MSLDC Mid-Term Review Petition For For FY 2018-19 to FY ...€¦ · MSLDC Mid-Term Review Petition For Truing up of Budget Cost of Operation for FY 2015-16 & 2016-17, Provisional

MSLDC Mid-Term Review Petition

For

Truing up of Budget Cost of Operation for FY 2015-16 & 2016-17,

Provisional truing-up for FY 2017-18 and

ARR forecast and determination of Fees and Charges

For FY 2018-19 to FY 2019-20

Submitted to

Maharashtra Electricity Regulatory Commission

Mumbai

By

Maharashtra State Load Despatch Centre

(Maharashtra State Electricity Transmission Company Ltd.)

Kalwa

2nd January, 2018

MSLDC MTR Petition FY 2016-17 to FY 2019-20 Page 2

Table of Contents

1 Background ..................................................................................................................................... 6

2 Approach for the filing .................................................................................................................... 7

3 True-up for FY 2015-16 .................................................................................................................. 8

3.1 Operating Cost Budget ............................................................................................................ 8

3.2 Capital Charge Budget .......................................................................................................... 14

3.3 Revenue True-up for FY 2015-16 ......................................................................................... 20

3.4 Summary of True-Up for FY 2015-16 .................................................................................. 21

4 Operational performance of SLDC during the 3rd Control Period ................................................ 22

5 True-up for FY 2016-17 ................................................................................................................ 27

5.1 Operation & Maintenance ..................................................................................................... 27

5.2 Interest on Working Capital .................................................................................................. 28

5.3 RLDC Fees & WRPC Charges ............................................................................................. 30

5.4 Capitalization ........................................................................................................................ 30

5.5 Depreciation .......................................................................................................................... 32

5.6 Interest & Financial Charges................................................................................................. 33

5.7 Return on Equity ................................................................................................................... 34

5.8 Reactive Energy Charges Paid / Income from Reactive Energy Charges ............................. 35

5.9 Income Tax ........................................................................................................................... 36

5.10 Non-Tariff Income ................................................................................................................ 36

5.11 Income from Open Access Charges ...................................................................................... 38

5.12 Income from Monthly Operating Charges ............................................................................ 38


6 Provisional True-Up for FY 2017-18 ............................................................................................ 41




6.4 Capital Expenditure Plan and Capitalization ........................................................................ 48

6.5 Depreciation .......................................................................................................................... 51


6.7 Return on Equity ................................................................................................................... 55

6.8 Reactive Energy Charges ...................................................................................................... 56

6.9 Income Tax ........................................................................................................................... 56


6.11 Income from Open Access Charges & Monthly Operating Charges .................................... 57

6.12 Income from Monthly Operating Charges ............................................................................ 58


7 Revised ARR for FY 2018-19 to FY 2019-20 .............................................................................. 60





7.4 Capital Expenditure Plan and Capitalisation......................................................................... 65

7.5 Depreciation .......................................................................................................................... 69


7.7 Return on Equity ................................................................................................................... 71

7.8 Reactive Energy Charges paid / Income from Reactive Energy Charges ............................. 71

7.9 Income Tax ........................................................................................................................... 72


7.11 Income from Open Access Charges ...................................................................................... 72

7.12 Impact of truing up and provisional truing up ...................................................................... 73

7.13 Summary of ARR for Control Period from FY 2018-19 to FY 2019-20 .............................. 73

8 Sharing of MSLDC Charges ......................................................................................................... 75

9 Fees to be charged by MSLDC ..................................................................................................... 77

9.1 Registration or Connection Fees ........................................................................................... 78

9.2 Scheduling and Re-Scheduling Fees ..................................................................................... 78

9.3 Short Term Open Access Application Processing Fees ........................................................ 78

9.4 Renewable Energy Certificate Processing Fees .................................................................... 78

10 Compliance to Directives .......................................................................................................... 79

10.1 Ring-fencing and Autonomy ................................................................................................. 79

10.2 Manpower Development ....................................................................................................... 80

10.3 Technology and Operational Systems Upgradation .............................................................. 82

10.4 Incentive Schemes ................................................................................................................ 86

10.5 Vacancies .............................................................................................................................. 86

10.6 Project Planning .................................................................................................................... 87

