of IP sets more than it has projected. The

increase in sales could be also due to supplying more number of hours

of power to IP sets on agricultural feeders than stipulated by the

Government. Hence, the HESCOM is directed to regulate henceforth

the hours of power supply to exclusive agricultural feeders as stipulated

by the Government.

For the present accepting the HESCOM’s explanation on this issue, in

the absence of feeder wise energy meter data in respect of

segregated agricultural feeders, based on the meters provided to

DTCs feeding predominantly IP set loads, the Commission decides to

approve 5,266.70 MU sales to IP sets for the FY15 as filed by the

HESCOM, in its tariff application.

The HESCOM is directed to report the total IP set consumption on the

basis of data from energy meters in respect of agricultural feeders

segregated under NJY duly calculating the distribution system losses in

11 KV lines, distribution transformers and LT line, to the Commission

every month regularly. The HESCOM is also directed to calculate the

actual distribution losses prevailing in 11 kV lines, DTCs and LT lines as

per the methodology approved by the Commission for arriving at the

net IP sets consumption.

c) Total Approved Sales:

The category wise sales approved by Commission and the

actuals for FY15 are indicated in the table below:

TABLE – 4.4

Approved & Actual Sales – FY15

Figures in MU

Category Approved

Actuals

considered

for APR

Difference (Actuals

–Approved)

LT-2a* 1346.50 1315.36 -31.14

LT-2b 12.54 13.68 1.14

LT-3 383.71 371.11 -12.60

xxxi

LT-4b 28.57 17.02 -11.55

LT-4c 0.77 1.07 0.30

LT-5 303.44 315.81 12.37

LT-6 199.58 203.28 3.70

LT-6 131.37 133.13 1.76

LT-7 20.07 22.61 2.54

HT-1 200.37 195.96 -4.41

HT-2a 1105.60 926.07 -179.53

HT-2b 121.71 114.55 -7.16

HT-2c 26.00 47.37 21.37

HT-3a & b 148.36 137.38 -10.98

HT-4 18.11 15.70 -2.41

HT-5 26.73 19.67 -7.06

Sub total 4073.43 3849.77 -223.66

BJ/KJ 85.21 91.92 6.71

IP 4696.46 5266.70 570.24

Sub total 4781.67 5358.62 576.95

Grand total** 8855.09 9208.39 353.29 *Including BJ/KJ installations consuming more than 18 units/month

**Excludes sale to HRECS and SEZ.

Thus, the Commission approves sales of 9208.39 MU for FY-15.

4.2.2 Distribution Losses for FY15:

HESCOM’s Submission:

The Commission had approved distribution losses for FY15 as

shown in the table below:

Range FY15

Upper limit 19.50%

Average 19.00%

Lower Limit 18.50%

HESCOM has reported the distribution loss level of 16.74% in its

annual accounts for FY15.

1 Energy at Interface Points in MU 11059.46

2 Total sales in MU 9208.39

3 Distribution losses as a percentage of

input energy at IF points 16.74%


The distribution losses of 16.74% reported by the HESCOM is based on

the sales of 9208.39 MU as against the energy of 11059.46 MU at

interface points. Considering the approved range of losses for FY15, the

xxxii

HESCOM has achieved reduction of distribution losses below the lower

limit of allowable losses by 1.76 percentage point. Hence HESCOM is

entitled to incentive for better performance in loss reduction, during

FY15 as follows:

TABLE – 4.5

Incentive for loss reduction for FY15

Particulars FY15

Actual input at IF points as per audited

accounts in MU 11059.46

Retail sales as per audited accounts in

MU 9208.39

Percentage distribution losses 16.74%

Lower limit target for distribution loss 18.50%

Reduction in loss in percentage point 1.76%

Input at target loss for actual sales in MU 11298.64

Decrease in input due to reduction in

distribution losses in MU 239.18

Average cost of power purchase at IF

points in Rs./unit 2.89

Savings in power purchase cost due to

reduction of losses in Rs.Crores 69.18

50% of savings to be included in APR 15

(balance 50% being the share of

consumes) 34.59

Accordingly, the Commission decides to add an amount of Rs.34.59

Crores to the allowable ARR for FY15.

4.2.3 Power Purchase:

The Commission in its Tariff order dated 12th May, 2014 had approved

source wise quantum and cost of power purchase for FY15. The

HESCOM, in its application, has submitted the details of actual power

purchase for FY15 for reviewing its Annual Performance. The details of

power purchase is listed as under:

TABLE – 4.6

HESCOM’s POWER PURCHASE FOR FY 15

Source

Actuals for FY15 Approved for FY15

Difference of Actuals

over the Approved-for

FY15

% increase /decrease over

approved figures

xxxiii

Energy in

MUs

Cost in

Rs Cr

Rate

in Rs

per

Unit

Energy in

MUs

Cost in

Rs Cr

Rate

in Rs

per

Unit

Energy

in MUs

Cost

in Rs

Cr

Rate

in Rs

per

Unit

Energy Cost Rate

KPCL

Hydel

Stations

3474.26 193.09 0.56 3569.02 184.27 0.52 -94.76 8.82 0.04 -2.66 4.79 7.64

KPCL-

Thermal

Stations

2794.25 1123.44 4.02 2908.45 1107.63 3.81 -114.20 15.81 0.21 -3.93 1.43 5.57

Total 6268.51 1316.53 2.10 6477.47 1291.9 1.99 -208.96 24.63 0.11 -3.23 1.91 5.30

CGS 2387.02 735.13 3.08 2592.37 811.6 3.13 -205.35 -76.51 -0.05 -7.92 -9.43 -1.63

Major IPPs 1057.40 496.12 4.69 1208.4 551.7 4.57 -151.00 -55.58 0.13 -12.50 -10.07 2.77

IPPs -Minor

(NCE

Projects)

1017.61 380.64 3.74 1065.3 389.55 3.66 -47.69 -8.91 0.08 -4.48 -2.29 2.29

Other

States

Projects

28.87 9.08 3.15 37.26 11.87 3.19 -8.39 -2.79 -0.04 -22.52 -23.50 -1.27

Short

/Medium

term

including U

I & Sce-11

554.15 277.91 5.02 279.55 145.82 5.22 274.60 132.09 -0.20 98.23 90.58 -3.86

Transmissio

n Charges

(KPTCL &

PGCIL)

- 530.20 - - 515.92 - 0.00 14.28 0.00 - 2.77 -

LDC

Charges

(POSOO &

SLDC)

- 11.19 - - 5.91 - 0.00 5.28 0.00 - 89.34 -

Energy

Balancing

199.6 27.93 1.40 - - - 199.60 27.93 1.40 - - -

Others

Charges

- 0.59 - - - - 0.00 0.59 0.00 - - -

TOTAL 11513.19* 3785.31* 3.29 11660.35 3724.31 3.19 -147.19 61.01 0.09 -1.26 1.64 2.94

*Excluding HRECS

Commission’s analysis and decisions;

1. The actual power purchase for FY15, as filed by the HESCOM, for

approval of ARR in the Annual Performance Review is 11513.16 MU

amounting to Rs.3785.32 Crores as against the approved quantum

of 11660.35 MU amounting to Rs.3724.31 Crores. Thus, there is a

reduction in quantum of power purchase to an extent of 147.19 MU

with an increase in the cost to an extent of Rs. 61.01 Crores.

2. On an analysis of the source-wise approved and actual power

purchases, the following deviations in quantum of energy and its

cost of purchase are found:

As against the approved quantum of 11660.35 MU, the actual

power purchased by HESCOM is 11513.16 MU for FY15, which is

around 1.26% of the approved quantum. Such decrease during

xxxiv

FY14 was 2.67%. The reduction in sales reflected in reduced power

purchase.

i. On verification of the source-wise power purchase, it is found that,

there is lesser energy supply from KPCL thermal, CGS, NCE and

other State projects to an extent of 621.39 MU at a cost of

Rs.119.16 Crores. Consequently, the HESCOM has purchased short

term power to a tune of 554.15 MU at a cost of Rs.277.91 Crores.

The HESCOM has incurred an additional cost Rs.132.09 Crores

towards short term/medium term Power Purchase resulting in an

increase in per unit cost by 9 Paise.

ii. All these factors including the change in the source wise mix of

supply and reconciliation of energy and its cost among ESCOMs

have resulted in higher average power purchase cost of the

HESCOM at Rs.3.29 per KWh as against the approved rate of

Rs.3.19 per KWh leading to an increase by Rs.0.09 per unit. During

FY14, the increase was Rs.0.26 per unit. The increase in per unit

cost is 2.94%, in FY15.

3. The Commission notes that, the SLDC is yet to implement the intra-

state ABT scheme. The Commission therefore directs SLDC to take

appropriate action immediately to expedite the implementation of

intra-state ABT scheme and to host such details on its website.

4. The Commission in its Tariff order dated 2nd March, 2015 had

directed HESCOM to move the Government to effect necessary

adjustments in the tariff subsidy payable to ESCOMs and ensure

that there are no inter- ESCOM payments outstanding in their

accounts. Further, HESCOM was also directed to reconcile the inter-

ESCOM exchanges and its costs duly making necessary

adjustments to ensure proper accounting of energy and its cost.

5. It is observed that, inter-ESCOMs’ balanced energy to an extent of

199.6 MU at a cost of Rs.27.93 Crores has resulted in increased

receivables of HESCOM to an extent of Rs.27.93 Crores in FY15.

xxxv

6. HESCOM is directed to reconcile the inter ESCOM energy

exchanges and its costs every month and the difference amounts

shall be collected/paid out of the tariff subsidy received from the

Government of Karnataka, to ensure proper accounting of energy

and its cost.

In terms of the MYT Regulations, the Commission taking note of the

above facts, decides to consider 11513.19 MU at a cost of Rs. 3785.58

Crores (as per audited accounts) towards power purchases, for

approving the Annual Performance Review of HESCOM for FY15.

4.2.4 Renewable Purchase Obligation (RPO) compliance by the HESCOM for

FY15:

The HESCOM has submitted that its achievement of non-solar RPO and

solar RPO are 10.30% and 0.34%, respectively, as against the targets of

7% and 0.25%, respectively, as indicated below:

TABLE – 4.7

RPO compliance as submitted by the HESCOM for the FY15

Name of

Company

Total Input

Energy incl.

HRECS

(MU)

Non-Solar RPO Solar RPO

Target Achieved Target Achieved

(MU) (%) (MU) (%) (MU) (%) (MU) (%)

HESCOM 11793.59 825.55 7 809.02 6.86 29.48 0.25 39.61 0.34

The Commission has approved total power purchase quantum of

11806.37 MU (including HRECS) for the FY15 in the APR of HESCOM.

Based on the information furnished, the Commission notes that the

HESCOM has purchased non-solar energy of 809.02 MU (6.86%) and

solar energy of 39.61 MU (0.34%). Considering the surplus solar energy

of 10.09 MU, the net short-fall in non-solar RPO is 0.06 percentage point

for the FY15.

The Commission notes that, when the State as a whole is taken for the

purpose of assessment of achievement of non-solar RPO, in aggregate

all the State owned ESCOMs have achieved the total non-solar RPO

xxxvi

target set for the State. The Commission therefore decides not to

recognize the individual achievement of the HESCOM and to treat the

matter as closed.

4.2.5 Operation and Maintenance Expenses:


The HESCOM has sought approval of O&M expenditure of

Rs.580.95 Crores for FY15. HESCOM has claimed the O&M

expenses as follows:

TABLE – 4.8

O & M Expenses for FY15 – HESCOM’s submission

Amount in Rs.Crores

Particulars FY15

Repairs & Maintenance 48.86

Employee Expenses 455.46

A&G expenses 76.63

O&M expenses 580.95


The Commission in its Tariff Order dated 12th May, 2014 had approved

O&M expenses for FY15 as detailed below:

xxxvii

TABLE – 4.9

Approved O&M Expenses for FY15 Amount in Rs. Crores.

Particulars FY15

No. of installations as per actuals as per Audited Accts 4289372

Weighted Inflation Index 6.89%

CGI based on 3 Year CAGR 5.17%

Actual O&M expenses for FY13 467.68

Approved O&M Expenses for FY15 565.55

As per the Annual Audited Accounts of HESCOM for FY15, the actual

O&M expenditure is as follows:

TABLE – 4.10

O&M Expenses of HESCOM as per Annual Audited Accounts for FY15

Amount in Rs.Crores

Repairs & Maintenance 48.86

Employee Expenses 455.46

A&G expenses 76.64

O&M expenses 580.96

The Commission in its preliminary observations, had sought the details

of the items of expenditure incurred by HESCOM during FY15 under A &

G expenses. HESCOM in its replies has stated that it has incurred

expenses of Rs.26.24 Crores towards professional charges, Rs.21.90

Crores towards conveyance, travel and vehicle hire expenses besides

other A&G expenses. On a detailed review of the expenses, it is

observed that HESCOM is incurring substantial expenses on vehicle hire

charges and professional charges.

Also, the R&M expenses are increasing year on year, without proper

justification. One of the major items incurred under R & M is expenses

are on repairs of distribution transformers. The HESCOM needs to

institutionalize a mechanism for minimizing such expenses. These

expenses are abnormally increasing as compared to the previous

years. Since the O & M expenses are controllable, HESCOM has to

initiate necessary measures to ensure prudence in incurring these

expenses. The Commission is of the view that HESCOM should control

its O & M expenses as per the approved O & M expenses so that the

xxxviii

actual O & M expenses does not exceed the approved levels.

However, for the present based on the provisions of the MYT

Regulations, the Commission has proceeded with determining the

normative O & M expenses.

Considering the Wholesale Price Index (WPI) as per the data available

from the Ministry of Commerce & Industry, Government of India and

Consumer Price Index (CPI) as per the data available from the Labour

Bureau, Government of India and adopting the methodology followed

by the CERC with CPI and WPI in a ratio of 80: 20, the allowable

inflation for FY15 is computed as follows:

Year WPI CPI Composite

Series Yt/Y1=Rt Ln Rt

Year

(t-1)

Product [(t-

1)* (LnRt)]

2003 92.6 107 104.12

2004 98.72 111.1 108.624 1.04 0.04 1 0.04

2005 103.37 115.8 113.314 1.09 0.08 2 0.17

2006 109.59 122.9 120.238 1.15 0.14 3 0.43

2007 114.94 130.8 127.628 1.23 0.20 4 0.81

2008 124.92 141.7 138.344 1.33 0.28 5 1.42

2009 127.86 157.1 151.252 1.45 0.37 6 2.24

2010 140.08 175.9 168.736 1.62 0.48 7 3.38

2011 153.35 191.5 183.87 1.77 0.57 8 4.55

2012 164.93 209.3 200.426 1.92 0.65 9 5.89

2013 175.35 232.2 220.83 2.12 0.75 10 7.52

2014 182 246.9 233.92 2.25 0.81 11 8.90

A= Sum of the product column 35.36

B= 6 Times of A 212.19

C= (n-1)*n*(2n-1) where n= No of years of data=12 3036.00

D=B/C 0.07

g(Exponential factor)= Exponential (D)-1 0.0724

e=Annual Escalation Rate (%)=g*100

7.24

For the purpose of determining the normative O & M expenses for FY15,

the Commission has considered the following:

a) The actual O & M expenses allowed for FY13 excluding contribution

to Pension and Gratuity Trust.

b) The three year compounded annual growth rate (CAGR) of the

number of installations considering the actual number of

installations as per audited accounts up to FY15.

c) The weighted inflation index (WII) at 7.24% as computed above.

xxxix

d) Efficiency factor at 2% as considered in the earlier two control

periods.

Thus, the normative O & M expenses for FY15 will be as follows:

Particulars FY15

No. of Installations as per actuals as per Audited Accts 4090052

Weighted Inflation Index 7.24%

Consumer Growth Index (CGI) based on 3 Year CAGR 3.52%

O & M expenses for FY13 excluding P&G contribution - Rs.

Crs. 400.19

Normative O&M Expenses - Rs.Crs. 470.61

The above normative O & M expenses have been computed without

considering the contribution to Pension and Gratuity Trust.

The Commission has treated certain employee costs on account of

contribution to P&G Trust as uncontrollable O&M expenses as these

expenditure are incurred on the basis of actuarial valuation. This

component has been allowed beyond the normative O&M expenses

to enable ESCOMs to meet their actual employee costs.

The HESCOM in its audited accounts for FY15 has indicated an amount

of Rs.83.22 Crores towards contribution to Pension and Gratuity Trust.

Considering the contribution to terminal benefits to the Pension and

Gratuity Trust as uncontrollable O & M expenses, the Commission has

computed the allowable O & M expenses for FY15, as follows:

TABLE – 4.11

Allowable O & M Expenses for FY15

Amount in Rs. Crores

Sl.


1 Normative O & M expenses 470.61

2 Additional employee cost (uncontrollable

O & M expenses)

83.22

3 Allowable O & M expenses for FY15 553.83

Thus, the Commission decides to allow an amount of Rs.553.83 Crores

as O&M expenses for FY15.

xl

4.2.6 Depreciation:


The HESCOM has claimed an amount of Rs.99.05 Crores as

depreciation, worked out after deducting depreciation on assets

created out of consumers’ contributions / grants as per Accounting

Standards (AS) – 12


As per the Audited accounts of the HESCOM for FY15, it is noted that,

Rs.99.05 Crores has been accounted as depreciation. The

depreciation is determined by the Commission in accordance with the

provisions of the KERC (Terms and Conditions for Determination of

Tariff) Regulations, 2006 as amended on 1st February, 2012.

Considering the opening and closing amount of gross blocks of fixed

assets for FY15 and the depreciation as per the annual accounts, the

weighted average rate of depreciation works out to 4.30%. The

amount of depreciation claimed by the HESCOM as per its audited

accounts is rightly without considering the cost of assets created out of

consumer contribution / grants.

Based on the above, the Commission decides to allow the net

depreciation of Rs.99.05 Crores for FY15.

4.2.7 Capital Expenditure for FY15

The HESCOM has reported a capital expenditure of Rs.527.21Crores

(Format D17) against the approved capex of Rs.797.5 Crores for FY15.

But, it has furnished the capital expenditure against each category of

works for a total of Rs.458.78 Crores as shown below:

xli

TABLE – 4.12

Capital expenditure for FY15


Sl

No Particulars Units

Approve

d Capex

Actual

Expenditur

e

1 Mandatory works, Social

obligation and other works

a Gangakalyan 50.00 35.85

b

Special Development Plan for

backward talukas under

Nanjundappa scheme(SDP)

village

s 1.98

c Electrification of Hamlets(Not

covered under RGGVY) Nos. 1.00 1.32

d

Electrification of HB/DB/JC/AC

(Habitations) including IP Sets

under SCSP

Nos. 0.50 0.83

e

Electrification of

TC(Habitations) including IP

Sets under TSP

Nos. 0.50 0.32

f

Electrification of BPL

Households (Not covered

under RGGVY)

1.00

g RGGVY

No of

House

hold

3.04

H Rehabilitation of flood affected

villages (special Programme).

Nos. of

Village

s

10.00 0.53

I Water works Nos. 30.00

2 Expansion of network and

system improvement works.

a E & I works. 50.00 19.52

b Energization of IP sets under

general. Nos. 40.00 1.87

c Service connections other than

IP/BJ/KJ/Water works. Nos. 35.00 21.83

d

Construction of new 33 KV

stations Nos

8.00 4.68 Construction of new 33 KV

lines. Kms

e Augmentation of 33 KV

stations. Nos. 8.00 0.05

f Construction of 11 KV lines for

33 KV / 110 KV sub-stations. Feeders 40.00 12.43

g Nirantar Jyoti Yojana.

No of

feeder

/Kms

50.00 72.77

h R- APDRP. PART

A&B 15.49

i Creating infrastructure to UAIP

Sets Nos 45.00 91.80

3 Reduction of T & D and ATC loss

xlii

a Providing meters to un-metered

IP sets. Nos. 7.50 0.00

b Providing meters to un-metered

BJ/KJ installations. Nos. 15.00 7.76

c

Replacement of faulty / MNR

energy meters by static meters.

& Replacement of more than

10 year old electromechanical

energy meters by static meters.

Nos. 25.00 2.94

d DTC's metering ( Other than

APDRP) Nos. 10.00 1.91

e

Replacement of 33 KV lines

Rabbit conductor by Coyote

conductor.

Kms 10.00 1.81

f 11 KV Re-conductoring. Kms 8.00 12.18

g LT Re-conductoring. Kms 20.00 16.29

h HVDS 200.00

Sub - total 295.50 42.89

4 New initiatives works 10.00

a Installation of energy efficient

motors 1.00

b Smart grid/sprinklar/drip

irrigation system 1

c Establishing ALDC & SCADA. 1.02

5 Replacement and other

miscellaneous works

a Replacement of failed

distribution transformers. Nos. 80.00 110.03

b Replacement of Power

Transformers. Nos. 5.00 5.20

c

Replacement of old and failed

equipment and other works of

existing 33 KV stations and lines.

Nos of

works 3.00 2.11

d

Preventive measures to reduce

the accidents. (Providing

intermediate poles, Restringing

of sagging lines, providing guy

&struds, providing guarding,

DTC earthing )

Nos of

works 10.00 6.96

e T&P materials. Nos 3.00 0.00

f Civil Engineering works. No of

works 20.00 5.20

g Others 1.06

Total 797.50 458.78

Commission’s Analysis and decision:

From the above table, it is seen that, in some of the categories, the

HESCOM has incurred excess capex over the approved amount. The

Commission had directed KPTCL and ESCOMs to approach the

Commission with proper justification, if the capex in any category is

likely to exceed 10% or Rs.10 Crores, in the financial year, for an in-

xliii

principle approval, but the HESCOM has not sought any approval of

this kind. Some of the categories in which the capex has been

exceeded above the approved limit are:

i. In the case of Electrification of Hamlets (Not covered under

RGGVY) & Electrification of HB/DB/JC/AC (Habitations) including IP

Sets under SCSP programs, HESCOM has achieved 32% and 66%

above the approved capex of Rs.1.0 Crore and Rs.0.5 Crore.

ii. In the case of NJY and creating infrastructure to Un-Authorized IP

Sets, the HESCOM has exceeded its own projections by 46% and

104% over the approved capex of Rs.50 Crores and Rs.45 Crores.

iii. In the case of 11kV Re-conductoring work, the capex is exceeded

by 52% over the approved capex of Rs.8 Crores.

iv. In case of Replacement of failed distribution transformers, the

capex incurred is indicated at an alarmingly high value of Rs.110.03

Crores which is 38% above the approved limit of Rs.80 Crores.

v. With regard to the Replacement of failed distribution transformers,

the Commission had sought the details of failed distribution

transformers, repaired and replacement and also, the procurement

of new transformers for replacement of failed transformers for FY15.

In its reply the HESCOM has stated that, 22064 Transformers had

failed, 662 nos were scrapped as they could not be repaired, 17944

Nos were repaired and 1356 new transformers were procured for

replacement of failed transformers which has cost Rs.9.34 Crores.

The HESCOM should note that, the failed transformers should be

replaced by repaired good transformers only and it should be

charged to revenue expenditure. In case, the failed transformer is

scrapped, only then, it can be replaced by a new transformer, to be

accounted under capex. Hence, the amount spent for procurement

of new transformers for replacement of failed transformers at Rs.9.34

Crores shall have to be considered as capex instead of Rs.110.03

Crores and the total capex indicated at Rs.458.78 Crores will

become Rs.358.09 Crores (after deducting the excess capex of

xliv

Rs.100.69 Crores indicated as capex of new transformers for

replacement of failed ones).

vi. In many other categories of works, HESCOM has not achieved more

than 20% of the approved capex, which shows that, the planning

and implementation coordination is not properly monitored by while

taking up the capex program.

The year-wise capital expenditure incurred by HESCOM against the

approved Capex during the last four years is shown in the following

Table:

TABLE – 4.13

Approved Vs Actual capital investment Amount in Rs.Crores

Particulars FY12 FY13 FY14 FY15

Capital Investment Proposed &

Approved 1495.17 1189.22* 1178* 797.5*

Capital Investment actually

incurred (Figures as per Annual

Report)

224.48 251.27 343.05

358.09

Short fall 1270.69 937.95 834.95 431.41

% Achievement 15.01% 21.13% 29.12% 44.90%

* Rs.500 Crores was considered for the purpose of computing ARR for FY13, FY14 & FY15

From the above table, it can be noted that, the HESCOM was not able

to achieve more than 44.90% of the approved capex in any of the

year from FY12. Further, looking at the capital expenditure for FY15, it is

noted that, even though it has exceeded the capex in certain

categories of works, it has not exceeded the overall capex approved

by the Commission.

Taking into consideration the above facts, the Commission decides to

allow the actual capital expenditure of Rs.358.09 Crores for FY15, after

deducting the capex not meeting the prudence norms as per the

following para.

4.2.8 Prudence check of FY15:

The prudence check of capex of HESCOM was taken in two parts:

a) Prudence check of execution of the capital works of FY15:

b) Prudence check of material Procurement process of FY15:

xlv

a) Prudence check of execution of the capital works of FY15:

The Commission had taken up prudence check of the capital

expenditure incurred by for the period FY15 by engaging the services

of M/s. Deloitte Touche Tohmatsu India Private Limited, (M/s. Deloitte)

as consultant to evaluate the capital expenditure of FY15 pertaining to

completed and categorized works.

M/s. Deloitte has collected the list of works carried out in HESCOM for

FY15.The works were divided into three categories based on their cost

(a) works costing above Rs.6 Lakh, (b) works costing Rs.3 to 6 Lakh and

(c) works below Rs.3 Lakhs. The works were taken up under various

schemes like RAPDRP, UNIP and Niranthara Jyothi Schemes apart from

General capital works like service connection, Extension &

Improvement works, Civil engineering works, metering, etc. A

representative sample in each category was selected covering the

geographical area of the Company as per the Scope of work and

submitted the report of the prudence check.

The consultant has considered sample works of 120 Nos. with a cost of

Rs.4,463 Lakh in Rs.6 Lakh and above category, 40 No. of works with a

cost of Rs.217 Lakh in Rs.6 Lakh to Rs.3 Lakhs category and 33 Nos. of

works from 11 divisions with a total cost of Rs.91 Lakh in below Rs.3 Lakh

category.

As per the report of the consultant, the following are the salient

features:

TABLE – 4.14

Gist of Prudence check findings for FY15

Particulars Numbers Amount

in Rs. Lakhs

Works costing Rs.6 Lakhs and above considered as

samples for validation 120 4,463

Works costing between than Rs.6 Lakhs and Rs.3

Lakhs considered as samples 40 217

Works costing below Rs.3 Lakhs considered as

samples 33 91

Works not meeting the

norms of prudence

Rs.6 Lakhs and above 01 68.68

Rs.6 Lakhs and Rs.3 Lakhs Nil

below Rs.3 Lakhs Nil

Total works not meeting the norms of prudence 01 68.68

Some of the other findings of the prudence check are summarized in

the following Table:

xlvi

TABLE – 4.15

Summary of Works having cost overrun

Particulars Within 10% 10-25% Above 25%

Rs.6 Lakhs and above 66 13 41

Rs.6 Lakhs and Rs.3 Lakhs 20 03 17

below Rs.3 Lakhs 23 03 07

TABLE – 4.16

Summary of Works having Time overrun

Particulars Within Year Between one

and two Years

Above 2

Years

Rs.6 Lakhs and above 106 09 05

Rs.6 Lakhs and Rs.3 Lakhs 40 - -

below Rs.3 Lakhs 33 - -

The Commission had forwarded the copy of the Report on the

Prudence check seeking HESCOM’s comments thereon. The reply

forwarded by HESCOM is summarized below:

HESCOM has stated that, it has categorised assets of the pertaining to

work of establishment 5 MVA transformers other than the transformer

on 28.01.2015. Subsequently, it has installed 5 MVA transformer on

12.08.2015 for which pre commissioning test has been carried out after

four months on 01.12.2015 and the load on the transformer has been

taken. The categorization of works before commissioning of the

project is not proper. The Commission views this matter seriously and

directs the HESCOM to monitor and avoid such things in future. The

Commission noting the above points has taken a view that, one work

amounting to Rs.68.68 Lakhs in the samples selected by the consultant

during FY15, does not qualify for being treated as prudent and

consequently the corresponding depreciation and interest on loans

allowed by the Commission in the tariff have to be disallowed in APR of

FY15 as detailed below:

xlvii

TABLE – 4.17

Details of Amounts disallowed in APR FY15

Particulars Amount in Rs.

Lakhs

Total cost of categorized works eligible for prudence check 10,313

Total cost of the sample works 4,771

Cost of sample works not meeting prudence norms (01 work

with cost of Rs.68.68 lakh against a sample basket of 61 works

with Rs.954 Lakhs)

68.68

Percentage of cost not meeting prudence norms with respect

to the total samples considered in the category (Rs.68.68 lakh

against a sample basket with Rs.954 Lakhs)

7.20

Overall cost of capex not meeting prudence norms compared

with the cost of that category of samples (Rs.68.68 lakh forming

7.2% of sample basket escalated to total capex under the

respective category of works of Rs.1964 Lakhs)

141.39

Amount to be disallowed towards works not meeting prudence

norms calculated on the basis of weighted average interest &

weighted average depreciation on the capex to be disallowed. 17.43

b) Prudence check of Material Procurement process of FY15:

The HESCOM has been executing capital works both on turnkey as well

as partial turnkey contracts. In the process, the HESCOM procures

major materials like, distribution transformers, poles and conductor etc.

and issues them to the partial turnkey contractor for carrying out the

labour contract work as per award. The contractor would also invest

on some of the smaller materials associated with the works viz., cross

arm, bolt & nuts, earthing materials etc.

In view of the fact that, a large quantity of major materials are being

procured by the ESCOMs, the Commission decided to review material

procurement process of major materials as a part of prudence check

with a view ensure that procurement is carried out in a cost-effective

manner without compromising on the operational needs.

The Analysis of procurements in FY15 revealed that a considerable

level of inventory vis-à-vis the actual requirement, seems to have been

maintained in the case of,

xlviii

a. Special three pin cross arms,

b. 1.1 KV GI pins,

c. LT wiring Kit for 100KVA TC,

d. D.P Set.

Hence, the HESCOM has to take measures to utilize the procured

materials in a systematic way and reduce the inventory by planning

the delivery schedule of the material in synchronisation with the work

execution and the inventory level should be around 25% only of annual

requirement.

Further, the HESCOM is going for open tendering under e-procurement

mode for all the purchases, except in case of the orders placed with

Govt. owned firms, for which exemption is given under KTPP Act.

The Commission noting the above points directs HESCOM to maintain

its inventory judiciously.

c) Prudence Check of Capital Investment for the period FY13 to FY14:

The Commission has treated a capex of Rs.13.46 Crores along with

Rs.7.21 Crores for the asset created by KPTCL in the HESCOM area for

which the downstream lines not completed are attributable to the

HESCOM as not meeting the prudence norms. The Commission had

given an opportunity to the HESCOM to justify the project to meet the

norms of prudence by submitting sufficient data.

The HESCOM has submitted its reply with adequate data to claim that

the works meet the norms of prudence and after verifying all the data,

the Commission has decided that, the works could be considered as

meeting the norms of prudence and that no further disallowance, in

respect of these works, is necessary.

d) Prudence Check of Capital Investment for the period FY10 to FY12:

xlix

The Commission had disallowed a capex of Rs.2.64 Crores incurred for

one work pertaining to the period FY10 - FY12 as not meeting the

prudence norms and disallowed the weighted average interest and

depreciation on the corresponding capex in the Tariff order dated

02.03.2016. HESCOM has submitted the required data to justify the work

as meeting the prudence norms and after verifying the data submitted

by HESCOM, the Commission decides not to continue the

disallowance.

4.2.9 Interest and Finance Charges:

a) Interest on loan:


The HESCOM, in its application has claimed an amount of

Rs.180.75 Crores towards interest on long term loans drawn from

banks / financial institutions for FY15.


The Commission has noted the status of opening and closing balances

of long term loans as per the audited accounts for FY15, the details in

Format- D9 of the filings and replies to the preliminary observations as

shown below:

TABLE – 4.18

Allowable Interest on Loans – FY15

Amount in Rs.Crores

Particulars FY15

Total opening balance of loans 1003.47

Add new Loans 173.29

Less Repayments 153.63

Total loan at the end of the year 1023.13

Average Loan 1013.30

Interest on long term loans as per audited accounts for FY15 116.26

l

Considering the average loan amount of Rs.1013.30 Crores and an

amount of Rs.116.26 Crores incurred towards interest on long term

loans, the weighted average rate of interest works out to 11.47% which

is within the present interest rates charged by the bank/ financial

institutions.


towards interest on long term loan for FY15.

4.2.10 Interest on Working Capital:


The HESCOM has stated that it has borrowed short term loans

and overdrafts during FY15 to meet its day to day expenditure

(working capital). As per the audited accounts and the replies

to preliminary observations, the HESCOM has incurred Rs.82.91

Crores towards interest on short term loans and overdraft for

FY15.


The Commission notes that, as per the audited accounts and the

replies to its preliminary observations, the HESCOM has incurred an

interest of Rs.82.91Crores on short term borrowings/ Overdrafts during

FY15.

The present interest rates by commercial banks and financial

institutions are charged mainly on the basis of base rate of interest

declared by RBI from time to time. The Commission has considered

interest on short term loan at base rate plus certain basis points

depending upon the tenure of the loan. As per the HESCOM’s

application, it is stated that short term loans for FY15 has been availed

at a weighted average rate of interest of 10.98%. However,

considering the base rate of interest with spread of 250 basis points

and noting the downward trend in the interest rate, the Commission

li

decides to allow short term loans at a normative interest of 11.75% for

FY15.

As per the KERC (Terms and Conditions for Determination of Tariff)

Regulations, 2006 as amended on 1st February, 2012, the Commission

computes the allowable interest on working capital for FY15 as follows:

lii

TABLE – 4.19

Allowable Interest on Working Capital for FY15

Amount in Rs.Crores

Particulars FY15

One-twelfth of the amount of O&M Expenses 46.15

Opening GFA 3174.87

Stores, materials and supplies 1% of Opening balance of GFA 31.75

One-sixth of the Revenue 808.60

Total Working Capital 886.50

Rate of Interest (% p.a.) 11.75%

Normative Interest on Working Capital 104.16

Actual interest on WC as per audited accounts for FY15 82.91

Allowable Interest on Working Capital 93.54

The Commission decides to allow an amount of Rs.93.54 Crores

towards interest on working capital for FY15.

4.2.11 Interest on Consumer Deposits:


The HESCOM has claimed an amount of Rs.44.64 Crores towards

payment of interest on security deposits for FY15.


The Commission notes that, as per the audited accounts for FY15, the

interest on consumer security deposits amounting to Rs.44.64 Crores

claimed by the HESCOM works out to a weighted average rate of

interest of 8.35%. Under the KERC (Interest on Security Deposit)

Regulations, 2005 the interest on consumer deposits is to be allowed as

per the bank rate prevailing as on the 1st of April of the relevant year.

The bank rate as on 1st April, 2014 was 9.00%.


towards interest on consumer deposits for FY15.

4.2.12 Other Interest and Finance charges:

liii

The HESCOM has claimed an amount of Rs.2.47 Crores towards other

interest and finance charges for FY15 which includes charges payable

to banks / financial institutions and guarantee commission payable to

GoK. The Commission notes that the claims are as per audited

accounts and hence decides to allow the same for FY15.

Thus the allowable interest and finance charges for FY15 are as follows:

TABLE – 4.20

Allowable Interest and Finance Charges


Sl.


1. Interest on Loan capital 116.26

2. Interest on working capital 93.54

3. Interest on consumer deposits 44.64

4. Other interest and finance charges 2.47

Total interest and finance charges 256.91

4.2.13 Other Debits:


The HESCOM, has claimed credit balance of Rs.0.78 Crores

towards other debits.


The Commission notes that as per the audited accounts, the allowable

other debits excluding provisions for bad and doubtful debts for FY15

are as detailed below:

TABLE – 4.21

Allowable Other Debits


Sl

No Particulars FY15

1 Losses relating to fixed assets 0.10

2 Assets decommissioning cost 0.14

3 Gain on sale of assets (0.12)

4 Miscellaneous losses and write offs 8.39

Total 8.51

liv

Thus, the Commission decides to consider an amount of Rs.8.51 Crores

as other debits for FY15.

4.2.14 Net Prior Period Credits/ Charges:


The HESCOM has not claimed Net Prior Period Charges for FY15.


The Commission notes that the net prior period credits/ charges are

included in the other income account in the audited accounts for

FY15. As per the Audited Accounts for FY15, the prior period expenses is

Rs.47.24 Crores on account of employee costs, A&G and other

expenses, under provided depreciation and power purchase cost of

earlier years. Further the prior period income of Rs.12.58 Crores is on

account of excess provision for depreciation, other expenses and

other income of prior period.

Thus, the Commission decides to allow a net prior period debit of

Rs.34.66 Crores for FY15.

4.2.15 Return on Equity:


The HESCOM has not claimed any Return on Equity for FY15.


As per the KERC (Terms and Conditions for Determination of Tariff)

Regulations, 2006 as amended on 1st February, 2012, the Commission

computes the allowable Return on Equity at 15.5% on equity plus

reserves and surplus, as at the beginning of the year besides allowing

taxes as per actuals. Considering the status of equity amount as per

audited accountsfor FY15, the allowable RoE is determined as follows:

lv

TABLE – 4.22

Allowable Return on Equity


Particulars FY15

Paid Up Share Capital 707.53

Share deposit 155.25

Reserves and Surplus as on 31.03.2015 (1219.60)

Less recapitalized security deposit 34.00

Total Equity (390.82)

Considering accumulated losses of Rs.1219.60 Crores and total equity of

Rs.862.78 Crores, as at the beginning of the year and recapitalization of

security deposit of Rs.26.00 Crores, the HESCOM has negative net worth of

Rs.390.82 Crores.

In view of the negative Equity, the Commission decides not to allow any

Return on Equity for FY15.

4.2.16 Income tax :

As per the audited accounts, HESCOM has not incurred any expenditure

towards payment of Income Tax for FY15. The Commission decides not to

allow any income tax for FY15.

4.2.17 Other Income:


The HESCOM has claimed a net amount of (-) Rs.0.08 Crores as other

income.


As per the audited Accounts FY15, an amount of Rs.26.58 Crores is

shown as Other Income for FY15. This amount includes income from

interest on fixed deposits, sale of scrap, profit on sale of stores, rebate

on collection of electricity duty and other recoveries.

lvi

The Commission notes that the negative amount of Rs.0.08 Crores

claimed in its application by the HESCOM is as per the audited

accounts for FY15 by considering the net debit balance of Rs.34.66

Crores towards prior period charges / income. Since, the Commission

has considered the prior period charges separately as discussed in the

earlier paragraphs, the same has not been factored while allowing

other income.

Thus, the Commission decides to consider an amount of Rs.26.58

Crores as other income for FY15.

4.2.18 Fund towards Consumer Relations / Consumer Education:

The Commission has been allowing an amount of Rs.0.50 Crore per year

towards consumer relations / consumer education. The HESCOM in its

application had not reported any expenditure towards Consumer Relations /

Consumer Education incurred separately during FY15. However, the

HESCOM in its reply to the Commission’s preliminary observations has

informed that an amount of Rs.6.30 Lakhs has been incurred towards

consumer education programmes under a separate head of account. Hence,

considering the expenditure reported by HESCOM, the Commission decides

to factor Rs.0.06 Crores in the APR, as expenses towards consumer relations

/ consumer education for FY15.

4.3 Abstract of Approved Revised ARR for FY15:

As per the above item-wise decisions of the Commission, the

consolidated Statement of ARR for FY15 is as follows:

TABLE – 4.23

Approved Revised ARR for FY15 as per APR

Amount in Rs.Crores

Sl.

No. Particulars

As per

APR


1 Revenue from tariff and Misc Charges 2297.20

2 Tariff Subsidy for IP & BJ/KJ installation 2554.38




lvii


5 SLDC Charges 9.94


transmission 3785.58

6 Employee Cost

7 Repairs & Maintenance

8 Admin & General Expenses

Total O&M Expenses 553.83





12 Interest on belated payment on PP Cost



15 Less interest capitalised 0


16 Other Debits 8.51


18 Return on Equity 0.00

19 Provision for taxation 0

20

Funds towards Consumer

Relations/Consumer Education 0.06

21 Other Income 26.58

ARR 4712.02

22 Deficit for FY13 carried forward

23

Regulatory asset to be recovered in FY16

& FY17

24

Incentives on account of loss reduction

beyond the targeted losses and

disallowance on imprudent capex 34.42

Net ARR 4746.44

4.4 Gap in Revenue for FY15:

As against an approved ARR of Rs.4949.36 Crores, the Commission,

after the Annual Performance Review of the HESCOM, decides to

allow an ARR of Rs.4746.44 Crores for FY15. Considering the revenue of

Rs.4851.18 Crores, a surplus of Rs.105.14 Crores is determined for the

year FY15.

The Commission decides to carry forward the surplus of Rs.105.14

Crores of FY15 to the proposed ARR for FY17 as discussed in the

subsequent Chapter of this Order.

lviii

CHAPTER – 5

ANNUAL REVENUE REQUIREMENT FOR FY17-19

5.0 Annual Revenue Requirement (ARR) for FY17-FY19 - HESCOM’s Filing:

HESCOM in its application dated 15th December, 2015, has sought

approval of ARR for FY17-19. The summary of the proposed ARR for

FY17-19 is as follows:

TABLE – 5.1

Proposed ARR for FY17-19

Amount in

Rs.Crores

Sl.

No Particulars FY17 FY18 FY19

1 Energy @ Gen Bus (With HRECS & AEQUS) in MU 13738.00 14505.47 15307.86

2 Transmission Losses in % 5.96% 6.03% 5.95%

3 Energy @ Interface in MU 12919.59 13631.44 14397.42

4 Distribution Losses in % 16.40% 16.20% 16.00%

Sales in MU

5 Sales to other than IP & BJ/KJ 4389.95 4663.85 4968.34

6 Sales to IP & BJ/KJ 6410.84 6759.28 7125.50

7 Total Sales 10800.79 11423.13 12093.84


8 Revenue from tariff and Misc Charges 2749.15 2922.01 3120.48

9 Tariff Subsidy 3260.81 3437.82 3623.87

10 Total Existing Revenue 6009.96 6359.83 6744.35


11 Power Purchase Cost 4902.22 4915.82 5252.05

12 Transmission charges of KPTCL 579.18 648.59 651.85

13 SLDC Charges 6.00 7.00 8.00

14


transmission 5487.40 5571.41 5911.90

15 Employee Cost 586.37 641.09 700.40

16 Repairs & Maintenance 57.21 61.91 66.99

17 Admin & General Expenses 89.73 97.10 105.07

18 Total O&M Expenses 733.31 800.10 872.46

19 Depreciation 112.10 128.48 147.33


20 Interest on Capital Loans 315.00 361.38 413.06

21 Interest on Working capital loans 127.62 135.67 144.36

22 Interest on belated payment on PP Cost 140.00 140.00 140.00

23 Interest on consumer security deposits 59.38 67.11 75.85

24 Other Interest & Finance charges 0.00 0.00 0.00

25 Less interest & other expenses capitalised 0.00 0.00 0.00

lix

26 Total Interest & Finance charges 642.00 704.16 773.27

27 Other Debits 18.64 19.65 20.66

28 Net Prior Period Debit/Credit 0.00 0.00 0.00

29 Return on Equity 0.00 0.00 0.00

30

Funds towards Consumer Relations/Consumer

Education 0.50 0.50 0.50

31 Other Income 27.94 28.67 29.40

32 ARR 6966.01 7195.63 7696.72

33 Deficit -956.05 -835.80 -952.37

34 Surplus for FY15 carried forward 132.41 -1102.36 -1938.16

35 Regulatory asset -197.69

36 Carrying cost on RA -23.72

37 Incentive for loss reduction in FY15 -57.31

38 Net ARR 7112.32 8297.99 9634.88

The HESCOM has requested the Commission to approve the Annual

Revenue Requirement of Rs.7112.32 Crores for FY17, Rs.8297.99 Crores

for FY18 and Rs.9634.88 Crores for FY19. Further, HESCOM has proposed

increase in retail supply tariff by 102 paise per unit in respect of all the

categories of consumers including BJ/KJ and IP set consumers for FY17,

in order to bridge the gap in revenue of Rs.1102.36 Crores.