10.7 Preparedness of SLDC in handling future challenges ........................................................... 88

10.8 Reactive Energy Charges ...................................................................................................... 91

11 Prayers....................................................................................................................................... 92


List of Tables Table 1: Employee Expenses for FY 2015-16 ........................................................................................ 8 Table 2: A&G Expense for FY 2015-16 ............................................................................................... 10 Table 3: R&M Expense for FY 2015-16 .............................................................................................. 10 Table 4: O&M Expenses for FY 2015-16 ............................................................................................. 11 Table 5: Sharing of Gains and Loss on account of O&M Expenses for FY 2015-16 ........................... 11 Table 6: Interest on Working Capital for FY 2015-16 .......................................................................... 12 Table 7: RLDC Fee & WRPC Charges for FY 2015-16 ...................................................................... 14 Table 8: Capitalization for FY 2015-16 ................................................................................................ 14 Table 9: Depreciation for FY 2015-16 .................................................................................................. 18 Table 10: Details of Existing Loans allocated to MSLDC by MSETCL .............................................. 18 Table 11: Interest on Loan .................................................................................................................... 19 Table 12: Return on Equity ................................................................................................................... 19 Table 13: Revenue Components for FY 2015-16 ................................................................................. 20 Table 14: Final True-Up for FY 2015-16 ............................................................................................. 21 Table 15: ADMC for FY 2014-15 to FY 2016-17 ................................................................................ 25 Table 16: Breakup of Operation and Maintenance Expenses for FY 2016-17 ..................................... 27 Table 17: Operation and Maintenance Expenses for FY 2016-17 ........................................................ 28 Table 18: Sharing of Gains and Loss on account of O&M Expenses for FY 2016-17 ......................... 28 Table 19: Interest on Working Capital for FY 2016-17 ........................................................................ 29 Table 20: RLDC Fee & WRPC Charges for FY 2016-17 .................................................................... 30 Table 21: Capitalization for FY 2016-17 .............................................................................................. 30 Table 22: Depreciation for FY 2016-17 ................................................................................................ 33 Table 23: Details of Existing Loans allocated to MSLDC by MSETCL .............................................. 33 Table 24: Interest on Loan .................................................................................................................... 34 Table 25: Return on Equity ................................................................................................................... 35 Table 26: Non-Tariff Income for FY 2016-17 ...................................................................................... 37 Table 27: Income from Open Access charges for FY 2016-17 ............................................................ 38 Table 28: Income from Monthly Operating Charges for FY 2016-17 .................................................. 38 Table 29: Final True-Up for FY 2016-17 ............................................................................................. 39 Table 30: O&M Expenses for FY 2017-18 ........................................................................................... 43 Table 31: Employee Expenses for FY 2017-18 .................................................................................... 45 Table 32: A&G Expenses for FY 2017-18 ........................................................................................... 46 Table 33: R&M Expenses for FY 2017-18 ........................................................................................... 46 Table 34: O&M Expenses for FY 2017-18 ........................................................................................... 47 Table 35: Interest on Working Capital for FY 2017-18 ........................................................................ 48 Table 36: RLDC Fee & WRPC Charges for FY 2017-18 .................................................................... 48 Table 37: Revised Capex and Capitalisation for FY 2017-18 .............................................................. 49 Table 38: Revised Capex and Capitalisation for FY 2017-18 .............................................................. 50 Table 39: Depreciation for FY 2017-18 ................................................................................................ 52 Table 40: Details of Existing Loans allocated to MSLDC by MSETCL .............................................. 54 Table 41: Interest on Loan for FY 2017-18 .......................................................................................... 55 Table 42: Return on Equity for FY 2017-18 ...................................................................................... 56 Table 43: Non-Tariff Income for FY 2017-18 ...................................................................................... 57 Table 44: Income from Open Access charges for FY 2017-18 ............................................................ 58 Table 45: Income from Monthly Operating Charges for FY 2017-18 .................................................. 58 Table 46: Summary of Provisional True-up of FY 2017-18 ................................................................. 58 Table 47: O&M Expenses for Control Period ...................................................................................... 60 Table 48: Detailed O&M Expenses for Control Period ........................................................................ 62 Table 49: Interest on Working Capital for Control Period ................................................................... 63 Table 50: RLDC Fee & WRPC Charges for Control Period ................................................................ 64 Table 51: Projected Capitalization for FY 2018-19 .............................................................................. 67 Table 52: Projected Capitalization for 2019-20 .................................................................................... 68 Table 53: Depreciation Estimated for New Control Period .................................................................. 69


Table 54: Details of Existing Loans allocated to MSLDC by MSETCL .............................................. 70 Table 55: Interest on Loan for FY 2018-19 to FY 2019-20 .................................................................. 70 Table 56: Return On Equity estimated for FY 2018-19 & FY 2019-20 ............................................... 71 Table 57: Non-Tariff Income estimated for FY 2018-19 & FY 2019-20 ............................................. 72 Table 58: Income from Open Access Charges for FY 2018-19 & FY 2019-20 ................................... 72 Table 59: Impact of truing up Amortized over FY 2018-19 to FY 2019-20 ........................................ 73 Table 60: Summary of Annual Fixed Charges for FY 2018-19 to FY 2019-20 ................................... 73 Table 61: List of TCRs sharing MSLDC Charges for FY 2016-17 ...................................................... 75 Table 62: Base Transmission Capacity Rights for FY 2016-17 and sharing ........................................ 76 Table 63: Projected Base Transmission Capacity Rights for FY 2018-19 to FY 2019-20 ................... 76 Table 64: Sharing of MSLDC Charges for FY 2018-19 to FY 2019-20 .............................................. 76 Table 65: Proposed MSLDC Charges for FY 2018-19 to FY 2019-20 ................................................ 77


1 Background

Maharashtra State Load Despatch Centre (MSLDC) is the apex body for integrated operation

of electricity grid in the State of Maharashtra and constituted under Section 31 of the

Electricity Act (EA), 2003. MSLDC operates from two centres i.e. at Kalwa and Ambazari

(Nagpur) in Maharashtra and an additional sub-LDC Mumbai, which now shifted to MSLDC

Control room and being operated through separate desk.

In accordance with the first proviso to Section 31(2) of the EA 2003, the Maharashtra State

Electricity Transmission Company Limited (MSETCL), which is the State Transmission

Utility (STU) in the State of Maharashtra, operates the MSLDC.

The Hon’ble Commission notified the MERC (Multi Year Tariff) Regulations 2015(the MYT

Regulations 2015) on 8 December, 2015 in exercise of the powers conferred by Section 181

(2) read with Sections 36, 39, 40, 41, 51, 61, 62, 64, 65 and Section 86 of the Electricity Act,

2003. These Regulations are applicable for Control Period from 1 April, 2016 to 31 March,

2020. In accordance with the provisions of the MYT Regulations, 2015, MSLDC is required

to submit the Multi Year Tariff for Commission’s approval.

MSLDC filed a Petition on 29 January, 2016 for approval of truing up of Budget of Cost of

Operations for FY 2014-15, provisional truing-up for FY 2015-16 and ARR forecast and fees

and charges for FY 2016-17 to FY 2019-20; with reference to Section 32 of the EA, 2003,

previous Orders of the Commission on MSLDC’s Operating and Capital Charges; applicable

provisions of the MERC (Multi Year Tariff) Regulations 2011 (the MYT Regulations, 2011);

the MERC (Multi Year Tariff) Regulations 2015 (the MYT Regulations 2015) and

Regulation 18.9 of the MERC (Transmission Open Access) Regulations, 2014 (the

Transmission OA Regulations). The Commission after due consideration had issued the

Order in the matter of Truing up of Budget of Cost of operations for FY 2014-15, Provisional

Truing-Up for FY 2015-16 and ARR forecast and determination of Fees and Charges for FY

2016-17 to FY 2019-20 on 22 July 2016 herein referred to as MSLDC MYT Order (Case No.

20 of 2016).

In accordance with the provisions of the MYT Regulations, 2015, MSLDC is required to

submit the Mid-Term Review for Commission’s approval.