5.1 Annual Performance Review for FY15 & FY16:

As discussed in the preceding chapter of this Order, the Commission

has carried out the Annual Performance Review for FY15 based on the

audited accounts furnished by HESCOM. Accordingly, a surplus of

Rs.105.14 Crores of FY15, is required to be carried forward in to the ARR

of FY17.

As regards APR for FY16, the current financial year (i.e. FY16) is yet to be

completed. Hence, the Commission decides to take up the APR of

FY16 during the revision of ARR / Retail Tariff for FY18.

5.2 Annual Revenue Requirement for FY17-19:

5.2.1 Capital Investments for FY17-19:

The HESCOM has proposed its capex of Rs.901.05 Cores, Rs.838.55

Crores and Rs.827.55 Crores for FY17, FY18 and FY19 respectively. The

lx

said proposal is stated to be as per the capital expenditure guidelines,

issued by the Commission.

The HESCOM has stated that, the works which are absolutely essential

have been included in the Investment Plan, prioritization of Capital

Works is undertaken so as to strike a balance between achieving the

desired objective of Transmission and Distribution Loss reduction as

well as discharging social responsibility.

Further, the HESCOM has stated that, the annual Investment Plan

includes all the planned and Non-Plan works, budget provision is made

for the ongoing works and works that have been proposed to be taken

up during the relevant period. The long term projects such as DDUGVY,

IPDS, Replacement of overhead lines by UG Cable under DAS, which

are spread over a span of 3 to 5 years, are included as per the target

to be achieved year-wise. DTC metering and Replacement of old

meters by Static meters, which in turn result in reduction of Technical

and Commercial losses have been prioritized. Social obligatory works,

such as Ganga Kalyan works, SDP, TSP, SCSP and UNIP are being taken

up as per GOK guidelines. The projects such as NJY first and second

Phase, RAPDRP Part A & B which are under completion are prioritized

for FY-17. Also NJY Phase III in 4 districts is yet to be started, for which

financial assistance is obtained from NEF.

The Investment is being made on System strengthening works such as

Reconductoring, link lines, preventive measure works are being taken

into consideration in order to improve tail end voltage, reduction of

losses and prevent Accidents. Investment is being made on E & I works

like additional DTCs, feeder bifurcation, line conversion, shifting of

transformer to load centre, enhancement of transformers capacity

etc. are considered for energy saving and improving quality supply

and reduction of load.

lxi

Investment is also proposed on New Sub Stations/ Augmentation and

also replacement works in Stations in order to improve Voltage

regulation, reduce distribution losses and to cater load growth. All the

Projects are being monitored by the Project Monitoring Cell at the

Corporate Office. The category wise capex indicated for FY17, FY18

and FY19 by HESCOM is as follows:

TABLE – 5.2

Proposed Capex for the Control Period


Sl

No Scheme

Capital

Budget

FY-17

Capital

Budget

FY-18

Capital

Budget

FY-19

1 Mandatory works, Social obligation and other works

a Gangakalyan IP sets 20.00 25.00 25.00

b Special Development Plan for backward talukas under

Nanjundappa scheme(SDP) 20.00 20.00 20.00

c Electrification of Hamlets(Not covered under RGGVY) 1.00 1.00 1.00

d Electrification of HB/DB/JC/AC (Habitations) under SCP

(Not covered under RGGVY) 1.00 0.50 0.50

e Electrification of TC(Habitations) under TSP


f Electrification of BPL Households


g Water works 5.00 5.00 5.00

h RGGVY 5.00 3.00 3.00

DDUGJY 110.00 100.00 100.00

i DDG (Phase-1 & Phase-2)

j Rehabilitation of flood affected villages (special

programme).

2 Expansion of network and system improvement works.

A E & I works. 25.00 25.00 25.00

b Energization of IP sets under general.

Energization of IP sets as per GOK 125.00 125.00 125.00

c Service connections other than IP/BJ/KJ/Water works. 30.00 30.00 30.00

d Construction of new 33 KV stations and lines. 4.00 4.00 4.00

e Augmentation of 33 KV stations. 3.00 3.00 3.00

f Construction of 11 KV lines for 33 KV / 110 KV sub-stations. 5.00 5.00 5.00

g Nirantar Jyoti Yojana.

50.00 40.00 40.00

50.00 40.00 30.00

h R- APDRP. 20.00 20.00 20.00

i R-APDRP exclusively for Modem and meters 1.00 1.00 1.00

IPDS 46.00 50.00 50.00

3 Reduction of T & D and ATC loss

a Providing meters to un-metered IP sets. 0.05 0.05 0.05

b Providing meters to un-metered BJ/KJ installations. 2.00 0 0

c Replacement of faulty / MNR energy meters by static

meters. 5 5 5

lxii

d Replacement of more than 10 year old electromechanical

energy meters by static meters. 50 50 50

e DTC’s metering ( Other than APDRP) 50.00 25.00 25.00

f Replacement of 33 KV lines Rabbit conductor by Coyote

conductor 5.00 5.00 5.00

g Replacement of 11 KV lines Weasel conductor by Rabbit

conductor. 10.00 10.00 10.00

h Replacement of age old LT conductor by Rabbit

conductor. 6.00 6.00 6.00

i HVDS (Pilot project for 1 district/year) 1 1 1

j NEF (REC) for replacing 11 KV OH feeders by UG Cables in

Hubli and Belgaum cities. 100 100 100

4 New initiatives works

a IT initiatives, automation and call centre 1.00 1.00 1.00

b Installation of energy efficient motors

c Smart grid/sprinkler/drip irrigation system 0.5 0.5 0.5

d Providing solar roof tops to HESCOM office buildings 5 3 2

e Establishing ALDC & SCADA. 1.00 1.00 1.00

f Thermal Imaging and GIS Mapping of DTCs 5 5 5

g Special pilot project for Strategic Business Centre at

Shiggaon sub-Division 1 1 1

5 Replacement and other miscellaneous works

a Replacement of failed distribution transformers. 100.00 100.00 100.00

b Replacement of Power Transformers. 2.00 2.00 2.00

c Replacement of old and failed equipment and other works

of existing 33 KV stations and lines. 3.00 3.00 3.00

d

Preventive measures to reduce the accidents. (Providing

intermediate poles replacement of deteriorated

conductor, DTC earthing etc.)

5.00 5.00 5.00

e T&P materials. 1.00 1.00 1.00

f Creating infrastructure to UAIP Sets 20.00 10.00 10.00

g Civil Engineering works. 5.00 5.00 5.00

Total 901.05 838.55 827.55

Commission’s Analysis and decision:

From the above table, the Commission notes that, the HESCOM has

proposed a capex of Rs.110 Crores for FY17 and Rs.100 Crores each for

FY18 and FY19, for Deendayal Upadhyaya Gram Jyoti Yojana

(DDUGJY) program, but has not mentioned anything about the extent

of grant from the GoI.

In case of HVDS (Pilot project for 1 district/year), HESCOM has

indicated a capex of Rs.1 Crore for FY17 to FY19, fully aware that, HVDS

lxiii

scheme for a feeder may cost more than Rs.2 to Rs.3 Crores. Further,

HESCOM has stated that, it is not going to continue with the HVDS

program, as it is not an economical solution.

In the case of Smart grid/sprinkler/drip irrigation system, the HESCOM

has shown Rs.0.5 Crore allocation for each year and has stated that, it

has made provisions for only sanctioning the estimates and calling

tenders.

In respect of Replacement of failed distribution transformers, the

HESCOM has indicated Rs.100 Crores each for FY17 to FY19. From the

data submitted for FY15, on the failure and replacement of

transformers, the capex incurred on the new transformer works out to

only 15 to 20 % of the amount indicated as incurred and it is felt that,

the accounting practice in respect of released and replaced

transformers is to be checked/examined. Further, the HESCOM should

note that, the failed transformers should be replaced by repaired good

transformers only and it should be charged to revenue expenditure. In

case, the failed transformer is scrapped, it can be replaced by a new

transformer, which has to be accounted under capital expenditure.

Hence, considering the scrapped transformers in the previous years the

capex for replacement of failed distribution transformers by new ones,

shall to be limited to Rs.5 Crores and the proposed capex for FY17, FY18

and FY19 shall be considered as Rs.806.05 Cores, Rs.743.55 Crores and

Rs732.55 Crores respectively.

For creating infrastructure to UAIP Sets, HESCOM has shown a capex of

Rs.20 Crores for FY17 and Rs.10 Crores for FY18 and FY19. The HESCOM,

in its reply to the preliminary observations, has stated that, due to non-

participation of the bidders for execution of the work, the program is

delayed. The HESCOM should take necessary action to complete the

regularization of UAIP sets by creating infrastructure.

lxiv

The HESCOM, while projecting the capital expenditure for the control

period, should identify high loss feeders, high loss subdivisions, division

and circles to specifically reduce losses and to improve reliability of

distribution system. The HESCOM should list out high loss feeders of the

year in descending order and chalk out a program to tackle high loss

feeders, on a priority, to reap the benefit of loss reduction.

The HESCOM should also list out the lengthy 11 Kv feeders with huge

loads and bifurcate them to reduce the loads and losses thereby

improving the reliability and quality of supply.

The optimal distribution system loss shall be less than 10%, even to

maintain the voltage regulations, within the permissible limits of 9 % for

11Kv system and 6% for LT distribution system. The HESCOM should plan

towards bringing down the distribution system losses below 10%, by the

end of the control period.

The HESCOM should prepare a detailed perspective plan by

conducting 11Kv feeder wise and DTC-wise load flow studies

considering the present and projected loads on each feeder. This

would lead to least cost, techno economically feasible improvement

methods for reducing the current level of distribution system energy

losses to less than 10% and improve the reliability of the system.

The HESCOM should subject its system strengthening works for the

period from FY-17 to FY-21, to periodical techno-economic analysis, to

ascertain as to whether the investments have resulted in loss reduction

and improvement of reliability.

The HESCOM should take up system improvement works such as:

a) Reactive power compensation to improve the PF to 0.9-0.95 lag.

b) Reconfiguration of distribution lines.

c) Replacement of conductors by higher size, wherever required.

lxv

d) Drawing express feeders to bifurcate the loads.

e) Establishing new 33Kv substations and proposing for Establishment

of new transmission voltage substations by KPTCL.

f) Installing additional DTCs and shifting DTCs to load centers to

reduce the LT line lengths.

The Commission notes that, the HESCOM has not achieved capex of

more than 50% of the approved capex in any of the previous years.

Also, it may be noted that, while proposing a capex for FY16, HESCOM

had stated that, it would be achieving only Rs.500 Crores even though

it had proposed Rs.1900 Crore of capex. Considering the capex

achievement in the past, the Commission recognizes the capex

proposed by HESCOM at Rs.806.05 Cores, Rs.743.55 Crores and

Rs.732.55 Crores for FY17, FY18 and FY19 respectively after deducting

the amount towards to replacement of failed transformers. However,

the Commission considers a capex of Rs.600 Crores for FY17 and Rs.550

Crores for FY18 and FY19 for tariff computations, subject to prudence

Check. In case, the HESCOM requires any additional capex during the

financial year, the Commission may be approached with proper

justification for in principle approval.

5.2.2 Sales Forecast for FY17-19:

I. Category wise estimation of number of installations and sales

by HESCOM for the control period FY17-19:

88) The HESCOM, in their tariff application has submitted that, the

energy sales for the control period depends on the population,

policies of the Government, various implementation of various

schemes, hours of supply to consumers etc. Further, the HESCOM

has submitted that the forecast has been prepared considering

the growth during the period FY-12 to FY-16. Further, it is stated that,

the energy sales for the control period are estimated considering

the following hours of supply of the consumers;

lxvi

Feeder

Categor

y

Urban

NJY/

semi

urban

Rural EIP Industrial/H

T/

EHT/Water

Supply 3ph 1 ph 3ph

open

delta

FY-17 22-24 18-20 3+3 02-04. 3+3 02-04. 24

FY-18* 24 24 4+3 05-06. 4+3 05-06. 24

FY-19* 24 24 4+3 05-06. 4+3 05-06. 24

* Note: By FY-18, the thermal power plants BTPS unit-3 of capacity 1x700 MW and

Yeramarus thermal plant of capacity 2x800 MW is expected to start generation.

Hence, hours of power supply is assumed more for rural and EIP feeders as per

govt. norms.

It is further stated that, for LT-2(a), LT-b, LT-3, LT-5,LT-6, HT-1, HT-2(a)

and HT-2(b) categories, five-year CAGR is considered, for LT-4(b)

category four-year CAGR is considered, for LT-4(c) (ii), LT-7, HT-

3(a)(iii), HT-3(b), HT-4 and HT-5 categories present trend is

considered and for HT-3(a) (ii) due to inconsistency, the CAGR of

installations is considered for projections .

2) The preliminary observations of the Commission and the queries

raised during the validation process on sales forecast for the control

period and the replies furnished by HESCOM are discussed below:

i) LT (1) – BJ/KJ category:

The HESCOM has estimated the number of installation consuming

below 18 units and the number of installations consuming above 18

units at a growth rate of 0.04% based on the CAGR for the period FY12

to FY16. However, while computing the energy sales, the HESCOM has

grossed up the BJ/KJ sales of FY-15 by the LT line losses to arrive at the

consumption to this category. The Commission notes that BJ/KJ

installations are metered and read.

The Commission had directed the HESCOM to revise the sales estimate

duly considering the energy consumption as recorded in the

consumers’ meter and without grossing up sales by LT line losses. It is

informed that sales are grossed up with LT line losses, as there are

35205 installations yet to be metered.

lxvii

The Commission reiterates its stand that, as the sales increase due to

increase in the number of installations, the line loss is taken care of by

the specific consumption and grossing up sales by loss is not correct.

Thus, the Commission has considered the specific consumption as per

actuals for FY15 for estimating the sales to BJ/KJ installations.

ii) Other Categories excluding IP Sets:

a) The Commission had observed that the HESCOM had included FY-

16 data, which is an estimated figure, for working out the CAGR

and had suggested that only actual data available up to FY15 had

to be considered for estimating the CAGR. In reply it is stated that,

the estimates for FY-16 are made considering the data up to

November, 15 and it has considered FY16 as the base year for

projecting the number of installations and sales. The Commission

notes that even though FY16 is the base year, including FY16 data

(which itself is an estimated figure) for arriving at actual growth rate

is not correct.

b) The midyear number of installations indicated at page 66 of the

filing do not match with the midyear installations indicated in D-21

Format. Further, it should indicate the year-end figures in D-2 Format

and mid-year figures in D-21 Format. Also, it is noted that the year-

end figures for the number of installations indicated in page 65 and

66 are same as the mid-year number of installations indicated at

page 66. Thus the figures shall be reconciled. In the replies it is

stated that the figures agree for FY17.

However, during the validation process, the Commission pointed out

that, the figures does not match, in respect of the following category:

Mid-Year figure as in

Page-66


D-21

lxviii

Category


Page-66

116693 146781

Further, it was also noted that there are minor differences in the total

number of installations for FY 18 & FY19 as indicated at page 66 and D-

2 Format. The figures have since been reconciled and confirmed in

HESCOM’s replies to the above query.

c) The Commission in its preliminary observations, had noted that, the

estimation of energy not supplied is complicated and depends on

a number of factors like duration of power not supplied, the timing

at which the power was not supplied, consumption pattern, the

type of consumers, Government Policy on hours of supply to urban

and rural areas etc. For example, power cuts in respect of domestic

consumers during the morning hours may not have much impact

on the energy consumed as appliances like water heaters, washing

machines etc. would be used whenever the power supply is

available. Similarly, industries working in one or two shifts may

schedule their production whenever the power supply is available

and as such it may not result in considerable reduction in energy

consumption. Thus, it becomes imperative to make individual

category-wise study to arrive at energy not supplied due to missing

hours. In this context, the Commission had requested the HESCOM

to furnish details of studies conducted category wise. In its replies,

the HESCOM has informed that it has not made any individual

category-wise study to estimate the impact of power cuts.

The Commission notes that, in absence of such a study, the impact of

energy not supplied due to missing hours cannot be assessed.

d) As regards the number of installations, the commission had noted

that the growth rate considered for LT6- Street light and LT-7-

lxix

Teporaray supply, is lower compared than the normal growth rate.

Further, the Commission had observed that even though there is

negative growth in HT-4, HESCOM had proposed addition to this

category during the control period.

It is stated that HESCOM has revised the number of installations for FY16

for LT-6 street lights and LT-7 considering the growth rate of second half

of FY15 and accordingly, it has worked out the CAGR at 2.97% and

13.44% respectively. Regarding HT-4 installations, it is stated that, the

negative growth may be due to shifting of installations to HT-2c and it

has proposed additions to this category keeping in view upcoming

colonies and apartments.

e) The Commission during the process of validation, had requested

the HESCOM to furnish the details of number of installations shifted

to HT-2c from HT-2a, HT-2b and HT-4 categories and the

corresponding sales for FY13, FY14 and FY15. HESCOM has furnished

the details in the matter.

f) Regarding the sales growth rate, the Commission had noted that

the growth rate considered for LT- 2(b), LT-5 and LT-6 SL is lower and

for HT1, HT-3 (a) & (b) and HT-4 categories, it is higher. HESCOM has

stated that it has revised the sales for FY16 for LT- 2(b), LT-5, LT-6 SL,

HT1 and HT-3 (a) & (b) considering the growth rate of second half of

FY15 and accordingly has worked out the CAGR. Regarding HT-4

installations, it is stated that, sales is estimated keeping in view the

upcoming colonies and apartments.

The replies furnished by HESCOM have been noted by the Commission

and the approach of the Commission in estimating the sales is

discussed in the subsequent paragraphs.

II. Commission’s approach for estimating the number of installations

and sales for Control Period FY17-19:

lxx

The Commission has issued the KERC (Load Forecast) Regulations, 2009

which specify that the Commission shall normally adopt the forecast as

per EPS and can deviate from the EPS while approving ERCs or PPAs by

passing orders after duly giving opportunity to the stakeholders.

For the present control period FY17 to FY19, the filing done by ESCOMs

indicates that sales forecast is not in tune with the 18th EPS. The tariff

petition filed by the ESCOMs which includes the sales estimates and

power purchase quantum has been made public and the

stakeholders have been heard in the matter. After considering the

views expressed by the stakeholders the Commission has decided to

adopt the methodology specified in the following paragraphs which is

different from the CEA’s approach for the reasons stated below:

a. The State of Karnataka is under peak and energy shortages situation

and the supply of electricity is determined by the present restricted

generation availability. The last three years data of energy at

generation bus indicated below justify the above stand:

Year

18th EPS –

Generation

MU

Actual supplied

MU

2013 58513 57046

2014 63001 57725

2015 67833 59969

From the above Table, it is seen that the actual growth rate is

different from those estimated by in the 18th EPS, by the CEA.

b. The loss levels considered by the Commission are as per the loss

reduction trajectory fixed by the Commission for the respective

control periods. Hence the loss levels as adopted by the CEA are

not relevant for the purpose of the approval of ARR and Tariff.

lxxi

In view of the above, the Commission has considered the business as

usual scenario and the methodology adopted by the Commission to

estimate the number of installations and sales to categories other than

BJ/KJ and IP sets is discussed below:

1) No. of Installations:

While estimating the number of installations (Excluding BJ/KJ and IP),

the following approach is adopted:

a. The base year number of installations for FY16 is modified duly

validating the revised estimate furnished by HESCOM in the current

filing and data available as on 30.11.2005. Accordingly, the base

year estimation has been revised which has an impact on the

estimates on number of installations and sales for the control

period.

b. Wherever the number of installations estimated by HESCOM for the

control period is within the range of the estimates based on the

CAGR for the period FY10 – FY15 and for the period FY12 – FY15, the

estimates of HESCOM are retained.

c. Wherever the number of installations estimated by HESCOM for the

control period is lower than the estimates based on the CAGRs for

the period FY10 – FY15 and for the period FY12 – FY15, the estimates

based on the lower of the CAGRs for the period FY10 – FY15 and for

the period FY12 – FY15 are considered.

d. Wherever the number of installations estimated by HESCOM for the

control period is higher than the estimates based on the CAGRs for

the period FY10 – FY15 and for the period FY12 – FY15, the estimates

based on the higher of the CAGRs for the period FY10 – FY15 and

for the period FY12 – FY15 are considered.

lxxii

e. For LT 4b and 4c, LT-7, HT-2©, HT-4 and HT-5 categories, the

estimates of HESCOM are retained as there is no specific growth

pattern in these categories.

Based on the above approach, the total number of installations

(excluding BJ/KJ and IP installations) estimated by the Commission for

the control period is indicated in the table below:

Nos.

FY17 FY18 FY19

Filed Approved Filed Approved Filed Approved

3131030 3122019 3274916 3261773 3425074 3407402

2) Energy Sales:

i) For categories other than BJ/KJ and IP sets, generally the sales are

estimated considering the following approach:

a. The base year sales for FY16 as estimated by HESCOM are

validated duly considering the actual sales up to November,

2015 and modified suitably.

b. Wherever the sales estimated by HESCOM for the control period

is within the range of the estimates based on the CAGR for the

period FY10 – FY15 and for the period FY12 – FY15, the estimates

of HESCOM are retained.

c. Wherever the sales estimated by HESCOM for the control period

is lower than the estimates based on the CAGRs for the period

FY10 – FY15 and for the period FY12- FY15, the estimates based

on the lower of the CAGRs for the period FY10 – FY15 and for the

period FY12 – FY15 are considered.

d. Wherever sales estimated by HESCOM is higher than the

estimates based on the CAGRs for the period FY10 – FY15 and

lxxiii

for the period FY12 – FY15, the estimates based on the higher of

the CAGRs for the period FY10 – FY15 and for the period FY12 –

FY15 are considered.

e. For LT 4b and 4c, LT-7, HT-2©, HT-4 and HT-5 categories, the

estimates of HESCOM are retained as there is no specific growth

pattern in these categories.

f. For HT-2a based on the information furnished by HESCOM

regarding the energy sold under open access, the Commission

worked out the sales factoring the impact of the above.

However, the above approach has not been adopted as sales

estimation based on CAGR was more reasonable.

Based on the above approach, the sales (excluding BJ/KJ and IP sales)

estimated by the Commission for the control period is indicated in the

table below:

Figures in MU

FY17 FY18 FY19

Filed Approved Filed Approved Filed Approved

4389.95 4352.70 4663.85 4628.84 4968.34 4933.19

ii) Sales to BJ/KJ :

The break-up of sales to BJ/KJ installations as filed by HESCOM for FY-

15, is as indicated below:

Particulars No. of

Installations

Consumption in

MU

Specific consumption per

installation per month

(kWh)

Installations consuming

less than or equal to18

units

618729 91.92 12.38

lxxiv


more than 18 units and

billed under LT2(a)

142905 72.12 42.06

Considering the above specific consumption and considering the

number of installations as proposed by HESCOM, the sales approved

for the control period for BJ/KJ is as indicated below:

MU

Particulars FY17 FY18 FY19


less than or equal to18

units

90.84 89.19 87.57


more than 18 units and

billed under LT2(a)

77.02 82.79 88.47

iii) Sales to IP sets for FY17-19

In its Tariff Order dated 6th May, 2013, the Commission had approved a

specific consumption of IP sets as 8,244 units/installation/annum for the

entire control period of the FY14 to the FY16, by considering the

unauthorized IP sets, that existed in the distribution system. The

HESCOM has reported the total sales of 5,266.70 MU against 6,01,939

numbers of IP set installations serviced, which translates into a specific

consumption of 8,996 units / installation / annum for the FY15. It is

observed that the actual specific consumption achieved by the

HESCOM for the FY15 is more than the approved figure of 8,284 units /

installation / annum by 752 units / installation / annum. The approved

sales quantity for the FY15 was 4,696.46 MU. This indicates an increase

in sales to an extent of 570.24 MU to that of approved quantum for the

FY15.

The Commission notes that, the HESCOM has achieved a specific

consumption of 8,996 units/installation/annum which is on the basis of

consumption reported by it for the FY15. As discussed above, the

lxxv

HESCOM has not considered the meter readings of agricultural feeders

segregated under NJY for arriving at the total IP set consumption for

the FY15. But, the HESCOM in its tariff filing has requested for

considering specific consumption of 8,735 units/installation/annum for

the FY17 to the FY19, instead of 8,996 units/installation/annum

achieved by it for the FY15, citing the presence of 54,669 numbers of

unauthorized IP installations in the distribution system, which are yet be

regularized/taken into account for want of creation of necessary

infrastructure.

It is further noted that, there is a significant decrease in specific

consumption of IP sets for the period from April 2015 onwards, as per

the HESCOM’s own analysis of the 142 numbers of agricultural feeders

segregated under NJY. As per the analysis, it is revealed that the

specific consumption of 603 units/installation/month has been

achieved which translates into 7,236 units/installation/annum. The

Commission notes that this figure cannot also be taken for fixing the

specific consumption for the FY17 to the FY19, as the analysis carried

out is for a few months in the FY16 from April 2015 onwards. Hence, in

the absence of relevant data for a full year, it is proper to consider the

specific consumption of 8,244 units/installation/annum which was

approved for the FY14 to FY16 by the Commission, for the FY17 to the

FY19 also. In view of this, the Commission decides to approve the

specific consumption of 8,244 units / installation / annum for the FY17 to

the FY19.

It is noted that the HESCOM has projected the number of IP set

installations as 6,84,611, 7,22,444 and 7,62,368 for the FY17, FY18 and

FY19 respectively in the present Tariff filing. However, it is also necessary

to factor in the unauthorized IP set installations as the HESCOM, in its

calculations for ARR for the FY17 to FY19, has not considered the

presence of 54,669 numbers of unauthorized IP sets in the field which

are likely to be regularized /taken into account in the next three years.

Accordingly, the unauthorized installations have also been taken into

lxxvi

consideration while arriving at number of installations for the FY17 to

the FY19. In view of this, the Commission has considered the number of

IP sets furnished by the HESCOM for the FY17 to the FY19 with

modification duly factoring the unauthorized IP set installations

reported by it. Hence, based on the estimated number of installations

for the FY17 to the FY19, the mid-year number of installations is

determined and the sales to IP set consumers are indicated as below:

Particulars As filed by HESCOM

As approved by the

Commission

FY16 FY17 FY18 FY19 FY17 FY18 FY19

No of installations 6,48,760 6,84,611 7,22,444 7,62,368 7,14,611 7,34,778 7,74,703

Mid-Year no of

installations

6,66,686 7,03,528 7,42,406 6,81,686 7,24,695 7,54,741

Specific consumption in

units/installation/annum

9,476 9,475 9,472 8,244 8,244 8,244

Sales in MU 6,317.43 6,665.83 7,032.01 5,619.82 5,974.38 6,222.08

Accordingly, the Commission approves 5,619.82 MU, 5,974.38 MU and

6,222.08 MU as energy sales to IP sets as against the HESCOM’s sales

projections of 6,317.43 MU, 6,665.83 MU and 7,032.01 MU respectively

for FY17, FY18 and FY19. Further, any variation in sales in the FY17 would

be trued up during the Annual Performance Review for the FY17 based

on the energy consumption in respect of agricultural feeders

segregated under NJY.

The above approved IP set consumption is with the assumption that

the Government of Karnataka would release full subsidy to cover the

approved quantum. However, if there is any variation in the subsidy

allocation by the GoK, the quantum of power to be supplied to IP sets

of 10 HP and below shall be proportionately regulated. The payment

of subsidy by the GoK on supply to IP sets is detailed in Chapter 6 of this

Order.

The Commission reiterates that the HESCOM shall report the total IP sets

consumption on the basis of data from energy meters in respect of

agriculture feeders segregated under NJY, to the Commission every

month, regularly duly deducting the actual distribution system losses in

lxxvii

11 KV lines, distribution transformers and LT lines, calculated as per the

methodology approved by the Commission.

Further, the HESCOM is directed to adhere to the duration of power

supply stipulated by the Government in respect of arranging power

supply to exclusive agricultural feeders. The Commission also directs

the HESCOM to take up enumeration of IP sets in its jurisdiction in order

to identify defunct/dried up wells and un-authorized IP sets in the field

and take necessary action to arrive at correct number of IP sets in its

account on the basis of enumeration report. The compliance

regarding the same shall be submitted to the Commission within six

months from the date of issue of this order.

Based on the above discussions, the category wise approved number

of installations for the control period vis-à-vis the estimates made by

HESCOM is indicated below:

TABLE – 5.3

Category wise Approved number of installations

Category

FY-17 FY-18 FY-19

HESCOM’s

estimate

Approved** HESCOM’s

estimate


estimate

Approved**

No. No. No. No. No. No.

LT-2a* 2577712 2569914 2688337 2677762 2802815 2789253

LT-2b 6088 6141 6563 6603 7075 7101

LT-3 334935 335266 350807 350244 367443 365891

LT-4 (b) 1024 1024 1195 1195 1393 1393

LT-4 (c) 383 383 453 453 538 538

LT-5 108301 107495 114622 113960 121312 120815

LT-6 37277 36507 41126 39735 45373 43248

LT-6 20812 20800 21431 21432 22068 22083

LT-7 41662 41622 47262 47262 53614 53614

HT-1 278 268 308 297 341 329

HT-2 (a) 1433 1433 1558 1573 1694 1727

HT-2 (b) 486 487 495 494 504 502

HT2C 307 307 378 378 463 463

HT-3(a)& (b) 235 235 267 270 306 310

HT-4 32 32 33 33 34 34

HT-5 65 65 81 81 101 101

lxxviii

Sub-Total

other than

BJ/KJ and

IP sets

Other than

BJ/KJ & IP

3131030 3122019 3274916 3261773 3425074 3407402

BJ/KJ 611431 611431 600325 600325 589421 589421

IP 684611 714611 722444 734778 762368 774703

Sub Total

BJ/KJ and

IP sets

1296042 1326042 1322769 1335103 1351789 1364124

Total 4427072 4448061 4597685 4596876 4776863 4771526

*Includes BJ/KJ consuming more than 18 units/installation/month

** Excludes HRECS

iv. The category wise approved sales for the control period vis-à-vis the

estimates made by HESCOM is indicated below:

TABLE – 5.4

Category wise Approved Energy sales

Category

FY-17 FY-18 FY-19

HESCOM’s

estimate


estimate


estimate

Approved**

MU MU MU MU MU MU

LT-2a* 1487.78 1473.94 1578.30 1567.97 1674.36 1667.49

LT-2b 14.43 15.35 15.66 16.58 16.98 17.90

LT-3 440.50 440.50 473.72 473.52 509.65 509.02

LT-4 (b) 17.47 17.47 18.16 18.16 18.87 18.87

LT-4 (c) 1.48 1.48 1.97 1.97 2.64 2.64

LT-5 312.98 316.72 317.17 324.81 321.43 333.10

LT-6 231.47 231.47 249.13 252.19 268.14 274.76

LT-6 134.86 137.51 139.75 145.29 144.81 153.51

LT-7 14.61 14.61 14.75 14.75 14.90 14.90

HT-1 239.32 229.75 258.61 246.33 279.46 264.11

HT-2 (a) 1013.41 1013.41 1042.09 1042.10 1071.58 1071.60

HT-2 (b) 135.84 132.59 145.50 141.46 155.86 150.91

HT2C 83.14 83.14 114.97 114.97 159.04 159.04

HT-3(a)& (b) 230.82 212.92 261.75 236.42 297.81 262.52

HT-4 14.01 14.01 14.15 14.15 14.29 14.29

HT-5 17.83 17.83 18.17 18.17 18.52 18.52

Sub-Total

other than BJ/KJ and IP

sets

Other than BJ/KJ & IP

4389.95 4352.70 4663.85 4628.84 4968.34 4933.19

BJ/KJ 93.41 90.84 93.45 89.19 93.49 87.57

IP Sets 6317.43 5619.82 6665.83 5974.38 7032.01 6222.08

Sub Total

BJ/KJ and IP sets

6410.84 5710.66

6759.28 6063.57 7125.50 6309.65

Total 10800.79 10063.35 11423.13 10692.41 12093.84 11242.84

* Includes BJ/KJ consuming more than 18 units/installation/month

** Excludes HRECS

lxxix

5.2.3 Distribution Losses for FY17-19:


As per the audited accounts for FY15, the HESCOM has reported

distribution losses of 16.74% as against an approved loss level of 19.00%.

The Commission in its Tariff Order dated 2nd March, 2015 had fixed the

target level of losses for FY16 at 17.50%. HESCOM in its filing has

proposed to achieve the following loss levels during FY17-19:

TABLE – 5.5

Projected Distribution Losses-FY17-19 – HESCOM’s Submission

Figures in % Losses


Projected

Distribution losses

16.40 16.20 16.00

Commission’s Analysis and Decisions:

The performance of HESCOM in achieving the loss targets set by the

Commission in the past six years is as follows:

TABLE – 5.6

Approved & Actual Distribution Losses-FY10 to FY16

Figures in % Losses

Particulars FY10 FY11 FY12 FY13 FY14 FY15 FY16

Approved Distribution

losses

22.50 20.00 19.35 18.00 19.00 19.00 17.50

Actual distribution

losses

20.86 20.54 19.99 19.88 18.05 16.74 -

The Commission notes that the loss reduction achieved by HESCOM in

the control period FY11-13 was 0.98 percentage point. In the

preceding years of FY14 & FY15, the loss reduction has been 3.14

lxxx

percentage point (in two years of the control period FY14-16). Overall

in the past five years HESCOM has been able to achieve distribution

loss reduction of 4.12 percentage point.

The distribution loss projections indicated by the HESCOM shows

reduction from existing levels of 16.74% in FY15 to 16.40% in FY17 and

further reduction 0.20 percentage point for each of the year FY18 and

FY19. It is observed that, the Commission has been allowing capital

expenditure as incurred by the HESCOM and it has also allowed the

capex as proposed for the ensuing control period. The majority of the

capex like HVDS, E&I works, NJY, DTC metering, RAPDRP should enable

HESCOM not only to strengthen its infrastructure but also reduce the

distribution losses.

The loss reduction proposed by HESCOM is meager as compared to

present actual loss levels. Hence, the Commission, during the

validation meeting stressed upon the need of further reduction in the

distribution loss levels proposed by HESCOM for the control period FY17-

19 duly considering the past and the present capex for which HESCOM

agreed with the suggestions of the Commission.

Considering the present loss levels and the investments made in the

past besides the proposed investments in the ensuing control period,

the Commission decides to fix the following distribution loss targets for

FY17-19:

TABLE – 5.7

Approved Distribution Losses for FY17-19

Figures in % Losses


Upper limit 16.50 16.00 15.50

Average 16.00 15.50 15.00

Lower limit 15.50 15.00 14.50

lxxxi

5.2.4 Power Purchase for FY17-19

The ESCOMs in their filings, have submitted the D-1 statement wherein

the requirement of power purchase for the control period has been

furnished. The consolidated statement showing the energy

requirement, year-wise is shown hereunder:

TABLE – 5.8

Requirement of electricity As filed by Licensees

Distribution Utilities Energy

(MU) Energy (MU) Energy (MU)

FY17 FY18 FY19

BESCOM 32907.24 34674.06 36540.95

MESCOM 5589.96 5904.27 6236.49

CESC 7214.18 7725.09 8274.48

HESCOM 13738.00 13942.08 14849.40

GESCOM 8559.14 8902.63 9292.18

HRECS 322.87 350.14 372.61

AQUEOS 12.98 17.78 22.46

MSEZ 80.49 89.33 113.06

TOTAL 68424.40 72168.78 76161.08

HESCOM submission:

The HESCOM has submitted its power purchase requirement for the

control period FY17 to FY19 based on the projected sales as follows:

TABLE – 5.9

Energy Requirement as filed by HESCOM

Particulars As filed by HESCOM

FY 17 FY18 FY19

Sales (MU) 10800.78 11423.14 12093.84

Distribution losses (%) 16.40 16.20 16.00

Energy at IF point (MU) 12919.59 13631.43 14397.43

Transmission Losses (%) 3.47 3.37 3.27

Energy Required to meet

the sales of HESCOM (MU) 13384.02 14106.83 14884.14

lxxxii


The validation of sales and allowable distribution losses has been

discussed in the previous section of this chapter. Based on the

approved sales and the allowable distribution losses, the requirement

of Power for the HESCOM, for the control period FY17 to FY19 is worked

out as detailed below:

The quantum of energy allowed by the Commission includes the

requirement of HRECS and AEQUS – SEZ.

TABLE – 5.10

Power Purchase requirement approved for the

Control period FY17 to FY19

Particulars FY 17 FY18 FY19

Sales (MU) 10063.35 10692.41 11242.84

Distribution losses (%) 16.00 15.50 15.00

Energy at IF point (MU) 11980.18 12653.74 13226.87

Transmission Losses (%) 3.47 3.37 3.27

Energy Required to meet

the sales of HESCOM (MU) 12410.83 13095.04 13674.01

Hukeri RECS 296.98 305.38 314.95

AEQUS 14.39 19.68 25.95

Total 12722.20 13420.11 14014.91

5.2.5 Sources of Power:

HESCOM’s submission;

In its filings, the HESCOM has furnished the sources of power to meet

the requirement of power of all ESCOMs for the control period FY17 to

FY19.

The HESCOM has submitted the sources of Power and the availability

of each source on the basis of:

lxxxiii

(i) the details furnished by the KPCL in respect of KPCL Generating

Stations.

(ii) ex-Bus generation details furnished by the Central Generating

Stations to CEA for preparation of LGBR of FY6 in respect of CGS

Generating Stations.

(iii) the contracted capacity in the case of Major IPPs (UPCL), Minor

IPPs (NCE sources) and others such as Jurala Power & TB Dam

Power.

The Capacity share of the existing sources and the envisaged

additional sources vis-à-vis the energy requirement for the entire State,

its fixed charges and variable charges are discussed in the tariff

application of HESCOM. The same are shown in the following Tables.

The requirement indicated in the tables includes the requirement of

HRECS, MESCOM - SEZ and AEQUS - SEZ.

TABLE – 5.11

Consolidated power purchases requirement filed for FY 17

SOURCES Energy in

MU

Fixed Cost

in

Rs Cr

Variable

Cost in

Rs Cr

Gross Cost

in Rs Cr

Per unit

Cost

KPCL Hydel Energy: 11604.37 28.77 739.16 767.93 0.66

KPCL Thermal Energy: 21690.83 3110.50 6493.51 9604.01 4.43

CGS Energy: 18721.72 1983.03 4574.50 6557.54 3.50

UPCL: 7523.00 1231.51 1653.26 2884.77 3.83

Renewable Energy: 6821.92 0.00 2661.08 2661.08 3.90

Other State Hydel 147.75 63.75 0.00 63.75 4.31

Short Term 1500.52 0.00 756.53 756.53 5.04

PGCIL & POSOCO

Charges 0.00 916.23 0.00 916.23 0.49

KPTCL Transmission,

SLDC and PGCIL

POSOCO Charges 0.00 2745.17 0.00 2745.17 0.40

DEDUCT/ADD THE

EXCESS/DEFICIT

AVAILABILITY

-2.04 0.00 -0.64 -0.64

Requirement of Utilities

other than ESCOMs 416.34 0.00 176.80 176.80 4.25

lxxxiv

TOTAL 68424.40 10078.96 17054.21 27133.17 3.97

TABLE – 5.12

Consolidated power purchases requirement filed by ESCOMs for FY 18

SOURCES Energy in

MU

Fixed Cost

in Rs Cr

Variable

Cost in Rs

Cr

Gross Cost

in Rs Cr

Per

unit

Cost

KPCL Hydel Energy 12042.05 0.00 754.14 754.14 0.63

KPCL Thermal Energy 24277.85 5070.00 7060.74 12130.75 5.00

CGS Energy 21274.61 1983.04 5920.22 7903.27 3.71

UPCL 5628.59 1231.51 1261.69 2493.20 4.43

Renewable Energy 8349.07 0.00 3362.68 3362.68 4.03


PGCIL & POSOCO Charges 0.00 1186.65 0.00 1186.65 0.56

KPTCL Transmission and

SLDC & PGCIL POSOCO

Charges 0.00 2918.23 0.00 2918.23 0.40

DEDUCT/ADD THE

EXCESS/DEFICIT

AVAILABILITY -8.39 0.00 -3.24 -3.24 3.86

HRECS, AEQUS-SEZ AND M-

SEZ FILINGS 457.25 0.00 204.75 204.75 4.48

TOTAL 72168.78 12442.96 18560.98 31003.94 4.30

TABLE – 5.13

Consolidated power purchases requirement filed by ESCOMs for FY 19

SOURCES

Energy in

MU

Fixed Cost

in Rs Cr

Variable

Cost in Rs

Cr

Gross Cost

in Rs Cr

Per unit

Cost

KPCL Hydel Energy 12042.05 0.00 772.48 772.48 0.64

KPCL Thermal Energy 24277.89 4932.96 7250.85 12183.80 5.02

CGS Energy 23344.44 1983.05 6744.61 8727.67 3.74

UPCL 5628.59 1231.51 1286.92 2518.43 4.47

Renewable Energy 10219.82 0.00 4362.05 4362.05 4.27


PGCIL & POSOCO

Charges 0.00 1365.22 0.00 1365.22 0.58

KPTCL Transmission &

SLDC and PGCIL

POSOCO Charges 0.00 2961.86 0.00 2961.86 0.39

lxxxv

DEDUCT/ADD THE

EXCESS/DEFICIT

AVAILABILITY -8.59 0.00 -37.24 -37.24 43.35

HRECS, AEQUS-SEZ

AND M-SEZ FILINGS 509.13 0.00 245.66 245.66 4.83

TOTAL 76161.08 12528.13 20625.33 33153.46 4.35

Commission’s analysis and decisions

The energy requirement of the ESCOMs, including HESCOM, is being

met by Karnataka Power Corporation Limited (KPCL) Generating

stations, Central Generating Stations (CGS), Major Independent Power

producers (IPPs) and Minor Independent Power producers (NCE

sources) through long-term power purchase agreement. The

contingent requirement to meet the deficit is being met through

purchases from Short/Medium term sources by calling for bids and also

purchases from the Power Exchange. Hence, to arrive at the available

quantum of energy and power for the control period FY17 to FY19, the

Commission has considered the availability as furnished by KPCL and

by SRPC/CERC/CEA for CGS, in respect of their respective Generating

Stations. The availability of CGS stations is based on the share of

Karnataka, as notified from time to time.

In the case of Minor IPPs (NCE/RE sources), the actual generation

capacity contracted by the ESCOMs, as indicated in D-1 format has

been considered. The availability from the other sources such as Jurala

Hydel Station and TB dam Power Stations of Telangana State are taken

at 50% and 20 % of their installed capacity respectively as the share of

Karnataka, as per the contracts executed with these generators.

Further, as the Short Term Power/Medium Term Power procurement to

an extent of around 1108.80 MU has already been contracted by

ESCOMs till May 2016, the same has been considered towards

availability for FY17.

lxxxvi

The availability as furnished by the KPCL in respect of Yeramarus Unit-1

& Unit-2 and Yelahanka Combined Cycle Power Plant (YCCPP), having

a capacity of 1600 MW and 350 MW respectively, has not been

considered, as the said generating stations are yet to be synchronized

with the grid and the CoD is yet to be declared. Similarly, Kudgi Unit1,

Unit2 and Unit3, having a total capacity of 2400 MW, are not

considered since they are yet to be synchronized with the grid and

CoD is yet to be declared.

The availability of BTPS unit 3 has been considered since it has been

synchronized and supplying power to the grid. As its commissioning

date and Commercial operation date of is yet to be declared by the

KPCL, the quantum of energy is restricted to the requirement of

ESCOMs and allowed fuel expenses in FY17. For FY18 and FY19, the

availability of energy from this unit has been considered, as furnished

by the KPCL, duly limiting the quantum of energy as per the

requirement of ESCOMs, to meet the sales targets.

Based on the above availability criteria, the energy allowed for the

State to achieve the sales target of the respective years, is given in the

following Table.

TABLE – 5.14

ABSTRACT OF POWER PURCHASE APPROVED FOR ESCOMS FOR THE CONTROL PERIOD

FY17 TO FY19

SOURCES

FINANCIAL YEAR 2016-17 FINANCIAL YEAR 2017-18 FINANCIAL YEAR 2018-19

Energy

in MU

Cost in Rs

Crs.

Per unit

Cost

Energy in

MU

Cost in Rs

Crs.

Per unit

Cost

Energy in

MU

Cost in Rs

Crs.