In accordance with Regulations 8.1 of the MYT Regulations, 2015, MSLDC is filing present

Petition for:

a) Approval of Truing-up of Budget Cost of MSLDC for FY 2015-16

b) Approval of Truing-up of Annual Fixed Cost of MSLDC for FY 2016-17.


c) Provisional Truing-up of Annual Fixed Cost of MSLDC for FY 2017-18

d) Approval of revised ARR forecast for FY 2018-19 to FY 2019-20 and Determination

of Fees and Charges for FY 2018-19 to FY 2019-20

MSLDC is filing this detailed Mid-term Review Petition for 3rd Control Period, before the

Hon’ble Commission and has made all efforts to provide the necessary data.

2 Approach for the filing

The present filing for the truing-up for FY 2015-16 is based on applicable provisions of the

MERC (Multi Year Tariff) Regulations, 2011 (The MYT Regulations, 2011). Filing for the

truing-up for FY 2016-17 and for the provisional truing-up for FY 2017-18 is based on

applicable provisions of the MERC (Multi Year Tariff) Regulations, 2015 (The MYT

Regulations, 2015).

Filing for each year of the Control Period is from FY 2018-19andFY 2019-20 is based on

applicable provisions of the MERC (Multi Year Tariff) Regulations, 2015 (the MYT

Regulations, 2015) and other relevant Regulations.

The detailed methodology adopted for the preparation of MSLDC Petition is discussed in the

subsequent sections.


3 True-up for FY 2015-16

MSLDC humbly submit that Audited Accounts and Allocation Statement for FY 2015-16

have been finalized, has been attached to the Petition as Annexure- 2. MSLDC therefore

seeks true- up of operating and capital cost budget and SLDC revenue components for FY

2015-16 as per the Audited Accounts/principles laid down in the previous Orders of the

Commission on MSLDC’s Operating Cost Budget and Capital Charge Budget, as applicable

for various heads of expenditure/revenue. Further, all computations are also presented in

spreadsheet data formats stipulated by the Commission for submission of MYT Petition,

which are separately submitted in a computer readable file along with this Petition. The same

has also been attached to the Petition as Annexure- 1.

The copy of Auditor Certified Trial Balance for FY 2015-16 & FY 2017-18 has been

enclosed as Annexure- 11 in the Petition.

MSLDC has provided detailed rationale for truing up and key issues in the subsequent

paragraphs.

3.1 Operating Cost Budget

3.1.1 Operation & Maintenance Expenses

Operations and Maintenance Expenses consist of following expenditure heads;

a) Employee Expenses

b) Administration and General Expenses

c) Repairs and Maintenance Expenses

The detailed expenses under the above mentioned heads and the rationale for the expenses

have been discussed in detail as follows:

a) Employee Expenses

The Employee expense approved by the Hon’ble Commission in Case No. 20 of 2016 and

actual Employee expenses incurred by MSLDC is shown in table below:

Table 1: Employee Expenses for FY 2015-16

(Rs. Lakh)

Particulars Approved in Case No.

20 of 2016 Actual

Employee Expenses 1468.76 1442.89


The actual Employee Expenses for FY 2015-16 are Rs. 1442.89 Lakh as per the Audited

Accounts, which are marginally lower than Rs. 1468.76 Lakh approved by the Hon’ble

Commission. The actual Employee Expenses includes Wage Arrears of Rs. 137.12 Lakhs for

both Kalwa and Ambazari, the details of Wage Arrears for FY 2015-16 is annexed as

Annexure 12.

Further, there exists a variation in the Employee Expense claimed in the Petition against

Audited Allocation Statement to the tune of Rs. 2.5 Lakhs. The same amount pertains to

shifting of Training Expenses, which was categorised under Staff Welfare Expenses for the

year and included under Employee Expenses considered for the Audited Allocation

Statement. Owing to the nature of such expenses the same was included under A&G

Expenses.

MSLDC humbly requests the Hon’ble Commission to approve the employee expenses as

claimed in this Petition. The details of Employee Expenses provided in Form 2.2 of MTR

Petition Formats, annexed as Annexure 1.

b) Administrative and General Expenses

The Administrative and General Expenses (A&G) includes the following major heads:

Rent, Rates and Taxes;

Insurance;

Revenue Stamp Expenses, Telephone, Postage & Telegrams;

Legal Charges;

Technical Fees, Consultancy and Other Professional Charges;

Conveyance and Travel;

Electricity charges;

Vehicle Running Expenses i.e., Petrol and Oil & Vehicle Hiring Expenses;

Security/Service Charges Paid to Outside Agencies for safety & protection;

IT and Communication related expenses

Other Charges:

o Fee and Subscriptions - Books and Periodicals

o Printing and Stationery

o Advertisement Expenses

o Water Charges

o Upkeep of Office Premises

o Miscellaneous Expenses

The actual A&G Expenses for FY 2015-16 as per audited accounts are Rs. 636.35 Lakh as

against Rs. 657.63 Lakh approved by the Hon’ble Commission. However, it is submitted that

the actual A&G expenses for FY 2015-16 of Rs. 636.35 Lakh are marginally lower as


compared with expenses of A&G expenses approved in Case 20 of 2016 for FY 2015-16 of

Rs. 657.63 Lakh. Accordingly, MSLDC requests the Hon’ble Commission to approve A&G

expenses for FY 2015-16 based on actuals.

The A&G Expense approved by the Hon’ble Commission in Case No. 20 of 2016 and actual

A&G expenses incurred by MSLDC shown in Table below:

Table 2: A&G Expense for FY 2015-16

(Rs. Lakh)


20 of 2016 Audited

A&G Expenses 657.63 636.35

As explained under Employee Expenses head, Training Expenses of Rs. 2.5 Lakhs was

shifted from Employee Expenses to A&G Expenses. Thus, to this extent, A&G Expenses

claimed under Petition are higher than that appearing in Audited Allocation Statement.

The details of Administrative and General Expenses provided in Form F2.3 of MTR Petition

Formats, annexed as Annexure 1.

c) Repairs and Maintenance Expenditure

The actual R&M Expenses for FY 2015-16 as per the Audited Accounts are Rs.102.88 Lakh

as against Rs. 135.00 Lakh approved in Case No. 20 of 2016 by the Hon’ble Commission.

The R&M Expense approved by the Hon’ble Commission in Case No. 20 of 2016 and actual

R&M expenses incurred by MSLDC shown in the following Table:

Table 3: R&M Expense for FY 2015-16

(Rs. Lakh)


20 of 2016 Actual

R&M Expenses 135.00 102.88

The details of Repair and Maintenance Expenditure provided in Form F2.4of MTR Petition

Formats.


The broad breakup of R&M expenditure incurred and as reported under the head of ‘Plant &

Machinery’, attached separately in the Annexure- 3. The Commission is requested to allow

the actual expenses for FY 2015-16.

Operation and Maintenance (O&M) expenses

The Operation and Maintenance (O&M) expenses approved by the Hon’ble Commission for

FY 2015-16 in Case No. 20 of 2016 and the actual expenses incurred by MSLDC as per

Audited Accounts are summarized in Table as below:

Table 4: O&M Expenses for FY 2015-16

(Rs. Lakh)

Particulars Approved in Case

No. 20 of 2016 Actual

Employee Expenses 1468.76 1442.89

A&G Expenses 657.63 636.35

R&M Expenses 135.00 102.88

Operation and Maintenance Expenses 2261.39 2182.12

MSLDC humbly request the Hon’ble Commission to approve Operation and Maintenance

expenses as claimed in this Petition.

The Maharashtra Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2015

under Regulation 8.4 (a) specifies as under:

“8.4 ……

(a) the approved aggregate gain or loss to the Generating Company or

Licensee or MSLDC on account of controllable factors for the Years 2015-16

and 2016-17 and provisional Truing-up for the Year 2017-18, and the amount

of such gains or such losses that may be shared in accordance with Regulation

11;”(Emphasis Added)

Further, as per Regulation 12.2 of the MYT Regulations, 2011, variation in O&M expense

corresponding to approved value are categorised as controllable expenses. Thus, impact of

sharing of gains/loss has been considered on this account for FY 2015-16 and the same is

presented in the following table.

Table 5: Sharing of Gains and Loss on account of O&M Expenses for FY 2015-16

(Rs. Lakh)

Particulars

O&M Expenses Approved under Case No. 20 of 2016 2261.39

Actual O&M expense 2182.12


Particulars

Total Gain/(Loss) on account of controllable factors 79.27

Sharing proposed 26.42

3.1.2 Interest on Working Capital

The methodology specified in the MYT Regulations, 2011 has been considered for

calculation of Interest on Working Capital(IoWC) for FY 2015-16. Further, in line with the

Hon’ble Commission’s directive in Order dated 16 May, 2006 in Case No. 30 of 2005, the

Operating Cost Budget alone has been considered for calculation of IoWC. The relevant

extract of aforementioned Order is reproduced as below:

“34. ......