Per

unit

Cost

in Rs.

KPCL Hydel

Energy 10704.90 1001.38 0.94 12045.33 1099.16 0.91 12045.33 1139.37 0.95

KPCL Thermal

Energy 17646.77 7252.08 4.11 19323.50 8392.29 4.34 20992.89 9198.23 4.38

CGS Energy 21525.17 6980.84 3.24 21525.17 7082.24 3.29 21525.17 7184.17 3.34

UPCL 7462.68 3093.67 4.15 7462.68 3129.03 4.19 7462.68 3165.10 4.24

Renewable

Energy: 6846.71 2790.38 4.08 8394.81 3413.83 4.07 10265.57 4452.20 4.34

Other State

Hydel 144.08 67.73 4.70 144.08 71.64 4.97 144.08 75.78 5.26

Short Term 1108.80 558.84 5.04 0.00 0.00 0.00 0.00

lxxxvii

PGCIL &

POSOCO

Charges - 949.21 0.44 958.70 0.45 968.29 0.45

KPTCL

Transmission,

SLDC and

PGCIL

POSOCO

Charges - 3112.76 0.48 3197.08 0.47 3500.45 0.50

TOTAL 65439.11 25806.89 3.94 68895.57 27343.97 3.97 72435.72 29683.58 4.10

5.2.6 HESCOM’s Power Purchase cost & Transmission charges:


HESCOM has submitted the Power Purchase cost including the

transmission charges and LDC charges, in D-1 Format wherein energy

to an extent of 13738.002 MU, 14505.479 MU and 15307.85 MU at a cost

of Rs.5487.786, Rs.5571.413 and Rs.5911.90, for the control period years

of FY17, FY18 and FY19 respectively.

As regards power purchase cost, the HESCOM has submitted that, the

same is considered as per the agreed contracts/regulations and

based on the tariff furnished by KPCL for KPCL Stations and the tariff

determined by the CERC in respect of Central Generating Stations,

DVC Stations, and UPCL stations. Further, it is submitted that, the

average cost without escalation, paid towards the supply of NCE

during FY15 is considered in arriving the cost of NCE for the control

period FY 17 to FY19.

Commission’s analysis and decisions

After a detailed analysis of the tariff rates claimed by the HESCOM, the

Commission has arrived at the power purchase cost to be allowed in

the ARR for the control period.

The basis for computation of power purchase cost for the control

period FY17 to FY19 is as indicated below:

lxxxviii

The fixed charges and variable charges of RTPS Unit 1 to 7, BTPS unit 1

and the Hydel Generating Stations exclusive of Muinirabad, MGHE,

Shiva & Shimsha, are reckoned based on the respective PPAs

approved by the Commission.

The fixed charges and variable charges of Munirabad, MGHE, Shiva &

Shimsha hydel Stations, BTPS Unit 2 and RTPS unit 8, have been

computed based on the tariffs determined by the Commission and the

Commission’s norms approved in the PPAs.

The fixed charges and variable charges for the Central Generating

Stations, UPCL Station and the Stations of DVC are reckoned based on

the tariffs determined by the CERC and the CERC norms.

The variable charges of all the thermal stations including CGS stations

are reckoned based on the recent landed cost of fuel and other

variable components.

The variations, if any, in these allowed costs, will be considered during

the FAC exercise / Annual Performance Review of FY17.

Based on the allowed requirement of energy and the power allocation

given by the Government of Karnataka, the Power Purchase quantum

and its costs are approved in the ARR of HESCOM for the control

period FY17 to FY19, as shown in Annexure- 1 & 2.

The consolidated power purchase cost allowed by the Commission vis-

a-vis the power purchase cost as filed by the HESCOM for the control

period FY17 to FY19 is shown the following table:

TABLE – 5.15

Approved Power Purchase Cost of HESCOM for FY17

Source of Power Power Purchase Cost as filed by

HESCOM

Power Purchase Cost Approved

by the Commission

lxxxix

Energy in

MU

Cost in Rs

Cr

Per Unit

cost in

Rs

Energy in

MU

Cost in Rs

Cr

Per Unit

cost in Rs

KPCL Hydel Energy 2295.36 153.63 0.669 2389.11 209.603 0.877

KPCL Thermal Energy 4590.05 2030.90 4.425 3127.44 1291.364 4.129

CGS Energy 3744.34 1311.51 3.503 4188.28 1358.304 3.243

UPCL 1504.60 576.95 3.835 1452.06 601.954 4.146

Renewable Energy 1321.53 507.00 3.836 1321.53 550.130 4.163

Others 31.79 12.20 3.838 28.04 13.179 4.701

Short Term 250.33 127.17 5.080 215.746 108.737 5.040

PGCIL & POSOCO Charges 183.24 0.489 184.693 0.441

KPTCL Transmission, SLDC &

PGCIL POSOCO Charges 585.18 0.426 615.500 0.484

TOTAL 13738.002 5487.786 3.994603 12722.200 4933.463 3.877838

xc

TABLE – 5.16


Source of Power

Power Purchase Cost as filed by

HESCOM

Power Purchase Cost Approved by

the Commission

Energy in

MU

Cost in

Rs Cr

Per Unit

cost in Rs

Energy in

MU

Cost in

Rs Cr

Per Unit

cost in Rs



CGS Energy 3829.58 1426.45 3.725 4180.493 1375.472 3.290

UPCL 788.00 349.05 4.430 1449.358 607.702 4.193


Others 594.22 227.43 3.827 27.983 13.913 4.972

PGCIL & POSOCO Charges 212.69 0.555 186.193 0.445

KPTCL Transmission and

SLDC & PGCIL POSOCO

Charges 655.59 0.452 594.520 0.443

TOTAL 14505.479 5571.413 3.841 13420.106 5307.052 3.955

TABLE – 5.17


Source of Power

Power Purchase Cost as filed by

HESCOM

Power Purchase Cost Approved by the

Commission

Energy

in MU

Cost in

Rs Cr

Per Unit

cost in Rs

Energy in

MU

Cost in

Rs Cr

Per Unit

cost in Rs



CGS Energy 4204.84 1576.01 3.748 4089.973 1365.057 3.338

UPCL 788.00 352.58 4.474 1417.975 601.396 4.241


Others 489.27 190.98 3.903 27.377 14.398 5.259

PGCIL & POSOCO

Charges 243.54 0.579 183.983 0.450

KPTCL Transmission

and SLDC & PGCIL

POSOCO Charges 659.85 0.431 655.290 0.468

TOTAL 15307.85 5911.90 3.862 14014.912 5870.214 4.188549

xci

The HESCOM shall regulate the quantum and cost of power for the

control period, as approved by the Commission. However, since the

power purchase costs are uncontrollable as per the MYT Regulations,

any excess quantum or cost will be trued up in Annual Performance

Review of the respective years.

In respect of energy and costs allowed in respect of new generating

stations/ sources, the same is subject to approval of the Power

Purchase Agreements, by the Commission.

The Commission has fixed a ceiling rate of Rs.4.50 per unit for short-term

procurement and the same is retained for the year FY17.

The Commission notes that, the procurement of power under short term

has come down significantly over the years. With a view to reduce the

cost of power procurement by avoiding purchase of high cost energy,

the Commission reiterates its earlier directive that, any short-term/

contingent power procurement over and above the approved rate

Rs.4.50 per Kwh, shall be made by the ESCOMs only with the prior

approval of the Commission.

The Commission also reiterates its that any short-term or medium-term

power purchase to be made over and above the approved

quantities, shall be procured only through competitive bidding, duly

complying with the GoI guidelines, issued in the matter from time to

time.

5.2.7 Renewable Purchase Obligation (RPO) target for FY17:

a. Non-Solar RPO:

HESCOM has submitted that it will be able to achieve non-solar RPO of

8.18% as against target of 7.50% specified by the Commission vide its

(Procurement of Energy from Renewable Sources)(Third Amendment)

Regulations, 2015 for FY17.

xcii

The Commission has approved power purchase quantum of 12722.20

MU for FY17 (including HRECS and AEQUS SEZ). The Non-solar RPO

target would be 954.17 MU. The Commission has approved purchase

of 1030.38 MU from RE sources other than Solar. Thus, HESCOM would

be able to meet its non-solar RPO obligation.

In case, there is any need to buy RECs to meet the RPO, the cost

thereon would be factored in the APR of FY17.

b. Solar RPO

HESCOM has submitted that it will be able to achieve solar RPO of

2.12% as against target of 0.75% specified by the Commission vide

its(Procurement of Energy from Renewable Sources)(Third

Amendment) Regulations, 2015for FY17 and has submitted that it

will be able to procure 254.50 MU of solar energy under PPA route.

The Commission has approved power purchase quantum 12722.20 MU

for FY17 (including HRECS and AEQUS SEZ). The Solar RPO target would

be 95.42 MU. The Commission has approved purchase of 291.15 MU of

Solar energy. Thus, HESCOM would be able to meet its Solar RPO

obligation also.

In case, there is any need to buy RECs to meet the RPO, the cost

thereon would be factored in the APR of FY17.

5.2.8 O & M Expenses for FY17-19:

HESCOM’s Proposal:

The HESCOM in its application has requested the Commission to

consider the projected O&M expenses computed on the basis of

weighted inflation index of 6.69% using the methodology followed by

the CERC. Further, HESCOM has considered three year CAGR on the

xciii

basis of actual data of FY12 to FY15 for computing the consumer

growth index of 3.52%.

Based on the above indices and the projected O & M expenses of

Rs.628.65 Crores for the base year of FY16, the HESCOM has sought the

O & M expenses for FY17-19 as detailed below:

TABLE – 5.18

O&M Expenses for FY17-19-HESCOM’s Proposal

Amount in Rs.Crores


No of installations 4427071 4597681 4776864

Weighted Inflation Index 6.69% 6.69% 6.69%

CGI based on 3 year

CAGR 3.52% 3.52% 3.52%

O & M expenses 680.26 736.11 796.54

Based on the above projected total normative O & M Expenses,

HESCOM has segregated the O & M Expenses as follows:

Amount in Rs.Crores


R&M cost 57.21 61.91 66.99

Employee cost 533.32 577.10 624.48

A&G expenses 89.73 97.10 105.07

Total O&M cost 680.26 736.11 796.54

Further, based on the proposed recruitment of additional employees

during the control period, HESCOM has projected the additional

Employee cost also. The total O&M expenses projected by HESCOM

are as follows:

Amount in Rs.Crores


Normative O & M Cost 680.26 736.11 796.54

xciv

Additional Employee Cost 53.06 63.99 75.92

Total O & M Cost 733.32 800.10 872.46

Commission’s analysis &decision:

As per the norms specified under the MYT Regulations, the O & M

expenses are controllable expenses and the distribution licensee is

required to operate these expenses within the approved values.

The Commission in its preliminary observations made on the increase in

employee cost due to additional recruitment, had sought details of

cadre wise additional employee cost projected for FY17.

HESCOM in its replies has stated that, additional officers / employees

are proposed to be recruited during FY17 and the additional cost

would be Rs.53.06 Crores for FY17, Rs.10.93 Crores for FY18 and Rs.11.92

Crores for FY19.

HESCOM has not informed the status of the recruitment and the

proposed induction of such additional employees. In the absence of

supporting data for claiming such additional employee cost due to

recruitment, the Commission is of the view that such expenses could

be factored only after being incurred by the distribution licensee.

However, the Commission is of the view that any increase in the

employee strength should reflect in improved productivity and

efficiency for the betterment of services rendered by the ESCOMs to its

consumers in the State. Accordingly, the Commission will look into the

issue at the time of approving the APR for relevant years instead of

loading these costs in the present ARR exercise in the absence of

finalization of such additional employee’s recruitment and its cost.

xcv

The Commission has computed the O & M expenses for FY17-19 duly

considering the actual O & M expenses of FY15 as per the audited

accounts (being the latest data available as per the audited

accounts) to arrive at the O & M expenses for base year i.e. FY16. The

actual O& M expenses for FY15 were Rs.580.96 Crores. Considering the

Wholesale Price Index (WPI) as per the data available from the Ministry

of Commerce & Industry, Government of India and Consumer Price

Index (CPI) as per the data available from the Labour Bureau,

Government of India and adopting the methodology followed by

CERC with CPI and WPI in a ratio of 80: 20, the allowable annual

escalation inflation rate for FY17 is computed as follows:

TABLE – 5.19

Computation of Inflation Index for FY17

Year WPI CPI Composite

Series Yt/Y1=Rt Ln Rt

Year

(t-1)

Product [(t-

1)* (LnRt)]

2003 92.6 107 104.12

2004 98.72 111.1 108.624 1.04 0.04 1 0.04

2005 103.37 115.8 113.314 1.09 0.08 2 0.17

2006 109.59 122.9 120.238 1.15 0.14 3 0.43

2007 114.94 130.8 127.628 1.23 0.20 4 0.81

2008 124.92 141.7 138.344 1.33 0.28 5 1.42

2009 127.86 157.1 151.252 1.45 0.37 6 2.24

2010 140.08 175.9 168.736 1.62 0.48 7 3.38

2011 153.35 191.5 183.87 1.77 0.57 8 4.55

2012 164.93 209.3 200.426 1.92 0.65 9 5.89

2013 175.35 232.2 220.83 2.12 0.75 10 7.52

2014 182 246.9 233.92 2.25 0.81 11 8.90

A= Sum of the product column 35.36

B= 6 Times of A 212.19

C= (n-1)*n*(2n-1) where n= No of years of data=12 3036.00

D=B/C 0.07

g(Exponential factor)= Exponential (D)-1 0.0724

e=Annual Escalation Rate (%)=g*100

7.24

For the purpose of determining the normative O & M expenses for

FY17-19, the Commission has considered the following:

e) The actual O & M expenses incurred as per the audited accounts

for FY15 inclusive of contribution to the Pension and Gratuity Trust to

arrive at the base year O&M expenses for FY16.

xcvi

f) The three years compounded annual growth rate (CAGR) of the

number of installations considering the actual number of

installations as per the audited accounts up to FY15 and as

projected by the Commission for FY16-FY19.

g) The weighted inflation index (WII) at 7.24% as computed above.

h) Efficiency factor at 2% as considered in the earlier two control

periods.

The above said parameters are computed duly considering the same

methodology as followed in the earlier tariff orders of the Commission.

Accordingly, the normative O & M expenses for FY17-19 are as follows:

TABLE – 5.20

Approved O & M expenses for FY17-19

Amount in Rs.Crores

Particulars FY16 FY17 FY18 FY19

No. Of Installations 4448061 4596876 4771526

CGI based on 3 Year CAGR 4.14% 3.97% 3.86%

Inflation index 7.24% 7.24% 7.24%

Base Year O&M Cost (as per actuals of FY15) 633.66

Approved O&M Expenses 693.09 756.93 825.79

Since, the base year data includes the O & M expense inclusive of

contribution to the P & G Trust, the Commission has not considered

allowing contribution to the P & G Trust separately.

Thus, the Commission decides to approve the O&M expenses of

Rs.693.09 Crores for FY17, Rs.756.93 Crores for FY18 and Rs.825.79 Crores

for FY19.

5.2.9 Depreciation:


The HESCOM, in its application has claimed the depreciation for the

control period based on the following assumptions:

xcvii

1) Depreciation rates as specified by CERC on the Assets for each

year of the control period.

2) Individual group wise assets are calculated on pro-rata basis as per

the actuals in FY15.

3) 3-year CAGR for projecting the assets created out of consumer

contribution/grants are is considered and Depreciation is

withdrawn on the assets created on account of contribution

/grants as per Accounting Standard-12 .

4) 70% of the proposed capex is considered as addition of assets for

each year of the control period

Accordingly, HESCOM has claimed the depreciation for FY17-19 as

detailed below:

TABLE – 5.21

Depreciation-FY17-19- HESCOM’s Proposal

Amount in Rs.Crores


Buildings 2.67 3.10 3.54

Hydraulics Works 0.10 0.12 0.14

Other Civil Works 0.09 0.11 0.12

Plant & Machinery 38.51 44.63 51.04

Lines Cable Networks

148.2

4 171.83

196.4

9

Vehicles 0.58 0.68 0.77

Furniture & Fixtures 0.25 0.29 0.33

Other Equipment 0.22 0.26 0.29

Total

190.6

7

221.0

1

252.7

2

Less withdrawals 12.20 14.84 13.81

Less assets (DCW &

Grants) 66.37 77.69 91.57

xcviii

Net Depreciation

112.1

0

128.4

8

147.3

3

Commission’s analysis and decision:

In accordance with the provisions of the MYT Regulations and

amendments thereon, the Commission has determined the

depreciation for FY17-19 considering the following:

a) The actual rate of depreciation of category wise assets is

determined considering the depreciation and gross block of

opening and closing balance of fixed assets as per the audited

accounts for FY15.

b) This actual rate of depreciation is considered to on the gross block

of fixed assets projected by the Commission on the amount of

capex recognized for the purpose of factoring depreciation for

FY17-19.

c) The depreciation on account of assets created out of consumers

contribution / grants are considered (deducted) based on the

opening and closing balance of such assets as proposed by the

HESCOM at the weighted average rate of depreciation as per

actuals in FY15.

Accordingly, the computation of depreciation for FY17-19, is shown as

follows:

TABLE – 5.22

Approved Depreciation for FY17-19



Buildings 2.89 3.07 3.27

Civil 0.17 0.18 0.19

Other Civil 0.12 0.12 0.13

Plant & M/c 38.93 41.58 44.49

xcix

Line, Cable Network 71.41 76.28 81.63

Vehicles 0.11 0.12 0.13

Furniture 0.14 0.15 0.16

Office Equipments 0.09 0.09 0.10

Approved Depreciation 113.85 121.60 130.11

Thus, the Commission decides to approve an amount of Rs.113.85

Crores, Rs.121.60 Crores and Rs.130.11 Crores towards depreciation for

FY17, FY18 and FY19 respectively.

5.2.10 Interest on Capital Loans:

HESCOM’s proposal:

HESCOM has requested to approve interest on capital loans for FY17-

19 as follows:

c

TABLE – 5.23

Interest on Capital Loans– HESCOM’s Proposal



Opening balance 2446.21 2803.83 3219.13

Add new loans 901.05 838.55 827.55

Less repayment 543.43 423.25 381.52

Closing balance loans 2803.83 3219.13 3665.16

Average loans 2625.02 3011.48 3442.15

Rate of interest in % 12% 12% 12%

Interest on capital Loans 315.00 361.38 413.06


The Commission notes the capex and capital loans proposed by

HESCOM for FY17-19. As discussed in the preceding paragraphs of this

Chapter, considering the capex recognized by the Commission for

approval of ARR for the control period, the requirement of capital loan

is Rs.420.00 Crores, Rs.385.00 Crores and Rs.385.00 Crores for FY17, FY18

and FY19 respectively. Further, the Commission has considered the

repayment of long term loan as proposed by HESCOM at Rs.144.53

Crores, Rs.170.32 Crores and Rs.191.79 Crores for FY17, FY18 and FY19

respectively.

As per the audited accounts of FY15, the HESCOM had incurred

weighted average rate of interest of 11.47% on capital loans. This rate

of interest is considered for the existing loan balances for which interest

has to be factored during FY17. For further period, the weighted

average rate of interest of the preceding year is considered for existing

loans. As discussed in the preceding paragraphs, the Commission has

considered capex amount of Rs.600.00 Crores for FY17, Rs.550.00 Crores

for FY18 and Rs.550.00 Crores for FY19 for the purpose of factoring

interest on loan. The Commission has considered new loans which is in

compliance with the debt equity ratio of 70 : 30.

ci



notified by the RBI from time to time plus spread of certain basis points

depending upon the tenure of the loan. Hence, the Commission

would consider the same approach in factoring the interest on new

capital loans. As per the tariff application of HESCOM, the new loans

are proposed at interest rate of 12%. The Commission notes that the

interest rates availed by HESCOM are on a higher side as compared to

other ESCOMs and the present base rate. HESCOM needs to initiate

financial prudence measures so as to avail loans at comparatively

lesser interest rates and to reduce the interest burden on the

consumers. However, at present considering the base rate of interest

with spread of 200 basis points and considering the interest rates at

which new loans are availed in FY16, the Commission decides to allow

capital loans at a rate of 12% for FY17-19. It shall be noted that, the

rate of interest now considered by the Commission on the new capital

loans for the control period is subject to review during APR and revision

of ARR of the relevant years of the control period.

Accordingly, the approved interests on capital loans for FY17-19 are as

follows:

TABLE – 5.24

Approved Interest on Capital Loans for FY17-19



Opening balance of capital Loans 1235.27 1510.74 1725.42

Add new capital Loans 420.00 385.00 385.00

Less Repayments 144.53 170.32 191.79

Total capital loan at the end of the

year 1510.74 1725.42 1918.63

Average capital Loan 1373.01 1618.08 1822.02

Approved Interest on capital Loan 158.64 187.81 212.24

Thus, the Commission decides to approve interest on capital loans of

Rs.158.64, Rs.187.81 Crores and Rs.212.24 Crores for FY17, FY18 and

FY19 respectively.

cii

5.2.11 Interest on Working Capital:


HESCOM has claimed interest on working capital based on the norms

prescribed in the MYT Regulations as follows:

TABLE – 5.25

Interest on Working Capital – HESCOM’s Submission



One -twelfth of the amount of O & M

Expenses 56.69 61.34 66.38

Opening GFA 3647.52 3994.43 4317.28

Stores, materials and supplies - 1% of

opening balance of GFA 36.48 39.94 43.17

One-Sixth of the Revenue 992.98 1053.36 1119.06

Total Working Capital 1086.15 1154.64 1228.61

Rate of Interest 11.75% 11.75% 11.75%

Interest on Working Capital 127.62 135.67 144.36


As per the norms specified under the MYT Regulations, the Commission

has computed the interest on working capital which consists of one

months’ O & M expenses, 1% of opening GFA and two months’

revenue.



declared by RBI from time to time. Hence, the Commission would

consider base rate plus certain basis points depending upon the

tenure of the loan. As per the HESCOM’s application, it is stated that

working capital loans for FY15 and FY16 has been availed at the rate of

interest ranging from 12.50% to 13%. The Commission notes that, the

ciii

present working capital loans availed by HESCOM is comparatively at

a higher rate of interest. HESCOM needs to initiate financial prudence

measures in availing short term loans so that the interest burdens on its

consumers are reduced. However, considering the base rate of

interest with spread of 250 basis points and noting the present interest

rate on working capital loan availed by HESCOM, the Commission

decides to allow short term loans at a normative interest of 12% for

FY17-19.

Accordingly, the approved interest on working capital loans for FY17-

19 are as follows:

TABLE – 5.26

Approved Interest on Working Capital loans for FY17-19

Amount in Rs.

Crores

Particulars FY 17 FY 18 FY 19

One-twelfth of the amount of O&M Expenses. 57.76 63.08 68.82

Opening Gross Fixed Assets 3641.95 3879.40 4154.80

Stores, materials and supplies at 1% of Opening balance

of GFA 36.42 38.79 41.55

One-sixth of Revenue 922.68 980.36 1030.83

Total Working Capital 1016.86 1082.23 1141.19

Rate of Interest (% p.a.) 12.00% 12.00% 12.00%

Interest on Working Capital loans 122.02 129.87 136.94

Thus, the Commission decides to approves interest on working capital

loans of Rs.122.02 Crores, Rs.129.87 Crores and Rs.136.94 Crores for


5.2.12 Interest on Consumer Security Deposit:


HESCOM has claimed interest on consumer security deposit on the

closing balance of deposits projected for each year of the control

period as follows:

TABLE – 5.27

civ

Interest on Consumer Security Deposits for FY17-19- HESCOM’s Proposal



Projected Consumer security deposits 678.65 767.01 866.88

Rate of interest at bank rate 8.75% 8.75% 8.75%

Proposed interest on consumer security deposits 59.38 67.11 75.85


In accordance with the KERC (Interest on Security Deposit) Regulations

2005, the interest rate to be allowed is the bank rate prevailing on the

1st of April of the financial year for which the interest is due. As per

Reserve Bank of India notification dated 29th September, 2015, the

bank rate is 7.75%. This being the latest notified bank rate, the

Commission has considered the same for computation of interest on

consumer deposits for FY17-19.

The Commission has considered the deposits as per audited accounts

of FY15 and half yearly accounts of FY16 for onward projection for

FY17-19. The interests on consumer security deposits for FY17-19 are as

follows:

TABLE – 5.28

Approved Interest on Consumer Security Deposits for FY17-19



Opening balance of consumer security deposits 641.55 709.55 782.55

Rate of Interest at bank rate to be allowed as per

Regulations 7.75% 7.75% 7.75%

Approved Interest on Consumer Security Deposits 52.36 57.82 63.67

Thus, the Commission decides to approve interest on consumer

security deposits of Rs.52.36, Rs.57.82 Crores and Rs.63.67 Crores for


5.2.13 Interest on belated payment of power purchase cost:

cv

HESCOM in its application has requested to allow an amount of

Rs.140.00 Crores towards interest on belated payment of power

purchase cost for each year of the control period. Since, interest on

working capital is being allowed separately as per the norms for

managing the day to day expenditure of the company without any

delays, the Commission decides not to allow interest on belayed

payment of power purchase cost separately.

The abstract of approved interest and finance charges for FY17-19 are

as follows:

TABLE – 5.29

Approved Interest and finance charges for FY17-19



Interest on Loan Capital 158.64 187.81 212.24

Interest on Working Capital 122.02 129.87 136.94

Interest on belated payment of power

purchase cost 0.00 0.00 0.00

Interest on Consumers Deposit 52.36 57.82 63.67

Approved Interest & Finance Charges 333.02 375.50 412.85

5.2.14 Other Debits:

HESCOM in its application has claimed an amount of Rs.18.64 Crores,

Rs.19.65 Crores and Rs.20.66 Crores towards other debits for FY17, FY18

& FY19 respectively. The Commission has not been considering the

projections for other debits for the reason that, the same cannot be

estimated beforehand. The Commission therefore has not allowed the

same in the ARR for the control period. However, such expenses would

be considered as per the audited accounts for the relevant years at

the time of APR.

5.2.15 Return on Equity:


HESCOM in its application has not claimed the Return on Equity for

having estimated the negative networth for the control period FY17-19.

cvi


The Commission has considered the actual amount of share capital,

share deposits and the accumulated profits/losses under reserves &

surplus as per the audited accounts for FY15 and the additional share

deposit reported in the half yearly accounts for FY16 for arriving at the

allowable equity base for the control period FY17-19.

The Commission, in accordance with the provisions of the MYT

Regulations has considered 15.5% of Return on Equity duly grossed up

with the applicable Minimum Alternate Tax (MAT) of 21.342%. This

works out to 19.706% per annum. Further, an amount of Rs.34.00 Crores

of recapitalized consumer security deposit as networth is considered as

per the orders of the Hon’ble Appellate Tribunal for Electricity in

Appeal No.46/2014.

Further, in compliance with the Orders of the Hon’ble ATE in Appeal

No.46/2014 wherein it is directed to indicate the opening and closing

balances of gross fixed assets along with break-up of equity and loan

component in the Tariff Order henceforth, the details of GFA, debt and

equity (networth) for FY17-19 are as follows:

TABLE – 5.30

Status of Debt Equity Ratio for FY17-19


Year Particulars GFA Debt Equity

(Networth)

Normative

Debt @

70% of

GFA

Normative

Equity @

30% of

GFA

%age

of

actual

debt

on

GFA

%age of

actual

equity

on GFA

FY17 Opening

Balance

3641.96 1235.27 (288.87)

Closing

Balance

3879.40 1510.74 (288.87) 2715.58 1163.82 38.94 Negative

FY18 Opening

Balance

3879.40 1510.74 (288.87)

Closing

Balance

4154.80 1725.42 (288.87) 2908.36 1246.44 41.53 Negative

FY19 Opening

Balance

4154.80 1725.42 (288.87)

Closing

Balance

4441.74 1918.63 (288.87) 3109.22 1332.52 43.20 Negative

cvii

From the above table it is evident that the debt equity lies within the

normative debt equity ratio of 70 : 30 on the closing balances of GFA

for each year of the control period. Further, the Commission will review

the same during the Annual Performance Review for each year based

on the actual data as per the audited accounts.

Accordingly, the Return on Equity that could be approved for FY17-19

works out as follows:

TABLE – 5.31

Approved Return on Equity for FY17-19



Paid Up Share Capital 934.49 934.49 934.49

Share Deposit 0 0 0

Reserves and Surplus (1189.36) (1189.36) (1189.36)

Less Recapitalised Security Deposit 34.00 34.00 34.00

Total Equity (288.87) (288.87) (288.87)

Approved Return on Equity 0.00 0.00 0.00

Since the networth of HESCOM is negative for all the three years of the

control period FY17-19, the Commission decides not to factor any

amount of return on equity for the control period.

5.2.16 Other Income:


HESCOM has claimed other income for the control period as detailed

below:

TABLE – 5.32

Other Income for FY17-19 – HESCOM’s Proposal

Amount in Rs.Crores


Other Income 27.94 28.67 29.40


cviii

The other income received by HESCOM mainly includes income from

incentives, rebate for collection of electricity duty, interest on bank

deposits, rent from staff quarters, profits from sale of stores and sale of

scrap besides incentives for timely payment of power purchase bills.

The Commission notes that HESCOM also receives income from sale of

power to HRECS and AEQUS SEZ which needs to be factored under

other income.

Based on the other income earned by HESCOM in the previous years,

the normal other income amount works out to Rs.30.00 Crores per year.

Further, considering expected revenue from sale of power to HRECS

and AEQUS SEZ and normative increase, the Commission decides to

approve the other income for the control periods are as follows:

TABLE – 5.33

Approved Other Income for FY17-19

Amount in Rs.Crores


Other Income 148.49 155.70 163.70

5.2.17 Fund towards Consumer Relations / Consumer Education:

The Commission has been allowing an amount of Rs.0.50 Crore per

year towards consumer relations / consumer education. This amount

is earmarked to conduct consumer awareness and grievance

redressal meetings periodically and institutionalize a mechanism for

addressing common problems of the consumers. The Commission has

already issued guidelines for consumer education and grievance

redressal activities.

The Commission decides to continue providing an amount of Rs.0.50

Crore for each year of the control period FY17-19 towards meeting the

expenditure on consumer relations / consumer education.

cix

The Commission directs HESCOM to furnish a detailed plan of action for

utilization of this amount and also maintain a separate account of

these funds and furnish the same at the time of APR.

5.3 Treatment of Regulatory Asset:

HESCOM in its application has claimed an amount of Rs.197.69 Crores

as Regulatory asset to be recovered in the ARR for FY17. Further an

amount of Rs.23.72 Crores has also been claimed as carrying cost on

the Regulatory asset.

The Commission notes that as per the Tariff Order dated 12th May, 2014

the deficit of Rs.415.33 Crores for FY13 was determined duly factoring

the additional subsidy of Rs.186.51 Crores payable by the Government

of Karnataka. This deficit was included in the ARR for FY15. Further,

while approving the ARR for FY15, an amount of Rs.214.58 Crores was

set aside as regulatory asset to be recovered in the tariff over the next

two years (FY16 & FY17). The Commission decided to allow carrying

cost at 12% p.a on the regulatory asset to be assessed at the time of

Annual Performance Review for FY15 and FY16. However, in the present

APR for FY15, as discussed in the previous chapter of this Order, the

revenue earned was more than sufficient to meet the expenses during

FY15. The APR of FY15 indicates a surplus of Rs. 105.14 Crores.

Further, the Commission in its Tariff Order dated 2nd March, 2015 had

decided to carry forward a Regulatory asset of Rs.197.69 Crores being

determined as detailed below:

Sl.

No Particulars

Amount

in

Rs Crs

1 Regulatory asset as per Commission’s Order dated 12th May, 2014. 214.58

2 Gap in revenue on APR of FY14 597.00

3 Surplus in revenue as per ARR for FY16. 442.02

4 Total Gap for FY16 369.56

5 Additional revenue allowed by revision of tariff in FY16 166.45

cx

6 Balance unfilled gap in revenue 203.11

7 Amount disallowed on imprudent capex (5.42)

8 Regulatory asset to be recovered in FY17 197.69

Hence the Commission decides to include this amount of Rs.197.69

Crores in the ARR for FY17.

5.4 Abstract of ARR for FY16:

In the light of the above analysis and decisions of the Commission, the

following is the approved ARR for the control period FY17-19:

cxi

TABLE – 5.34

Approved ARR for FY17-19

Amount in Rs.Crores

Sl.

No Particulars FY17 FY18 FY19

Revenue at existing tariff

1 Revenue from tariff and Misc. Charges 2631.09

2 Tariff Subsidy 2905.01

3 Total Existing Revenue 5536.10 0.00 0.00



5 Transmission charges of KPTCL 611.37 589.72 650.08

6 SLDC Charges 4.13 4.80 5.21

7


transmission 4933.46 5307.06 5870.20

8 O&M Expenses 693.09 756.93 825.79

9 Depreciation 113.85 121.60 130.11




12 Interest on belated payment on PP Cost 0.00 0.00 0.00


14 Other Interest & Finance charges 0.00 0.00 0.00

15 Less: interest & other expenses capitalised 0.00 0.00 0.00

16 Total Interest & Finance charges 333.01 375.50 412.85

17 Other Debits 0.00 0.00 0.00

18 Net Prior Period Debit/Credit 0.00 0.00 0.00

19 Return on Equity 0.00 0.00 0.00

20


Education 0.50 0.50 0.50

21 Other Income 148.49 155.70 163.72

22 ARR 5925.43 6405.89 7075.73

23 Surplus for FY15 carried forward 105.14

24 Regulatory asset -197.69

25 Net ARR 6017.97 6405.89 7075.73

5.5 Segregation of ARR into ARR for Distribution Business and ARR for Retail

Supply Business:

HESCOM in its application has not proposed any new ratio for

segregation of consolidated ARR into ARR for Distribution Business and

ARR for Retail Supply Business.

cxii

Commission’s Analysis and Decisions:

Since no new proposal has been furnished by HESCOM, the

Commission decides to continue with the existing ratio of segregation

of ARR as detailed below:

TABLE – 5.35

Approved Segregation of ARR – FY17 - 19

Particulars Distribution

Business

Retail Supply

Business

O&M 63% 37%

Depreciation 84% 16%

Interest on Loans 100% 0%

Interest on Consumer Deposits 0% 100%

RoE 82% 18%

GFA 84% 16%

Non-Tariff Income 0% 100%

Accordingly, the following is the approved ARR for Distribution Business

and Retail supply business:

TABLE – 5.36 APPROVED REVISED ARR FOR DISTRIBUTION BUSINESS – FY17 - 19


Sl.

No Particulars

FY17 FY18 FY19

1 O&M Expenses 436.65 476.86 520.25

2 Depreciation 95.63 102.15 109.29

Interest & Finance Charges




6 NET ARR 719.68 797.51 874.29

cxiii

TABLE – 5.37

APPROVED ARR FOR RETAIL SUPPLY BUSINESS – FY17 - 19

Amount in

Rs.Crores

Sl.

No Particulars

FY17 FY18 FY19


2 Transmission Charges 615.49 594.52 655.29

3 O&M Expenses 256.44 280.06 305.54

4 Depreciation 18.22 19.46 20.82

Interest & Finance Charges

5 Interest on Capital Loans 0 0 0



8 Less Other income 148.49 155.70 163.72

9


Education 0.50 0.50 0.50

10 Total 5205.75 5608.38 6201.44

5.6 Gap in Revenue for FY17:

As discussed above, the Commission decides to approve the Annual

Revenue Requirement (ARR) of HESCOM for its operations in FY17 at

Rs.6017.97 Crores as against HESCOM’s proposal of Rs.7112.32 Crores.

The ARR approved by the Commission also includes an amount of

Rs.105.14 Crores of surplus revenue earned in FY15 as discussed in

Chapter-4 of this Order. Based on the existing retail supply tariff, the

total realization of revenue will be Rs.5536.10 Crores which is less by

Rs.481.87 Crores than the projected revenue requirement for the year.

The net ARR and the gap in revenue for FY17 are shown in the following

table:

TABLE – 5.38

Revenue gap for FY17

Particulars FY17

Net ARR including carry forward surplus of FY15 ( Rs. Crores) 6017.97

Approved sales ( MU) 10063.35

Average cost of supply for FY17 ( Rs./unit) 5.98

Revenue at existing tariff ( Rs. Crores) 5536.10

Gap in revenue for FY17 ( Rs. Crores) (481.87)

cxiv

The determination of revised retail supply tariff on the basis of the

above approved ARR is detailed in the following Chapter.

5.7 Application for Additional Revenue Requirement for FY17:

The HESCOM, in its application dated 17th March, 2016, filed on 18th

March, 2016, seeking additional ARR for FY17, has submitted that:

1. The Second Transfer Scheme Rules dated 31.05.2002 were issued by

the GoK, for transfer of assets and liabilities and personnel of KPTCL

to the ESCOMs. According to Rule 4(13) of these Rules, the State

Government is responsible for funding the pension and other

liabilities of the personnel as on the date of Second Transfer i.e.

31.05.2002 and sub-rule 13(2)(b) provides for establishment of a

Pension Trust for managing the fund.

2. The GoK, vide its order dated 19.12.2002, has ordered constitution

of the Pension and Gratuity Trust and also decided to adopt “Pay

as you go” approach, in funding the pension and gratuity

requirement.

3. The GoK vide its letter dated 25.02.2016, has informed that against

the proposed pension and gratuity contribution of Rs.996.39 Crores

for FY17 and the arrears of pension contribution of Rs.2047.84 Crores

payable to KPTCL and ESCOMs, the Finance Department (FD) has

agreed to provide Rs.550 Crore for meeting the pension liability. As

there is difference between the proposed requirement and the

availability as indicated by the FD for FY17, the Pension Trust is

directed to work out the amount of contribution to be recovered

through tariff considering the indicative amount of contribution

available from the Government.

4. It is submitted by HESCOM that, as worked out by the Pension Trust,

an amount of Rs.448.28 Crores (Arrears of Rs.367.84 Crores and

Rs.80.44 Crores for FY17) has to be recovered through tariff.

cxv

Accordingly, HESCOM has filed an application claiming an additional

ARR of Rs.448.28 Crores, to be recovered through tariff.

Commission’s views and decision

The Commission proceeds to dispose of the application filed by

HESCOM, as follows:

a) The application for additional ARR has been filed on 16th March,

2016, that is much after completion of the process of calling for

objections on the original tariff application and furnishing replies

thereon. The Commission has also completed the process of public

consultation by holding a public hearing, in respect of HESCOM, on

3rd March, 2016.

b) As per Rule 4(13) of the Karnataka Electricity Reforms (Transfer of

Undertakings of KPTCL and its Personnel to Electricity Distribution

and Retail Supply Companies) Rules, 2002, notified by the

Government on 31.05.2002, the State Government is liable for

funding the pension and gratuity liability of existing pensioners as on

the effective date of Second Transfer Scheme.

c) The Government, as per its order dated 19.12.2002, has adopted

“pay as you go” approach to meet the pension and gratuity

requirements of existing pensioners on the effective date of second

transfer Scheme. With this arrangement, the GoK is liable to meet

the pension and gratuity requirement of existing pensioners as

noted above. Hence, this liability cannot be passed on to the

consumers, through tariff.

In view of the above, the Commission is unable to accept the

application for approval of additional ARR towards pension and

gratuity of the said pensioners. Accordingly, the said application

stands disposed of.

cxvi

CHAPTER – 6

DETERMINATION OF TARIFF FOR FY17

6.0 HESCOM’S Proposal and Commission’s Analysis for FY17:

6.1 Tariff Application

As discussed in the preceding Chapters, HESCOM has projected an

unmet gap in revenue of Rs.1102.36 Crores for FY17. In order to bridge

this gap in revenue, HESCOM, in its Tariff Application, has proposed a

tariff increase of 1002 paise per unit in respect of all the categories of

consumers.

6.2 Statutory Provisions Guiding Determination of Tariff

As per section 61 of the Electricity Act 2003, the Commission, is guided

inter-alia, by the National Electricity Policy, the Tariff Policy and the

following factors, while, determining the tariff so that,

the distribution and supply of electricity are conducted on

commercial basis;

competition, efficiency, economical use of resources, good

performance, and optimum investment are encouraged;

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 Commission;

efficiency in performance is to be rewarded ; and

a Multi-Year Tariff framework is adopted

Section 62(5) of the Electricity Act 2003, read with Section 27(1) of the

KER Act 1999, empowers the Commission to specify, from time to time,

the methodologies and the procedure to be observed by the licensees

in calculating the Expected Revenue from Charges (ERC). The

Commission determines the Tariff in accordance with the Regulations

and the Orders issued by the Commission from time to time.

cxvii

6.3 Consideration for Tariff setting:

The Commission has considered the following relevant factors for

determination of Retail Supply Tariff:

a) Tariff Philosophy:

As discussed in the earlier tariff orders, the Commission continues to

fix tariff below the average cost of supply for consumers whose

ability to pay is considered inadequate and fix tariff at or above the

average cost of supply for categories of consumers whose ability to

pay is considered to be greater. As a result the system of cross

subsidy continues. However, the Commission has taken due care

to progressively bring down the cross subsidy levels as envisaged in

the Tariff Policy of the Government of India.

b) Average Cost of Supply:

The Commission has been determining the retail supply tariff on the

basis of the average cost of supply. The KERC (Tariff) Regulations,

2000 require the licensees to provide details of embedded cost of

electricity voltage / consumer category-wise. The distribution

network of Karnataka is such that, it is difficult to segregate the

common cost between voltage levels. Therefore, the Commission

has decided to continue the average cost of supply approach for

recovery of the ARR. With regard to the indication of voltage-wise

cross subsidy with reference to the voltage wise cost of supply, the

decision of the Commission is noted in the subsequent para of this

Chapter.

cxviii

c) Differential Tariff:

Beginning with its tariff order dated 25th November, 2009 the

Commission has been determining differential retail supply tariff for

consumers in urban and rural areas. The Commission decides to

continue the same in the present order also.

6.4 New Tariff Proposals by HESCOM

HESCOM, in its tariff application has made the following new proposals:

1. Increase in Fixed Charges:

HESCOM has proposed to increase the fixed cost by Rs.10/- Per HP/KW

for all LT and HT-3(a) & (b) category of consumers. The demand

charges in respect of HT-1, HT-2(a) and HT-2(b), HT-2(c) has proposed

for increased to Rs.200 per KVA and Rs.40 per KVA in respect of HT-4

and HT-5 category of consumers

Commission’s Analysis and decisions:

On an analysis of the revenue at existing tariff of HESCOM, the

Commission notes that the total amount of fixed charges likely to be

recovered on the projected consumers, works out to Rs.269.34 Crores

for FY17. Whereas as per the approved ARR of HESCOM for FY17, the

fixed cost to be incurred in each of the activity in generation,

transmission and distribution is as follows:

Activity Total FC to be

incurred

Generation 967.08

Transmission including

SLDC charges

615.50

Distribution network cost 991.97

Total Fixed cost 2574.55

From the above analysis, the Commission notes that as against total

fixed expenditure of Rs.2574.55 Crores, HESCOM is able to collect the

expenditure only to an extent of Rs.269.34 Crores, in the form of fixed

charges, at the existing rates. This accounts for recovery of only 10.46%

cxix

of the fixed charges. The remaining 89.54% is being recovered in the

form of energy charges, it is not an efficient method of recovery of

fixed expenditure.

As per the new Tariff Policy issued by the Ministry of Power,

Government of India, dated 28th January 2016, two-part Tariff featuring

separate fixed and variable charges shall be introduced for all

consumers. In order to ensure their financial viability it is imperative that

the fixed expenditure incurred by the ESCOMs are recovered in the

form of fixed charges. On study of the existing rate of fixed charges

levied on the consumers and the amount collected thereon, it is

observed that fixed charges needs to be increased gradually to meet

the above objective. Hence the Commission hereby decides to

provide for collection of additional fixed charge of Rs.5/- per KW/HP

per month from the Domestic and LT Industrial consumers and RS.10/-

per KW /HP/ KVA per month from all the other categories of

consumers. This would enable the HESCOM to recover an additional

fixed charges from the projected consumers only to the extent of Rs.

41.81 Crores and the projected total recovery of fixed charges would

be Rs.311.15 Crores for FY17 which accounts for 12.09% of the total

fixed charges incurred.