...Accordingly, receivables corresponding to operating cost budget only need to be

accounted for.”

Therefore, MSLDC in this Petition has considered receivable only corresponding to the

Operating Budget.

It is respectfully submitted that the IoWC shall be payable on normative basis

notwithstanding that MSLDC has not taken any working capital loan from any outside

agency.

For FY 2015-16, the interest rate used by the Hon’ble Commission for calculation of interest

on Working Capital in the Order in Case No. 20 of 2016 has been considered. The Interest on

Working Capital approved by the Hon’ble Commission for FY 2015-16 in Case No. 20 of

2016 and normative interest on Working Capital is shown in Table below:

Table 6: Interest on Working Capital for FY 2015-16

(Rs. Lakh)



Interest on Working Capital 94.92 93.11

MSLDC submits that, there is no actual borrowings/loan taken for meeting its working

capital requirements.

The Hon’ble Commission is requested to allow Interest on Working Capital for FY 2015-16

as above. The detailed computation of normative interest on working capital has been given

in the Form 6 of MTR Petition Formats.


3.1.3 RLDC Fees and Western Region Power Committee (WRPC) Charges

The Hon’ble Commission in its Order in Case 30 of 2005, dated 16 May, 2006 had directed

that all costs, fees and charges pertaining to Regional Load Despatch Centre (RLDC) related

activities should form part of MSLDC Budget and should be recovered under the head RLDC

fees and charges as may be notified by the Commission from time to time. The relevant

extract of the said Order is reproduced as following.

“35. MSETCL has not claimed any charges towards RLDC fees and charges. The

Commission is of the opinion that as per Section 32(2) of EA 2003, SLDC is required

to exercise supervision and control of intra-State transmission system, co-ordinate

with RLDC in the process and is also required to ensure compliance of the directions

issued by RLDC as per Section 29 (3) of EA 2003. Hence, all costs, fees and charges

pertaining to RLDC related activities should form part of SLDC Budget and should be

recovered through RLDC fees and charges as may be notified by the Commission

from time to time. Accordingly, for the purpose of SLDC Budget for FY 2006-07, the

Commission has estimated RLDC related fees and charges forming part of SLDC

Budget as under.”

The charges towards RLDC Fees are being paid by MSEDCL against the invoices raised by

RLDC to MSEDCL. After payment, MSEDCL claims that charges from MSLDC and the

same are being paid by MSLDC to MSEDCL. The Central Electricity Regulatory

Commission (CERC) has issued an Order in Case No. 241/TT/2015, dated 26thDecember,

2016 approving Fees and Charges of WRLDC for the FY 2014-15 to FY 2018-19.

RLDC Fees during FY2015-16is Rs. 658.35 Lakh as against Rs. 627.03 Lakh approved in

Case No. 20 of 2016, MSEDCL has reimbursed this amount from MSLDC through three

different transactions and informed MSLDC vide 1stletter dated 3 February, 2016 for the

month of April 2015 to October 2015, vide 2ndletter dated8 March, 2016 for the month of

November 2015 to December 2015 and vide 3rdletter dated23 June, 2016 for January 2016 to

March 2016. As the provision made by MSLDC, these RLDC Fees and Charges have

exceeded by Rs. 31.32 Lakh, the same is requested to the Hon’ble Commission to approve as

per actuals.

As regards WRPC Secretariat Charges, as per WRPC share of SLDC along with each

constituent works out to be Rs. 9.72 Lakhs. The actual payment made on account of RLDC

Fees and Charges during FY 2015-16 was as follows:


Table 7: RLDC Fee & WRPC Charges for FY 2015-16

(Rs. Lakh)

Particulars Approved in Case No. 20

of 2016 Actual

RLDC Fees 627.03 648.63

WRPC Secretariat Charges 9.72

Total 627.03 658.35

Accordingly, MSLDC requests the Hon’ble Commission to approve RLDC Fees and WRPC

Charges for FY 2015-16 on actual basis. The details of RLDC Fees and WPRC Charges are

also provided in Form F7of MTR Petition Formats.

3.2 Capital Charge Budget

3.2.1 Capital Expenditure and Capitalisation

MSLDC in its ARR Petition in Case No. 20 of 2016, for approval of Budget Cost of

Operations, projected a capitalisation of Rs. 566.87 Lakh for FY 2015-16. The Hon’ble

Commission had approved capitalisation amount of Rs. 344.75 Lakh for FY 2015-16.

However, upon completion of the FY 2015-16, the actual capitalisation was Rs. 152.83 Lakh.

The breakup of actual capitalisation as DPR and Non-DPR schemes is as shown in the Table

below:

Table 8: Capitalization for FY 2015-16

(Rs. Lakh)

Sr. No. Project Title Actual

Capitalization

DPR Schemes

1

Replacement of existing RTUs and commissioning of

additional RTUs & DCs for Load Despatch Centre at Kalwa

and Ambazari

36.69

2 Hardware/Software for SCADA system 35.12

3 Enhancement of real time data acquisition- Procurement of

Hardware &Software licenses 3.83

Total DPR 75.64

Non-DPR Schemes

4 Enhancement of real time data acquisition 45.14

5

Infrastructure Development (Interior & Furnishing, Air

Conditioning, Security Systems, Testing equipment& tools,

Furniture, Auxiliary supplies, etc.)

32.05


Sr. No. Project Title Actual

Capitalization

Total Non-DPR 77.19

Total Schemes Capitalization 152.83

MSLDC submits that actual Capitalisation in FY 2015-16 is lower than the Capitalisation

approved by the Hon’ble Commission in Order in Case No. 20 of 2016. The decrease in

capitalisation in FY 2015-16 is attributable to reduced/nil capitalisation towards few schemes

that were proposed during FY 2015-16, which however got capitalised in the subsequent

years. Two DPR schemes which have been completed and capitalised fully during the year

are a) Replacement of existing RTUs and commissioning of additional RTUs & DCs for

Load Despatch Centre at Kalwa and Ambazari and b) Enhancement of real time data

acquisition- Procurement of Hardware & software licenses. The requisite details of the said

schemes are submitted in the CBA enclosed as Annexure-13. The details of time over-

run/cost over-run, if any of the DPR schemes are enclosed as Annexure-14.

As regards the scheme, “Erection, Testing & Commissioning 22/0.44 kV Indoor Type S/S for

New Building of SLDC at MSLDC Kalwa”, capitalization was claimed during FY 2015-16,

based on the accounting/internal practice followed by MSLDC despite the fact that final

commissioning of the scheme happened only during FY 2015-16. However, based on the

provisions of the MYT Regulations, 2011 and MYT Regulations, 2015, the capitalization

towards the entire scheme is now claimed only in FY 2016-17, where the indoor substations

were fully commissioned. To this extent, it may be noted that the capitalization/asset addition

in the audited TB for FY 2015-16 and TB for FY 2016-17 would differ. MSLDC further

would like to confirm that all other assets which have been considered to be capitalized in FY

2015-16 have been put to use as per the requirement under the Regulations.

In addition to the above, various non-DPR schemes as shown in the table above also got

capitalized during the year. MSLDC humbly requests the Hon’ble Commission to allow the

actual capitalisation of Rs. 152.83 Lakh for FY 2015-16.

As regards capitalisation towards, non-DPR schemes MSLDC would like to humbly submit

that the schemes capitalised within MSLDC are mostly of low value schemes (less than Rs.

100 Lakhs), and includes capitalisation of items procured on an intermittent basis such as

Furniture for Office, Fire Alarm System, Battery Sets with Charger, Online STOA

software/hardware, Office equipment including Servers, PCs, Printers, Laptop, Xerox

machine, Firewalls, Routers, LAN Components, cables, switches, etc. Thus, considering the

varied and intermittent nature of asset addition of lower value, it is difficult to club the same

under DPR scheme. Besides, the capitalisation towards non-DPR schemes as shown in the


table above is actually capitalised and based on Audited Accounts of FY 2015-16. In this

context the MSLDC humbly submit to the Hon’ble Commission to allow the capitalisation

for FY 2015-16 at actual.