2. Billing on KVAH basis to EHT/HT consumers

HESCOM has proposed to introduce KVAH billing in place of the

present system of billing on KWH basis in respect of EHT and HT

consumers with a view to reduce the distribution losses, encourage

efficient consumption of electricity by consumers lower electricity bill of

the consumers and reduce HESCOM’s energy requirement.

In order to estimate the category-wise KvAh consumption and its

impact on revenue/ consumer tariff/ cross subsidy the Commission has

directed HESCOM to furnish the KvAh consumption data of all its HT

consumers for FY13 to FY15 and FY16 up to November, 2015 and to

rework the financial implication for FY17 on the proposed billing on

cxx

KvAh basis for all the HT consumers. But, the required information has

not been submitted by HESCOM. In the absence of any scientific study

and failure on the part of HESCOM to furnish the require data along

with the financial implications, the Commission is unable to take any

decision in the matter and hence decides to continue the existing Kwh

billing system for all the HT consumers.

3. Other proposals:

HESCOM has made the following proposals:

a) Charge higher tariff to Kalyana Mantapas, where lavish wedding

are taking place.

b) Extend concessional tariff to RO drinking water supply units.

c) Concessional rate to Private irrigation installations under HT supply.

The Commission has examined the above proposals and notes that the

new proposals are not properly justified with financial implications and

hence, decides not to accept the proposals made.

6.5 Revenue at Existing Tariff and Deficit for FY17:

The Commission in its preceding Chapters has decided to carry

forward the surplus in revenue of Rs.105.14 Crores of FY15 to the ARR of

FY17.The gap in revenue for FY17 is proposed to be filled up by revision

of Retail Supply Tariff as discussed in the following paragraphs of this

Chapter.

Considering the approved ARR for FY17 and the revenue as per the

existing tariff, the gap in revenue for FY17 is as follows:

cxxi

TABLE – 6.1

Revenue Deficit for FY17

Amount in Rs.Crores

Particulars Amount

Approved Net ARR for FY17 including surplus of

FY15

6017.97

Revenue at existing tariff 5536.10

Deficit (481.87)

Additional Revenue to be realised by Revision of

Tariff

481.87

Accordingly, in this Chapter, the Commission has proceeded to

determine the retail supply tariff for FY17. The category-wise tariff as

existing, as proposed by HESCOM and as approved by the Commission

is as follows:

1. LT-1 BhagyaJyothi

The existing tariff and the tariff proposed are given below:

Sl.

No

Details Existing (as per 2015

Tariff Order)

Proposed by HESCOM

1 Energy Charges

(including recovery

towards service main

Charges)

552 paise / unit subject

to a monthly minimum

of Rs. 30 per installation

per month.

654 paise / unit subject

to a monthly minimum

of Rs. 30 per installation

per month.

Commission’s Views/ Decision

The GoK, as a policy, has extended free power to all BJ/KJ consumers,

whose consumption is not more than 18 units per month. The tariff

payable by these consumers is revised to Rs.5.98 per unit.

Further, the ESCOMs have to claim subsidy for only those consumers

who consume 18 units or less per month per installation. If the

consumption exceeds 18 units per month or any BJ/KJ installation is

found to have more than one out- let, it shall be billed as per the Tariff

Schedule LT 2(a).

The Commission determines the tariff (CDT) in respect of BJ / KJ

installations as follows:

LT – 1 Approved Tariff for BJ / KJ installations

cxxii

Commission determined Tariff Retail Supply Tariff

determined by the

Commission

598 paise per unit,

Subject to a monthly minimum of

Rs. 30 per installation per month.

-Nil-

Fully subsidized by GoK

*Since GOK is meeting the full cost of supply to BJ / KJ, the Tariff payable by these

Consumers is shown as Nil. However, if the GOK does not release the subsidy in

advance, a Tariff of Rs.5.98 per unit subject to monthly minimum of Rs. 30/- per

Installation per month shall be demanded and collected from these consumers.

Note: If the consumption exceeds 18 units per month or any BJ/KJ

installation is found to have more than one light point being

used, it shall be billed as per Tariff Schedule LT 2(a).

2. LT2 Domestic Consumers:


The details of the existing and proposed tariff under this category are

given in the Table below:

Proposed Tariff for LT-2 (a)

LT-2 a (i) Domestic Consumers Category

Applicable to areas coming under City Municipal Corporations and all

areas under Urban Local Bodies.

Det

ails

Existing as per 2015 Tariff

Order

Proposed by HESCOM

Fixed

Charges

per Month

For the first KW Rs.25 For the first KW Rs.25

For every additional KW

Rs.35

For every additional KW Rs.35

Energy

Charges

0-30 units

( life line

Consumpti

on )

0 to 30 units:270 paise/unit 0 to 30 units: 372 paise

/unit

Energy

Charges

exceeding

30 Units

per month

31 to 100 units:400paise/unit 31 to 100 units: 502 paise

/ unit

101 to 200 units: 540 paise

/unit


/unit

Above 200 units:640 paise

/unit

Above 200 units: 742 paise

/unit

cxxiii

LT-2(a)(ii) Domestic Consumers Category

Applicable to Areas under Village Panchayats

Details Existing as per 2015 Tariff Order

Proposed by HESCOM

Fixed Charges per

Month

For the first KW Rs.15 For the first KW Rs.15

For every additional KW

Rs.25

For every additional

KW Rs.25

Energy Charges

0-30 units ( life line

Consumption )


/unit

0 to 30 units:362 paise

/unit

Energy Charges

exceeding 30 Units

per month


/ unit


/ unit


/unit


/unit


/unit


/unit

Commission’s Decision

The Commission has decided to continue the two tier tariff in respect

of the domestic consumers as shown below:

(i) Areas coming under City Municipal Corporations and all Urban

Local Bodies

(ii) Areas under Village Panchayats.

The Commission approves the tariff for this category as follows:

Approved Tariff for LT 2 (a) (i) Domestic Consumers Category:

Applicable to Areas coming under City Municipal Corporations and all

other Urban Local Bodies

Details Tariff approved by the

Commission

Fixed Charges per Month For the first KW Rs.30

For every additional KW Rs.40

Energy Charges up to 30 Units per

month (0-30 Units)-life line consumption.

Upto 30 units: 300 paise/unit

Energy Charges in case the

Consumption exceeds 30 Units per

month

31 to 100 units: 440 paise/unit


Above 200 units: 690 paise/unit

LT-2(a)(ii) Domestic Consumers Category:


cxxiv

Details Tariff approved by the Commission

Fixed Charges per Month For the first KW Rs.20/-

For every additional KW Rs.30/-

Energy Charges up to 30

Units per Month (0-30 Units)-

Lifeline Consumption

Upto 30 units: 290 paise/unit

Energy Charges in case the

Consumption exceeds 30

units per month


Energy Charges 101 to 200 units: 560 paise/unit


LT2 (b) Private Professional and other Private Educational

Institutions, Private Hospitals and Nursing Homes.


The details of the existing and the proposed tariff under this

category are given in the Table below:

LT 2 (b) (i) Private Professional Educational Institutions & Private

Hospitals and Nursing Homes.

Applicable to areas coming under Municipal Corporations & all Urban

Local Bodies

Details Existing tariff as per 2015 Tariff

Order

Proposed by HESCOM

Fixed

Charges per

Month

Rs.35 per KW subject to a

minimum of Rs.65 per month


minimum of Rs.65 per

month

Energy

Charges

For the first 200 units 600

paise per unit

For the first 200 units 702

paise per unit

For the balance units 720

paise per unit

For the balance units 822

paise per unit

LT 2 (b) (ii) Private Professional Educational Institutions &Private

Hospitals and Nursing Homes.


Details Existing as per 2015 Tariff Order Proposed by HESCOM

Fixed

Charges per

Month


minimum of Rs.50 per Month


minimum of Rs.50 per

Month

cxxv

Energy

Charges

For the first 200 units: 550

paise per unit

For the first 200 units:652

paise per unit

For the balance units: 670

paise per unit

For the balance units:772

paise per unit

Commission’s decision

As in the previous Tariff Order, the Commission decides to continue the

two tier tariff structure as below:

(i) Areas coming under Municipal Corporations and all urban local

bodies.


Approved Tariff for LT 2 (b) (i) Private Professional and other Private

Educational Institutions, Private Hospitals and Nursing Homes

Applicable to areas under City Municipal Corporations and all urban

Local Bodies


Fixed Charges per Month Rs.45per KW subject to a minimum of Rs.75 per

Month.

Energy Charges 0-200 units: 625 paise/unit


Approved Tariff for LT 2 (b) (ii) Private Professional and other Private

Educational Institutions, Private Hospitals and Nursing Homes

Applicable in Areas under Village Panchayats


Fixed Charges per Month Rs.35 per KW subject to a minimum of Rs.60per

Month

Energy Charges 0-200 units: 570 paise/unit


3. LT3- Commercial Lighting, Heating and Motive Power


The existing and proposed tariff are as follows:

LT- 3 (i) Commercial Lighting, Heating& Motive Power

Applicable in areas under all Urban Local Bodies including City Municipal

Corporations

Details Existing as per 2015 Tariff Proposed by HESCOM

cxxvi

Order

Fixed Charges per

Month

Rs.40 per KW Rs. 40 per KW


paise per unit


paise per unit

For the balance units: 795

paise per unit


paise per unit

Demand based tariff (optional) where sanctioned load is above 5 KW

but below 50 KW.

Details Existing as per 2015 Tariff

Order

Proposed by HESCOM

Fixed

Charges

Rs. 55 per KW Rs. 55 per KW

Energy

Charges

For the first 50 units:695 paise

per unit

For the first 50 units: 797 paise

per unit


paise per unit


paise per unit

LT-3 (ii) Commercial Lighting, Heating& Motive Power

Applicable in areas under village Panchayats

Details Existing as per 2015

Tariff Order

Proposed by HESCOM

Fixed Charges

per Month

Rs. 30 per KW Rs.30 per KW

Energy Charges For the first 50 units:645

paise per unit


paise per unit

For the balance units:

745 paise per unit


847 paise per unit

Demand based tariff (optional) where sanctioned load is above 5 KW

but below 50 KW


Tariff Order

Proposed by HESCOM

Fixed Charges

per Month

Rs. 45 per KW Rs. 45 per KW

Energy Charges For the first 50 units: 645

paise per unit


paise per unit

For the balance

units:745 paise per unit


847paise per unit

Commission’s decision

As in the previous Tariff Order, the Commission decides to continue the

two tier tariff structure as below:

cxxvii

(i) Areas coming under Municipal Corporations and other urban

local bodies.


LT- 3 (i) Commercial Lighting, Heating& Motive Power

Applicable to areas under all Urban Local Bodies including Municipal

Corporations

Details Approved by the Commission

Fixed Charges per Month Rs 50 per KW

Energy Charges For the first 50 units: 715 paise/ unit

For the balance units: 815 paise/unit

Demand based tariff (Optional)where sanctioned load is above 5 kW

but below 50 kW


Fixed Charges per

Month

Rs 65 per KW

Energy Charges For the first 50 units: 715paise /unit

For the balance units: 815 paise/unit

LT-3 (ii) Commercial Lighting Heating& Motive Power Applicable to areas under Village Panchayats


Fixed Charges per

Month

Rs. 40 per KW

Energy Charges For the first 50 units: 665 paise per unit

For the balance units: 765 paise per unit

Demand based tariff (Optional)where sanctioned load is above 5 kW

but below 50 kW


Fixed Charges per

Month

Rs.55 per KW

Energy Charges For the first 50 units: 665 paise per unit

For the balance units: 765 paise per unit

4. LT4-Irrigation Pump Sets:

HESCOM Proposal:

The existing and proposed tariff for LT4 (a) are as follows:

cxxviii

LT-4 (a) Irrigation Pump Sets

Applicable to IP Sets up to and inclusive of 10 HP


Order

Proposed by HESCOM

Fixed Charges per

Month

Nil Free (In case GoK does

not release the subsidy

in advance, CDT of 610

paise per unit will be

demanded and

collected from

consumers)

Energy Charges CDT 508 paise per unit

Commission’s Views/ Decision

The Government of Karnataka has extended free supply of power to

farmers as per Government Order No. EN 55 PSR 2008 dated

04.09.2008. As per this policy of GoK, the entire cost of supply to IP sets

up to and inclusive of 10 HP is being borne by the GoK through tariff

subsidy. In view of this all the categories under the existing LT-4a tariff

are covered under free supply of power.

Considering the cross subsidy contribution from categories other than

IP Sets & BJ/KJ Categories, the Commission determines the tariff for IP

Set under LT4(a) category as follows:

Approved CDT for IP Sets for FY17

Particulars HESCOM

Approved ARR in Rs. Crores 6017.97

Revenue from other than IP & BJ/KJ installations in Rs. Crores 2839.03

Amount to be recovered from IP & BJ/KJ installations in Rs.

Crores 3178.94

Approved Sales to BJ/KJs installations in MU 90.84

Revenue from BJ/KJ installations at Average Cost of supply in

Rs. Crores 54.32

Amount to be recovered from IP Sets category in Rs. Crores 3124.62

Approved Sale to IP Sets in MU 5619.82

Commission Determined Tariff (CDT) for IP Set Category for

FY17 in Rs/unit 5.56

Accordingly, the Commission decides to approve tariff of Rs.5.56 per

unit as CDT for FY17 for IP Set category under LT4(a). In case the GoK

cxxix

does not release the subsidy in advance, a tariff of Rs.5.56 per unit shall

be demanded and collected from these consumers.

Approved by the Commission

LT-4 (a) Irrigation Pump Sets

Applicable to IP Sets up to and inclusive of 10 HP


Fixed charges per Month Free*

Energy charges

CDT (Commission Determined Tariff):

556 paise per unit

* In case the GoK does not release the subsidy in advance, a tariff of

Rs.5.56 per unit shall be demanded and collected from these

consumers.

PAYMENT OF SUBSIDY BY GOVERNMENT OF KARNATAKA FOR FY17:

Several consumers and stakeholders who participated in the Public

Hearing held by the Commission have expressed that the ESCOMs may

be showing part of their technical losses against IP set consumption by

inflating the number of live pump sets, in order to report technical

losses lower than the actual losses prevailing in the distribution system.

Further, they have also expressed that there are many defunct, non-

working/idle IP sets provided to both open wells and bore wells which

have dried up and the same have not been identified / deleted from

the ledger accounts by the ESCOMs and that the ESCOMs, however,

are treating these IP sets as live IP set installations and claiming subsidy

from the Government, which needs to be stopped immediately. They

have requested the Commission to direct the ESCOMs to take up

enumeration of IP sets in their jurisdiction to identify defunct/dried up

wells and un-authorized IP sets in the field and take necessary action to

arrive at the correct number of IP sets in their account on the basis of

the enumeration report. The Commission is also of the view that IP sets

of defunct /dried up wells should be deleted in the accounts of the

ESCOMs in order to reflect exact numbers of live IP sets and its usage

for claiming subsidy from the Government and more importantly to

assess the performance of the ESCOMs.

cxxx

The Commission has approved in respect of all the ESCOMs, a total

ARR of Rs.31,917.59 Crores for the FY17, which includes estimated

revenue of Rs.8,571.08 Crores against supply of 19,505.96 MU of power

to 25,64,999 number of IP sets (excluding HRECS). The Commission is of

the view that the actual number of IP set installations would be far less

than 25,64,999 approved for the FY17, if proper enumeration is carried

out to ascertain the correct number of IP sets by the ESCOMs.

Therefore, the ESCOMs need to immediately take up enumeration of IP

sets to arrive at the exact number of IP sets in use. The ESCOMs should

note that the quantum of sales to IP sets approved in ARR for FY17 is

subject to APR and the Commission will not accept such sales without

being substantiated in the manner specified by it.

The Commission has been issuing directives to ESCOMs for conducting

Energy Audit at the Distribution Transformer Centre (DTC)/feeder level

to enable detection and prevention of commercial losses. In view of

substantial progress in implementation of feeder segregation under

NJY scheme, the ESCOMs were also directed to submit IP set

consumption on the basis of the meter readings of the 11 kV feeders at

the substation level duly deducting the energy losses in 11kV lines,

distribution transformers & LT lines, in order to compute the

consumption of power by IP sets accurately. In this regard, the

Commission has noted that the ESCOMs have complied partly with

these directions and they have initiated measures to achieve full

compliance. The ESCOMs need to ensure full compliance as this has

direct impact on their revenues and tariff payable by other categories

of consumers.

For the forgoing reasons, the Commission directs the ESCOMs as

follows:

1) The ESCOMs shall manage supply of power to the IP sets for the

FY17, so as to ensure that it is within the quantum of subsidy

cxxxi

committed by the GoK. They shall procure power which is

proportional to such supply. In case the ESCOMs opt to supply

power to the IP sets in excess of the quantum corresponding to the

amount of subsidy the GoK has assured to be released for FY17, the

difference in the amount of subsidy relating to such supply shall be

claimed from the GoK. If the difference in subsidy is not paid by the

GoK, the same has to be collected from the IP set consumers.

2) The ESCOMs shall, immediately take up enumeration of IP sets,

11kV feeder wise by capturing the GPS co-ordinates namely

longitude, latitude and altitude of each live IP set in their jurisdiction

and complete this process within six months from the date of this

Order and submit the list of 11 kV feeder-wise IP sets’ census with

GPS co-ordinates to the Commission, on or before 15th October,

2016. The Commission would accordingly revise the number of IP

sets and its consumption for the FY17.

3) The ESCOMs shall compute the specific consumption and total sale

of energy to IP sets considering the month-wise energy input to 11

kV segregated agricultural feeders at the substation duly deducting

the energy losses prevailing in 11 kV lines, DTCs & LT Lines and

submit to the Commission, the monthly DTC wise/ feeder-wise

energy audit reports regularly in the formats prescribed by the

Commission, before 15th of succeeding month.

Pending compliance of the directives contained in (2) and (3) above,

the Commission hereby advises the Government to release only 90% of

the subsidy allocated for FY17. The Commission will advise the

Government, in the last quarter of the financial year to release the

balance 10% of subsidy for the year, on satisfactory compliance of the

above directives.

LT4 (b) Irrigation Pump Sets above 10 HP:

HESCOM’s Proposal

cxxxii

The existing and proposed tariff for LT-4(b) is as follows:

LT-4 (b) Irrigation Pump Sets:

Applicable to IP Sets above 10 HP


Order

Proposed by HESCOM

Fixed Charges per

Month

Rs. 30 per HP Rs. 30 per HP

Energy Charges 240 paise per unit 342 paise per unit

The existing and proposed tariff for LT4(c) is as follows:

LT-4 (c) (i) Irrigation Pump Sets:

Applicable to Private Horticultural Nurseries, Coffee and Tea

plantations up to & inclusive of 10 HP


Order

Proposed by HESCOM

Fixed Charges per

Month



LT-4 (c) (ii) Irrigation Pump Sets:

Applicable to Private Horticultural Nurseries, Coffee and Tea

plantations above 10 HP.


Order

Proposed by HESCOM

Fixed Charges per

Month



Approved Tariff:

The Commission decides to revise the tariff in respect of these

categories as shown below:

LT-4 (b) Irrigation Pump Sets:

Applicable to IP Sets above 10 HP

Fixed Charges per Month Rs.40 per HP

Energy Charges for the entire

consumption

280 paise/unit

LT4(c) (i) Irrigation Pump Sets:

Applicable to Horticultural Nurseries,

Coffee, Tea & Rubber plantations up to & inclusive of 10 HP

cxxxiii


Energy Charges 280 paise / unit

LT4 (c)(ii) Irrigation Pump Sets:

Applicable to Horticultural Nurseries, Coffee, Tea& Rubber

plantations above 10 HP


Energy Charges 280 paise/unit

5. LT5 Installations-LT Industries:


The existing and proposed tariffs are given below:

cxxxiv

LT-5(a)- LT Industries:

Applicable to all areas under HESCOM

i) Fixed charges


ii) Demand based Tariff (optional)

Details Description Existing Tariff as per

2015 Tariff Order

Proposed by

HESCOM

Fixed Charges per Month

Above 5 HP and

less than 40 HP

Rs. 45 per KW of

billing demand

Rs. 45 per KW of

billing demand

40 HP and above

but less than 67 HP

Rs. 60 per KW of

billing demand

Rs. 60 per KW of

billing demand

67 HP and above Rs. 150 per KW of

billing demand

Rs. 150 per KW of

billing demand

iii. Energy Charges


Tariff Order

Proposed by HESCOM

For the first 500 units 475 paise per unit 577 paise/ unit

For the next 500

units

555 paise per unit 657 paise/ unit

For the balance

units



i)Rs. 25 per HP for 5 HP &

below.

ii) Rs. 30 per HP for above 5

HP & below 40 HP

iii) Rs. 35 per HP for 40 HP &

above but below 67 HP

iv)Rs. 100 per HP for 67 HP &

above

i) Rs. 25 per HP for 5 HP &

below


HP & below 40 HP




above

cxxxv

LT-5(b)- LT Industries:

Applicable to all areas under HESCOM

i) Fixed charges



Details Description Existing Tariff as per

2015 Tariff Order

Proposed by

HESCOM


Above 5 HP and

less than 40 HP

Rs. 45 per KW of

billing demand

Rs. 45 per KW of

billing demand

40 HP and above

but less than 67 HP

Rs. 60 per KW of

billing demand

Rs. 60 per KW of

billing demand

67 HP and above Rs. 150 per KW of

billing demand

Rs. 150 per KW of

billing demand

iii. Energy Charges


Tariff Order

Proposed by HESCOM

For the first 500 units 470 paise per unit 572 paise/ unit

For the next 500

units


For the balance

units



i)Rs. 25 per HP for 5 HP &

below.


HP & below 40 HP




above

i) Rs. 25 per HP for 5 HP &

below


HP & below 40 HP




above

cxxxvi

Existing ToD Tariff for LT5: At the option of the consumers

ToD Tariff

Time of Day Increase (+ )/ reduction (-) in energy

charges over the normal tariff applicable

22.00 Hrs to 06.00 Hrs (-) 125 paise per unit

06.00 Hrs to 18.00 hrs 0

18.00 Hrs to 22.00 Hrs (+) 100 paise per unit Proposed ToD Tariff for LT5 : At the option of the consumer

ToD Tariff




06.00 Hrs to 18.00 hrs 0

18.00 Hrs to 22.00 Hrs (+) 100 paise per unit

Commission’s views / decisions:

The decision of the Commission in its earlier Tariff Orders providing for

mandatory Time of Day Tariff for HT2(a),HT2(b) and HT2(c) consumers

with a contract demand of 500 KVA and above is continued. The

optional ToD will continue as existing for HT2(a), HT2(b) and HT2(c)

consumers with contract demand of less than 500 KVA. Further, for LT5

and HT1 consumers, the optional ToD is continued as existing.

The Commission has decided to continue with two tier tariff structure

introduced in the previous Tariff Orders, which are as follows:

i) LT5 (a): For areas falling under Municipal Corporations.

ii) LT5 (b): For areas other than those covered under LT5 (a) above.

Approved tariff:

The Commission approves tariff under LT-5(a) and LT-5(b) as given

below:

Approved Tariff for LT 5 :

Approved Tariff for LT 5 (a):

Applicable to areas under Municipal Corporations

i) Fixed charges


cxxxvii

Fixed

Charges per

Month

i) Rs. 30 per HP for 5 HP & below

ii) Rs. 35 per HP for above 5 HP & below 40 HP

iii) Rs. 40 per HP for 40 HP & above but below 67 HP

iv) Rs. 100 per HP for 67 HP & above

Demand based Tariff (optional)

Fixed

Charges per

Month

Above 5 HP and less than 40

HP

Rs. 50 per KW of billing

demand

40 HP and above but less

than 67 HP


demand

67 HP and above Rs. 150 per KW of billing

demand

ii) Energy Charges


For the first 500 units 495 paise/unit

For the next 500 units 585 paise/ unit

For the balance units 615 paise/unit

Approved Tariff for LT 5 (b):

Applicable to all areas other than those covered under LT-5(a)

i) Fixed charges


Fixed

Charges per

Month

i) Rs. 30 per HP for 5 HP & below

ii) Rs. 35 per HP for above 5 HP & below 40 HP

iii) Rs. 40 per HP for 40 HP & above but below 67 HP

iv) Rs. 100 per HP for 67 HP & above


Fixed

Charges per

Month


HP


demand


than 67 HP

Rs.65 per KW of billing

demand

67 HP and above Rs. 150 per KW of billing

demand

cxxxviii

iii) Energy Charges

Details Approved tariff

For the first 500 units 485 paise/ unit



Approved ToD Tariff for LT5 : At the option of the consumer ToD Tariff



22.00 Hrs to 06.00 Hrs (-)125 paise per unit

06.00 Hrs to 18.00 hrs 0

18.00 Hrs to 22.00 Hrs (+)100 paise per unit

6. LT6 Water Supply Installations and Street Lights


The existing and the proposed tariffs are given below:

LT-6(a): Water Supply


Order

Proposed by HESCOM

Fixed Charges per

Month

Rs. 35/HP/month Rs. 35/HP/month

Energy Charges 340 paise/unit 442 paise/unit

LT-6 (b) : Public Lighting


Order

Proposed by HESCOM

Fixed Charges

per Month

Rs. 50/KW/month Rs. 50/KW/month

Energy Charges 500 paise/unit 602 paise/unit

Energy Charges

for LED Lighting

400 paise/unit 502 paise/unit

The Commission approves the tariff for this category as follows:

Tariff Approved by the Commission for LT-6 (a): Water supply

Details Approved Tariff

Fixed Charges per

Month

Rs.45 /HP/month

cxxxix


Tariff Approved by the Commission for LT-6 (b): Public Lighting


Fixed Charges per

Month

Rs. 60/KW/month


Energy Charges

for LED/ Induction

Lighting

450 paise/unit

7. LT 7- Temporary Installations and Advertising Hoardings:


The existing rate and the rate proposed are given below: Temporary Supply

a) Less than 67

HP:

Energy charge at 900

paise per unit subject

to a weekly minimum

of Rs. 160 per KW of

the sanctioned load.

Energy charge at 1002 paise

per unit subject to a weekly

minimum of Rs. 160 per KW of

the sanctioned load.

TARIFF SCHEDULE LT-7(b)

LT 7(b) Details Proposed by HESCOM

Power supply on

permanent

connection basis

Less than 67 HP:

Fixed Charges at Rs 40 per KW /month

Energy charges at 1002 paise / unit

Commission’s Decision :

As decided in the previous Tariff Order the tariff specified for

installations with sanctioned load / contract demand above 67 HP

shall be covered under the HT temporary tariff category under HT5.

With this, the Commission decides to approve the tariff for LT-7

category as follows:

APPROVED TARIFF SCHEDULE LT-7(a) Applicable to Temporary Power Supply for all purposes.


Tariff Order

Proposed by HESCOM

cxl

LT 7(a) Details Approved Tariff

Temporary Power

Supply for all

purposes.

Less than 67 HP:


subject to a weekly minimum of Rs.170

per KW of the sanctioned load.

APPROVED TARIFF SCHEDULE LT-7(b)

Applicable to Hoardings & Advertisement boards, Bus Shelters with

Advertising Boards, Private Advertising Posts / Sign boards in the

interest of public such as Police Canopy Direction boards, and other

sign boards sponsored by Private Advertising Agencies / firms on

permanent connection basis.

LT 7(b) Details Approved Tariff

Power supply on

permanent

connection basis

Less than 67 HP:

Fixed Charges at Rs 50 per KW /month


H.T. Categories:

Time of the Tariff (ToD)

The Commission decides to continue the mandatory Time of Day Tariff

for HT2(a), HT2(b) and HT2(c) consumers with a contract demand of

500 KVA and above. Further, the optional ToD will continue as existing

for HT2(a), HT2(b) and HT2(c) consumers with contract demand of less

than 500 KVA. The details of ToD tariff are indicated under the

respective tariff category.

8. HT-1 Water Supply & Sewerage


The Existing and the Proposed tariff are as given below:

Sl.

No.

Details Existing tariff as per 2015

Tariff Order

Proposed by HESCOM

1 Demand

Charges

Rs.180 / kVA of billing

Demand / Month

Rs.180 / kVA for billing

demand / Month

2 Energy Charges 410 paise per unit 512 paise per unit

cxli

Existing ToD tariff to HT-1 tariff to Water Supply & Sewerage installations at the option of the consumer

22.00 Hrs to 06.00 Hrs next day (-) 125 paise per unit

06.00 Hrs to 18.00 Hrs 0


Proposed ToD Tariff to HT-1

Time of day Increase (+) / reduction (-) in the energy


22.00 Hrs to 06.00 Hrs next day (- ) 125 paise per unit

06.00 Hrs to 18.00 Hrs 0


Commission’s decision:

The Commission approves the tariff for HT 1 Water Supply and Sewerage category as below:



cxlii

Approved Tariff for HT 1


Demand

Charges

Rs.190 / kVA of billing demand / Month

Energy Charges 450 paise/ unit

Approved ToD tariff to HT-1 tariff to Water Supply & Sewerage installations at the option of the consumer

22.00 Hrs to 06.00 Hrs next day (-) 125 paise per unit

06.00 Hrs to 18.00 Hrs 0


9. HT2 (a) – HT Industries & HT 2(b) – HT Commercial


The Existing and proposed tariff are as given below:

HT – 2 (a) - HT Industries- Applicable to all areas of HESCOM

Details Existing tariff as per Tariff

Order 2015

Proposed by HESCOM

Demand Charges Rs. 170 / kVA of billing

demand / month

Rs. 170 / kVA of billing

demand / month

Energy Charges

(iii) For the first one

lakh units

(iv) For the

balance units

585 paise per unit

615 paise per unit

687 paise per unit

717 paise per unit



cxliii

Railway traction and Effluent Plants


Order 2015

Proposed by HESCOM

Demand Charges Rs. 180 / kVA at billing

demand / month


demand / month

Energy Charges 555 paise per unit for all the

units

657 paise per unit for all

the units

Existing ToD Tariff for HT-2(a)



22.00 Hrs to 06.00 Hrs next day (- )125 paise per unit

06.00 Hrs to 18.00 Hrs 0


Proposed ToD Tariff for HT-2(a)




06.00 Hrs to 18.00 Hrs 0



The Commission approves the tariff for HT 2(a) category as below:

Approved Tariff for HT – 2 (a)

Applicable to all areas of HESCOM


Demand Charges Rs. 180 / kVA of billing demand / Month

Energy Charges

For the first one lakh units 620 paise/ unit

For the balance units 660 paise/ unit

Railway Traction & Effluent Treatment Plants


cxliv


Energy Charges 590 paise / unit for all the units

10. HT-2 (b) HT Commercial



HT – 2 (b)-HT Commercial- Applicable to all areas of HESCOM


Order 2015

Proposed by HESCOM


demand / month


demand / month

Energy Charges

(i) For the first two

lakh units

735 paise per unit

837 paise per unit

(ii)For the balance

units

765 paise per unit 867 paise per unit

Proposed ToD Tariff to HT-2(b)




06.00 Hrs to 18.00 Hrs 0



The Commission approves the following tariff for HT 2 (b) consumers:

Approved tariff for HT – 2 (b) - HT Commercial

Applicable to all areas of HESCOM


Demand Charges Rs.200/ kVA of billing demand / Month

Energy Charges

(i) For the first two lakh units 785 paise per unit

(ii) For the balance units 815 paise per unit

Note: The above tariff under HT2 (b) is not applicable for construction of new

industries. Such power supply shall be availed under the temporary

category HT5.

cxlv

11. HT – 2 (c) – Applicable to Hospitals and Educational Institutions:


HT-2 ( c)(i) - Applicable to Government Hospitals & Hospitals run by

Charitable Institutions, ESI Hospitals,

Educational Institutions belonging to Government, Local Bodies, Aided

Institutions and Hostels of all Educational Institutions

Details Existing Tariff as per

Tariff Order 2015

Proposed by HESCOM


demand / Month


demand / Month

Energy Charges

(i) For the first one lakh units 560 paise per unit 662 paise per unit

(ii) For the balance units 610 paise per unit 712 paise per unit

Existing & Proposed Tariff for HT – 2 (c) (ii) Applicable to Hospitals/Educational Institutions

other than those covered under HT2(c) (i)

Details Existing Tariff as per Tariff

Order 2015

Proposed by HESCOM

Demand Charges Rs.170 / kVA of billing demand

/ Month


demand / Month

Energy Charges

(i) For the first one lakh units 660 paise per unit 762 paise per unit

(ii) For the balance units 710 paise per unit 812 paise per unit

Commission’s Decision:

The Commission approves the following tariff for HT-2(c) consumers:

Approved tariff for HT – 2 (c) (i)

Applicable to Government Hospitals, Hospitals run by Charitable Institutions,

ESI Hospitals, Universities and Educational Institutions belonging to

Government & Local Bodies, Aided Educational Institutions and Hostels of all

Educational Institutions.


Demand Charges Rs.180 / kVA of billing demand / Month

Energy Charges

(i) For the first one lakh units 600 paise per unit


Approved tariff for HT – 2 (c) (ii)

Applicable to Hospitals & Educational Institutions

cxlvi

other than those covered under HT2(c) (i)



Energy Charges

(i) For the first one lakh units 700 paise per unit


Time of the Day Tariff: Approved ToD Tariff to HT-2(a), HT- 2(b) and HT2(c)

Time of day Increase (+) / reduction (-)in the energy


22.00 Hrs to 06.00 Hrs next day (- )125 paise per unit

06.00 Hrs to 18.00 Hrs 0


12. HT-3(a) Lift Irrigation Schemes under Government Departments /

Government owned Corporations/ Lift Irrigation Schemes under Pvt

/Societies:


The Existing and proposed tariff are given below:

HT- 3(a) (i) Applicable to LI Schemes under Government Departments /

Government owned Corporations

Details Existing charges as per Tariff

Order 2015

Proposed by HESCOM

Energy

Charges/

minimum

Charges

170 paise / unit

Subject to an annual minimum

of Rs.1000 per HP / annum

272 paise / unit

Subject to an annual

minimum of Rs. 1000

per HP / annum

HT -3(a) (ii) Applicable to Private LI Schemes and Lift Irrigation Societies

fed through Express / Urban feeders


Order 2015

Proposed by HESCOM

Fixed Charges Rs. 30 / HP / Month of

sanctioned load

Rs. 30 / HP / Month of

sanctioned load

Energy Charges 170 paise / unit 272 paise / unit

cxlvii

HT- 3(a) (iii) Applicable to Private. LI Schemes and Lift Irrigation

Societies

other than those covered under HT-3 (a)(ii)


Order 2015

Proposed by HESCOM

Fixed Charges Rs. 10 / HP / Month of

sanctioned load

Rs. 10 / HP / Month of

sanctioned load

Energy Charges 170 paise / unit 272 paise / unit

Commission’s Decision:

The Commission approves the following tariff for HT-3(a) consumers:

Approved tariff for HT 3 (a) (i)

Applicable to LI schemes under Govt. Dept. / Govt. owned Corporations

Energy Charges /

Minimum Charges

200 paise/ unit

subject to an annual minimum of Rs. 1120

per HP / annum

Approved tariff for HT 3 (a) (ii)

Applicable to Private. LI Schemes and Lift Irrigation Societies fed through

express / urban feeders

Fixed Charges Rs. 40 / HP / Month of sanctioned load


Approved tariff for HT 3 (a) (iii)

Applicable to Private. LI Schemes and Lift Irrigation Societies

other than those covered under HT 3 (a) (ii)

Fixed Charges Rs. 20 / HP / Month of sanctioned load


13. HT3 (b)- Irrigation & Agricultural Farms, Government Horticulture farms,

Private Horticulture Nurseries, Coffee, Tea, Coconut & Arecanut

Plantations:


The existing and the proposed tariff are given below:

cxlviii

HT3 (b)- Irrigation & Agricultural Farms, Government Horticulture farms,

Private Horticulture Nurseries, Coffee, Tea, Coconut & Arecanut

Plantations:


Order 2015

Proposed by HESCOM

Energy Charges /

minimum

Charges

370 paise / unit

subject to an annual

minimum of Rs.1000 per HP

of sanctioned load

472 paise / unit

subject to an annual

minimum of Rs.1000 per HP

of sanctioned load


The Commission approves the tariff for this category as indicated

below:

Approved Tariff

HT-3 (b)- Irrigation & Agricultural Farms, Government Horticulture farms,

Private Horticulture Nurseries, Coffee, Tea, Rubber, Coconut & Arecanut

Plantations:


Energy Charges /

minimum Charges

400 paise / unit

subject to an annual minimum

of Rs. 1120 per HP of sanctioned

load

14. HT-4- Residential Apartments/ Colonies:


The existing and proposed tariff for this category are given below:

Existing and proposed tariff for HT – 4 - Residential Apartments/

Colonies Applicable to all areas of HESCOM


Order 2015

Proposed tariff by HESCOM

Demand Charges Rs.100 / kVA of billing

demand


demand

Energy Charges 550 paise per unit 652 paise/ unit


cxlix

The Commission approves the tariff for this category as indicated

below:

Approved tariff

HT – 4 Residential Apartments/ Colonies Applicable to all areas of

HESCOM

Demand Charges Rs. 110 / kVA of billing demand

Energy Charges 585 paise/ unit

15. TARIFF SCHEDULE HT-5


The existing and proposed tariff for this category is given below:

HT 5 – Temporary supply

67 HP and above: Existing Proposed

Fixed Charges /

Demand Charges

Rs.210/HP/Month for the

entire sanction load /

contract demand

Rs.210/HP/Month for the

entire sanction load /

contract demand

Energy Charge 900 paise / unit (weekly

minimum of Rs.160/- per

KW is not applicable)

1002 paise / unit

Commission’s decisions:

TARIFF SCHEDULE HT-5

As approved in the Commission’s Tariff Order dated 02nd March 2015,

this tariff is applicable to 67 HP and above hoardings and

advertisement boards and construction power for industries excluding

those category of consumers covered under HT2(b) Tariff schedule

availing power supply for construction power for irrigation, power

projects and Konkan railway projects and also applicable to power

supply availed on temporary basis with the contract demand of 67 HP

and above of all categories.

Approved Tariff for HT – 5 – Temporary supply

67 HP and above: Approved Tariff

Fixed Charges /

Demand Charges

Rs. 220/HP/Month for the entire sanction load /

contract demand

cl


The Approved Tariff schedule for FY17 is enclosed in Annex – IV of this

Order.

6.6 Other Issues

6.6.1 Tariff for Green Power:

In order to encourage generation and use of green power in the State,

the Commission decides to continue the existing Green Tariff of 50

paise per unit as the additional tariff over and above the normal tariff

to be paid by HT-consumers, who opt for supply of green power from

out of the renewable energy procured by distribution utilities over and

above their Renewable Purchase Obligation (RPO).

6.6.2 Determination of wheeling charges for FY17:

HESCOM in their filing has proposed the following Wheeling charges:

Injection Point HT LT

Drawal Point

HT 24.15 [7.50%] 80.50 [16.04%]

LT 80.50 [16.04%] 56.35 [7.50%]

Note: Figures in brackets are applicable loss.

HESCOM has stated that the above wheeling charges would be

applicable to all the Open Access or Wheeling transactions for using

the HESCOM’s network, except for energy wheeled from NCE sources

to the consumers in the State.

Further, HESCOM has requested not to extend banking facility during

the summer months, as the cost of peak power would be five to six

times the average cost. Also it is stated that, if there is excess energy

available for banking, the concerned generators can be paid 85% of

the generic tariff or at the cost decided by the Hon’ble Commission.

cli

The Commission in its preliminary observations had directed HESCOM

to justify with working details the need for doing away with banking

facility during summer months.

HESCOM in their replies has furnished the wheeled energy data

pertaining to few installations that have wheeled energy. The

Commission notes that HESCOM has only furnished data of wheeled

energy and has not justified its stand to show that banking has

affected them financially or in terms of technical constraints during

summer months. As such the request of HESCOM is not considered.

The Commission has considered the approved ARR pertaining to

distribution wires business and has proceeded determining the

wheeling charges as detailed below:

6.6.3 Wheeling within HESCOM Area:

The allocation of the distribution network costs to HT and LT networks for

determining wheeling charges is done in the ratio of 30:70, as was

being done earlier. Based on the approved ARR for distribution

business, the wheeling charges to each voltage level is worked out as

under:

TABLE – 6.2

Wheeling Charges

Distribution ARR-Rs. Crs 719.68

Sales-MU 10063.35

Wheeling charges- paise/unit 71.51

Paise/unit

HT-network 21.45

LT-network 50.06

In addition to the above, the following technical losses are applicable

to all open access/wheeling transactions:

clii

Loss allocation % loss

HT 5.90

LT 9.24

Note: Total loss is allocated to HT, LT & Commercial loss based on energy flow

diagram furnished by HESCOM.

The actual wheeling charges payable (after rounding off) will depend

upon the point of injection & point of drawal as under:

paise/unit

Injection point

Drawal point

HT LT

HT 22[5.90%] 72[15.15%]

LT 72[15.15%] 50[9.24%] Note: Figures in brackets are applicable loss

The wheeling charges as determined above are applicable to all the

open access or wheeling transactions for using the HESCOM’s network,

except for energy transmitted or wheeled from Renewable sources to

the consumers in the State.

cliii

6.6.4 WHEELING OF ENERGY USING TRANSMISSION NETWORK OR NETWORK OF

MORE THAN ONE LICENSEE

In case the wheeling of energy [other than RE sources wheeling to

consumers in the State] involves usage of Transmission network or

network of more than one licensee, the charges shall be as indicated

below:

i. If only transmission network is used, transmission charges

determined by the Commission shall be payable to the

Transmission Licensee.

ii. If the Transmission network and the ESCOMs’ network are used,

Transmission Charges shall be payable to the Transmission

Licensee. Wheeling Charges of the ESCOM where the power is

drawn shall be shared equally among the ESCOMs whose

networks are used.

Illustration:

If a transaction involves transmission network &HESCOM’s network and

100 units is injected, then at the drawal point the consumer is entitled

for 81.91 units, after accounting for Transmission loss of 3.47% &HESCOM

technical loss of 15.15%.

The Transmission charge in cash as determined in the Transmission Tariff

order shall be payable to KPTCL & Wheeling charge of 72 paise per

unit shall be payable to HESCOM. In case more than one ESCOM is

involved the above 72 paise shall be shared by all ESCOMs involved.

iii. If ESCOMs’ network only is used, the Wheeling Charges of the

ESCOM where the power is drawn is payable and shall be

shared equally among the ESCOMs whose networks are used.

cliv

Illustration:

If a transaction involves injection to BESCOM’s network & drawal at

HESCOM’s network, and 100 units is injected, then at the drawal point

the consumer is entitled for 84.85 units, after accounting HESCOM’s

technical loss of 15.15%.

The Wheeling charge of 72 paise per unit applicable to HESCOM shall be equally

shared between HESCOM& BESCOM.

6.6.5 CHARGES FOR WHEELING OF ENERGY BY RE SOURCES (NON-REC ROUTE

) TO CONSUMERS IN THE STATE

The separate orders issued by the Commission from time to time in the

matter of wheeling and banking charges for RE sources (non-rec route

) wheeling energy to consumers in the State shall be applicable.

6.6.6 CHARGES FOR WHEELING ENERGY BY RE SOURCS WHEELING ENERGY

FROM THE STATE TO A CONSUMER/OTHERS OUTSIDE THE STATE AND FOR

THOSE OPTING FOR RENEWABLE ENERGY CERTIFICATE[REC]

In case the renewable energy is wheeled from the State to a consumer

or others outside the State, the normal wheeling charges as

determined in para 6.6.3 and 6.6.4 of this order shall be applicable. For

Captive RE generators including solar power projects opting for RECs,

the wheeling and banking charges as specified in the orders issued by

the Commission from time to time shall be applicable.

6.7 Other tariff related issues:

i) Cross Subsidy Surcharge (CSS):

HESCOM in its tariff petition has proposed the Cross Subsidy surcharge

as indicated below:

Paise/unit

Voltage

Level

HT-1 HT-2a HT-2b HT-2C HT-4 HT-5

66KV & 139.76 222.54 124.31 62.69 504.64 549.41

clv

above

HT level-

11KV/33KV

0 139.76 222.54 124.31 62.69 504.64

The determination of cross subsidy surcharge by the Commission is

discussed in the following paragraphs:-

The Commission in its MYT Regulations has specified the methodology

for calculating the cross subsidy surcharge. Based on the above

methodology, the category wise cross subsidy will be as indicated

below:

Particulars

HT-1

Water

Supply

HT-2a

Industries

HT-2b

Commercial

HT-2

(C)

HT3 (a)

Lift

Irrigation

HT3 (b)

Irrigation &

Agricultural

Farms

HT-4

Residential

Apartments

HT5

Temporary

Average Tariff-

Paise/unit 498.81 721.70 902.87 735.25 181.60 398.01 625.67 1509.97

Cost of supply

at 5% margin

@ 66 kV and

above level

565.04 565.04 565.04 565.04 565.04 565.04 565.04 565.04

Cross subsidy

surcharge

paise/unit @ 66

kV & above

level

-66.23 156.66 337.83 170.21 -383.44 -167.03 60.63 944.93

Cost of supply

at 5% margin

@ HT level

607.04 607.04 607.04 607.04 607.04 607.04 607.04 607.04

Cross subsidy

surcharge

paise/unit @ HT

level

-108.22 114.66 295.83 128.21 -425.44 -209.03 18.63 902.94

For the categories where the surcharge is negative, the surcharge is

made zero at the respective voltage level. For the remaining

categories, the Commission decides to determine the surcharge at

75% (instead of the 80% considered in its tariff order dated 02.03.2015)

of the cross subsidy amount as worked out above, as the cross subsidy

surcharge has to be gradually reduced. Thus, the cross subsidy

surcharge is determined as under rounding off to nearest paise:

Paise/unit

Voltage

level

HT-1 HT-2a HT-2b HT-2c HT-3a HT-3b HT-4 HT-5

66 kV &

above

0 118 253 128 0 0 45 709

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HT level-11

kV/33kV

0 86 222 96 0 0 14 677

The cross subsidy surcharge determined in this order shall be

applicable to all open access/wheeling transactions in the area

coming under HESCOM. However, the above CSS shall not be

applicable to captive generating plant for carrying electricity to the

destination of his own use and for those renewable energy generators

who have been exempted from CSS by the specific orders of the

Commission.

The Commission directs the Licensees to account the transactions

under open access separately. Further, the Commission directs the

Licensees to carry forward the amount realized under Open

Access/wheeling to the next ERC, as it is an additional income to the

Licensees.

ii) Rebate for use of Solar Water Heater:

The Commission has decided to retain the existing rebate of 50 paise

per unit subject to a maximum of Rs.50 per installation per month for

use of solar water heaters.

iii) Prompt payment incentive:

The Commission had approved a prompt payment incentive (i) in all

cases of payment through ECS and (ii) in the case of monthly bill

exceeding Rs.1,00,000/- (Rs. One lakh). The earlier rate of incentive was

0.25 % of the bill amount, the Commission decides to continue the

same.

iv) Relief to Sick Industries:

The Government of Karnataka has extended certain reliefs for

revival/rehabilitation of sick industries under the New Industrial Policy

2001-06 vide G.O. No. CI 167 SPI 2001, dated 30.06.2001. Further, the

Government of Karnataka has issued G.O No.CI2 BIF 2010, dated

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21.10.2010. The Commission, in its Tariff Order 2002, has accorded

approval for implementation of reliefs to the sick industries as per the

Government policy and the same was continued in the subsequent

Tariff Orders. In view of issue of the G.O No.CI2 BIF 2010, dated

21.10.2010, the Commission has accorded approval to the ESCOMs for

implementation of the reliefs extended to sick industrial units for their

revival / rehabilitation on the basis of the orders issued by the

Commissioner for Industrial Development and Director of Industries &

Commerce, Government of Karnataka.

v) Power Factor:

The Commission in its previous order had retained the PF threshold limit

and surcharge, both for LT and HT installations at the then existing levels

in the Tariff Order 2005. The Commission has decided to continue the

same in the present order as indicated below:

LT Category (covered under LT-3, LT-4, LT-5 & LT-6 where motive power

is involved): 0.85

HT Category: 0.90

vi) Rounding off of KW / HP:

In the Tariff Order 2005, the Commission had approved rounding off of

fractions of KW / HP to the nearest quarter KW / HP for the purpose of

billing and the minimum billing being for 1 KW / 1HP in respect of all the

categories of LT installations including IP sets. This shall continue to be

followed. In the case of street light installations, fractions of KW shall be

rounded off to the nearest quarter KW for the purpose of billing and

the minimum billing shall be for a quarter KW.

vii) Interest on delayed payment of bills by consumers:

The Commission, in its previous Order had approved interest on

delayed payment of bills at 12% per annum. The Commission decides

to continue the same in this Order also.

clviii

viii) Security Deposit (3 MMD/ 2 MMD):

The Commission had issued K.E.R.C. (Security Deposit) Regulations,

2007 on 01.10.2007and the same has been notified in the official

Gazette on 11.10.2007. The payment of security deposit shall be

regulated accordingly, pending orders of the Hon’ble High Court in

respect of WP 18215/2007.

ix) Mode of Payment by consumers:

The Commission, in its previous Order had approved revenue payment

in cash/cheque/DD of amounts up to and inclusive of Rs.10,000/-, and

payment of amounts above Rs.10,000 to be made only through

cheque. The consumers can also make payment of power bills

through Electronic Clearing System((ECS)/ Credit card/ online E-

payment up to the limit prescribed by the RBI.

Other ESCOMs in their application had proposed to consider the

collection of power supply bills above One lakh rupees, through

RTGS/NEFT. The Commission has examined the request and decides to

approve the payment of power supply bills above One lakh rupees,

through RTGS/NEFT, at the option of the Consumer of all ESCOMs.

6.8 Cross Subsidy Levels for FY17:

The Hon’ble Appellate Tribunal for Electricity (ATE), in its order dated 8th

October, 2014, in Appeal No.42 of 2014, has directed the Commission

to clearly indicate the variation of anticipated category-wise average

revenue realization with respect to overall average cost of supply in

order to implement the requirement of the Tariff Policy that tariffs are

within ±20% of the average cost of supply, in the tariff orders being

passed in the future. It has further directed the Commission to also

indicate category-wise cross subsidy with reference to voltage-wise

cost of supply so as to show the cross subsidies transparently.

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In the light of the above directions, the variations of the anticipated

category-wise average realization with respect to the overall average

cost of supply and also with respect to the voltage-wise cost of supply

of HESCOM and the cross subsidy thereon, is Indicated in ANNEXURE -

III of this Order. It is the Commission’s endeavor to reduce the cross

subsidies gradually as per the Tariff policy.

6.9 Effect of Revised Tariff

As per the KERC (Tariff) Regulations 2000, read with the MYT Regulations

2006, the ESCOMs have to file their applications for ERC/Tariff before

120 days of the close of each financial year in the control period. The

Commission observes that the ESCOMs have filed their applications for

revision of tariff on 15th December 2015 (within the time extended by

the Commission). As the tariff revision is effective from 1st April, 2016

onwards, ESCOMs would be recovering revenue for eleven months of

the Financial Year.

A statement indicating the proposed revenue and approved revenue

is enclosed vide Annexure III and detailed tariff schedule is enclosed

vide Annexure IV.

6.10 Summary of the Tariff Order:

The Commission has approved an ARR of Rs.6017.97 Crores for FY17

which includes the surplus for FY15 of Rs.105.14 Crores and the

Regulatory Asset of Rs.197.69 Crores, with a total gap in revenue of

Rs.481.87 Crores as against HESCOM’s proposed ARR of Rs.7112.32

Crores.

The Commission has allowed recovery of entire gap in revenue with

additional revenue of Rs.481.87 Crores on Tariff Revision as against

the additional revenue of Rs.1102.36 Crores proposed by HESCOM

for FY17.

HESCOM had proposed an increase of 102 paise per unit for all

categories of consumers resulting in average increase in retail supply

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tariff by 18.34%. The Commission has approved an average

increase of 48 paise per unit in the tariff. The average increase in

retail supply tariff of all the consumers for FY17 is 9%.

The Commission has allowed for recovery of additional

revenue partly by increase in fixed charges ranging from Rs.5

per KW/HP/KVA to Rs.10 per KW/HP/KVA.

The Commission has allowed for recovery of additional

revenue partly by increase in the energy charges in the range

of 15 paise per unit to 50 paise per unit.

The increase in energy charges for commercial category is 20

paise per unit, for LT Industries category is in the range of 15

paise per unit to 30 paise per unit and for other categories is in

the range of 20 paise per unit to 50 paise per unit.

Time of the day tariff which was made mandatory in the previous

Tariff Orders for installations under HT2 (a), HT2(b) and HT2(c) with

contract demand of 500KVA and above is continued in this Order.

Green tariff of additional 50 paise per unit over and above

the normal tariff which was introduced in the previous Tariff

Orders for HT industries and HT commercial consumers at their

option, to promote purchase of renewable energy from

ESCOMs, is continued in this Order.

As in the previous Orders, the Commission has continued to

provide a separate fund for facilitating better Consumer

Relations /Consumer Education Programmes.

The cap on cost of short-term power purchase to meet

shortfall in supply is continued at Rs.4.50 per unit.

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6.11 Commission’s Order

1. In exercise of the powers conferred on the Commission under

Sections 62, 64 and other provisions of the Electricity Act, 2003, the

Commission hereby determines and notifies the retail supply tariff of

HESCOM for FY17 as stated in Chapter-6 of this Order.

2. The tariff determined in this order shall be applicable to the

electricity consumed from the first meter reading date falling on or

after 1st April, 2016.

3. This Order is signed dated and issued by the Karnataka Electricity

Regulatory Commission at Bengaluru this day, the 30th March, 2016

Sd/-

(M.K.Shankaralinge Gowda)

Chairman

Sd/-

(H.D.Arun Kumar)

Member

Sd/-

(D.B.Manival Raju)

Member

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APPENDIX

ISSUE OF NEW DIRECTIVES AND

REVIEW OF COMPLIANCE OF DIRECTIVES ISSUED BY THE

COMMISSION

1. The following new directive is issued by the Commission

Directive on Energy Conservation:

In view of the increase in cost of electricity and the constraints in

capacity additions to generate additional power to meet the

increase in demand, it is imperative that all the consumers use

energy efficient equipment and adopt energy conservation

measures, in their daily activities to conserve electricity. To

achieve this, the Commission has notified the Demand Side

Management Regulations, 2015, on 28.07.2015. As per these

Regulations, the ESCOMs have to implement Demand Side

Management (DSM) and Energy Efficiency (EE) programmes in

their jurisdiction, to mitigate peak and energy shortages by

adoption of conservation technologies for more efficient use of

electricity. The objective is to flatten the load curve by reducing

the loads in their respective areas leading to reduction in system

peak load.

The Commission has noted that the ESCOMs have already

initiated the DELP (Domestic Efficient Lighting programme) for

supplying/distributing 9 watts capacity LED bulbs to the

consumers at a subsidised price. This initiative will certainly help

conserve substantial quantum of energy used for domestic

lighting, provided all the consumers accept and adopt it.

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In addition to the above initiative, the Commission notes that

there is a scope for energy conservation in use of equipment like

Air Conditioners, Fans, Refrigerators etc., in domestic/

commercial and industrial installations. Also, use of LED

lamps/energy efficient lamps like induction lamps in all the

streetlight installations including high mast street light installations

should be considered so as to make energy conservation

measures more broad based across wider range of consumers.

Therefore, the Commission hereby directs the ESCOMs to service

all the new installations only after ensuring that the BEE *****

(Bureau of Energy Efficiency five star rating) rated Air

Conditioners, Fans, Refrigerators, etc., are being installed in the

applicant consumers’ premises.

Similarly, all new streetlight/high mast installations including

extensions made to the existing streetlight circuits shall be

serviced only with LED lamps/energy efficient lamps like

induction lamps.

Further, the Commission directs the ESCOMs to take up

programmes to educate all the existing domestic, commercial

and industrial consumers, through media and distribution of

pamphlets along with monthly bills, regarding the benefits of

using five star rated equipment certified by the Bureau of Energy

Efficiency in reduction of their monthly electricity bills and

conservation of precious energy.

2. Review of Compliance of Existing Directives:

clxiv

The Commission had in its earlier tariff orders and other

communications issued several directives for compliance by the

HESCOM. While reproducing such directives, the compliance of the

directives as reported by the HESCOM is analysed in this Section.

i. Directive on implementation of Standards of Performance (SoP):

The Directive was:

“The HESCOM is directed to strictly implement the specified Standards

of Performance while rendering services related to supply of power as

per the KERC (Licensee’s Standards of Performance) Regulations, 2004.

Further, the HESCOM is directed to display prominently in Kannada and

English the details of various critical services such as replacing the

failed transformers, attending to fuse off call / line breakdown

complaints, arranging new services, change of faulty energy meters,

reconnection of power supply, etc., rendered by it as per Schedule-1

of the KERC (Licensee’s Standards of Performance) Regulations, 2004

and Annexure-1 of the KERC (Consumer Complaints Handling

Procedure) Regulations, 2004, on the notice boards in all the O & M

sections and O & M sub-divisions in its jurisdiction for the information of

consumers as per the following format.

Nature of

Service

Standards of

performance

(indicative

minimum time

limit for

rendering

services)

Primary

responsibility

centers where

to lodge

complaint

Next higher

Authority

Amount

payable to

affected

consumer

The HESCOM shall implement the above directives within one month

from the date of the order and report compliance to the Commission

regarding the implementation of the directives.”

Compliance by the HESCOM

clxv

As directed by the Commission, the HESCOM has displayed the details

of various critical services such as replacing the failed transformers,

attending to fuse off call / line breakdown complaints, arranging new

services, change of faulty energy meters, reconnection of power

supply, etc., in accordance with the Licensee’s Standards of

Performance Regulations, 2004 and Consumer Complaints Handling

Procedure Regulations, 2004, on the notice boards in all O&M sections,

O&M sub-divisions, divisions, Circles and Zonal offices and the same is

also hosted on the HESCOM’s web site “hescom.co.in” for the

information of consumers .

Further, action has been taken to display the coloured window size

sticker posters in Kannada in the premises of section offices and sub-

division offices to draw the attention of the consumers visiting the

offices.

The HESCOM will also stress on the consumer education campaign in

order to create awareness among the consumers regarding the

services extended by the HESCOM.

Commission’s Views

The Commission notes that the HESCOM has complied with the

directive by displaying the details of specified Standards of

Performance in Kannada on the notice boards in all its O & M sections

and subdivision offices for the information of the consumers. The

Commission directs the HESCOM to adhere to the specified standards

of performance while rendering services to ensure that consumer

complaints are attended to in a time bound manner.

The Commission reiterates its directive to the HESCOM to continue to

strictly implement the specified Standards of Performance while

rendering services related to supply of power as per the KERC

(Licensee’s Standards of Performance) Regulations, 2004. Compliance

clxvi

of the same shall be submitted to the Commission on a quarterly basis

regularly.

ii. Directive on use of safety gear by linemen:

The directive issued was:

“The Commission directs the HESCOM to ensure that all the linemen in

its jurisdiction are provided with proper and adequate safety gear and

also ensure that the linemen use such safety gear provided while

working on the network. The HESCOM should sensitise the linemen

about the need for adoption of safety aspects in their work through

suitably designed training and awareness programmes. The HESCOM is

also directed to device suitable reporting system on the use of safety

gear and mandate supervisory/higher officers to regularly cross check

the compliance by the linemen and take disciplinary action on the

concerned if violations are noticed. The HESCOM shall implement this

directive within one month from the date of the order and submit

compliance report to the Commission.”


The HESCOM linemen are provided with adequate safety equipment

such as Helmets with Electronic Induction Tester, Hand Gloves, tool kits,

rain coats, gum boots etc., as personal protective equipment for the

purpose of safety of linemen and it is also ensured that all the linemen

are using the safety equipment provided to them while working on the

distribution network.

The HESCOM has procured 3,500 numbers of Helmets and 3,500 pairs of

Hand gloves and has distributed to all the lineman staff. The

Superintending Engineers of O & M Circles are authorized for

procurement of good quality Rain Coats and Gum Boots to all the

clxvii

linemen working under their jurisdiction. So far 1,722 linemen have

been provided with safety gear and procurement of safety gears to

remaining linemen is in process.

Further, the concerned officers are regularly cross checking the

compliance by linemen and taking disciplinary action on the

concerned if they are not using the safety gear provided to them.

The HESCOM is conducting regular training programmes to all the

linemen regarding safety aspects and prevention of electrical

accidents, as part of pre employment / pre-promotional training and

also conducting training under National training program for C &D

employees.

Commission’s Views:

The Commission notes that the HESCOM has provided safety gadgets to

its linemen and also taken action to procure/provide additional safety

tools required for the linemen in the field. It is important that the

HESCOM should continue to focus on safety aspects to reduce the

number of electrical accidents occurring in the distribution system due

to negligence on the part of the field staff and also non-adherence of

safety procedures by them while working on the network. It is also

necessary that the frequency of imparting training to linemen should be

increased so that adherence to safety aspects becomes part of their

routine.

The Commission reiterates its directive that the HESCOM shall ensure

that all the linemen in its jurisdiction are provided with proper and

adequate safety gear and the linemen use such safety gear provided

to them while working on the network. The compliance in this regard

shall be submitted once in a quarter to the Commission regularly.

clxviii

iii. Directive on providing Timer Switches to Street lights by the

ESCOMs

The directive issued was:

“The Commission directs the HESCOM to install timer switches using

own funds to all the street light installations in its jurisdiction wherever

the local bodies have not provided the same and later recover the

cost from them. The BESCOM shall also take up periodical inspection of

timer switches installed and ensure that they are in working conditions.

They shall undertake necessary repairs / replacement work, if required

and later recover the cost from local bodies. The compliance

regarding the progress of installation of timer switches to streetlight

installations shall be reported to the Commission within three months of

the issue of the

order “


As per the directive of the Commission, the HESCOM has approached

the concerned Deputy Commissioners, Chief Executive Officers and

also the Local Presidents/ Executive Officers / Chairmen of the taluk

panchayths / city Municipal Corporations and town panchyaths and

appealed them to install the timer switches to streetlights which would

be mutually beneficial. The HESCOM officers were also directed to

contact the local civic authorities and stress the need for installing the

timer switches. Further, as regards installation of timer switches to

streetlights by the HESCOM and recover the cost from the local bodies,

the HESCOM is interacting with the concerned civic authorities and

appraised them that the HESCOM is willing to install the timer switches

out of its own funds and recover the cost later from the them.

The concerned HESCOM officers are also directed to contact the

concerned officials immediately and arrange to send the proposals/

action plan for installing the timer switches in their jurisdiction. In this

clxix

regard, the HESCOM has already collected the data regarding the

number of timer switches required to be installed and it is found that

around 18,500 timer switches are required. The HESCOM will take

necessary action to see that the timer switches are installed at the

earliest and compliance in this regard will be submitted to the

Commission shortly.

Commission’s Views

The Commission notes that the HESCOM so far has not installed timer

switches to streetlight installations in its jurisdiction. The Commission

reiterates that the streetlight installations should be provided with timer

switches for enabling them to be automatically switched on only

during the scheduled time. This measure would not only save

significant quantum of energy that is currently wasted because of

inefficient and unreliable manual operation of the switches which

allow them to be lit unnecessarily even during day time, but also

ensure that streetlights are lit during the scheduled dark hours when

the general public require them. As directed earlier the HESCOM

should install the timer switches at their cost and later recover it from

the local bodies. Persuading the local bodies to fix timer switches at

their own cost availing funds / grants received from Government and

other agencies for such programmes / works should also be explored

seriously.

Further, providing timer switches to streetlight installations in the

HESCOM also under “Nagara Jyothi” programme through M/s EESL

needs to be earnestly pursued with seriousness on the lines of the

BESCOM, to ensure installation of timer switches covering of all street

light installations in its jurisdiction. The progress /status in this regard shall

be reported to the Commission on a quarterly basis regularly.

clxx

The Commission reiterates its directive to the HESCOM that the

streetlight installations should be provided with timer switches for

ensuring prompt control and avoidance of wastage of electricity.

The Commission further directs the GESCOM that henceforth, the new

streetlight installations and any extension/modification to be carried

out to the existing streetlight installations shall be serviced only with

timer switches.

iv. Directive on load shedding:

The Commission had directed that:

1) Load shedding required for planned maintenance of transmission /

distribution networks should be notified in daily newspapers at least

24 hours in advance for the information of consumers.

2) The ESCOMs shall on a daily basis estimate the hourly requirement

of power for each substation in their jurisdiction based on the

seasonal conditions and other factors affecting demand.

3) Any likelihood of shortfall in the availability during the course of the

day should be anticipated and the quantum of load shedding

should be estimated in advance. Specific substations and feeders

should be identified for load shedding for the minimum required

period with due intimation to the concerned subdivisions and

substations.

4) The likelihood of interruption in power supply with time and duration

of such interruption may be intimated to consumers through SMS

and other means.

5) Where load shedding has to be resorted to due to unforeseen

reduction in the availability of power, or for other reasons,

consumers may be informed of the likely time of restoration of

supply through SMS and other means.

6) Load shedding should be carried out in different sub-stations /

feeders to avoid frequent load shedding affecting the same sub-

stations / feeders.

clxxi

7) The ESCOMs should review the availability of power with respect to

the projected demand for every month in the last week of the

previous month and forecast any unavoidable load shedding after

consulting other ESCOMs in the State about the possibility of inter-

ESCOM load adjustment during the month.

8) The ESCOMs shall submit to KERC their projections of availability and

demand for power and any unavoidable load shedding for every

succeeding month in the last week of the preceding month for

approval.

9) The ESCOMs shall also propose specific measures for minimizing

load shedding by spot purchase of power in the power exchanges

or bridging the gap by other means.

10) The ESCOMs shall submit to the Commission sub-station wise and

feeder wise data on interruptions in power supply every month

before the 5th day of the succeeding month.

The Commission had directed that the ESCOMs shall make every effort

to minimize inconvenience to consumers strictly complying with the

above directions. The Commission had indicated that it would review

the compliance of directions on a monthly basis for appropriate orders.

Compliance by the HESCOM:

M/s KEONICS, Bengaluru, has developed a SDRA (SCADA Data

Reporting and Analysis) software application for providing Dash Board,

generating MIS and power supply status reports of all categories at all

levels in the HESCOM, which will be geographical area wise and

constituency wise using raw SCADA data. SDRA enables analysis of

huge volume of data recorded by SCADA system and producing

reports/alerts for effectively monitoring of the operations of 11KV

feeders.

The HESCOM is implementing SDRA software and the detailed work

award has already been issued to M/s KEONICS, Bengaluru, for

clxxii

implementation of the said application software. Data gathering, data

structuring and aggregation work for SDRA application is in progress.

Further, as per directions of the Commission, the HESCOM will continue

to comply with the directive on load shedding.

The HESCOM is arranging 7 hours of 3-phase power supply to rural

areas with continuous 1-phase power supply during evening time, 22-

24 hours of power supply to NJY and 24 hours for all remaining

categories of feeders’ with effect from 01.01.2015. The HESCOM will

furnish its projections of requirement of energy and availability from

different sources and any unavoidable load shedding for every

succeeding month in the last week of the preceding month to

Commission regularly.

Further, in case of any pre-arranged load shedding the same is being

published in local newspaper in advance and is uploaded in the

HESCOM’s web site besides displaying on the notice boards of the

divisional/sub divisional /section offices. In case of any unscheduled

load shedding due to system constraints, the same is intimated to 24x7

Consumer Care Center in real time for communication to the

consumers. Further, a system of informing the consumers /public

through SMS in case of load shedding is under consideration.


The Commission observes that the HESCOM is not submitting its

projections of availability and demand for power and any

unavoidable load shedding required to be imposed for every

succeeding month in the last week of the preceding month, to the

Commission, regularly. The HESCOM shall henceforth submit the same

regularly to the Commission. The Commission also notes that the

HESCOM has not so far taken any action for providing information to

clxxiii

the consumers through SMSes regarding the time and duration of load

shedding. This has to be expedited as the consumers need to be

informed through SMSes in addition to notifications in newspapers

/media regarding load shedding due to reasons such as system

constraints, breakdown of lines/equipment, maintenance etc. This

would address significantly the consumers’ dissatisfaction on this issue.

Further, it is also necessary to avoid load shedding involving the same

sub-stations/feeders; the same should be on rotation basis to avoid

inconvenience to consumers/public.

The Commission reiterates that the HESCOM shall comply with the

directive on load shedding and submit monthly compliance reports to

the Commission regularly.

v. Directive on Establishing a 24x7 Fully Equipped Centralized

Consumer Service Center for Redressal of Consumer Complaints:

The directive was as below:

“The HESCOM is directed to put in place a 24x7 fully equipped

Centralized Consumer Service Center at its headquarters with state of

the art facility/system for receiving consumer complaints and

monitoring their redressal so that electricity consumers in their area of

supply are able to seek and obtain timely and efficient services /

redressal in the matter of their grievances.

Every complaint shall be received on a helpline telephone number by

the desk operator and registered with a docket number which shall be

intimated to the Consumer. Thereafter, the complaints shall be

transferred online /communicated to the concerned field staff for

resolving the same. Such a system should also generate daily reports

indicating the number/nature of complaints received, complaints

attended, complaints pending and reasons for not attending to the

complaints.

clxxiv

The HESCOM shall publish the details of the complaint handling

procedure/Mechanism with contact numbers in the local media

periodically for the information of the consumers. The compliance of

the action taken in the matter is to be submitted to the Commission

within two months from the date of this Order.

Further, the Commission directs the HESCOM to establish/strengthen

24x7 service stations, equipping them with separate vehicles &

adequate line crew, safety kits and maintenance materials in all its

sub-divisions including rural areas for effective redressal of Consumer

complaints.

The Commission also directs the HESCOM to hold consumer interaction

meetings in each O & M sub-division once every two months

according to a published schedule and invite consumers in advance

to participate in such meetings to sort out their grievances. Such

meetings shall be chaired by officers of the level of Superintending

Engineers and attended by the concerned Divisional and sub-

divisional Engineers. The HESCOM shall submit compliance of the same

to the Commission once in a quarter.”


The HESCOM has taken various measures to popularize the Call Centre,

which is provided with a toll free number 1800 425 1033 and a short

code “1912” to enable the consumers to register all type of complaints

relating to supply of electricity. The HESCOM has introduced new

software through which the customer will come to know his/ her

complaint number via SMS to his/ her mobile which also has a facility

to track the complaints. The HESCOM has been publishing

advertisements for the benefit of the consumers in all local papers

regarding establishment of a Centralized Call Centre and the need to

register all the complaints with this Centre only.

clxxv

All complaints are being received at the Centralized Call Centre only.

Each and every complaint is received on a helpline telephone number

by the desk operator and registered with a unique complaint Id which

the same is intimated to the consumers. The complaints are then

transferred online to the concerned section officer for resolving the

same. The reports are generated on a daily / monthly basis by

indicating the number / nature of complaints received /tracked and

monitored till its closure.

The HESCOM has directed all the concerned officials to accord top

priority for prompt/ speedy action in attending / resolving the

consumer complaints.

The HESCOM is conducting Consumer Interaction Meetings once every

two months at subdivision levels regularly and 60 such meetings have

been conducted during the current year. Further, the officials have

been directed to send personal invitation to the consumers to attend

the meetings and provide snap shots of the proceedings of the

meetings so as to enable to host on HESCOM’s website.

The HESCOM has provided 464 linemen and 51 vehicles to service

stations to effectively deal with the consumer complaints relating to

restoration of supply of power.


The Commission notes that the HESCOM has taken certain measures

for redressal of consumer complaints but, it is necessary to take further

measures in this regard for effectively deal with consumer complaints

relating to supply of electricity. The HESCOM should continue to focus

on improving the consumer services and further reduce the consumer

complaint downtime to ensure prompt services to the consumers. The

HESCOM should ensure prompt response to consumer complaints

about interruptions in power supply due to breakdown of

clxxvi

lines/equipment, replacement of faulty transformers etc. The HESCOM

should sensitize its field staff in this regard.

The Commission has noted that most of the consumers who

participated in the Public Hearing held by the Commission have

complained that the HESCOM is not efficiently rendering services to

them and also prior information is not given to them to attend

consumer interaction meetings held at the subdivisions. They have

requested that these aspects need to be improved so that the

complaints are resolved at the subdivision level. The Commission is also

of the opinion that the HESCOM should conduct consumer interaction

meetings at regular intervals and most of these complaints can be

resolved without escalating to higher authorities saving precious time

of the consumers. The HESCOM shall continue to ensure that the

higher officers are present in such meetings held at the subdivisions to

effectively redress the grievances of the consumers. 1.1.

The Commission reiterates its directive to the HESCOM to publish the

complaint handling procedures / contact number of the Centralized

Consumer Service Centre regularly in the local media and other

modes periodically for the information of public and ensure that all the

complaints of consumers are registered only through the centralized

consumer service centre for proper monitoring of disposal of

complaints registered.

The compliance in the matter shall be submitted to the Commission

once in a quarter regularly.

clxxvii

vi. Directive on Energy Audit:

The Commission had directed the HESCOM to prepare a metering

plan for energy audit to measure the energy received in each of the

interface points and to account for the energy sales. The Commission

had also directed the HESCOM to conduct energy audit and chalk

out an action plan to reduce distribution losses to a maximum of 15

per cent wherever it was above this level in towns/ cities having a

population of over 50,000.

The Commission had earlier directed all the ESCOMs to complete

installation of meters at the DTCs by 31st December, 2010. In this

regard, the ESCOMs were required to furnish to the Commission the

following information on a monthly basis on the progress achieved in

respect of:

a) Number of DTCs existing in the Company.

b) Number of DTCs already metered.

c) Number of DTCs yet to be metered.

d) Time bound monthly programme for completion of work.


Energy Audit of towns/cities:

The energy audit of 16 towns which have population of more than

50,000 is being carried out in the HESCOM. Below mentioned matrix

shows average energy losses recorded from the FY15 and the FY16 in

the 16 towns.

Year

Name of the towns / cities where loss range is

Below 15% >15%<=20

%

>20%

<=25

%

>

25%

clxxviii

FY15

Hubli, Dharwad , Sirsi , Karwar, Dandeli, Gadag ,

Haveri, Ranebennur, Belgaum, Bijapur, Ilkal, Gokak,

Bagalkote , Jamakhandi, Rabkavi, Banahatti

Nippani

FY16 (up to

Sept2015)

Hubli, Dharwad, Sirsi, Karwar, Dandeli, Gadag

,Haveri, Ranebennur, Belgaum , Bijapur, Ilkal,

Gokaka, Jamakhandi, Nippani

Rabkavi,

Bagalkote

It can be seen from the above that, for the FY15, out of 16 towns the

loss levels in 15 towns are less than 15 per cent. In the FY16, out of 16

towns, the loss levels in 14 towns are less than 15 per cent. Action will

be taken to bring down the losses to less than 15 per cent in Rabakavi

and Bagalakote during the remaining period of the FY16.

Action plan for reduction of high T&D and AT&C losses outlined as

below.

There are 2,600 feeders as on September, 2015 in the

HESCOM. All these feeders are being monitored continuously by way

of feeder-wise energy audit.

Re-conductoring of HT and LT lines have been proposed

wherever conductor capacity is found inadequate and is being

replaced by higher capacity conductors.

Replacement of 11 KV line Weasel conductor by Rabbit conductor in

selected 73 towns in phased manner.

Replacement of age old LT conductor by Rabbit conductor in

selected 73 towns in phased manner i.e., about average of 3,286 km

per annum.

Providing DTC metering in non-RAPDRP towns. Monitoring the energy

audit under NEF scheme is in progress.

Providing additional distribution transformers, Arial Bunched Cables,

maintenance works of DTCS, etc., in 25 towns under R- APDRP.

Providing additional distribution transformers to non-RAPDRP areas

under NEF scheme.

Providing UG cables / Arial Bunched Cables in 11 KV distribution

network for Belagavi, Hubli-Dharwad cities, under NEF Scheme.

Load balancing of DTCs and replacement of 10 years age old

electro mechanical meters by static meters.

clxxix

As per the recent guidelines of the GoK, measures have been taken/

proposed to regularize un-authorized IP sets and providing

infrastructure to these regularized IP sets, are proposed.

Energy audit of exclusive IP set feeders and the DTCs, feeding

predominantly IP sets are being done by taking readings every

month.

NJY feeders have been provided to arrange 24 hours of power

supply to villages in rural part of the HESCOM. Phase1 & 2 of the

project is nearing completion. When, all the feeders are

commissioned, the energy audit of NJY feeders will be more

accurate to quantify energy loss in rural areas. NJY 3rd phase project

has been proposed under NEF scheme for the balance feeders in

four districts and the tendering is in process.

Achieving 100 per cent reading and billing of LT installations and

minimizing the door lock and unread installations. Proper metering of

streetlight and water supply (LT-6) installations for monitoring the

consumption. It is proposed to provide timer switches to control “OFF

and “ON” of streetlights in urban areas of the HESCOM.

To pool up vigilance & MT batches to create mass raids to detect

theft of energy and to arrest possible theft. Study of category wise

consumption pattern of LT3 and LT5 installations and thereby taking

measures like rating, sealing of terminal covers of energy meters with

numbered polycarbonate seals etc.

DTC Metering:

The project consists of supply, installation, commissioning, and

maintenance of composite thread through type meter box of class 1.0

with LT Electronic Tri-Vector Meter having AMR compliant with

associated CTs, Modem and other materials for DTC metering works

under competitive bidding is taken up. It covers supply, erection and

maintenance up to 5 years, in the non-RAPDRP town areas and rural

areas.

clxxx

Under R-APDRP part-A, DTC metering in 25 towns has been proposed.

But, due to erroneous data, the DTC wise energy auditing has not been

conducted for R-APDRP towns. The R-APDRP project leaders are taking

measures for correcting data. Once the defects in R-APDRP “Go-live”

system are attended/ removed, DTC wise energy audit in R-APDRP

towns will be conducted after obtaining correct data.

In the initial phase, tenders were invited for supply, installation,

commissioning and maintenance of composite thread through type

meter box of class 1.0 with LT Electronic Tri-Vector Meter, having AMR

compliant, with associated CTs, Modem and other materials for 22,693

un-metered non-IP set DTCs. The work is awarded to M/s. Asian Fab

Tech Limited, Bangalore in which metering of 18,235 DTCs is

completed.

Under phase-II of DTC metering tenders were invited for;

Metering of remaining 12,162 un-metered DTCs of non-RAPDRP

towns and non-IP sets.

Replacement of the existing meters of 1,942 DTCs in respect of

non-RAPDRP towns and 3,996 DTCs in respect of non-IP sets. The

work of metering of total 5,938 DTCs is awarded to M/s. Asian Fab

Tech Limited, Bangalore, in which metering of 998 DTCs is

completed. Once all the DTCs are fixed with meters, the DTC wise

energy audit will be done regularly and in consistent manner.

However, the HESCOM has already submitted DTC wise energy

audit information for the month of July, 15 input and August, 15

DCB for 423 DTCs. Further, for balance DTCs, the energy audit will

be furnished time to time along with feeder wise details.

clxxxi


The Commission notes that the HESCOM has not submitted regularly

the monthly analysis of energy audit conducted in cities/towns

regularly. As seen from the consolidated energy audit statement for

the FY15 and for the period from April to September 2015, 3 of the 16

towns have distribution losses more than the mandated 15 per cent.

The Commission also notes that the HESCOM has initiated certain

measures to reduce the distribution losses and improving collection

efficiency to achieve the mandated losses of less than 15 per cent.

However, further remedial measures need to be continued to bring

down the loss figures well below the targeted levels. The HESCOM is

directed to initiate suitable measures to further bring down the loss

levels.

The Commission further notes that the DTC metering is completed for

18,235 DTCs out of the 22,693 DTCs in respect of 25 towns where

RAPDRP scheme is taken up. But, in spite of providing meters to

considerably a large number of DTCs, the HESCOM has not taken up

comprehensive energy audit reportedly due to erroneous data

/defects in R-APDRP “Go-live” system. There has been an inordinate

delay in tagging of consumer details with the feeders/DTCs by the

HESCOM. In fact, the HESCOM during the ESCOMs’ Review meetings

held in the Commission had committed to complete this exercise

before August 2014, but the progress achieved so far is not

satisfactory.

The HESCOM is directed to complete 100 per cent DTC metering along

with consumer indexing to take up energy audit of DTCs for which

meters have already been installed and to initiate corrective measures

for reducing distribution losses wherever they are above the standard

level. The compliance in respect of DTC wise energy audit conducted

clxxxii

with analysis and the remedial action initiated to reduce loss levels

shall be submitted every month regularly to the Commission.

Further, the HESCOM is directed to submit to the Commission the

consolidated energy audit report for the FY16, as per the formats

prescribed by the Commission, vide its letter No: KERC/D/137/14/91

dated 20.04.2015, before 15th May 2016.

vii. Directive on Implementation of HVDS:

In view of the obvious benefits in the introduction of HVDS in reducing

distribution losses, the Commission had directed the HESCOM to

implement High Voltage Distribution System in at least one O&M

division in a rural area in its jurisdiction by utilizing the capex provision

allowed in the ARR for the year.


Preparation of estimates for implementation of HVDS in Sadalga Hobli

of Bhoj Section as per the guidelines issued by the KERC is in process.

As regards progress of implementation of HVDS in respect of 11KV

Kummur feeder of Byadagi sub-division, the project has been

completed on 31.01.2015. Post implementation of HVDS, third

party evaluation will be carried out by M/s. Central Power Research

Institute, Bangalore and issuing of work award for the same is in

process.

Further, the concept of HVDS is covered in the implementation of on-

going projects like regularization of un-authorized IP sets and NJY, in

which scope is given for running lengthier HT lines whereas LT line is

clxxxiii

discouraged. Therefore, HVDS is not economically viable in other

places, as HT line is comparatively lengthier than LT line. The cost of

HVDS is also abnormally high, which the HESCOM cannot afford at this

stage and hence, exemption is sought form implementation of HVDS in

the HESCOM.


The Commission has been directing the ESCOMs to identify one sub-

division in each ESCOM with high LT/HT ratio and high distribution loss

levels, so that substantial loss reduction could be achieved by

implementing the HVDS in such subdivisions. Further, with a view to

bring down the cost of implementation of HVDS, the Commission also

issued revised guidelines to all the ESCOMs to implement HVDS in

subdivisions/feeders having the highest distribution losses. The

Commission also, after verifying the DPR in respect of implementation

of HVDS in Sadalga Hobli of Bhoj Section has directed that the cost of

the project be reduced by reusing the existing poles, conductors, etc.,

in execution of works. However, the HESCOM has not taken up

implementation of the same in its jurisdiction despite these directions.

In the ESCOMs’ Review meeting held in the Commission, the HESCOM

was also directed to submit a detailed report on the viability of

implementation of HVDS scheme, for taking a view in the matter by the

Commission. However, the HESCOM so far has not submitted its report

in this regard.

As regards its intention that the implementation of High Voltage

Distribution System is not necessary as projects in respect of

implementation of NJY and regularization of unauthorized IP sets are in

progress, it is noted that the concept of HVDS and NJY is totally

different and the ESCOMs were directed to implement the HVDS for

the agricultural feeders segregated under NJY wherever high

clxxxiv

distribution losses are prevailing. Therefore, by implementing the HVDS

in such feeders, the losses could be reduced significantly.

Hence, the HESCOM is directed to follow the revised guidelines issued

by the Commission and to take up implementation of HVDS

programme in Sadalga Hobli and submit compliance of the same

from time to time to the Commission.

viii. Directive on NirantharaJyothi – Feeder Separation:

The ESCOMs were directed to furnish to the Commission the

programme of implementing 11 KV taluk wise feeders segregation with

the following details

a) Number of 11 KV feeders considered for segregation.

b) Month wise time schedule for completion of envisaged work.

c) Improvement achieved in supply after segregation of feeders.


The Detailed Work Award for implementation of NJY phase-1

comprising of 246 feeders spread over 20 Taluks was issued during May-

September 2011 with completion period of nine months. The inordinate

delay in implementation of the project is attributed to problems in the

field during the execution of works such as Right of Way (ROW) issues,

approval from Railway authorities, forest clearances, opposition from

farmers for erection of poles in their fields and labour problems faced

by the agency executing the work. As on 31.12.2015, 218 feeders have

been commissioned. The works in respect of the remaining feeders is in

various stages of completion and the feeders will be commissioned at

the earliest.

As directed by the Commission, the analysis for evaluating the benefits

clxxxv

accrued to the system, in terms of reduction in failure of distribution

transformers, improvement in tail-end voltage and improvement in

supply, reduction in interruptions have been carried out through M/s

CPRI and the same is furnished.

The Detailed Work Award for NJY phase 2 comprising of 210 feeders

spread over 14 Taluks was issued during January-March 2012. As on

31.12.2015, 186 feeders have been commissioned, this constitutes 89

per cent of total feeders taken up for segregation. The works in respect

of the remaining feeders are in various stages of completion and the

same will be commissioned at the earliest. Further, the feeders for

which the segregation work is completed have been commissioned

thus resulting in realization of envisaged benefits.

All efforts are being made to commission the remaining feeders under

both NJY phase-1 and phase-2 in a time bound manner. Further,

action has been taken to ensure that NJY feeders are not tapped

illegally for operating IP sets. Further, M/s CPRI have furnished the

analysis reports in respect of some of the completed NJY feeders. The

report is submitted to the Commission.

Computation of IP consumption:

The HESCOM has 810 numbers of segregated agricultural feeders as at

the end of September, 2015. However, computation of IP set

consumption is made on the bases of exclusive IP feeder consumption,

wherever such feeders are more in numbers. In other cases, where

bifurcation is yet to be completed assessment IP set consumption is

being done on the basis of readings of meters fixed to DTCs feeding

predominant IP set loads.


The Commission notes that the HESCOM is yet to commission all the

feeders, both under NJY phase1 & 2 for which the segregation work

has been completed in all respects. The progress achieved in

clxxxvi

implementing the works both under NJY phase1&2 is not satisfactory as

the same has been delayed inordinately. The delay in implementation

of NJY works in fact, has resulted in non-realization of envisaged

benefits set out in the DPR when the project was initiated.

The Commission directs the HESCOM to expedite commissioning of

balance feeders and to carry out the performance analysis of such

feeders to ensure that the objectives set out as per DPR are

accomplished.

Further, the Commission has noted that the HESCOM has carried out

the performance analysis of feeders commissioned under NJY

indicating the benefits accrued to the system in terms of reduction in

failures of distribution transformers, improvement in tail-end voltage

and improvement in supply/reduction in interruptions and increase in

metered consumption. The analysis reveals that there is overall

improvement in supply condition after implementation of NJY besides

benefiting the consumers in rural area resulting in a positive socio-

economic impact. The analysis also reveals that post implementation

of NJY; the consumers are satisfied as the numbers of hours of

availability of power has increased.

The HESCOM is directed to expedite execution of NJY works under

both phase1&2 and report compliance thereon to the Commission.

Further, the HESCOM shall ensure that NJY feeders are not tapped

illegally for running IP sets which would defeat the very purpose of

feeder separation scheme undertaken at huge cost.

Further, it is noted that the HESCOM has already segregated 428

feeders taken up both under phase1&2 works and consequently

agricultural feeders are exclusive from rural loads and the energy

consumed by the IP sets could be more accurately measured at the

11 KV feeder level at the sub-stations after duly allowing for distribution

clxxxvii

losses in 11 KV lines, distribution transformers and LT lines. The HESCOM

is directed to report every month, the total IP set consumption only on

the basis of data from agricultural feeder energy meters and furnish

the specific consumption of IP sets as per the formats prescribed by

the Commission enclosed vide its letter No: KERC/D/137/14/91 dated

20.04.2015, before 15th May 2016.

The HESCOM is also directed to continue to furnish feeder wise IP sets

consumption based on energy meter data in respect of agriculture

feeders segregated under NJY to the Commission every month.

ix. Directive on Demand Side Management in Agriculture:

In view of the urgent need for conserving energy for the benefit of the

consumers in the State, the Commission had directed the HESCOM to

take up replacement of inefficient pumps with energy efficient pumps

approved by the Bureau of Energy Efficiency, at least in one sub-

division in its jurisdiction.


M/s Energy Efficiency Services Limited (EESL), New Delhi, is executing

the project on a pilot basis in Byadagi and Nippani sub-divisions, which

involves the replacement of 4,152 and 6,861 numbers of old pump sets

by new energy efficient pump sets, respectively.

Presently, in the first phase totally 590 pump sets both in Nippani and

Byadgi sub-divisions have been replaced by energy efficient pump

sets. Due to issues of Measurement & Verification (M&V) and Billing are

not resolved yet, approval was not accorded for replacement of

balance pump sets. However, M/s EESL, will be called for discussion to

sort out this issue.

clxxxviii

Observations

The bill raised by M/s EESL towards 5 feeders was amounting to Rs.10.23

Lakh based on 95 per cent of savings. One hour consumption of old

pump set has been measured by power analyzer i.e., rating of pump

sets carried out for 99 pump sets in respect of Benadi IP feeder in

Nippani sub-division.

The power recorded in respect of old pump was 608.36 kW. The

consumption per month was 608.36 KW x 6 hrs x 30 days=109,505

units per pump set.

The consumption recorded in respect of new pump was 391.1KW x

6 hrs x 30 days=70,398 units per month.

Accordingly, the average consumption of old pump=109,505/99

numbers=1,106 units / pump set / month and new pump=70,398/99

numbers =711 units / pump set / month.

Specific consumption allowed by the KERC=8,244 units/12

months=687 units / pump set / month. Hence, the saving criteria

based on calculation per hour, per day, per month, appear to be

unscientific due to the following reasons:

The methodology as a thumb rule by multiplication of 6 hours x

number of days appears to be incorrect on the ground that

pump sets may not be running on all the days and for entire 6

hours.

Number of unscheduled interruptions on the rural feeder due to

heavy wind/ rain is also considerable.

The consumption depends on type of crop, humidity in the

atmosphere and also due to unseasonal rains.

If the criterion proposed by EESL is considered, then IP sets operating

for 6 hours per day throughout the year is unrealistic, as the IP sets are

normally not functional during rainy season and also during peak

summer due to drastic reduction in water table.

clxxxix


The Commission notes that the HESCOM is implementing a pilot project

of DSM in agriculture in Nippani and Byadgi sub-divisions. It is observed

that not much progress has been achieved in this regard except

completion of replacement of 590 existing pumps. It appears that the

work is moving at a slow pace which needs to be expedited to reap

the expected benefits by implementing this project. It is important to

see that all the balance works relating to this project are expedited so

that the work is completed in a time bound manner and the farmers

are able to avail the benefits of this scheme.

Further, the HESCOM should also give emphasis on implementation of

DSM measures in the other parts of its jurisdiction in order to conserve

energy and also precious water for the benefit of farmers. The HESCOM

should focus its attention on implementation of DSM measures by

necessary coordination with all the stakeholders concerned to arrive at

an early agreement on a crucial measurement and verification

methodology to move forward for maximizing the benefits and scaling

up the same in whole of its jurisdiction.

The Commission during its review meetings with the ESCOMs held in the

Commission has been directing them to initiate DSM measures in any

one sub-division/taluk in order to assess the results of such measures

before scaling up in whole of its jurisdiction. The HESCOM is directed to

expedite the implementation of DSM project in Nippani and Byadgi

sub-divisions and complete at the earliest. The compliance thereon

shall be submitted to the Commission within three months from the date

of this order.

x. Directive on Lifeline supply to Un-Electrified households:

The Commission had directed the ESCOMs to prepare a detailed and

time bound action plan to provide electricity to all the un-electrified

cxc

villages, hamlets and habitations in every taluk and to every household

therein. The action plan shall spell out the details of additional

requirement of power, infrastructure and manpower along with the

shortest possible time frame (not exceeding three years) for achieving

the target in every taluk and district. The Commission had directed that

the data of un-electrified households could be obtained from the

concerned gram panchayaths and the action plan be prepared

based on the data of un-electrified households.


Details of the un-electrified households identified by the HESCOM and

the action taken to provide electricity to these households under

various schemes are as stated below.

Electrification of Rural households taken up under RGGVY 12th Plan:

In Haveri district, the number of villages proposed for intensive

electrification is 692. The number of habitations covered under this

scheme is 702. The un-electrified BPL households are 18,638 numbers

and APL households are 5,568 numbers. The project cost is Rs. 606.51

lakh. The approved project cost by the REC is Rs.590.99 lakh. The work

has been awarded to M/s Praveen Electrical Works, Gadag and the

same is in progress.

Electrification of un-electrified villages taken up under Deendayal

Upadhyaya Gram Jyoti Yojana scheme:

Rural electrification works in respect of 5 un-electrified villages in

Belgaum district is taken up. In this scheme, the number of BPL

households proposed is 70, the project cost is Rs.754 lakh and

tendering for the same is in process.


Uttara Kannada district is taken up. In this scheme, the number of

cxci

BPL households proposed is 216, the project cost is Rs.1,387 lakh

and tendering for the same is in process. 1.2.


Sirsi division coming under the jurisdiction of Uttara Kannada

district is taken up. In this scheme, the number of BPL households

proposed is 541, the project cost is Rs. 4458 lakh and tendering for

the same is in process.

Electrification of un-electrified rural households proposed under Deendayal

Upadhyaya GramJyoti Yojana (DDUGJY) scheme:

Sl.

No.

Name of the

District

No. of un-

electrified

households as per

Census 2011

No. of rural

households proposed

to be electrified

including BPL under

DDUGJY

No. of BPL

households

proposed to be

electrified under

DDUGJY

1 Uttara

Kannada 24,529 22,680 20,510

2 Haveri 31,059 13,360 9,020

3 Gadag 27,070 21,946 21,946

4 Dharwad 10,489 10,489 10,142

5 Bijapur 9,611 69,611 13,176

6 Bagalkot 43,478 34,885 12,739

7 Belgaum 1,24,951 1,16,495 78,018

Total 2,71,187 2,89,466 1,65,551 1.3.

Rs. 48.38 crore is sanctioned to the HESCOM for providing access

to electricity to rural households under DDUGJY scheme.

Estimates are to be prepared and tender process is to be

initiated.

Electrification of Mettinagadde and 13 un-electrified habitations in Honnavar

Taluk of Uttara Kannada District:

Electrification of 83 rural households in Mettinagadde and 13 un-

electrified habitations in Honnavar Taluk is proposed under this

project.

Detailed Work Award was issued to M/s. Mahesh Electricals &

Telecom, Pune, vide Letter No: HESCOM/SEE (PMC)/EE-P1/Indent-

839(A)/2014-15/Cys-763, for supply portion. Work has been

completed on 28.05.2015.

cxcii

Latest status of electrification of un-electrified households:

1) Total number of un-electrified rural households including BPL

households as on 31.03.2015 is 3,30,412. Out of these, electrification of

18,638 BPL households is sanctioned under RGGVY 10th Plan for Haveri

district and the work is in progress.

2) Electrification of 2,89,526 rural households including 1,65,621 BPL

households was proposed under Deendayal Upadyaya Gram Jyoti

Yojana (DDUGJY) scheme at a cost of Rs.601.73 crore.

3) Subsequently, as per the reallocation from GoK, under DDUGJY fund

for electrification of un-electrified rural households was restricted to

Rs. 48.38 crore only.

4) Hence, out of 1,65,621 un-electrified BPL households, 18,638

households have already sanctioned under RGGVY 12th plan and

85,104 BPL households are proposed under DDUGJY scheme totaling

to 1,03,742 households.

5) Balance, 2,26,670 households (16,4791 APL households and 61,879

BPL households) are yet to be electrified.


The Commission observes that only a meager progress is achieved in

electrification of BPL households by the HESCOM. It is seen that most of

the electrification works are either in proposal stage or execution stage

and in fact, for 2,26,670 households, the HESCOM is yet to formulate a

scheme. The HESCOM needs to expedite electrification of households

with the seriousness this matter deserves. The electrification of

households has remained stagnant for the last many years leaving vast

numbers of households in the remote areas remain without basic need

of electricity. The programme should be implemented within in a time

frame to ensure that the people are provided with the basic need of

electricity at the earliest.

cxciii

The Commission, while reviewing the status of compliance of its

directives during the ESCOMs’ Review meetings, has been stressing

upon ESCOMs to initiate necessary action to provide electricity to the

un-electrified households with funding arrangement by RGGVY or any

other source. The HESCOM shall come out with an action plan to

implement the directive of the Commission for providing electricity to

the un-electrified households in its jurisdiction and submit

compliance/progress achieved monthly to the Commission regularly.

Further, the Commission, concerned with the slow pace of progress of

this programme, in previous Tariff Order had directed the HESCOM to

cover electrification of 5 per cent of the total identified un-electrified

households every month beginning from April 2015 so as to complete

this programme in about twenty months. But, there is not much

progress in these aspects. The HESCOM is directed to expedite action

to provide electricity to the un-electrified households covering all the

remaining households within the targeted time fixed by the

Commission and report compliance to the Commission regarding the

monthly progress achieved from May, 2016 onwards. In the event of

non-compliance, the Commission may be constrained to initiate

penalty proceedings under section 142 of the Electricity Act, 2003.

xi. Directive on sub-division as Strategic Business Units (SBU).

The present organizational set up of the ESCOMs at the field level

appears to be mainly oriented to maintenance of power supply

without a corresponding emphasis on realization of revenue. This has

resulted in a serious mismatch between the power supplied,

expenditure incurred and the revenue realized in many cases. The

continued viability of the ESCOMs urgently calls for a change of

approach in this regard, so that the field level functionaries are made

accountable for ensuring realization of revenues corresponding to the

energy supplied in their jurisdiction.

cxciv

The Commission had directed the HESCOM to introduce the system of

Cost-Revenue Centre Oriented sub-divisions at least in two divisions in

its operational area and report results of the experiment to the

Commission.


The progress of introduction of SBU in Shiggaon sub-division is given

below:

Mapping: As per DCB of September, 2015, there are 42,437

installations and 1,001 DTCs. Mapping of all installations, DTCs and

feeders are completed so that DTC wise, feeder wise sales figures

are accurate.

Station meters: There are 19 numbers of 11 kV feeders and 3

numbers of 33 kV stations. All the feeders’ meters have been

checked and calibrated for accuracy to ensure that feeder wise

input energy is accurate.

Highest feeder loss: Detailed checking of all the installations has

been done. Out of which 11 kV Motalli feeder which has recorded

53 per cent loss has been taken up for intensive monitoring.

Not recording meters (MNR): The work of replacement of 166 non-

recording meters, sealing of meters and detection of un-authorized

installations and regularization of the same was carried out. There

are no MNR meters in LT-3 and LT-5 tariff categories.

Replacement of meters: Estimates for replacement of electro-

mechanical meters by electronic meter is proposed.

Additional DTCs: Additional DTCs are provided to reduce the losses.

Collection and Billing efficiency: In September 2015, 75 per cent

collection efficiency and 100 per cent billing efficiency achieved

respectively.

DTC metering: 100 per cent DTCs are metered in urban Area (141

numbers).

cxcv

T & D loss: Distribution losses reduced from 30 per cent in August,

2012 to 13.45 per cent in September, 2015.

Other details:

i. Pursuing recovery of arrears of long disconnected installations

and withdrawal statements are being sent to reduce the closing

balance.

ii. Outsourcing staff to Shiggaon sub division is in process.

iii. 100 per cent metering of BJ KJ installations is completed.


The Commission notes that, the ESCOMs have expressed their difficulty

in introduction of SBU concept in their O & M divisions / sub divisions due

to implementation issues in the field. The Commission recognizes the

problems associated with implementation of SBU concept. As an

alterantive, the Commission had instituted a study to make field

formations of the ESCOMs financially accountable without any

modification in their existing administrative set up. The Commission has

forwarded a report prepared by the consultants M/s PWC regarding

implementation on Financial Management Framework for distribution

utilities to take further action to implement a model suggested by the

consultant, in their jurisdiction to bring in accountability on the

performance of the divisions / sub-divisions in relation to the quantum of

energy received, sold and its cost so that they conduct their business on

commercial principles.

The HESCOM is therefore, directed to implement this financial

management framework model and report compliance thereon within

three months from the date of issue of this Order.

xii) Directive on Prevention of Electrical Accidents:

The directive was as follows:

cxcvi

“The Commission has reviewed the electrical accidents that have

taken place in the State during the year 2014-15 and with regret noted

that as many as 564 people and 514 animals have died due to these

accidents.

From the analysis, it is seen that the major causes of these accidents

are due to snapping of LT/HT lines, accidental contact with live

LT/HT/EHT lines, hanging live wires around the electric poles

/transformers etc., in the streets posing great danger to human lives.

Having considered the above matter, the Commission hereby directs

the HESCOM to prepare an action plan to effect improvements in

distribution networks and implement safety measures to prevent

electrical accidents. Detailed division wise action plans shall be

submitted by the HESCOM to the Commission.”


Following measures have been taken for prevention of electrical

accidents to employees/consumers/ Public.

Providing intermediate poles in lengthy spans – 852 poles have

been provided.

Replacements of broken /deteriorated poles – 266 poles have

been replaced.

Shifting of DTCs to safer places–7 distribution transformers have

been shifted to safer places.

Replacement of deteriorated conductors –19.2 Km deteriorated

conductor has been replaced.

Shifting of HT/LT lines – 55 Km of HT/LT line has been shifted to

provide safety clearance.

cxcvii

Reconductoring of 11kV line: The work covering 151 feeders with

1221 km has been tendered. The work in respect of 113 feeders

covering 866 km is completed. The balance work is in progress.

LT reconductoring: The work covering 581 DTCs with 1,049 km has

been tendered and the work in respect of 571 DTCs and 1,009 km

is in progress.

Preventive maintenance works in respect of lines/transformers is

being carried out regularly to reduce the accidents.

1.4.

Every year, budget provision is made for preventive measures to

reduce accidents. As a result, the number of accidents in some districts

has come down. Further, action is being taken to educate the

employees regarding safe use of equipment and consumer awareness

programme about safety aspects is being conducted at the district

Headquarters. All efforts are being made to reduce the electrical

accidents occurring in the distribution system.


The Commission observes that despite the HESCOM taking various

remedial measures including rectification of hazardous installations in

its network, the number of fatal electrical accidents involving both

human and livestock has only increased which is of a serious concern.

This indicates that identification and rectification of all hazardous

installations is not completed. The HESCOM should make more

concerted efforts for identification and rectification of all the

hazardous installations prevailing in the distribution system particularly

in densely populated areas & public places. The HESCOM also needs

to take up with the concerned local bodies regarding rectification of

the hazardous streetlight installations and other electrical works under

their control to ensure safety of the public. It is also necessary that the

HESCOM creates awareness through visual/print media continuously

about safety aspects among public to ensure that the attention on

safety aspects is maintained.

cxcviii

1.5.

1.6.

1.7. 1.8.

The Commission, during the Review meetings held with the ESCOMs

has been prompting the ESCOMs to take up periodical preventive

maintenance works, install LT protection to distribution transformers,

conduct regular awareness program for public on electrical safety

aspects in use of electricity and also about ensure use of safety tools

and tackles by their field staff besides imparting necessary training to

field staff at regular intervals. The HESCOM shall take effective steps to

achieve this.

1.9. 1.10.

Further, the HESCOM shall adhere to the best construction practices as

per the standards on construction/expansion of the distribution

network so that no maintenance is required for such network for a

reasonably long period of time. The HESCOM shall also conduct safety

audit and carryout preventive maintenance works as per the schedule

to keep the network equipment in a healthy condition. 1.11.

The Commission has already forwarded the Safety Technical Manual

prepared by a sub-Committee comprising of experts from the Advisory

Committee constituted by the Commission which should serve as a

useful guide for the field engineers to record all the technical

deficiencies prevalent in the distribution network and enable them to

take remedial measures on the basis of such an audit. In the Safety

Technical Manual detailed account of the steps to be taken on each

element of the distribution system is enumerated which would help the

field engineer in attending to the defects. The HESCOM is required to

circulate Safety Technical Manual among its field staff for necessary

guidance and also to continuously monitor the implementation of the

suggestions / recommendations contained in the reports.

1.12.

The Commission therefore reiterates its directive that the HESCOM shall

continue to take necessary measures to identify and rectify all the

hazardous locations/installations prevalent in its distribution system and

cxcix

to provide LT protection to distribution transformers under an action

plan to prevent and reduce the number of fatal electrical accidents

occurring in the distribution system. The compliance regarding the same

shall be submitted to the Commission every month regularly.

cc

APPENDIX

- I

Objections related to Tariff Issues - MESCOM

Sl

No. Objections Replies by Licensee

1 The projected average power purchase

cost does not correspond to the

decreasing fuel prices.

HESCOM has considered a linear

increase in the power purchase cost

without considering the distinct nature of

fixed (capacity) charges and variable

(energy) charges. The fixed charges for

a generating station ought to have

decreased on a year to year basis.

HESCOM has projected the individual

source wise power purchase cost as per

the details furnished by PCKL which is the

nodal agency for power purchase in

Karnataka. PCKL in turn has obtained the

details of power purchase cost from

generators like KPCL.

Commission's Views: The payment for power purchase is based on the tariff

determined as per Regulations issued by the CERC and also by the Commission. They

are based on norms stipulated under those Regulations.

2

The short term/medium term power of

279.55 MUs has been procured at an

average rate of Rs.5.27 /kWh at a cost of

Rs.145.82 crore. The short term/medium

term power procurement over and

above the quantum approved in the

tariff order and purchased at rates

exceeding the ceiling rate approved by

the Commission to the tune of Rs.17.96

Crores should be disallowed.

The Commission had approved the short

term and medium term purchases for

279.55 MU at a cost of Rs.145.82 Crores

based on the requirement of HESCOM

and other ESCOMs and as per the

allocation. The requirement for FY-15

submitted by HESCOM was based on the

projections which are bound to change

when the demand for power purchase

increases compared to the approved

quantum. In view of growing demand for

power the distribution companies are

forced to purchase excess power. Though

the price cap of Rs.4.50/- unit has been

fixed by the Commission, due approval is

taken by the concerned authorities when

cci

the purchase cost has exceeded the

price cap set by Commission.

Commission's Views: The State has faced shortage of power due to reduction of

availability from the expected sources, resulting in increase in the quantum of short-

term power purchase. These purchases are being made through competitive

bidding, duly complying with the provisions of the Electricity Act 2003. The

Commission also notes that PCKL is indeed procuring power at exchange at lower

prices.

3 The employee expenses are 78% of the

total O&M expenses and R&M and A&G

expenses are 22% of the total O&M

expenses. The allowable weighted

average inflation index is 7.22% for 2014-

15 and 7.25% for 2016-17. Considering

the actual O&M expenses for 2013-14

without contribution to Pension and

Gratuity Trust, three year compounded

annual growth rate (CAGR) of the

number of installations, the actual

number of installations as per audited

accounts for the period FY12 to FY15, the

weighted inflation factor, efficiency

factor of 2%, the normative O&M

expenses will be Rs.480.24 Crores for FY15

and Rs.522.23 Crores for FY17. Against

Rs.83.22 crore claimed as pension and

gratuity contributions, there was a cash

outgo of only Rs.21.51 crore. Hence, the

uncontrollable O&M expenses on

account of pension and gratuity may be

limited to Rs.21.51 crore in 2014-15. The

interest earned on Pension and Gratuity

fund investments have to be accounted

for in the ARR/APR. Hence, the allowable

The application for approval of Annual

Performance review for FY-15 along with

audited reports will be trued –up by the

KERC in respect of O & M expenses for FY-

15. HESCOM has not invested the Pension

and Gratuity fund Contributions in the

interest bearing Govt., security bonds and

is not earning any interest. Hence, the

income (interest earned) in this aspect

cannot be taken in to account in the ARR

of HESCOM. The contribution to Pension

and Gratuity fund are calculated on

actual basis, the details of which are

submitted in reply to the preliminary

observation made by the Commission.

HESCOM has considered the WPI and CPI

considered by the Commission in its Tariff

Order 2015 of HESCOM for projecting O &

M expenses for the control period.

ccii

O&M expenses will be Rs.501.75 crore as

against Rs.580.95 crore claimed for 2014-

15 and Rs.522.33 crore as against

Rs.733.31 crore projected in 2016-17

Commission's Views: The matter is appropriately dealt in this Tariff Order.

4 The consumer security deposits are

Rs.542.72 crore in 2014-15 as per audited

accounts and have been projected to

be Rs.678.65 crore in 2016-17. HESCOM

has utilized the consumer security

deposit as working capital and has

deprived the consumers of a reduction

in the ARR through interest earning on

the security deposits. HESCOM is double

charging the consumers by claiming

interest on working capital without

accounting for the consumer security

deposits which have been utilized as

working capital.

HESCOM has not invested the security

deposit collected from the consumer in

any kind of interest bearing securities. The

MYT regulations in Karnataka do not

specifically mention about reduction of

security deposit from the working capital.

Commission's Views: The interest on working capital is being determined as per the

MYT Regulations.

5 The HESCOM has claimed the interest on

security deposits during 2016-17 at a rate

of 9%, which is not in consonance with

the clause 3.1 of the KERC (Interest on

Security Deposit) Regulations, 2005.

Hence, the Commission should consider

7.75% bank rate published by RBI for the

purposes of allowing the interest on

consumer security deposits for 2016-17

HESCOM abides by the decision taken the

Commission in this regard.

Commission's Views The interest on security deposit of consumers is being allowed as

per the provisions of the Electricity Act, 2003 and the Regulations issued by the

cciii

Commission.

6 Rs.18.64 crore in FY17 towards bad and

doubtful debts should to be disallowed.

The Commission will not allow in the ARR

but will consider in the truing up on case

to case basis.

Commission's Views: This issue has been suitably dealt with in this Tariff Order.

7 For any additional sale to the subsidized

consumers above the approved sales,

the Government has to release

additional subsidy at the average cost

of supply. If so, the consumers will be

entitled for a refund / tariff reduction of

Rs.509.11 crore in FY 2014-15 as against a

surplus of Rs.132.41 crore computed by

the HESCOM.

The additional subsidy requirement of

HESCOM for FY-15 payable by Govt. of

Karnataka will be decided on the basis of

average cost of supply after truing up for

FY-15 by the Commission.

Commission's Views: The reply furnished by the HESCOM is acceptable. However,

HESCOM shall endeavour to recover the arrears of subsidy and other receivables

from the Government to mitigate cash flow problems and to reduce the cost of

borrowing to meet the deficit. The Commission ensures that such cost does not

exceed the normative expenditure approved by it.

8

HESCOM has not been able to adhere

to the mandate of the Tariff Policy of

designing tariff at ± 20 % of the average

cost of supply. Any benefit which

HESCOM wants to confer to the

subsidized category beyond the

maximum of ±20% should be recovered

through Government subsidy and

cannot in any way be loaded to the

subsidizing consumers

The actual cost of supply for each

consumer category is not yet done in

HESCOM, due to many reasons and the

tariff is determined on the basis of

average cost of supply. There will be many

practical problems in adopting this

concept. Firstly it may lead to ‘tariff shock’

to the low revenue yielding categories like

domestic and public utility installations.

Secondly there are a few categories

which are subsidized by Govt. whose

revenue realization rate is below the

average cost of supply.

Commission's Views: As directed by the Hon’ble ATE, the Commission has

endeavored to reduce the cross subsidy gradually which is reflected in the current

cciv

order as well. The voltage wise cross subsidy levels have also been indicated in the

tariff order, as directed by the Hon’ble ATE.

9 HESCOM has made contrary submissions

with regard to the proposal for increase

in demand charges. At page 188 of the

Petition, HESCOM has stated that it has

proposed revision of demand charges

by Rs.10/ kW for all LT categories and for

all HT categories, the fixed charges have

been proposed at Rs.200/kVA. However,

in the proposed rate schedule as well as

in the notification published in the

various newspapers, HESCOM has not

indicated any increase in the demand

charges. Recovery of demand charges

has been projected at Rs.240.86 crores in

Form D-21 (a) as well as Form D-21(b)

confirming that there is no proposal for

increase in demand charges.

HESCOM has not proposed any increase

in fixed charges / Demand charges in the

present petition for FY-17.

Commission's Views This matter has been dealt with suitably in the Tariff Order.

10 As the capital cost of meters has been

accounted for in the capital

expenditure projected by HESCOM,

Meter rental charges would entail

double allowance of the capital cost of

the meters. If the same is approved, the

recovery of meter rent has to be

accounted for as other incomes and

reduced from the ARR

HESCOM has not proposed meter rental

charges.

Commission's Views: Any income received by way of rentals, is rightly accounted as

other income and the consequent reduction in ARR passed on to the consumers,

11 HESCOM has published in the

newspaper that, it has achieved a profit

of Rs.132.26 Crores during FY15 and that

HESCOM has sought revision of tariff of

Rs.1.02 per unit by factoring the annual

revenue requirement and the expected

ccv

there will be no deficit in 2016 as per

tariff order dated 02.03.2015. Hence, the

proposal to hike tariff should be

rejected.

revenue and to make good the gap of

Rs.1102.36 Crores. The profit of Rs.132.26

crores has been deducted while

computing the gap of Rs.1102.36 crores.

Commission's Views: The Commission has dealt with the matter appropriately in this

Tariff Order.

12 As the farmers have suffered crop loss

due to drought, the proposal for hike in

tariff needs to be rejected.

The revision of tariff is sought to make

good the gap of Rs.1102.36 crores which

includes power purchase cost and other

expenses.


13

The bills for IP sets are not being issued

once in 3 months as directed in the tariff

order.

To assess the consumption for energy

balancing and to claim subsidy from the

Government, it is necessary to issue bills to

IP sets every month and the same is not in

violation of the tariff order.

Commission's Views: The reply furnished by the HESCOM is reasonable.

14 The benefit of relief package ordered by

GoK on 9.3.2003 has not been extended

to the Farmers of Malnad region and

evasive replies are given when

approached.

The package amount has not been

released to HESCOM

Commission's Views. This is not an issue relating to tariff.

15 The directions of the GoK to pay

Rs.10000/- per IP set connection

charges is a burden to the farmers who

have IP sets of 1 to 2 HP capacity and

hence, the charges should be reduced

to Rs.1000/- per IP set.

As the rate is fixed by the Government,

HESCOM will bring the request to the

notice of the Government for suitable

action.

Commission's Views: The reply furnished by the HESCOM is acceptable.

16 Levy of both fixed charges and energy

charges in the bill is not proper, instead,

the fixed charges should be deducted

from the energy charges in the bill.

Fixed charges are collected on the basis

of fixed assets of the licensee and

charged from the consumers to improve

the distribution network and to provide

ccvi

necessary facilities and maintain the lines,

irrespective of whether the consumers

consume as per the sanctioned load or

not. There is no provision to adjust the

minimum charge with energy charges.

Commission's Views The reply furnished by the HESCOM is acceptable.

17 The tariff discrimination between

consumers of Urban and Rural areas is to

be removed and a uniform tariff is to be

introduced.

The Commission has fixed the differential

tariff and HESCOM will abide by the

orders.

Commission's Views The Commission is determining tariff for various category of

consumers in accordance with Section 62 of the Electricity Act 2003. The factors

determining the consumer tariff are discussed in the relevant chapter of the tariff

Order.

18

HESCOM is selling its Tariff petition book

at a cost of Rs.1000/- whereas it had

charged only Rs.300/- in previous years.

The common man cannot afford to

purchase the book at high cost, hence it

should be given free of cost.

Since the data involved and furnished to

the Commission was in 3 books of about

1000 pages, HESCOM has fixed the price

on the basis of photo copying charges.

However, the interested persons had the

option of getting the photo copy of the

required portion only by paying photo

copying charges.

Commission's Views The reply furnished by the HESCOM is reasonable.

19 HESCOM has published the tariff

proposals in two newspapers which do

not have wide publication and the last

date for filing the objections is not

indicated in the paper publication.

HESCOM has published the notification on

17th & 18th January 2016 in Vijayavani ,

Praja vani, Indian Expres, and Times of

India. This is done as per Regulations.

Commission's Views The reply furnished by the HESCOM is acceptable.

ccvii

20

There is a huge balance of Rs.2167.54

Crores to be collected from consumers

and the reasons for not collecting the

same are not explained. HESCOM has to

collect the arrears from the local bodies

and improve the collection efficiency

from 87% to 100%.

Rs.454 Crores shown as receivables from

other ESCOMs/KPTCL has to be ordered

to be collected in a time bound

manner.

The arrears of Rs.2161.61 Crores as on

31.03.2015 include the running bills, dues

from the Government institutions, IP Set

arrears, etc. HESCOM is putting all efforts

to collect the arrears. Action is taken to

recover the arrears as per the Revenue

Recovery Act 1976 duly issuing the ‘A’ ‘B’

& ‘C’ forms. Even, in respect of the long

disconnected installations, cases are

registered with the Vidyuth Lok Adalat for

recovery of arrears in all the sub divisions

which are monitored meticulously from

the Corporate Office. Rs.454 Crores is

receivables from other ESCOMs, HESCOM

has to pay Rs.1357 Crores to other

ESCOMs.

Commission's Views: The reply furnished by HESCOM is reasonable. HESCOM shall

endeavour to recover the arrears of subsidy and other receivables from the

Government to mitigate cash flow problems and to reduce the cost of borrowing to

meet the deficit.

21 The capex of Rs.2 Crores sought by

HESCOM for installing meters to

unmetered BJ/KJ installations should be

disallowed as the EA 2003, provides that,

no power supply should be given

without meter and when a meter

becomes faulty, the same has to be

replaced by a good one by accounting

in R&M and O&M expenditure.

The proposal of capex of Rs.2 Crores is for

installing meters to very old installations for

which meters were not fixed while

providing service. Presently, no installation

is serviced without meter.

Commission's Views : The reply furnished by the HESCOM is reasonable.

22 HESCOM has made a willful default by

paying interest for late payment of bills

to an extent of Rs.140 Crores and the

same should be disallowed.

HESCOM is in a financial crisis and hence

could not pay the power bills of KPCL in

time. KPCL has levied interest on late

payments and the same has been

ccviii

claimed by HESCOM.

Commission's Views: The Commission is not allowing any interest on the delayed

payment of power purchases in the ARR.

23 HESCOM has incurred capital

expenditure of Rs.2 Crores more than the

approved capex in NJY and

reconductoring work. The benefits like,

reduction of losses, energy saved should

be quantified.

The Commission is conducting prudence

check of capital expenditure incurred for

FY15.

Commission's Views HESCOM has submitted the reasons for the variations in actual

capex as against approved figures. The Commission is also conducting prudence

check of the capex before allowing interest and depreciation on the capitalized

assets.

24 According to the report by Chartered

Accountants, there are 28 cases

pending in which Rs.5.97 Crores has to

be received by HESCOM. HESCOM

should take measures for speedy

disposal of cases.

At present, the officers of MESCOM are

the Appellate authorities for resolving the

disputes in HESCOM. Action will be taken

to speed up the process.

Commission's Views: the Commission directs HESCOM to speed up the process.

25 As required under the Tariff Regulations,

HESCOM has not published the

accounts for Base year, ensuing year

and control year.

HESCOM has published its tariff petition,

the effect of true up of FY14,

consequential true up of FY15 and deficit

for FY17.


26 The Regulatory asset of Rs.197.69 Crores

ordered to be carried forward to FY16

has been wrongly accounted as

expenditure by HESCOM. The Regulatory

asset of FY13 should not be carried

forward to FY17.

As per the tariff orders of 2014 and 2015,

the Regulatory asset is to be carried

forward to FY17 and HESCOM has

included the carrying cost as per the

directions of the Commission.

Commission's Views: The Commission has suitably dealt with this issue in this Order.

ccix

27 As the distribution loss is not computed

based on actual consumption, the

incentive for loss reduction should not be

allowed.

HESCOM has achieved a loss reduction of

16.74 % against the target level of 17.50%

fixed by the Commission and the incentive

as per the directions of the Commission is

to be allowed.


28 The IP set consumption arrived at by

HESCOM is an inflated figure. HESCOM

has shown the IP set consumption at

8735 units per IP set and estimated

6713.43 MU for FY17. The actual

consumption would be 3402.18 MUs.

HESCOM has arrived at the IP set

consumption based on the meter

readings of the DTCs predominantly

feeding IP Sets and the IP set consumption

arrived at by HESCOM is realistic.


Necessary directions have been issued to the HESCOM in the matter.

29 The Maximum demand charges and

Fixed charges for the installations should

be reduced on prorata basis for the

duration of load shedding. The

Commission should reject the increasing

the FC proposed by HESCOM as there is

no basis for such claims.

HESCOM does not accept for the

proposal of prorata decreasing the fixed

charges. The Fixed charges are claimed

for the creation and maintenance of the

distribution system assets of HESCOM.

Commission's Views: The fixed charge is being incurred by ESCOMs irrespective of the

quantum of energy supplied and has to be recovered.

30 The proposed billing on the basis of

KVAh should not be considered.

HESCOM was unable to furnish the

information on KVAh billing sought by the

Commission.


31 The recruitment proposal initiated by

HESCOM will increase the burden on the

consumers, instead HESCOM could have

opted for outsourcing the staff.

HESCOM has taken decision to recruit

employees commensurate with the

increase in distribution system and works-

load norms and outsourcing is not a

feasible option.

Commission's Views : Reply furnished by HESCOM is acceptable.

ccx

32 HESCOM is not properly utilizing the

grants of Central Government for

schemes for the purpose set forth.

HESCOM is utilizing the Central

Government fund for the schemes. The

RGGVY and funds are utilized for RGGVY

and APDRP works only.


33 As the application is not made within

120 days before the commencement of

financial year, the application is not

maintainable.

The petition is filed within the time

extended by the Commission.

Commission's Views: : HESCOM has filed its petition for truing-up for FY15 and

determination of Annual Revenue Requirement for FY17, FY18 and FY19 on 15th

December, 2015, within the time limit extended by the Commission. The Hon’ble

Appellate Tribunal for Electricity (ATE), in the Case reported in 2010 ELR (APTEL) 0175

has held that “if the Licensee is unable to file ARR petition due to some reasons, it will

not be proper to say that the application has to be rejected. What could be done in

such a situation is that the carrying cost can be denied and not the revenue

recoverable for the period of delay”. In the present case, the revenue requirement

sought is from 1st April, 2016 up to 31st March 2019, and therefore, the time taken by

HESCOM for filing the application will not adversely affect the consumers’ interest and

hence, the petition is maintainable.

34 HESCOM has not indicated any step to

improve its efficiency to transfer the

benefit of efficiency gains to the

consumers and in the absence of any

specific gains the application is not

maintainable. It has failed to improve

efficiency and has not complied with all

directives.

The Commission has been issuing

directives, reviewing the old directives and

issuing the new directives in order to

improve the efficiency of operation of

HESCOM and while fixing the tariff in terms

of MYT regulations the efficiency gains are

being passed on to the consumers.

Commission's Views: The sharing of gains and losses have been dealt with suitably in

this Tariff Order.

35 As per the tariff policy the tariff to be

fixed should be within +/- 20 % of the

“cost to serve”. Since the cost to serve of

HESCOM has not been approved by the

Due to difference in average cost of

supply for different consumer categories,

bringing tariff in line with the tariff policy

norms of +/- 20% has to be achieved in a

ccxi

Commission, it is not possible to verify

whether the proposed tariff is within

limits.

phased manner which otherwise may

result in heavy burden on some

consumers.

Commission's Views As directed by the Hon’ble ATE, the Commission has endeavored

to reduce the cross subsidy gradually which is reflected in the current order as well.

The voltage wise cross subsidy levels have also been indicated in the tariff order, as

directed by the Hon’ble ATE.

36

The cost of power to IP Sets is being

recovered from the Industrial consumers

through cross subsidy, which is not

proper.

Subsidy is released by GoK as per the

Commission determined tariff in respect of

IP sets and BJ/KJ installations. Hence, the

burden is not passed on to the consumers.

The Cross Subsidy from the high revenue

paying consumers like commercial and

industrial categories contribute cross

subsidy to low revenue paying consumers

like domestic and public utility installations

like street lights and water supply.

Commission's Views: The Electricity Act, 2003 envisages gradual reduction of cross

subsidies. The Commission has endeavour to reduce the cross subsidy gradually

which is reflected in the current order as well.

37

The existing rebate to installations with

solar water heating system has to be

continued and enhanced to Rs.100.

Installation of Solar water heating system is

mandatory to some of the categories and

is continued since the issue of the order by

Government. Solar water heating system

rebate is continued. HESCOM opposes

any increase in the rebate.


38 HESCOM has stated that, the revenue

deficit for FY17 would be Rs.984 Crores

but, has mentioned that total revenue

deficit is Rs.1102.36 Crores.

The net revenue gap of Rs.1102.36 Crores

for FY-17 is furnished in Page No: 133 of the

application with all the details.

Commission's Views The Commission has suitably dealt with this issue in this Order.

ccxii

39

HESCOM has not furnished the data in

table A1 to A4 and table D1 to D24 and

ARR and hence the petition is

incomplete.

HESCOM has furnished the prescribed

formats A1 to A4 in page No 199 to 203

relating profit & loss accounts, balance

sheet, cash flow & ARR. HESCOM has

furnished the expected revenue from

charges at existing tariff on page No 127

and 128 and also through D-2 and D-21

statements vide page No 219 - 220 and

Page No 272-275 respectively.

Commission's Views The Commission has suitably dealt with this issue in this Order.

40 HESCOM has not made available details

of slab wise sanctioned load, fixed

charges, energy charges and

consumption.

HESCOM has not offered any comment.


41 HESCOM has not made available details

of GIS mapping of at least one feeder

with transformer centers as directed by

the Commission.

Geographical positioning system is taken

up in RAPDRP projects.

Commission's Views. Necessary directions have been issued to the HESCOM in the

matter.

42

HESCOM has not paid remuneration to

the non-official member of CGRF.

HESCOM is paying the remuneration as

per norms.


43

The ARR and tariff proposal of the

HESCOM has not provided any

concrete plan towards agricultural DSM.

HESCOM agrees that the rural areas have

a tremendous scope in load

management as the pump sets used for

irrigations purposes are highly inefficient.

But the replacement of pump set requires

huge investment. HESCOM is already

facing financial strain in view of huge

accumulated loss and cannot make huge

ccxiii

investment on its own. However, a

beginning has been made by taking up

pilot projects in two taluks of HESCOM

area.

Commission's Views The reply of the HESCOM is acceptable. Commission would

monitor the progress of the proposed scheme.

44 HESCOM has proposed late payment

surcharge in the range of 12% to 24% per

annum. The rate of interest on advance

payment has been proposed at 4% per

annum. The interest rate on late

payment surcharge and interest rate on

advance payment should be fixed at a

rate equivalent to the interest rate on

working capital.

This aspect may be considered by the

Commission.

Commission's Views: The Commission will deal with the matter appropriately in this

order.

45 There are no separate estimates

provided for technical and commercial

losses, except description of measures

aimed at reduction of the same. The

Commission may either require the

Licensee to carry out proper loss

estimation studies for assessment of

technical and commercial losses under

its supervision, or initiate a study itself to

segregate voltage wise distribution

losses.

HESCOM welcomes the suggestion and in

due course, HESCOM is prepared for study

of such possible segregation.

Commission's Views: The Commission is issuing directives on energy audit and voltage

wise loss segregation.

46 An appropriate roadmap for 100%

metering of particularly IP Sets should be

approved by the Commission and a

All categories are metered in HESCOM

except agricultural category and some in

BJ / KJ Category. Action is being taken to

ccxiv

realistic time frame should be laid. The

road map should provide for

disincentives in case of slippages /

noncompliance by the Licensee

towards the targets set for metering.

fix the meters to remaining unmetered

installations in BJ/ KJ category.

Commission's Views: This issue has been dealt in this order.

Objections related to Quality of Service:

47 HESCOM has failed in implementing SoP

Regulations.

Consumers can file complaints against

the officers of HESCOM and claim

compensation as per SoP Regulations.

Commission's Views: This is not tariff related issues.

48

HESCOM has not complied with the

directions of the Commission to install

timer switches to street lights. The street

lights glow during the day time.

Maintenance of the street lights is the

responsibility of local bodies. HESCOM has

to invest on timer switches and letters

have been written to respective local

bodies as the cost of timer switches has to

be borne by them.

Commission's Views: This issue has been dealt separately in this order.

49 HESCOM has to reduce distribution loss

from 17% to 10% by reducing LT line

length, adding DTCs, installing shunt

capacitors, conducting distribution

system studies etc.,

As the length of the LT lines supplying

power to IP Sets and rural areas is more,

the distribution loss is more. The loss will be

reduced after feeder separation under

NJY Scheme.

Commission's Views: Necessary directions have been issued to the HESCOM in the

matter.

50 HESCOM has not conducted consumer

interaction meetings as directed by the

Commission.

HESCOM will take action against the

officers who have not conducted the

consumer meetings.

Commission's Views: The reply furnished is acceptable

51 Victims of Electrical accidents and crop

loss due to electrical accidents are to be

compensated adequately.

HESCOM will take steps to reduce

accidents and the compensation is paid

as per rules.

Commission's Views: This issue has been dealt separately in this order.

ccxv

52

HESCOM is yet to electrify several un-

electrified households in Uttarkannada

District.

Tendering process is initiated for

electrification of un-electrified households

in Karwar and Sirsi divisions. For

unelectrified hamlets in Honnavar and

Methinagadde, electricity will be provided

under DDUGJY.

Commission's Views: The reply furnished is acceptable.

53 The sales proposed at 5.57% to 7.66% by

HESCOM cannot be achieved, if the

interruption and load shedding is

continued.

Based on the demand for energy during

the past 4-5 years and increase in the

number of consumer installations, the

estimation of sales made is proper.


54 HESCOM has shown an efficiency factor

of 2% in O&M cost without any basis.

The efficiency factor is fixed by the

Commission.

Commission's Views : The reply furnished by the HESCOM is acceptable.

55 HESCOM has not shown compensation

given to consumers under SoP

Regulations, in the other expenses.

The compensation provided to the

consumers under SoP Regulations is very

meager and hence the same is not

separately shown in other expenses.


56 In the absence of publication of

guidelines about vigilance activities, the

public are put to hardship by the

vigilance raids.

As per section 126 of the Electricity Act,

2003, action is taken in case of theft of

energy. Suitable action will be taken after

discussing with the concerned.

Commission's Views: The reply furnished is acceptable.

57 As per section 23 of the Act, HESCOM

should have taken approval of the

Commission for load shedding, but,

HESCOM is resorting to unscheduled

load shedding on its own which is

adversely affecting the industries.

HESCOM is informing the consumers in

advance about the scheduled load

shedding. Unscheduled load shedding is

resorted to, only under inevitable

circumstances.


58 ALDC which will help in monitoring of

loads is not operational in HESCOM

ALDC (Area load Despatch Centre) is

established long back and is functioning

ccxvi

at Corporate Office of HESCOM.

Commission's Views: The Reply furnished by the HESCOM is acceptable.

59

HESCOM has not educated the

consumers on prevention of accidents.

The Number of Fatal and Non-fatal

accidents are not furnished.

The details of action taken by HESCOM in

preventing the electrical accidents are

furnished on page No 26 of the petition.

The details of electrical accidents in FY-14,

FY-15 & FY-16 are furnished in para 12 of

the reply to the preliminary observations

made by the Commission.

Commission's Views: The Reply furnished by the HESCOM is acceptable. The

Commission is reviewing regularly the performance of the HESCOM in handling these

issues.

60 The Electrical equipment procured by

HESCOM is of poor quality as the

conductors are snapping even without

rainfall and transformers are failing within

3 months.

HESCOM is procuring quality materials

checked by TA & QC wing and other third

party agencies.

Commission's Views: The reply furnished is reasonable.

61 The inventory of assets updated by the

officers is not being cross verified by the

higher officers.

The asset registers are maintained in

division offices and audited regularly by

AG and Statutory auditors.

Commission's Views: The Reply furnished by the HESCOM is acceptable.

62 The outsourced meter readers should be

directed to wear uniforms and display

their ID cards during meter reading

The meter readers of HESCOM are

provided with uniforms and identity

cards. However, the out sourced persons

are not provided with uniforms

Commission's Views. The reply furnished is acceptable.

Specific requests

63 Laghu Udyog Bharathi has requested to

make ToD optional as industries are

facing difficulties due to compulsory

HESCOM will abide by the decision of the

Commission.

ccxvii

implementation of ToD.

Commission's Views. TOD metering is a demand side measure to clip the peak

demand. As per the existing TOD structure, penalty is being levied for consumption

during 6 PM to 10 PM and incentive is being extended for consumption during 10 PM

to 6 AM. There is no case for review of ToD for the present.

64 Sri G Hegde, Kadekodi has requested

that, ATP counters should be open from

8Am to 8 PM to enable consumers to

pay bills.

HESCOM will explore the possibilities.

Commission's Views The reply furnished is acceptable.

65 Sri G G Hegde, Kadekodi has requested

that, substations are to be established

at Sampakanda and Banavasi village to

reduce the 11kV line length.

HESCOM has not offered any comment.

Commission's Views: Though the issue is not related to Tariff issue, establishing of a

substation should be based on the requirements. Hence, the Commission directs

HESCOM to study the case and act on it.


that, the subsidy amount released by

GoK for IP set and BJ/KJ has to be

remitted to the consumers accounts

Transfer of subsidy amount to the

consumer account is not possible as, the

subsidy is the tariff paid by the

Government for free supply consumers.

Commission's Views The reply furnished by the HESCOM is reasonable.


that, a separate tariff needs to be fixed

as six dams and one Nuclear plant have

been established in Uttara Kannada

District and people have sacrificed their

property.

HESCOM does not agree to the proposal

Commission's Views: The Commission is determining tariff for various category of

consumers in accordance with Section 62 of the Electricity Act 2003, and request

made is not consonance with the said provisions.

68 Sri Praveen Sood, IPS, Additional Director

General of Police, Administration,

All offices are categorized under LT3,

irrespective of the nature of the activities.

ccxviii

Bengaluru, has requested to include

police stations under LT2 (a) category

instead of LT3 category considering the

nature of service rendered by the Police

to the citizens.

If police stations are brought under LT2 (a)

category, there will be disparity among

offices and loss of revenue to HESCOM.

Commission's Views: The reply furnished by the HESCOM is in order.

69 Sri Rangarej R.K has requested that, the

Photo labs should be removed from LT5

and brought under LT3 category and

Cinema halls should be brought under

LT5 category.

The present categorization is proper.

However, the Commission may take a

view in the matter,

Commission's Views: The current categorization of tariff is in order.

70 Sri Rangarej R.K has requested that,

Drinking water supply units should be

supplied with discounted Tariff.

HESCOM agrees to the proposal.

Commission's Views: The Commission had appropriately dealt with the matter in this

order.

71 Sri Rangarej R.K has requested that, the

Commission should not consider the hike

in tariff for the Kalyana mantapa as

proposed by Karnataka Vidhana Sabha

Committee, as it will have an impact on

comman man.

HESCOM has proposed higher tariff for

Kalyana mantapa as marriages are

conducted on luxurious scales.

Commission's Views: The Commission has appropriately dealt with the matter in this

order.

72 Sri P.N Karanth has stated that, the

demand based tariff is existing only for LT3

and LT5. The demand based tariff needs

to be extended to other LT categories

such as) LT2 (b), LT4, LT6 and LT7. The

consumer will not have any unnecessary

interference like meter testing and

vigilance raids. The exact load on

transformer can be calculated and large

The categorization of installations in under

the purview of the Commission. Demand

based tariff may be considered for LT2 (b)

category. However, for LT4, LT6 & LT7

demand based tariff may not serve the

purpose.

ccxix

capacity transformers can be avoided.

Commission's Views : Demand based tariff is provided to LT3 and LT5 category having

connected load of 5kW and above. As per the provisions of demand based tariff, the

consumers can have the load more than the sanctioned load in his premises. In case

of LT2(a) as per the Regulations, fixed charges for domestic and A.E.H category shall

be based on the sanctioned load, irrespective of the connected load, as long as the

load limiter is working in good condition. Hence, demand based tariff is not suitable

for this category. Other categories such as LT2(b) (except educational institutions),

LT4, LT6 and LT7 should not have the load more than sanctioned load. As, the meters

fixed to these categories of installations have no option for recording maximum

demand.

The gist of the submissions made during the Public Hearing, held on

03.03.2016.

1 Overhead conductors should the

replaced by UG/AB cable to prevent

accidents and reduce interruptions in

rural areas. The compensation paid by

HESCOM to the victims is inadequate

and needs to be enhanced.

HESCOM has replied to the points raised

by the public.

2 The works should be awarded to local

contractors instead of awarding the

works of the entire district to a single

company.

3 IP Set and BJ/KJ consumers should be

charged at least nominal tariff instead of

free supply.

4 The functioning of consumer advocacy

in the Commission needs to be restarted.

5 The interruption on Kumta to

Madanagere 34km, 11kV line is very high

and HESCOM needs to construct a

substation at Madanagere to improve

ccxx

the power position.

6 Supply of energy meters in Divisions are

not as per the requirement. Sufficient

number of meters should be kept in

stock. The MNR meters are to be

replaced immediately.

7 Bill collection counters are to be opened

at panchayat levels and quality of print

in the bills should be improved.

8 The consumer should be informed

through SMS about the load shedding in

advance.

9 Since 10% supervision charge is

collected on the Deposit Contribution

Works (DCW), any observation made by

the Electrical inspectorate should be

attended by HESCOM itself without

insisting the consumer to attend the

observations.

10 Where the infrastructure is created by

the Industrial consumers, concession in

tariff should be given to such consumers.

11 The problems associated with the

INFOSYS software issues should be sorted

out immediately.

12 In order to reduce the time taken to

sanction the temporary power supply,

AEE Ele O&M subdivision should be

delegated with the power to sanction

power up to 50KW.

13 HESCOM is not sealing the energy meters

and load limiters in the consumer’s

premises despite continuous follow up.

14 The appeal proceedings in back billing

ccxxi

cases needs to be expedited.

15 As alternate fuel is available in Malnad

region for heating water, Solar water

heater should not be made compulsory.

16 The consumer interaction meetings and

awareness programmes are not

regularly conducted. Hence, Rs.50 Lakh

earmarked for the purpose should not

be allowed.

17 The performance by Vigilance squad is

not proportionate to the high

expenditure spent on vigilance.

18 PF incentive should be given for HT

consumers for maintaining PF above 0.9.

19 The ETP plants are not being given

rebate as provided for in the tariff.

20 In ToD billing, treatment of taxation is not

uniform among ESCOMs.

21 Low voltage problem in Sirsi Taluk should

be rectified by installing additional

transformers.

22 Collecting arrears in respect of long

disconnected installations over 20 years

is not proper

23 HESCOM has no authority for collection

of service tax on the works executed

under self-execution.

Commission's Views: The Commission has considered the points raised by the public

and the replies given by HESCOM while passing this order wherever found

appropriate.

ccxxii

ANNEXURE - I

ESCOMS’ TOTAL APPROVED POWER PURCHASE FOR FY17

NAME OF THE GENERATING STATION

ENERGY

ALLOWE

D (MU)

CAPACIT

Y

CHARGES

(RS Cr)

ENERGY

CHARG

ES (RS

Cr)

TOTAL

COST

(RS Cr)

PER UNIT

RATE

(RS/

Kwh)

KPCL THERMAL STATIONS

RAICHUR THERMAL POWER STATION_RTPS 1-7 (7x210) 7538.53 619.64 2327.80 2947.44 3.91

RAICHUR THERMAL POWER STATION_RTPS 8 (1x250) 1510.85 211.06 454.42 665.49 4.40

BELLARY THERMAL POWER STATIONS_BTPS-1 (1x500) 2823.10 295.60 1035.95 1331.55 4.72



TOTAL KPCL THERMAL 17646.77 1570.36 5681.72 7252.08 4.11

CGS SOURCES

N.T.P.C-RSTP-I&II (3X200MW+3X500MW) 3246.74 197.69 739.53 937.23 2.89

N.T.P.C-RSTP-III (1X500MW) 819.69 75.28 192.48 267.76 3.27

NTPC-Talcher (4X500MW) 2765.03 213.25 400.36 613.61 2.22

Simhadri Unit -1 &2 (2X500MW) 1490.74 226.09 363.15 589.24 3.95

NTPC Tamilnadu Energy Company Ltd (NTECL)_Vallur TPS Stage I

&2 &3 (3X500MW) 1081.78 174.91 222.18 397.09 3.67

Neyveli Lignite Corporation_NLC TPS-II STAGE I (3X210MW) 950.35 68.49 228.93 297.41 3.13

Neyveli Lignite Corporation_NLC TPS-II STAGE 2 (4X210MW) 1280.64 105.25 308.49 413.73 3.23

Neyveli Lignite Corporation_NLC TPS I EXP (2X210MW) 731.33 90.16 182.73 272.90 3.73

Neyveli Lignite Corporation_NLC TPS2 EXP (2X250MW) 865.82 111.21 199.16 310.37 3.58

NLC TAMINADU POWER LIMITED (NTPL) (TUTICORIN) (2X500MW) 1442.76 185.27 371.08 556.34 3.86

MAPS (2X220MW) 249.31 0.00 49.86 49.86 2.00

Kaiga Unit 1&2 (2X220MW) 922.44 0.00 274.89 274.89 2.98

Kaiga Unit 3 &4 (2X200MW) 1001.80 0.00 298.54 298.54 2.98

NPCIL-Kudan Kulam Atomic Power Generating Station (KKNPP)

(1X1000MW) 1527.09 0.00 455.07 455.07 2.98

DVC-Unit-1 &2 Meja TPS (2x500MW) 1574.83 274.91 360.39 635.30 4.03

DVC-Unit-7 & 8-KODERMA TPS (2x500MW) 1574.83 261.62 349.87 611.49 3.88

TOTAL CGS 21525.17 1984.13 4996.71 6980.84 3.24

TOTAL MAJOR IPPS

UDUPI POWER CORPORATION LIMITED_UPCL (2x600) 7462.68 1325.73 1767.94 3093.67 4.15

KPCL HYDEL STATIONS

SHARAVATHI VALLEY PROJECT_SVP (10x103.5+2x27.5) 4203.20 20.49 182.11 202.60 0.48

MAHATMA GANDHI HYDRO ELECTRIC POWER HOUSE_MGHE

(4x21.6+4x13.2) 180.68 2.32 17.79 20.11 1.11

GERUSOPPA_GPH (SHARAVATHI TAIL RACE_STR) (4x60) 527.47 24.38 55.93 80.30 1.52

KALI VALLEY PROJECT_KVP (2x50+5x150+1x135) 2923.95 19.16 229.11 248.27 0.85

VARAHI VALLEY PROJECT_VVP (4x115+2x4.5) 1087.86 11.82 129.40 141.22 1.30

ALMATTI DAM POWER HOUSE_ADPH (1x15+5x55) 523.72 27.51 80.48 107.99 2.06

ccxxiii

BHADRA HYDRO ELECTRIC POWER HOUSE_BHEP

((1x2+2x12)+(1x7.2+1x6)) 65.15 1.14 29.76 30.90 4.74

KADRA POWER HOUSE_KPH (3x50) 355.25 19.15 47.57 66.72 1.88

KODASALLI DAM POWER HOUSE_KDPH (3x40) 325.56 12.00 34.43 46.42 1.43

GHATAPRABHA DAM POWER HOUSE_GDPH (2x16) 91.67 1.96 14.77 16.74 1.83

SHIVASAMUDRAM (4x4+6x3) & SHIMSHAPURA (2x8.6) HYDRO

STATIONS_SHIVA & SHIMSHA 310.76 3.54 27.46 31.00 1.00

MUNIRABAD POWER HOUSE (2x9+1x10) 109.63 0.43 8.68 9.11 0.83

TOTAL KPCL HYDRO 10704.90 143.90 857.48 1001.38 0.94

OTHERS

PRIYADARSHINI JURALA HYDRO ESLECTRIC STATION (6x39) 111.61 65.09 0.00 65.09 5.83

TUNGABHADRA DAM POWER HOUSE_TBPH (4x9+4x9) 32.47 2.64 0.00 2.64 0.81

TOTAL OTHER HYDRO 144.08 67.73 0.00 67.73 4.70

SHORT TERM POWER

SHORT TERM POWER 1108.80 0.00 558.84 558.84 5.04

NON-CONVENTIONAL ENERGY SOURCES

WIND-IPPS 3826.75 0.00 1368.74 1368.74 3.58

KPCL-WIND (9x0.225+10x0.230) 12.86 0.00 4.32 4.32 3.36

MINI HYDEL-IPPS 1344.12 0.00 450.45 450.45 3.35

CO-GEN/CAPTIVE 172.09 0.00 65.02 65.02 3.78

BIOMASS 196.60 0.00 97.72 97.72 4.97

SOLAR-IPP 1261.40 0.00 784.50 784.50 6.22

SOLAR-KPCL (YELESANDRA,ITNAL,YAPALDINNI,SHIMSHA)

(3x1+3x1+1x3x1x5) 32.89 0.00 19.63 19.63 5.97

TOTAL NCE 6846.71 0.00 2790.38 2790.38 4.08

TRANSMISSION CHARGES

PGCIL CHARGES 949.21 949.21 0.44

KPTCL CHARGES 3092.77 3092.77 0.47

SLDC & POSOCO CHARGES 19.99 19.99 0.003

TOTAL INCLUDING TRANSMISSION & LDC CHARGES 65439.11 5091.87 20715.0

2

25806.8

9 3.94



ENERGY

ALLOWED

(MU)

CAPACI

TY

CHARGE

S (RS Cr)

ENERGY

CHARGES

(RS Cr)

TOTAL

COST

(RS Cr)

PER UNIT

RATE

(RS/

Kwh)






ccxxiv



CGS SOURCES


N.T.P.C-RSTP-III (1X500MW) 819.69 75.28 196.33 271.61 3.31

NTPC-Talcher (4X500MW) 2765.03 213.25 408.37 621.62 2.25



&2 &3 (3X500MW) 1081.78 176.33 226.63 402.96 3.72






MAPS (2X220MW) 249.31 0.00 50.86 50.86 2.04

Kaiga Unit 1&2 (2X220MW) 922.44 0.00 280.39 280.39 3.04

Kaiga Unit 3 &4 (2X200MW) 1001.80 0.00 304.51 304.51 3.04


(1X1000MW) 1527.09 0.00 464.17 464.17 3.04



TOTAL CGS 21525.17 1985.60 5096.64 7082.24 3.29

TOTAL MAJOR IPPS


KPCL HYDEL STATIONS



(4x21.6+4x13.2) 195.03 2.32 20.00 22.32 1.14






((1x2+2x12)+(1x7.2+1x6)) 63.36 1.14 30.59 31.73 5.01





STATIONS. 330.66 3.54 30.45 33.99 1.03


TOTAL KPCL HYDRO 12045.33 142.53 956.63 1099.16 0.91

OTHER HYDRO

ccxxv



TOTAL OTHER HYDRO 144.08 71.64 0.00 71.64 4.97


WIND-IPPS 3981.63 0.00 1424.99 1424.99 3.58

KPCL-WIND (9x0.225+10x0.230) 12.86 0.00 4.32 4.32 3.36

MINI HYDEL-IPPS 1344.81 0.00 450.68 450.68 3.35

CO-GEN/CAPTIVE 172.09 0.00 64.12 64.12 3.73

BIOMASS 262.15 0.00 135.15 135.15 5.16

SOLAR-IPP 2588.38 0.00 1314.95 1314.95 5.08


(3x1+3x1+1x3x1x5) 32.89 0.00 19.63 19.63 5.97

TOTAL NCE 8394.81 0.00 3413.83 3413.83 4.07


PGCIL CHARGES 958.70 958.70 0.45

KPTCL CHARGES 3171.28 3171.28 0.46


TOTAL INCLUDING TRANSMISSION & LDC CHARGES 68895.57 5569.41 21774.55 27343.96 3.97



ENERGY

ALLOWED

(MU)

CAPACI

TY

CHARGE

S (RS Cr)

ENERGY

CHARGES

(RS Cr)

TOTAL

COST

(RS Cr)

PER UNIT

RATE

(RS/

Kwh)







YERMARUS THERMAL POWER STATION_YTPS (2x800) 1547.46 204.23 413.13 617.36 3.99


CGS SOURCES


N.T.P.C-RSTP-III (1X500MW) 819.69 75.28 200.26 275.54 3.36

NTPC-Talcher (4X500MW) 2765.03 213.25 416.53 629.79 2.28



&2 &3 (3X500MW) 1081.78 176.33 231.16 407.49 3.77


ccxxvi





MAPS (2X220MW) 249.31 0.00 51.88 51.88 2.08

Kaiga Unit 1&2 (2X220MW) 922.44 0.00 285.99 285.99 3.10

Kaiga Unit 3 &4 (2X200MW) 1001.80 0.00 310.60 310.60 3.10


(1X1000MW) 1527.09 0.00 473.46 473.46 3.10



TOTAL CGS 21525.17 1985.60 5198.58 7184.17 3.34

TOTAL MAJOR IPPS


KPCL HYDEL STATIONS



(4x21.6+4x13.2) 195.03 2.32 20.83 23.16 1.19






((1x2+2x12)+(1x7.2+1x6)) 63.36 1.14 32.33 33.47 5.28





STATIONS_SHIVA & SHIMSHA 330.66 3.54 31.75 35.29 1.07


TOTAL KPCL HYDRO 12045.33 138.20 1001.17 1139.37 0.95

OTHERS



TOTAL OTHERS 144.08 75.78 0.00 75.78 5.26


WIND-IPPS 4649.94 0.00 1669.14 1669.14 3.59

KPCL-WIND (9x0.225+10x0.230) 12.86 0.00 4.32 4.32 3.36

MINI HYDEL-IPPS 1443.36 0.00 483.69 483.69 3.35

CO-GEN/CAPTIVE 172.09 0.00 64.12 64.12 3.73

BIOMASS 262.15 0.00 135.15 135.15 5.16

SOLAR-IPP 3692.28 0.00 2076.14 2076.14 5.62

ccxxvii


(3x1+3x1+1x3x1x5) 32.89 0.00 19.63 19.63 5.97

NTPC- SOLAR 0.00 0.00 0.00 0.00 0.00

TOTAL NCE 10265.57 0.00 4452.20 4452.20 4.34


PGCIL CHARGES 968.29 968.29 0.45

KPTCL CHARGES 3472.60 3472.60 0.48


TOTAL INCLUDING TRANSMISSION & LDC CHARGES 72435.72 5795.47 23888.11 29683.58 4.10

ccxxviii

ANNEXURE-II

APPROVED POWER PURCHASE FOR HESCOM - FY17


% SHARE

OF

ENERGY

ALLOWE

D

ENERGY

ALLOWE

D (MU)

CAPACI

TY

CHARGE

S (RS Cr)

ENERGY

CHARGE

S (RS Cr)

TOTAL

COST

(RS Cr)

PER

UNIT

RATE

(RS/

Kwh)


RAICHUR THERMAL POWER STATION_RTPS 1-7 (7x210) 15.396 1160.624 95.399 358.386 453.784 3.910

RAICHUR THERMAL POWER STATION_RTPS 8 (1x250) 19.458 293.975 41.068 88.420 129.488 4.405

BELLARY THERMAL POWER STATIONS_BTPS-1 (1x500) 19.458 549.307 57.517 201.570 259.087 4.717



TOTAL KPCL THERMAL 17.722 3127.444 280.387 1010.977 1291.364 4.129

CGS SOURCES

N.T.P.C-RSTP-I&II (3X200MW+3X500MW) 19.458 631.737 38.467 143.895 182.362 2.887

N.T.P.C-RSTP-III (1X500MW) 19.458 159.491 14.648 37.453 52.100 3.267

NTPC-Talcher (4X500MW) 19.458 538.009 41.494 77.900 119.394 2.219

Simhadri Unit -1 &2 (2X500MW) 19.458 290.062 43.992 70.660 114.652 3.953

NTPC Tamilnadu Energy Company Ltd (NTECL)_Vallur TPS

Stage I &2 &3 (3X500MW) 19.458 210.489 34.033 43.232 77.265 3.671

Neyveli Lignite Corporation_NLC TPS-II STAGE I

(3X210MW) 19.458 184.914 13.326 44.543 57.869 3.130

Neyveli Lignite Corporation_NLC TPS-II STAGE 2

(4X210MW) 19.458 249.181 20.478 60.024 80.503 3.231

Neyveli Lignite Corporation_NLC TPS I EXP (2X210MW) 19.458 142.299 17.543 35.556 53.099 3.732

Neyveli Lignite Corporation_NLC TPS2 EXP (2X250MW) 19.458 168.468 21.639 38.752 60.391 3.585

NLC TAMINADU POWER LIMITED (NTPL) (TUTICORIN)

(2X500MW) 19.458 280.727 36.048 72.203 108.251 3.856

MAPS (2X220MW) 19.458 48.509 0.000 9.702 9.702 2.000

Kaiga Unit 1&2 (2X220MW) 19.458 179.485 0.000 53.487 53.487 2.980

Kaiga Unit 3 &4 (2X200MW) 19.458 194.925 0.000 58.088 58.088 2.980

NPCIL-Kudan Kulam Atomic Power Generating Station

(KKNPP) (1X1000MW) 19.458 297.134 0.000 88.546 88.546 2.980

DVC-Unit-1 &2 Meja TPS (2x500MW) 19.458 306.424 53.491 70.124 123.615 4.034

DVC-Unit-7 & 8-KODERMA TPS (2x500MW) 19.458 306.424 50.905 68.076 118.981 3.883

TOTAL CGS 19.458 4188.279 386.065 972.239 1358.304 3.243

TOTAL MAJOR IPPS

UDUPI POWER CORPORATION LIMITED_UPCL (2x600) 19.458 1452.058 257.956 343.998 601.954 4.146

KPCL HYDEL STATIONS

SHARAVATHI VALLEY PROJECT_SVP (10x103.5+2x27.5) 26.742 1124.034 5.480 48.699 54.179 0.482

MAHATMA GANDHI HYDRO ELECTRIC POWER

HOUSE_MGHE (4x21.6+4x13.2) 19.458 35.156 0.452 3.462 3.913 1.113

GERUSOPPA_GPH (SHARAVATHI TAIL RACE_STR) (4x60) 19.458 102.633 4.743 10.882 15.625 1.522

KALI VALLEY PROJECT_KVP (2x50+5x150+1x135) 19.458 568.930 3.727 44.580 48.307 0.849

VARAHI VALLEY PROJECT_VVP (4x115+2x4.5) 19.458 211.671 2.300 25.178 27.478 1.298

ALMATTI DAM POWER HOUSE_ADPH (1x15+5x55) 19.458 101.903 5.353 15.659 21.012 2.062


((1x2+2x12)+(1x7.2+1x6)) 19.458 12.677 0.222 5.791 6.013 4.743

KADRA POWER HOUSE_KPH (3x50) 19.458 69.123 3.726 9.256 12.982 1.878

KODASALLI DAM POWER HOUSE_KDPH (3x40) 19.458 63.346 2.334 6.698 9.033 1.426

ccxxix

GHATAPRABHA DAM POWER HOUSE_GDPH (2x16) 19.458 17.837 0.382 2.874 3.257 1.826

SHIVASAMUDRAM (4x4+6x3) & SHIMSHAPURA (2x8.6)

HYDRO STATIONS 19.458 60.466 0.690 5.342 6.032 0.998

MUNIRABAD POWER HOUSE (2x9+1x10) 19.458 21.331 0.084 1.689 1.773 0.831

TOTAL KPCL HYDRO 22.318 2389.108 29.493 180.110 209.603 0.877

OTHERs

PRIYADARSHINI JURALA HYDRO ESLECTRIC STATION

(6x39) 19.458 21.717 12.665 0.000 12.665 5.832

TUNGABHADRA DAM POWER HOUSE_TBPH (4x9+4x9) 19.458 6.318 0.514 0.000 0.514 0.813

TOTAL OTHERS 19.458 28.035 13.179 0.000 13.179 4.701

SHORT TERM POWER 19.458 215.746 0.000 108.737 108.737 5.040

RENEWABLE SOURCES

WIND-IPPS 896.570 0.000 320.075 320.075 3.570

KPCL-WIND (9x0.225+10x0.230) 0.000 0.000 0.000 0.000 #DIV/0!

MINI HYDEL-IPPS 38.640 0.000 12.944 12.944 3.350

CO-GEN/CAPTIVE 95.170 0.000 36.000 36.000 3.783

BIOMASS 0.000 0.000 0.000 0.000 0.00

SOLAR-IPP 288.070 0.000 179.260 179.260 6.223


(3x1+3x1+1x3x1x5) 3.080 0.000 1.850 1.850 6.006

TOTAL RENEWABLE SOURCES 1321.530 0.000 550.130 550.130 4.163


PGCIL CHARGES 184.693 184.693 0.44

KPTCL CHARGES 611.370 611.370 0.48


TOTAL AVAILABILITY INCLUDING, TRANSMISSION & LDC

CHARGES 19.458

12722.20

0 967.079 3966.384 4933.463 3.878



% SHARE

OF

ENERGY

ALLOWE

D

ENERGY

ALLOWED

(MU)

CAPACI

TY

CHARGE

S (RS Cr)

ENERGY

CHARGE

S (RS Cr)

TOTAL

COST

(RS Cr)

PER UNIT

RATE

(RS/

Kwh)





ccxxx




CGS SOURCES


N.T.P.C-RSTP-III (1X500MW) 19.421 159.195 14.620 38.131 52.751 3.314

NTPC-Talcher (4X500MW) 19.421 537.009 41.417 79.311 120.727 2.248



Stage I &2 &3 (3X500MW) 19.421 210.097 34.246 44.014 78.260 3.725


(3X210MW) 19.421 184.571 13.301 45.350 58.651 3.178


(4X210MW) 19.421 248.718 20.440 61.111 81.551 3.279




(2X500MW) 19.421 280.205 35.981 73.510 109.491 3.908

MAPS (2X220MW) 19.421 48.419 0.000 9.878 9.878 2.040

Kaiga Unit 1&2 (2X220MW) 19.421 179.151 0.000 54.455 54.455 3.040

Kaiga Unit 3 &4 (2X200MW) 19.421 194.563 0.000 59.139 59.139 3.040


(KKNPP) (1X1000MW) 19.421 296.582 0.000 90.149 90.149 3.040



TOTAL CGS 19.421 4180.493 385.631 989.840 1375.472 3.290

TOTAL MAJOR IPPS


KPCL HYDEL STATIONS



HOUSE_MGHE (4x21.6+4x13.2) 19.421 37.878 0.451 3.884 4.335 1.144






((1x2+2x12)+(1x7.2+1x6)) 19.421 12.305 0.221 5.941 6.162 5.008





HYDRO STATIONS 19.421 64.219 0.688 5.913 6.602 1.028


TOTAL KPCL HYDRO 19.421 2339.374 27.682 185.790 213.472 0.913

OTHERS


(6x39) 19.421 21.677 13.400 0.000 13.400 6.182


TOTAL OTHERs 19.421 27.983 13.913 0.000 13.913 4.972

RENEWABLE SOURCES

ccxxxi

WIND-IPPS 958.560 0.000 343.164 343.164 3.580

KPCL-WIND (9x0.225+10x0.230) 0.000 0.000 0.000 0.000 #DIV/0!

MINI HYDEL-IPPS 38.640 0.000 12.944 12.944 3.350

CO-GEN/CAPTIVE 95.170 0.000 36.000 36.000 3.783

BIOMASS 0.000 0.000 0.000 0.000 #DIV/0!

SOLAR-IPP 574.550 0.000 291.920 291.920 5.081


(3x1+3x1+1x3x1x5) 3.080 0.000 1.850 1.850 6.006



PGCIL CHARGES 186.193 186.193 0.45

KPTCL CHARGES 589.720 589.720 0.44


TOTAL INCLUDING, TRANSMISSION & LDC CHARGES 19.421 13420.106 1081.659 4225.392 5307.052 3.955



% SHARE

OF

ENERGY

ALLOWE

D

ENERGY

ALLOWED

(MU)

CAPACI

TY

CHARGE

S (RS Cr)

ENERGY

CHARGE

S (RS Cr)

TOTAL

COST

(RS Cr)

PER UNIT

RATE

(RS/

Kwh)







YERMARUS THERMAL POWER STATION_YTPS (2x800) 19.001 294.032 38.805 78.499 117.303 3.989


CGS SOURCES


N.T.P.C-RSTP-III (1X500MW) 19.001 155.748 14.304 38.051 52.355 3.362

NTPC-Talcher (4X500MW) 19.001 525.381 40.520 79.145 119.665 2.278



Stage I &2 &3 (3X500MW) 19.001 205.548 33.504 43.922 77.427 3.767


(3X210MW) 19.001 180.574 13.013 45.255 58.268 3.227


(4X210MW) 19.001 243.333 19.998 60.984 80.981 3.328


ccxxxii



(2X500MW) 19.001 274.138 35.202 73.356 108.559 3.960

MAPS (2X220MW) 19.001 47.371 0.000 9.857 9.857 2.081

Kaiga Unit 1&2 (2X220MW) 19.001 175.272 0.000 54.341 54.341 3.100

Kaiga Unit 3 &4 (2X200MW) 19.001 190.350 0.000 59.016 59.016 3.100


(KKNPP) (1X1000MW) 19.001 290.160 0.000 89.961 89.961 3.100



TOTAL CGS 19.001 4089.973 377.281 987.776 1365.057 3.338

TOTAL MAJOR IPPS


KPCL HYDEL STATIONS



HOUSE_MGHE (4x21.6+4x13.2) 19.001 37.057 0.441 3.959 4.400 1.187






((1x2+2x12)+(1x7.2+1x6)) 19.001 12.039 0.217 6.144 6.360 5.283





HYDRO STATIONS 19.001 62.828 0.673 6.033 6.706 1.067


TOTAL KPCL HYDRO 19.001 2288.720 26.260 190.230 216.490 0.946

OTHERs


(6x39) 19.001 21.208 13.896 0.000 13.896 6.552


TOTAL OTHERs 19.001 27.377 14.398 0.000 14.398 5.259

RENEWABLE SOURCES

WIND-IPPS 1439.580 0.000 516.809 516.809 3.590

KPCL-WIND (9x0.225+10x0.230) 0.000 0.000 0.000 0.000 #DIV/0!

MINI HYDEL-IPPS 38.640 0.000 12.944 12.944 3.350

CO-GEN/CAPTIVE 95.170 0.000 36.000 36.000 3.783

BIOMASS 0.000 0.000 0.000 0.000 #DIV/0!

SOLAR-IPP 625.560 0.000 518.250 518.250 8.285


(3x1+3x1+1x3x1x5) 3.080 0.000 1.850 1.850 6.006



PGCIL CHARGES 183.983 183.983 #DIV/0!

KPTCL CHARGES 650.080 650.080 #DIV/0!

SLDC & POSOCO CHARGES 5.210 5.210 #DIV/0!

ccxxxiii

TOTAL INCLUDING, TRANSMISSION & LDC CHARGES 19.001 14014.912 1101.192 4769.022 5870.214 4.189

ccxxxiv

With ref. to

ACS

Approved as per RST

Sales-M U Revenue

Rs. crores

Sales-M U Revenue

Rs. crores

1 LT-1[fully subsidised by

GoK]*

Bhagya Jyothi/Kutir Jyothi

93.41 61.09 90.84 54.32 5.98 0.00 -1.97

2 LT-2(a)(i) Dom. / AEH - Applicable to City

Municipal Corporations areas and

all area under Urban Local

Bodies. 940.95 523.60 942.22 478.64 5.08 -15.05 -16.72

4 LT-2(a)(ii) Dom. / AEH - Applicable to areas

under Village Panchayats 546.83 251.00 531.72 226.06 4.25 -28.90 -30.30

5 LT-2(b)(i) Pvt. Educational Institutions

Applicable to all areas of Local

Bodies including City Corporations 10.73 8.94 11.41 8.94 7.84 31.05 28.47

6 LT-2(b)(ii) Pvt. Educational Institutions

Applicable to areas under Village

Panchayats 3.70 2.83 3.94 2.72 6.90 15.71 13.43

7 LT-3(i) Commercial - Applicable in areas

under all ULBs including City

Corporations. 305.70 286.51 308.35 268.92 8.72 45.84 42.97

8 LT-3(ii) Commercial - Applicable to areas

under Village Panchayats 134.80 114.50 132.15 104.39 7.90 32.10 29.50

9 LT-4(a)* IP<=10HP 6317.43 3853.63 5619.82 3124.62 5.56 -7.02 -8.85

10 LT-4(b) IP>10HP 17.47 6.43 17.47 6.10 3.49 -41.62 -42.77

11 LT-4 (c) (i) Pvt. Nurseries, Coffee & Tea

Plantations of sanctioned load of

10 HP & below 1.30 0.47 1.30 0.41 3.15 -47.87 -48.90

12 LT-4 (c) (ii) Pvt. Nurseries, Coffee & Tea

Plantations of sanctioned load of

above 10 HP 0.18 0.08 0.18 0.09 5.00 -19.14 -20.73

13 LT-5(a) LT Industrial 92.05 69.55 93.12 64.72 6.95 16.23 13.95

LT-5(b) 220.93 162.85 223.60 154.36 6.90 15.44 13.17

14 LT-6 Water supply 231.47 110.07 231.47 104.89 4.53 -24.22 -25.71

15 LT-6 Public lighting 134.86 84.89 137.51 80.06 5.82 -2.64 -4.56

16 LT-7(a) Temporary supply 14.61 14.64 14.61 13.88 9.50 58.87 55.74

9066.42 5551.08 8359.71 4693.12 5.61 -6.12 -7.97

1 HT-1 Water supply & sew erage 239.32 132.88 229.75 113.94 4.96 -17.07 -9.17 -2.95

2 HT-2(a) Industrial

1013.41 789.06 1013.41 729.69 7.20 25.41 31.88 40.91

3 HT-2(b) Commercial 135.84 119.82 132.59 116.73 8.80 47.22 61.24 72.28

4 HT-2( c) (i) Govt./ Aided Hospitals &

Educational Institutions 40.22 29.37 40.24 27.04 6.72 12.36 23.06 31.49

5 HT-2( c) (ii) Hospitals and Educational

Institutions other than covered

under HT-2( c) (i) 42.92 33.76 42.90 32.25 7.52 25.73 37.70 47.13

6 HT-3(a)(i) Lift Irrigation - Applicable to lif t

irrigation schemes under Govt

Dept, / Govt. ow ned Corporations 164.90 44.85 152.02 30.40 2.00 -66.56 -63.37 -60.86

7 HT-3(a)(ii) Lift Irrigation - Applicable to

Private lif t irrigation schemes Lift

Irrigaton societies on

urban/express feeders 61.10 16.74 56.28 11.79 2.09 -64.95 -61.62 -58.99

8 HT-3(a)(iii) LI schemes other than those

covered under HT 3(a)(ii) 4.67 1.35 4.47 1.05 2.35 60.59 -56.83 -53.88

9 HT - 3b Irrigation & Agriculture

Farms,Govt. Horticultural Farms,

Pvt.Horticulture Nurseries,

Coffee, Tea,Cocanut & Arecanut

Plantations 0.15 0.07 0.16 0.06 0.00 -37.29 -31.32 -29.31

10 HT-4 Residential Apartments -Colonies 14.01 9.56 14.01 9.13 6.52 8.94 19.32 27.49

11 HT-5 Temporary supply 17.83 22.02 17.83 22.33 12.52 109.44 129.39 145.10

1734.37 1199.49 1703.65 1094.42 6.42 7.42 17.66 25.71

10800.79 6750.57 10063.35 5787.53 5.75 -3.84

234.76 230.44

0.00

10800.79 6985.33 10063.35 6017.97 5.98 0.00

* These categories are subsidised by GoK. In case subsidy is not released by the Gok in advance, HESCOM

shall raise demand & collect CDT of Rs.5.98/unit by BJ/KJ & Rs.5.56/unit from IP set Consumers.

* Voltage w ise cost of supply per unit to: LT Rs: 6.10, HT Rs.5.46 & EHT- Rs.5.11 Page - 218

PROPOSED AND APPROVED REVENUE AND REALISATION AND LEVEL OF CROSS SUBSIDY FOR FY-17 OF HESCOM

Level of

Cross

Subsidy in

% (LT&HT)

Annexure - III

Sl No Category Description

Average

Realisation in

Rs. Per Kwh

Level o f

C ro ss

Subsidy in %

With ref. to voltage

wise COS*

Level of

Cross

Subsidy in

% (EHT)

Grand Total

Proposed by HESCOM

LT - TOTAL

HT - TOTAL

TotalMisc. Revenue

Pow er supply to Hukeri RECS

ccxxxv

ANNEX - IV

ELECTRICITY TARIFF - 2017

K.E.R.C. ORDER DATED: 30th March,2016

Effective for the Electricity consumed from the first meter

reading date falling on or after 01.04.2016

Hubli

Electricity Supply Company Ltd.,

ccxxxvi

ELECTRICITY TARIFF-2017

GENERAL TERMS AND CONDITIONS OF TARIFF:

(APPLICABLE TO BOTH HT AND LT)

1. Supply of power is subject to execution of agreement by the

Consumer in the prescribed form, payment of prescribed

deposits and compliance of terms and conditions as stipulated

in the Conditions of Supply of Electricity of the Distribution

Licensees in the State of Karnataka and Regulations issued

under Electricity Act 2003 at the time of supply and continuation

of power supply is subject to compliance of the said Conditions

of Supply / Regulations as amended from time to time.

2. The tariffs are applicable to only single point of supply unless

otherwise approved by the Licensee.

3. The Licensee does not bind himself to energize any installation,

unless the Consumer guarantees the minimum charges. The

minimum charge is the power supply charges in accordance

with the tariff in force from time to time. This shall be payable by

the Consumer until power supply agreement is terminated,

irrespective of the installation being in service or under

disconnection.

4. The tariffs in the schedule are applicable to power supply within

the Karnataka State.

5. The tariffs are subject to levy of Tax and Surcharges thereon as

may be decided by the State Government from time to time.

6. For the purpose of these tariffs, the following conversion table would

be used:

1 HP=0.746 KW. 1HP=0.878 KVA.

ccxxxvii

7. The bill amount will be rounded off to the nearest Rupee, i.e., the bill

amount of 50 paise and above will be rounded off to the next higher

Rupee and the amount less than 50 paise will be ignored.

8. Use of power for temporary illumination in the premises already having

permanent power supply for marriages, exhibitions in hotels, sales

promotions etc., is limited to sanctioned load at the applicable

permanent power supply tariff rates. Temporary tariff rates will be

applicable in case the load exceeds sanctioned load as per the

Conditions of Supply of Electricity of the Distribution Licensees in the

State of Karnataka.

9. No LT power supply will be given where the requisitioned load is 50

KW/67 HP and above. This condition does not apply for installations

serviced under clause 3.1.1 of K.E.R.C. (Recovery of Expenditure for

supply of Electricity) Regulations, 2004 and its amendments from time

to time. The applicant is however at liberty to avail HT supply for lesser

loads. The minimum contract demands for HT supply shall be 25 KVA

or as amended from time to time by the Licensee with the approval of

KERC.

10. The Consumer shall not resell electricity purchased from the Licensee

to a third party except –

(a) Where the Consumer holds a sanction or a tariff provision for

distribution and sale of energy,

(b) Under special contract permitting the Consumer for resale of

energy in accordance with the provisions of the contract.

11. Non-receipt of the bill by the Consumer is not a valid reason for non-

payment. The Consumer shall notify the office of issue of the bill if the

same is not received within 7 days from the meter reading date.

Otherwise, it will be deemed that the bills have reached the Consumer

in due time.

12. The Licensee will levy the following charges for non-realization of each

Cheque

ccxxxviii

1 Cheque amount upto

Rs. 10,000/-

5% of the amount subject to a

minimum of Rs100/-

2 Cheque amount of

Rs. 10,001/- and upto

Rs. 1,00,000/-


minimum of Rs 500/-

3 Cheque amount above

Rs. 1 Lakh:


minimum of Rs 3000/-

13. In respect of power supply charges paid by the Consumer through

money order, Cheque /DD sent by post, receipt will be drawn and the

Consumer has to collect the same.

14. In case of any belated payment, simple interest at the rate of 1 % per

month will be levied on the actual No. of days of delay subject to a

minimum of Re.1/- for LT installation and Rs.100/- for HT installation. No

interest is however levied for arrears of Rs.10/- and less.

15. All LT Consumers, except Bhagya Jyothi and Kutir Jyothi Consumers,

shall provide current limiter/Circuit Breakers of capacity prescribed by

the Licensee depending upon the sanctioned load.

16. All payments made by the Consumer will be adjusted in the following

order of priority: -

(a) Interest on arrears of Electricity Tax

(b) Arrears of Electricity Tax

(c) Arrears of Interest on Electricity charges

(d) Arrears of Electricity charges

(e) Current month’s dues

17. For the purpose of billing,

(i) the higher of the rated load or sanctioned load in respect of LT

installations which are not provided with Electronic Tri-Vector

meter.

(ii) Sanctioned load or MD recorded whichever is higher, in respect

of installations provided with static meters or Electronic Tri-Vector

meter will be considered.

Penalty and other clauses shall apply if sanctioned load is

exceeded.

18. The bill amount shall be paid within 15 days from the date of

presentation of the bill failing which the interest becomes payable.

ccxxxix

19. For individual installations, more than one meter shall not be provided

under the same tariff. Wherever two or more meters are existing for

individual installation, the sum of the consumption recorded by the

meters shall be taken for billing, till they are merged.

20. In case of multiple connections in a building, all the meters shall be

provided at one easily accessible place in the ground floor.

21. Reconnection charges: The following reconnection charges shall be

levied in case of disconnection and included in the monthly bill.

For reconnection of:

a Single Phase Domestic installations

under Tariff schedule LT 1 & LT2 (a)

Rs.20/-per Installation.

b Three Phase Domestic installations

under Tariff schedule LT2 (a) and

Single Phase Commercial & Power

installations.

Rs.50/-per Installation.

c All LT installations with 3 Phase supply

other than LT2 (a)

Rs.100/-per

Installation.

d All HT& EHT installations Rs.500/-per

Installation.

22. Revenue payments up to and inclusive of Rs.10, 000/- shall be made by

cash or cheque or D.D and payments above Rs.10, 000/- shall be

made by cheque or D.D only. Payments under other heads of

account shall be made by cash or D.D up to and inclusive of

Rs.10, 000/- and payment above Rs.10, 000/-shall be by D.D only.

Note: The Consumers can avail the facility of payment of monthly power

supply bill through Electronic clearing system (ECS)/ Credit cards /

on line E-Payment @ www.billjunction.com at counters wherever

such facility is provided by the Licensee in respect of revenue

payments up to the limit prescribed by the RBI.

23. For the types of installations not covered under any Tariff schedules,

the Licensee is permitted to classify such installations under

appropriate Tariff schedule under intimation to the K.E.R.C.

24. Seasonal Industries

Applicable to all Seasonal Industries

i) The industries that intend to avail this benefit shall have Electronic Tri-

Vector Meter fitted to their installations.

ii) Working season’ months and ‘off-season’ months shall be

determined by an order issued by the Executive Engineer of the

ccxl

concerned O&M Division of the Licensee as per the request of the

Consumer and will continue from year to year unless otherwise

altered. The Consumer shall give a clear one month’s notice in

case he intends to change his ‘ working season’.

iii) The consumption during any month of the declared off-season

shall not be more than 25% of the average consumption of the

previous working season.

iv) The ‘Working season’ months and ‘off-season’ months shall be

full–calendar months. If the power availed during a month

exceeds the allotment for the ‘off-season’ month, it shall be

taken for calculating the billing demand as if the month is the

‘working season’ month.

v) The Consumer can avail the facility of ‘off-season’ up to six

months in a calendar year not exceeding in two spells in that

year. During the ‘off-season period, the Consumer may use

power for administrative offices etc., and for overhauling and

repairing plant and machinery.

25 Whether an institution availing Power supply can be considered as

charitable or not will be decided by the Licensee on the

production of certificate Form-12 A from the Income Tax

department.

ccxli

26 Time of the Tariff (ToD)

The Commission as decides in the earlier tariff order, decide to

continue compulsory Time of Day Tariff for HT2(a) and HT2(b) and also

decided to extend the same to newly introduced HT2(c) consumers

with a contract demand of 500 KVA and above. Further, the optional

ToD would continue as existing earlier for HT2(a) and HT2(b) consumers

with contract demand of less than 500 KVA. Also the ToD for HT1

consumers on optional basis would continue as existing earlier. Details

of ToD tariff are indicated under the respective tariff category.

27. SICK INDUSTRIES:

The Government of Karnataka has extended certain reliefs for

revival/rehabilitation of sick industries under the New Industrial Policy

2001-06 vide G.O. No. CI 167 SPI 2001, dated 30.06.2001. Further, the

Government of Karnataka has issued G.O No.CI2 BIF 2010, dated

21.10.2010. The Commission, in its Tariff Order 2002, has accorded

approval for implementation of reliefs to the sick industries as per the

Government policy and the same was continued in the subsequent

Tariff Orders. In view of issue of the G.O No.CI2 BIF 2010, dated

21.10.2010, the Commission has accorded approval to ESCOMs for

implementation of the reliefs extended to sick industrial units for their

revival / rehabilitation on the basis of the orders issued by the

Commissioner for Industrial Development and Director of Industries &

Commerce, Government of Karnataka.

28. Incentive for Prompt Payment / Advance Payment: An incentive at the

rate of 0.25% of such bill shall be given to the following Consumers by

way of adjustment in the subsequent month’s bill:

(i) In all cases of payment through ECS.

(ii) And in the case of monthly bills exceeding Rs.1, 00,000/- (Rs.

one lakh), if the payment is made 10 days in advance of the due

date.

(iii) Advance Payment exceeding Rs.1000/- made by the

Consumers towards monthly bills

29. Conditions of Supply of Electricity of the Distribution Licensees in the

State of Karnataka and amendments issued thereon from time to time

ccxlii

and Regulations issued under Electricity Act 2003 will prevail over the

extract given in this tariff book in the event of any discrepancy.

30. Self-Reading of Meters:

The Commission has approved Self-Reading of Meters by Consumers

and issue of bills by the Licensee based on such readings and the

Licensee shall take the reading at least once in six months and

reconcile the difference, if any and raise the bills accordingly. This

procedure may be implemented by the Licensee as stipulated under

Section 26.01 of Conditions of Supply of Electricity of the Distribution

Licensees in the State of Karnataka.

---0---

ccxliii

ELECTRICITY TARIFF—2017

PART-1

HIGH TENSION SUPPLY

Applicable to Bulk Power Supply of Voltages

at 11KV (including 2.3/4.6 KV) and above at

Standard High Voltage or Extra High Voltages

when the Contract Demand is 50 KW / 67 HP

and above.

ccxliv


PART-1

HIGH TENSION SUPPLY

Applicable to Bulk Power Supply at Voltages of 11KV (including

2.3/4.6 KV) and above at Standard High Voltage or Extra High

Voltages when the Contract Demand is 50 KW / 67 HP and above.

CONDITIONS APPLICABLE TO BILLING OF HT INSTALLATIONS:

1. Billing Demand

A) The billing demand during unrestricted period shall be the maximum

demand recorded during the month or 75% of the CD, whichever is

higher.

B) When the Licensee has imposed demand cut of 25% or less, the

conditions stipulated in (A) shall apply.

C) When the demand cut is in excess of 25%, the billing demand

shall be the maximum demand recorded or 75% of the restricted

demand, whichever is higher.

D) If at any time the maximum demand recorded exceeds the CD or the

demand entitlement, or opted demand entitlement during the period

of restrictions, if any, the Consumer shall pay for the quantum of excess

demand at two times the normal rate per KVA per month as deterrent

charges as per Section 126(6) of Electricity Act 2003. For over drawal

during the billing period, the penalty shall be two times the normal

rate.

E) During the periods of disconnection, the billing demand shall be

75% of CD, or 75% of the demand entitlement that would have been

applicable, had the installation been in service, whichever is less. This

provision is applicable only, if the installation is under disconnection for

the entire billing month.

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F) During the period of energy cut, the Consumer may get his demand

entitlement lowered, but not below the percentage of energy

entitlement, (For example, In case the energy entitlement is 40% and

the demand entitlement is 80%, the re-fixation of demand entitlement

cannot be lower than 40% of the CD). The benefit of lower demand

entitlement will be given effect to from the meter reading date of the

same month, if the option is exercised on or before 15th of the month. If

the option is exercised on or after 16th of the month, the benefit will be

given effect to from the next meter reading date. The Consumer shall

register such option by paying processing fee of Rs.100/- at the

Jurisdictional sub-division office.

(i) The billing demand in such cases, shall be the “Revised (Opted)

Demand Entitlement” or, the recorded demand, whichever is

higher. Such option for reduction of demand entitlement, is allowed

only once during the entire span of that particular “Energy Cut

Period”. The Consumer, can however opt for a higher demand

entitlement up to the level permissible under the demand cut

notification, and the benefit will be given effect to from the next

meter reading date. Once the Consumer opts for enhancement of

demand, which has been reduced under Clause (F), no further

revision is permitted during that particular energy cut period.

(ii) The opted reduced demand entitlement will automatically cease

to be effective, when the energy cut is revised. The facility for

reduction and enhancement can however be exercised afresh by

the Consumer as indicated in the previous paras.

G) For the purpose of billing, the billing demand of 0.5 KVA and above will

be rounded off to the next higher KVA, and billing demand of less than

0.5 KVA shall be ignored.

2. Power factor (PF)

It shall be the responsibility of the HT Consumer to determine the

capacity of PF correction apparatus and maintain an average PF of

not less than 0.90.

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(i) The specified P.F. is 0.90. If the power factor goes below 0.90

Lag, a surcharge of 3 Paise per unit consumed will be levied for

every reduction of P.F. by 0.01 below 0.90 Lag.

(ii) The power factor when computed as the ratio of KWh / KVAh

will be determined up to 3 decimals (ignoring figures in the other

decimal places), and then rounded off to the nearest second

decimal as illustrated below:

(a) 0.8949 to be rounded off to 0.89

(b) 0.8951 to be rounded off to 0.90

In respect of Electronic Tri-Vector meters, the recorded average PF

over the billing period shall be considered for billing purposes. If the

same is not available, the ratio of KWh to KVAh consumed in the billing

month shall be considered.

3. Rebate for supply at high voltage:

If the Consumer is availing power at voltage higher than 13.2 KV, he will

be entitled to a rebate as indicated below:

Supply Voltage: Rebate

A) 33/66 KV 2 Paise/unit of energy consumed

B) 110 KV 3 Paise/unit of energy consumed

C) 220 KV 5 Paise/unit of energy consumed

The above rebate will be allowed in respect of all the installations of

the above voltage class, including the existing installations, and also

for installations converted from 13.2 KV and below to 33 KV and above

and also for installations converted from 33/66 KV to 110/220 KV, from

the next meter reading date after conversion / service / date of

notification of this Tariff order, as the case may be. The above rebate is

applicable only on the normal energy consumed by the Consumer,

including the consumption under TOD Tariff, and is not applicable on

any other energy allotted and consumed, if any, viz.,

i) Wheeled Energy.

ii) Any energy, including the special energy allotted over and above

normal entitlement.

iii) Energy drawal under special incentive scheme, if any.

The above rebate is not applicable for Railway Traction.

4. I

n respect of Residential Quarters/ Colonies availing Bulk power supply

by tapping the main HT supply, the energy consumed by such Colony

ccxlvii

loads, metered at single point, shall be billed under HT-4 tariff schedule.

No reduction in demand recorded in the main HT meter will be

allowed.

5. Energy supplied may be utilized for all purposes associated with the

working of the installations, such as, Office, Stores, Canteens, Yard

Lighting, Water Supply and Advertisements within the premises.

6. Energy can also be used for construction, modification and expansion

purposes within the premises.

7. Power supply under HT-4 tariff schedule may be used for Commercial

and other purposes inside the colony, for installations such as Canteen,

Club, Shop, Auditorium etc., provided, this load is less than 10% of the

CD.

8. In respect of Residential Apartments availing HT Power supply under HT-

4 tariff schedule, the supply availed for Commercial and other

purposes like Shops, Hotels, etc., will be billed under appropriate tariff

schedule, (Only Energy charges) duly deducting such consumption in

the main HT supply bill. No reduction in the recorded demand of the

main HT meter is allowed. Common areas shall be billed at Tariff

applicable to that of the predominant Consumer category. [

9. Seasonal Industries

a. The industries, which intend to utilize seasonal industry benefit, shall

conform to the conditionalities under Para no. 25 of the General

terms and conditions of tariff (applicable to both HT & LT).

b. The industries that intend to avail this benefit, shall have Electronic

Tri-Vector Meter fitted to the installation.

c. Monthly charges during the working season shall be the demand

charges on 75% of the contract demand or the recorded maximum

demand during the month, whichever is higher, plus the energy

charges

d. Monthly charges during the off season, shall be demand charges

on the maximum demand recorded during the month, or 50% of the

CD whichever is higher plus the energy charges.

TARIFF SCHEDULE HT 1

[Applicable to Water Supply, Drainage / Sewerage water treatment

plant and Sewerage Pumping installations, belonging to Karnataka

ccxlviii

Urban Water Supply and Sewerage Board, other local bodies, State

and Central Government.

RATE SCHEDULE

Demand charges Rs.190/kVA of billing demand/month

Energy charges 450 paise/unit

ToD Tariff at the option of the Consumer Time of Day Increase + / reduction (-) in energy



06.00 Hrs to 18.00 Hrs 0

18.00 Hrs to 22.00 Hrs + 100 paise per unit

Note: Energy supplied to residential quarters availing bulk supply by

the above category of Consumer, shall be metered separately

at a single point, and the energy consumed shall be billed at HT-

4 Tariff. No reduction in the demand recorded in the main HT

meter will be allowed.

TARIFF SCHEDULE HT-2(a)

Applicable to Industries, Factories, Workshops, Research &

Development Centres, Industrial Estates, Milk dairies, Rice Mills, Phova

Mills, Roller Flour Mills, News Papers, Printing Press, Railway

Workshops/KSRTC Workshops/ Depots, Crematoriums, Cold Storage,

Ice & Ice-cream mfg. Units, Swimming Pools of local bodies, Water

Supply Installations of KIADB and other industries, all Defence

Establishments. Hatcheries, Poultry Farm, Museum, Floriculture, Green

House, Bio Technical Laboratory, Hybrid Seeds processing Units, Stone

Crushers, Stone cutting, Bakery Product Manufacturing Units, Mysore

Palace illumination, Film Studios, Dubbing Theatres, Processing, Printing,

Developing and Recording Theaters, Tissue Culture, Aqua Culture,

Prawn Culture, Information Technology Industries engaged in

development of Hardware & Software, Information Technology (IT)

enabled Services / Start-ups (As defined in GOI notification dated

17.04.2015)/ Animation / Gaming / Computer Graphics as certified by

the IT & BT Department of GOK/GOI, Drug Mfg. Units, Garment Mfg.

Units, Tyre retreading units, Nuclear Power Projects, Stadiums

maintained by Government and local bodies, also Railway Traction,

Effluent treatment plants and Drainage water treatment plants owned

other than by the local bodies, LPG bottling plants, petroleum pipeline

projects, Piggery farms, Analytical Lab for analysis of ore metals, Saw

ccxlix

Mills, Toy/wood industries, Satellite communication centers, and

Mineral water processing plants / drinking water bottling plants.

RATE SCHEDULE

HT-2(a): Applicable to all areas of HESCOM.

.Demand charges Rs.180kVA of billing demand/month

Energy charges

For the first one lakh units 620 paise per unit

For the balance units 660 paise per unit

Railway Traction and Effluent Treatment Plants


Energy Charges 590 paise per unit for all the units

TARIFF SCHEDULE HT-2(b) Applicable to Commercial Complexes, Cinemas, Hotels, Boarding & Lodging,

Amusement Parks, Telephone Exchanges, Race Course, All Clubs, T.V.

Station, All India Radio, Railway Stations, Air Port, KSRTC bus stations, All

offices, Banks, Commercial Multi-storied buildings.

APMC Yards, Stadiums other than those maintained by Government and

Local Bodies, Construction power for irrigation, Power Projects and Konkan

Railway Project, Petrol / Diesel and Oil storage plants, I.T. based medical

transcription centers, Telecom, Call Centres, BPO/KPO.

RATE SCHEDULE

HT-2 (b): Applicable to all areas of HESCOM

Energy charges

For the first two lakh units 785 paise per unit


TARIFF SCHEDULE HT-2(c)

RATE SCHEDULE

HT-2 (c) (i)- Applicable to Government Hospitals, Hospitals run by Charitable

Institutions, ESI hospitals, Universities and Educational Institutions belonging

to Government and Local bodies, Aided Educational Institutions and Hostels

of all Educational Institutions.

Demand charges Rs.180/kVA of billing demand /month

Energy charges



RATE SCHEDULE

HT-2 (c) (ii) - Applicable to Hospitals and Educational Institutions other than

those covered under HT-2 (c)(i).

Demand charges Rs.200 /kVA of billing demand/month

ccl


Energy charges



Note: Applicable to HT-2 (a) , HT-2 (b) & HT-2(c) Tariff Schedule.

1. Energy supplied may be utilized for all purposes associated

with the working of the installation such as offices, stores,

canteens, yard lighting, water pumping and

advertisement within the premises.

2. Energy can be used for construction, modification and

expansion purposes within the premises.

TOD Tariff applicable to HT 2(a), HT2(b) and HT2(c) category.

Time of Day Increase + / reduction (-) in energy charges

over the normal tariff applicable


06.00 Hrs to 18.00 Hrs 0


TARIFF SCHEDULE HT-3 (a)

Applicable to Lift irrigation Schemes/ Lift irrigation societies,

RATE SCHEDULE

HT-3 (a)(i): Applicable to LI schemes under Govt. Departments/ Govt.

owned Corporations

Energy charges/ Minimum Charges 200 paise per unit subject to an

annual minimum of Rs.1120 per

HP/Annum

HT-3(a)(ii): Applicable to Private LI schemes and Lift Irrigation societies:

Connected to Urban/Express feeders

Fixed Charges Rs.40 /HP/per month of sanctioned load


HT-3(a)(iii): Applicable to Private LI schemes and Lift Irrigation societies

other than those covered under HT-3 (a)(ii)

Fixed Charges Rs.20 /HP/per month of sanctioned

load


TARIFF SCHEDULE HT-3 (b)

HT-3 (b): Applicable to Irrigation and Agricultural Farms, Government

Horticultural Farms, Private Horticulture nurseries, Coffee, Tea,

Rubber, Coconut & Arecanut Plantations. RATE SCHEDULE

Energy charges / Minimum Charges 400 paise per unit subject to an

annual minimum of Rs.1120/- per HP

of sanctioned load.

Note: These installations are to be billed on quarter yearly basis.

TARIFF SCHEDULE HT-4

Applicable to Residential apartments and colonies (whether situated

outside or inside the premises of the main HT Installation) availing

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power supply independently or by tapping the main H.T. line. Power

supply can be used for residences, theatres, shopping facility, club,

hospital, guest house, yard/street lighting, canteen located within the

colony.

RATE SCHEDULE

Applicable to all areas

Demand charges Rs.110/- per kVA of billing demand/

month


NOTE: (1) In respect of residential colonies availing power supply by tapping

the main H.T. supply, the energy consumed by such colony loads

metered at a single point, is to be billed at the above energy

rate. No reduction in the recorded demand of the main H.T.

supply is allowed.

(2) Energy under this tariff may be used for commercial and other

purposes inside the colonies for installations such as, Canteens,

Clubs, Shops, Auditorium etc., provided, this commercial load is

less than 10% of the Contract demand. [

(3) In respect of Residential Apartments, availing HT Power supply

under HT-4 tariff schedule, the supply availed for Commercial and

other purposes like Shops, Hotels, etc., will be billed under

appropriate tariff schedule (Only Energy charges), duly deducting

such consumption in the main HT supply bill. No reduction in the

recorded demand of the main HT meter is allowed. Common

areas shall be billed at Tariff applicable to the predominant

Consumer category. TARIFF SCHEDULE HT-5

Tariff applicable to sanctioned load of 67 HP and above for

hoardings and advertisement boards and construction power for

industries excluding those category of consumers covered under

HT2(b) Tariff schedule availing power supply for construction

power for irrigation, power projects and Konkan Railway Projects

and also applicable to power supply availed on temporary basis

with the contract demand of 67 HP and above of all categories.

HT – 5 – Temporary supply

RATE SCHEDULE

67 HP and above:

Fixed charges /

Demand Charges

Rs.220/HP/month for the entire sanction load /

contract demand


Note:

1. Temporary power supply with or without extension of distribution

main shall be arranged through a pre–paid energy meter duly

observing the provisions of Clause 12 of the Conditions of Supply of

Electricity of the Distribution Licensees in the State of Karnataka.

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2. This Tariff is also applicable to touring cinemas having licence for

duration less than one year.

3. All the conditions regarding temporary power supply as stipulated in

Clause 12 the Conditions of Supply of Electricity of the Distribution

Licensees in the State of Karnataka shall be complied with before

service. ------

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ELECTRICITY TARIFF-2017

PART-II

LOW TENSION SUPPLY

(400 Volts Three Phase and

230Volts Single Phase Supply)

HESCOM


PART-II

LOW TENSION SUPPLY (400 Volts Three Phase and

230Volts Single Phase Supply) CONDITIONS APPLICABLE TO BILLING OF LT INSTALLATIONS:

1. In case of LT Industrial / commercial Consumers, Demand based Tariff at

the option of the Consumer, can be adopted. The Consumer is permitted

to have more connected load than the sanctioned load. The billing

demand will be the sanctioned load, or Maximum Demand recorded in

the Tri-Vector Meter during the month, whichever is higher. If the Maximum

ccliv

Demand recorded is more than the sanctioned load, penal charges at

two times the normal rate shall apply.

2. Use of power within the Consumer premises for bonafide temporary

purpose is permitted subject to the conditions that, total load of the

installation on the system does not exceed the sanctioned load.

3. Where it is intended to use power supply temporarily, for floor polishing and

such other portable equipments, in a premises having permanent power

supply, such equipments shall be provided with earth leakage circuit

breakers of adequate capacity.

4. The laboratory installations in educational institutions are allowed to install

connected machineries up to 4 times the sanctioned load. The fixed

charges shall however be on the basis of sanctioned load.

5. Besides combined lighting and heating, electricity supply under tariff

schedules LT2 (a) & LT2 (b), can be used for Fans, Televisions, Radios,

Refrigerators and other household appliances, including domestic water

pumps and air conditioners, provided, they are under single meter

connection. If a separate meter is provided for Air-conditioner load, the

Consumer shall be served with a notice to merge this load and to have a

single meter for the entire load. Till such time, the air conditioner load will

be billed under Commercial Tariff.

6. Bulk LT supply

If power supply for lighting / combined lighting & heating {LT 2(a)}, is

availed through a bulk Meter for group of houses belonging to one

Consumer, (ie, Where bulk LT supply is availed), the billing for energy shall

be done at the slab rate for energy charges matching the consumption

obtained by dividing the bulk consumption by number of houses. In

addition, fixed charges for the entire sanctioned load shall be charged as

per Tariff schedule.

7. A rebate of 25 Paise per unit will be given for the House/ School/Hostels

meant for Handicapped, Aged, Destitute and Orphans, Rehabilitation

Centres under Tariff schedule LT 2(a).

8. SOLAR REBATE: A rebate of 50 Paise per unit of electricity consumed

subject to a maximum of Rs. 50/- per installation per month will be allowed

to Tariff schedule LT 2(a), if solar water heaters are installed and used.

Where Bulk Solar Water Heater System is installed, Solar Water Heater

cclv

rebate shall be allowed to each of the individual installations, provided

that, the capacity of Solar Water Heater in such apartment / group

housing shall be a minimum capacity of 100 Ltr. per household.

9. A rebate of 20% on fixed charges and energy charges will be allowed in

the monthly bill in respect of public Telephone booths having STD/ISD/ FAX

facility run by handicapped people, under Tariff schedule LT 3.

10. A rebate of 2 paise per unit will be allowed if capacitors are installed as

per Clause 23 of Conditions of Supply of Electricity of the Distribution

Licensees in the State of Karnataka in respect of all metered IP Set

Installations.

11. Power Factor (PF):

Capacitors of appropriate capacity shall be installed in accordance with

Clause 23 of Conditions of Supply of Electricity of the Distribution Licensees

in the State of Karnataka, in case of installations covered under Tariff

category LT 3, LT4, LT 5, & LT 6, where motive power is involved.

(i) The specified P.F. is 0.85. If the PF is found to be less than 0.85 Lag, a

surcharge of 2 Paise per unit consumed will be levied for every

reduction of P.F. by 0.01 below 0.85 Lag. In respect of LT installations,

however, this is subject to a maximum surcharge of 30 Paise per unit.

(ii) The power factor when computed as the ratio of KWh/KVAh will be

determined up to 3 decimals (ignoring figures in the other decimal

places) and then rounded off to the nearest second decimal as

illustrated below:

(a) 0.8449 to be rounded off to 0.84

(b) 0.8451 to be rounded off to 0.85

(iii) In respect of Electronic Tri-Vector meters, the recorded average PF

over the billing period shall be considered for billing purposes.

(iv) During inspection, if the capacity of capacitors provided is found to be

less than what is stipulated in Conditions of Supply of Electricity of the

Distribution Licensees in the State of Karnataka, a surcharge of 30

Paise/unit will be levied in the case of installations covered under Tariff

categories LT 3, LT 5, & LT 6 where motive power is involved.

(v) In the case of installations without electronic Tri-vector meters even

after providing capacitors as recommended in Clause 23.01 and 23.03

of Conditions of Supply of Electricity of the Distribution Licensees in the

State of Karnataka, if during any periodical or other testing / rating of

the installation by the Licensee, the PF of the installation is found to be

cclvi

lesser than 0.85, a surcharge determined as above shall be levied from

the billing month following the expiry of Three months’ notice given by

the Licensee, till such time, the additional capacitors are installed and

informed to the Licensee in writing by the Consumer. This is also

applicable for LT installations provided with electronic Tri-vector meters.

12. All new IP set applicants shall fix capacitors of adequate capacity in

accordance with Clause 23 of Conditions of Supply of Electricity of the

Distribution Licensees in the State of Karnataka before taking service. [

13. All the existing IP set Consumers shall also fix capacitors of adequate

capacity in accordance with Clause 23 of Conditions of Supply of

Electricity of the Distribution Licensees in the State of Karnataka, failing

which, PF surcharge at the rate of Rs.60/-per HP/ year shall be levied. If the

capacitors are found to be removed / not installed, a penalty at the same

rate as above (Rs. 60/-per HP / Year) shall be levied.

14.The Semi-permanent cinemas having Semi-permanent structure, with

permanent wiring and licence of not less than one year, will be billed

under commercial tariff schedule i.e., LT 3.

15.Touring cinemas having an outfit comprising cinema apparatus and

accessories, taken from place to place for exhibition of cinematography

films, and also outdoor shooting units, will be billed under Temporary Tariff

schedule i.e., LT 7.

16. The Consumers under IP set tariff schedule, shall use the energy only for

pumping water to irrigate their own land as stated in the IP set application / water

right certificate and for bonafide agriculture use. Otherwise, such installations

shall be billed under appropriate Industrial / Commercial tariff, based on the

recorded consumption if available, or on the consumption computed as per the

Table given under Clause 42.06 of the Conditions of Supply of Electricity of the

Distribution Licensees in the State of Karnataka.

17. The water pumped for agricultural purposes may also be used by the

Consumer for his bonafide drinking purposes and for supplying water to

animals, birds, Poultry farms, Dairy farms and fish farms maintained by the

Consumer in addition to agriculture.

18. The motor of IP set installations can be used with an alternative drive for

other agricultural operations like sugar cane crusher, coffee pulping, etc.,

with the approval of the Licensee. The energy used for such operation,

shall be metered separately by providing alternate switch and charged at

cclvii

LT Industrial Tariff (Only Energy charges) during the period of alternative

use. However, if the energy used both for IP Set and alternate operation is

measured together by one energy meter, the energy used for alternate

drive shall be estimated by deducting the average IP Set consumption for

that month as per the IP sample meter readings for the sub division, as

certified by the sub divisional Officer.

19. The IP Consumer is permitted to use energy for lighting the pump house

and well limited to two lighting points of 40 Watts each.

20. Billing shall be made at least once in a quarter year for all IP sets.

21. In case of welding transformers, the connected load shall be taken as:

a) Half the maximum capacity in KVA as per the nameplate specified

under IS: 1851

OR

b) Half the maximum capacity in KVA as recorded during the rating by

the Licensee, whichever is higher.

22. Electricity under Tariff LT 3 / LT 5 can also be used for Lighting, Heating and

Air-conditioning, Yard-Lighting, water supply in the premises of

Commercial / Industrial Units respectively.

23. Fluorescent fittings shall be provided by the Licensee for the Streetlights in

the case of villages covered under the Licensee’s electrification

programme for initial installation.

In all other cases, the entire cost of fittings including Brackets, Clamps,

etc., and labour for replacement, additions and modifications shall be met

by the organizations making such a request. Labour charges shall be paid

at the standard rates fixed by the Licensee for each type of fitting.

24. Lamps, fittings and replacements for defective components of fittings shall

be supplied by the concerned Village Panchayaths, Town Panchayaths or

Municipalities for replacement.

25. Fraction of KW / HP shall be rounded off to the nearest quarter KW / HP for

purpose of billing and the minimum billing being for 1 KW / 1HP in respect

of all categories of LT installations including I.P. sets. In the case of street

lighting installations, fraction of KW shall be rounded off to nearest quarter

KW for the purpose of billing and the minimum billing shall be quarter KW.

cclviii

26. Seasonal Industries:

a) The industries who intend to utilize seasonal industry benefit, shall

comply with the conditionalities under Para no. 25 of the General

terms and conditions of tariff (applicable to both HT & LT).

b) The industries that intend to avail this benefit, shall have Electronic

Tri-Vector Meter fitted to their installation.

c) Monthly charges during the seasonal months shall be fixed charges

and energy charges. The monthly charges during the off seasonal

months, shall be the energy charges plus 50% of the fixed charges.

TARIFF SCHEDULE LT-1

LT-1: Applicable to installations serviced under Bhagya Jyothi and Kutira

Jyothi (BJ/KJ) schemes.

RATE SCHEDULE

Energy charges

(including recovery towards

service main charges)

Nil*

Fully subsidized by the GOK

Commission Determined Tariff for the above category i.e., LT-1 is Rs.5.98 per unit.

*Since GOK is meeting the full cost of supply to BJ / KJ, the Tariff payable by

these Consumers is shown as Nil. However, if the GOK does not release the

subsidy in advance, a Tariff of Rs.5.98 per unit subject to monthly minimum of

Rs.30/- per Installation per month shall be demanded and collected from these

Consumers.

Note: If the consumption exceeds 18 units per month or any BJ/KJ installation

is found to have more than one out let, it shall be billed as per Tariff

Schedule LT 2(a).

TARIFF SCHEDULE LT-2(a)

Applicable to lighting/combined lighting, heating and motive Power

installations of residential houses and also to such houses where a

portion is used by the occupant for (a) Handloom weaving (b) Silk

rearing and reeling and artisans using motors up to 200 watts (c)

Consultancy in (i) Engineering (ii) Architecture (iii) Medicine (iv)

Astrology (v) Legal matters (vi) Income tax (vii) Chartered Accountants

(d) Job typing (e) Tailoring (f) Post Office (g) Gold smithy (h)

Chawki rearing (i) Paying guests/Home stay guests (j) personal

Computers (k) Dhobis (l) Hand operated printing press (m) Beauty

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Parlours (n) Water Supply installations, Lift which is independently

serviced for bonafide use of residential complexes/residence, (o) Farm

Houses and yard lighting limiting to 120 Watts, (p) Fodder Choppers &

Milking Machines with a connected load up to 1 HP.

Also applicable to the installations of (i) Hospitals, Dispensaries, Health

Centers run by State/Central Govt. and local bodies. (ii) Houses,

schools and Hostels meant for handicapped, aged destitute and

orphans (iii) Rehabilitation Centres run by charitable institutions, AIDS

and drug addicts Rehabilitation Centres (iv) Railway staff Quarters with

single meter (v) fire service stations.

It is also applicable to the installations of (a) Temples, Mosques,

Churches, Gurudwaras, Ashrams, Mutts and religious/Charitable

institutions (b) Hospitals, Dispensaries and Health Centres run by

Charitable institutions including X-ray units (c) Jails and Prisons (d)

Schools, Colleges, Educational institutions run by State/Central

Govt.,/Local Bodies (e) Seminaries (f) Hostels run by the Government,

Educational Institutions, Cultural, Scientific and Charitable Institutions

(g) Guest Houses/Travelers Bungalows run in Government buildings or

by State/Central Govt./Religious/Charitable institutions (h) Public

libraries (i) Silk rearing (j) Museums (k) Installations of Historical

Monuments of Archeology Departments(l) Public Telephone Booths

without STD/ISD/FAX facility run by handicapped people (m) Sulabh /

Nirmal Souchalayas (n) Viswa Sheds having Lighting Loads only.

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RATE SCHEDULE

LT 2 (a) (i): Applicable to areas coming under City Municipal Corporations

and all other Urban Local Bodies

Fixed charges per month For the first KW Rs.30/- per KW

For every additional KW Rs.40/- per KW

Energy charges

For 0 - 30 units (Lifeline

consumption)

300 Ps/unit

31 to 100 units 440 paise /unit


Above 200 units 690 paise /unit

LT-2(a)(ii): Applicable to Areas under Village Panchayats

Fixed charges per month For the first KW Rs.20/- per KW

For every additional KW Rs.30/- per KW

Energy charges

For 0 - 30 units (Lifeline

consumption)

290 paise /unit





Applicable to the installations of Private Professional and other

Private Educational Institutions including aided, unaided

institutions, Nursing Homes and Private Hospitals having only

lighting or combined lighting & heating, and motive power. [[[[[

RATE SCHEDULE

LT 2 (b) (i): Applicable to City Municipal Corporations and all other Urban

Local Bodies

Fixed charges Rs.45 per KW subject to a minimum of Rs.75 per

month

Energy charges



LT-2(b)(ii): Applicable in Areas under Village Panchayats

Fixed charges Rs.35 per KW subject to a minimum of Rs.60 per

month

Energy charges



Note: Applicable to LT-2 (a), LT-2 (b) Tariff Schedules.

1 A rebate of 25 paise. Per unit shall be given for installation of a house/

School/ Hostels meant for Handicapped, Aged, Destitute and Orphans,

Rehabilitation Centres run by Charitable Institutions.

cclxi

2 (a) Use of power within the consumer’s premises for temporary purposes

for bonafide use is permitted subject to the condition that, the total

load of the installation on the system does not exceed the

sanctioned load.

(b) Where it is intended to use floor polishing and such other portable

equipment temporarily, in the premises having permanent supply,

such equipment shall be provided with an earth leakage circuit

breaker of adequate capacity.

3 The laboratory installations in educational institutions are allowed to

install connected machinery up to 4 times the sanctioned load. The fixed

charges shall however be on the basis of sanctioned load.

4. Besides lighting and heating, electricity supply under this schedule can be

used for fans, Televisions, Radios, Refrigerators and other house-hold

appliances including domestic water pump and air conditioners,

provided, they are under single meter connection. If a separate meter is

provided for Air conditioner Load, the consumption shall be under

commercial tariff till it is merged with the main meter.

5. SOLAR REBATE: A rebate of 50 Paise per unit of electricity consumed to a

maximum of Rs.50/- per installation per month will be allowed to Tariff

schedule LT 2(a), if solar water heaters are installed and used. Where Bulk

Solar Water Heater System is installed, Solar Water Heater rebate shall be

allowed to each of the individual installations, provided that, the

capacity of Solar Water Heater in such apartment / group housing shall

be a minimum capacity of 100 Ltr, per household.


Applicable to Commercial Lighting, Heating and Motive Power

installations of Clinics, Diagnostic Centers, X Ray units, Shops, Stores,

Hotels / Restaurants / Boarding and Lodging Homes, Bars, Private guest

Houses, Mess, Clubs, Kalyan Mantaps / Choultry, permanent Cinemas/

Semi Permanent Cinemas, Theatres, Petrol Bunks, Petrol, Diesel and oil

Storage Plants, Service Stations/ Garages, Banks, Telephone

Exchanges. T.V.Stations, Microwave Stations, All India Radio, Dish

Antenna, Public Telephone Booths/ STD, ISD, FAX Communication

Centers, Stud Farms, Race Course, Ice Cream Parlours, Computer

Centres, Photo Studio / colour Laboratory, Xerox Copiers, Railway

Installation excepting Railway workshop, KSRTC Bus Stations excepting

Workshop, All offices, Police Stations, Commercial Complexes, Lifts of

Commercial Complexes, Battery Charging units, Tyre Vulcanizing

Centres, Post Offices, Bakery shops, Beauty Parlours, Stadiums other

than those maintained by Govt. and Local Bodies. It is also applicable

to water supply pumps and street lights not covered under LT 6, Cyber

cafés, Internet surfing cafés, Call centers, Information Technology (IT)

cclxii

enabled services, I.T. based medical transcription centers, Private

Hostels not covered under LT -2 (a), Paying guests accommodation

provided in an independent / exclusive premises.

RATE SCHEDULE

LT-3 (i): Applicable to City Municipal Corporations and all other urban local

bodies

Fixed charges Rs.50 per KW per month

Energy charges

For 0 - 50 units 715 paise /unit


Demand based tariff (optional) where sanctioned load

is above 5 KW but below 50 KW

Fixed charges Rs.65 per KW

Energy charges As above

RATE SCHEDULE

LT-3 (ii): Applicable in Areas under Village Panchayats


Energy charges For 0 - 50 units 665 paise /unit


Demand based tariff (optional) where sanctioned load

is above 5 KW but below 50 KW


Energy charges As above

Note: 1. Besides Lighting, Heating and Motive power, Electricity supply under

this Tariff can also be used for Yard lighting/ air Conditioning/water

supply in the premises.

2. The semi-permanent Cinemas should have semi-Permanent

Structure with permanent wiring and licence for a duration of not

less than one year.

3. Touring Cinemas having an outfit comprising Cinema apparatus

and accessories taken from place to place for exhibition of

cinematography film and also outdoor shooting units shall be billed

under LT- 7 Tariff.

4. A rebate of 20% on fixed charges and energy charges shall be

allowed in the monthly bill in respect of telephone Booths having

STD / ISD/FAX facility run by handicapped people.

5.Demand based Tariff at the option of the Consumer can be

adopted as per Para 1 of the conditions applicable to LT

installations.

cclxiii

TARIFF SCHEDULE LT-4 (a), LT-4 (b) & LT-4(c)

Applicable to (a) Agricultural Pump Sets including Sprinklers (b) Pump

sets used in (i) Nurseries of forest and Horticultural Departments (ii)

Grass Farms and Gardens (iii) Plantations other than Coffee, Tea,

Rubber and/ Private Horticulture Nurseries.

cclxiv

cclxv

TARIFF SCHEDULE LT-4 (a)

Applicable to I.P. Sets up to and inclusive of 10 HP

RATE SCHEDULE

Fixed charges Free

Energy charges

Commission Determined Tariff (CDT) for LT4 (a) category is 556 Paise per unit. In

case the GOK does not release the subsidy in advance in the manner specified

by the Commission in K.E.R.C. (Manner of Payment of subsidy) Regulations,

2008, CDT of 556 Paise per unit shall be demanded and collected from these

Consumers.

Note: This Tariff is applicable for Coconut and Areca nut plantations also.

TARIFF SCHEDULE LT-4 (b):

Applicable to IP sets above 10 HP

RATE SCHEDULE

Fixed charges Rs.40 per HP per month.

Energy charges 280 paise per unit

TARIFF SCHEDULE LT-4 (c) (i):

Applicable to Private Horticultural Nurseries, Coffee, Tea and Rubber

plantations of sanctioned load up to and inclusive of 10 HP.

RATE SCHEDULE



TARIFF SCHEDULE LT-4 (c)(ii):

Applicable to Private Horticultural Nurseries, Coffee , Tea and Rubber

plantations of sanctioned load above 10 HP.

RATE SCHEDULE



Note: 1) The energy supplied under this tariff shall be used by the consumers only for

pumping water to irrigate their own land as stated in the I.P. Set application / water right certificate and for bonafide agriculture use. Otherwise, such installations shall be billed under the appropriate Tariff (LT-3/ LT-5) based on the recorded consumption if available, or on the consumption computed as per the Table given under Clause 42.06 of the Conditions of Supply of Electricity of the Distribution Licensees in the State of Karnataka.

2) The motor of IP set installations can be used with an alternative drive for other agricultural operations like sugar cane crusher, coffee pulping, etc., with the approval of the Licensee. The energy used for such operation shall be metered separately by providing alternate switch and charged at LT Industrial Tariff (Only Energy charges) during the period of alternative use. If the energy used both for IP Set and alternate operation, is however measured together by one energy meter, the energy used for alternate drive shall be estimated by deducting the average IP Set consumption for that month as per the IP sample meter readings for the sub division as certified by the sub divisional Officer.

cclxvi

3) The Consumer is permitted to use the energy for lighting the pump house and well limited to 2 lighting points of 40 W each.

4) The water pumped for agricultural purposes may also be used by the Consumer for his bonafide drinking purposes and for supplying water to animals, birds, Poultry farms, Dairy farms and fish farms maintained by the Consumer in addition to agriculture.

5) Billing shall be made at least once in a quarter year for all IP sets. 6) A rebate of 2 paise per unit will be allowed if capacitors are installed as per Clause

23 of Conditions of Supply of Electricity of the Distribution Licensees in the State of Karnataka in respect of all metered IP Set Installations.

7) Only fixed charges as in Tariff Schedule for Metered IP Set Installations shall be collected during the disconnection period of IP Sets under LT 4(a), LT 4(b) and LT 4(c) categories irrespective of whether the IP Sets are provided with Meters or not.


Applicable to Heating & Motive power (including lighting) installations

of industrial Units, Workshops, Poultry Farms, Sugarcane Crushers,

Coffee Pulping, Cardamom drying, Mushroom raising installations,

Flour, Huller & Rice Mills, Wet Grinders, Milk dairies, Ironing, Dry Cleaners

and Laundries having washing, Drying, Ironing etc., exclusive Tailoring

Shops, Bulk Ice Cream and Ice manufacturing Units, Coffee Roasting

and Grinding Works, Cold Storage Plants, Bakery Product Mfg. Units,

KSRTC workshops/Depots, Railway workshops, Drug manufacturing units

and Testing laboratories, Printing Presses, Garment manufacturing units,

Bulk Milk vending Booths, Swimming Pools of local Bodies, Tyre

retreading units, Stone crushers, Stone cutting, Chilly Grinders, Phova

Mills, pulverizing Mills, Decorticators, Iron & Red-Oxide crushing units,

crematoriums, hatcheries, Tissue culture, Saw Mills, Toy/wood industries,

Viswa Sheds with mixed load sanctioned under Viswa Scheme,

Cinematic activities such as Processing, Printing, Developing,

Recording theatres, Dubbing Theatres and film studios, Agarbathi

manufacturing unit., Water supply installations of KIADB & industrial

units, Gem & Diamond cutting Units, Floriculture, Green House, Biotech

Labs., Hybrid seed processing units. Information Technology industries

engaged in development of hardware & Software, Information

Technology (IT) enabled Services / Start-ups (As defined in GOI

notification dated 17.04.2015)/ Animation / Gaming / Computer

cclxvii

Graphics as certified by the IT & BT Department of GOK/GOI, Silk

filature units, Aqua Culture, Prawn Culture, Brick manufacturing units,

Silk / Cotton colour dying, Stadiums maintained by Govt. and local

bodies, Fire service stations, Gold / Silver ornament manufacturing

units, Effluent treatment plants, Drainage water treatment plants, LPG

bottling plants and petroleum pipeline projects, Piggery farms,

Analytical Lab. for analysis of ore metals, Satellite communication

centers, Mineral water processing plants / drinking water bottling plants

and soda fountain units.

Tariff for LT 5 :

Tariff for LT 5 (a):

Applicable to areas under Municipal Corporations

i) Fixed charges


Fixed

Charges per

Month

i) Rs.30 per HP for 5 HP & below

ii) Rs.35 per HP for above 5 HP & below 40 HP

iii) Rs.40 per HP for 40 HP & above but below 67 HP

iv) Rs.100 per HP for 67 HP & above

cclxviii

Demand based Tariff (optional)

Fixed

Charges per

Month


HP


demand


than 67 HP


demand

67 HP and above Rs.150 per KW of billing

demand

ii) Energy Charges


For the first 500 units 495 paise/unit



Tariff for LT 5 (b):

Applicable to all areas other than those covered under LT-5(a)

i. Fixed charges

Fixed Charges

per Month

i) Rs.30 per HP for 5 HP & below

ii) Rs.35 per HP for above 5 HP & below 40 HP

iii) Rs.40 per HP for 40 HP & above but below 67 HP

iv)Rs.100 per HP for 67 HP & above

ii. Demand based Tariff (optional)

Fixed

Charges

per Month

Above 5 HP and less than 40 HP Rs.50 per KW of billing demand

40 HP and above but less than

67 HP

Rs.65 per KW of billing demand

67 HP and above Rs.150 per KW of billing demand

iii. Energy Charges




TOD Tariff applicable to LT-5: At the option of the Consumer

Time of Day Increase+ / reduction (-) in energy



06.00 Hrs to 18.00 Hrs 0


NOTE:

1. DEMAND BASED TARIFF

In the case of LT Industrial Consumers, Demand based Tariff at the option of

the Consumer can be adopted. The Consumer is permitted to have more

connected load than the sanctioned load. The billing demand will be the

sanctioned load or Maximum Demand recorded in the Tri-Vector Meter

cclxix

during the month which ever is higher. If the Maximum Demand recorded is

more than the sanctioned load, penal charges at two times the normal rate

shall apply.

2. Seasonal Industries: The industries which intend to utilize seasonal industry

benefit shall comply with the conditionalities under para no. 26 of general

terms and conditions applicable to LT.

3. Electricity can also be used for lighting, heating, and air-conditioning in the

premises.

4. In the case of welding transformers, the connected load shall be taken as

(a) Half the maximum capacity in KVA as per the name plate specified

under-IS1851 or (b) Half the maximum capacity in KVA as recorded during

rating by the Licensee, whichever is higher.


Applicable to water supply and sewerage pumping installations and

also applicable to applicable to water purifying plants maintained by

Government and Urban Local Bodies/ Grama Panchayats for supplying

pure drinking water to residential areas, Public Street lights/Park lights

of village Panchayat, Town Panchayat, Town Municipalities, City

Municipalities / Corporations / State and Central Govt. / APMC, Traffic

signals, Surveillance Cameras at traffic locations belonging to

Government Department, subways, water fountains of local bodies.

Also applicable to Streetlights of residential Campus of universities,

other educational institutions, housing colonies approved by local

bodies/development authority, religious institutions, organizations run

on charitable basis, industrial area / estate and notified areas, also

Applicable to water supply installations in residential Layouts, Street

lights along with signal lights and associated load of the gateman hut

provided at the Railway level crossing.

RATE SCHEDULE

Water Supply- LT-6 (a)

Fixed charges Rs.45 HP/month

Energy charges 390 paise /unit

Public lighting- LT-6 (b)

Fixed charges Rs.60/KW/month

Energy charges 550 paise /unit

Energy Charges for LED/ Induction

Lighting

450 paise/unit


Temporary Supply and Permanent Supply to Advertising Hoardings

cclxx

TARIFF SCHEDULE LT-7(a)

Applicable to Temporary Power Supply for all purposes.

LT 7(a) Details Approved Tariff

Temporary Power

Supply for all

purposes.

Less than 67 HP:


subject to a weekly minimum of Rs.170

per KW of the sanctioned load.


Applicable to Hoardings & Advertisement boards, Bus Shelters with

Advertising Boards, Private Advertising Posts / Sign boards in the

interest of public such as Police Canopy Direction boards, and other

sign boards sponsored by Private Advertising Agencies / firms on

permanent connection basis.

LT 7(b) Details Approved Tariff

Power supply on

permanent

connection basis

Less than 67 HP:

Fixed Charges at Rs.50 per KW / month

& Energy charges at 950 paise / unit

Note:

1. Temporary power supply with or without extension of distribution main shall

be arranged through a pre–paid energy meter duly observing the

provisions of Clause 12 of the Conditions of Supply of Electricity of the

Distribution Licensees in the State of Karnataka.

2. This Tariff is also applicable to touring cinemas having licence for duration

less than one year.

3. All the conditions regarding temporary power supply as stipulated in Clause

12 of the Conditions of Supply of Electricity of the Distribution Licensees in

the State of Karnataka shall be complied with before service.

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HESCOM - · PDF fileHESCOM ANNUAL PERFORMANCE REVIEW FOR FY15 & ... MESCOM Mangalore Electricity Supply Company MFA Miscellaneous First Appeal MIS Management Information System