The details of the actual Capital Expenditure and Capitalisation for FY 2015-16 are provided

in Form F 3.3of the MTR Petition Formats, submitted along with this filing.

3.2.2 Financial Restructuring Plan (FRP) of MSEB Companies and Tariff Impact

As per the provisions of the Electricity Act, 2003, the restructuring of erstwhile MSEB was

approved in the Cabinet meeting held on 20.05.2005 and notified vide GR No.

Reform/1002/pr/kra/9061/Urja-a5 (hereinafter referred as the Transfer Scheme) dated

07.06.2005. The first amendment to the Transfer scheme was notified on 31 March, 2016. In

this context, Government of Maharashtra (GoM) issued following directions on FRP. Some

of the directives are reproduced as under.

a) The GoM directed that with effect from 4th June 2005 all property, interest in

property, rights and liabilities which immediately before the said date vested in the

MSEB, shall be vested with the State Government and the State Government shall

transfer the said properties to the successor companies viz. Maharashtra State

Electricity Distribution Company Limited (MSEDCL), Maharashtra State Electricity

Transmission Company Limited (MSETCL), Maharashtra State Power Generation

Company Limited (MSPGCL and Maharashtra State Electricity Board Holding Co.

Ltd (MSEBHCL) with effect from 6th June, 2005.

b) The assets of MSEB to be revalued and revaluation to be done in such a manner that

the tariff is not adversely affected.

Based on the above, a revaluation exercise has been undertaken and has been completed.

Accordingly, the asset of MSEBHCL, MSPGCL, MSETCL and MSEDCL has been carried

out. As part of asset revaluation of MSETCL, the assets of MSLDC has also been revalued.

Regulation 27.9 of the MERC MYT Regulations, 2011 as well as Regulation 23.10 of the

MERC MYT Regulations, 2015 permits revaluation of assets. However, such revaluation is

permitted subject to the condition that it doesn’t result in any tariff increase. The relevant

extract of the said Regulations, is reproduced as under.

MERC MYT Regulations, 2011

“27.9 Revaluation of assets shall be permitted during the Control Period provided it

does not affect tariff adversely.”

MERC MYT Regulations, 2015


“23.10 The impact of revaluation of assets shall be permitted provided it does not

resulting in increase in Tariff of the Generating Company or Licensee:”

In order to avoid any adverse impact of tariff/MSLDC charges, no claim is made on

additional RoE on increased equity arising out of increased value of assets as part of

revaluation. Secondly, on the same lines, additional depreciation owing to FRP has not

been considered while working out the Tariff/MSLDC charges in the present Petition.

The same in bought to the kind notice of the Hon’ble Commission.

3.2.3 Depreciation

MSLDC submits that depreciation for FY 2015-16 has been computed considering the

depreciation rates in accordance with the MERC MYT Regulations, 2011 in the books of

accounts of MSETCL and the same has been considered for the assets of MSLDC. The assets

related to MSLDC have been identified along with the depreciation on the same.

MSLDC in its Petition under Case No. 20 of 2016 has claimed a depreciation of Rs. 444.12

Lakh against which the Hon’ble Commission approved depreciation of Rs. 271.51 Lakh in

the said Order. MLSDC submits that the actual depreciation for FY 2015-16 for truing up is

Rs.304.42 Lakh. It is humbly submitted that the actual depreciation for FY 2015-16 considers

the impact of the asset Computer Software/IT equipment which was recognized by the

Hon’ble Commission as an ‘IT Equipment’ and had approved the depreciation at 15% in

accordance with the MYT Regulation, 2011. MSLDC further submits that the same has been

considered under the IT Equipment and MSLDC has accounted depreciation at the same

depreciation rate of 15% as approved by the Hon’ble Commission in Case No. 20 of 2016.

Besides, the actual depreciation reported for FY 2015-16 in the audited allocation statement

considers impact of capitalisation of the DPR scheme indoor substation in respective years.

However, based on the provisions of the MYT Regulations, 2011, the capitalisation towards

the entire scheme is now claimed in the FY 2016-17, where the indoor substations were fully

commissioned. In this context, it may be noted that the depreciation in the audited TB for FY

2015-16 and the present claim for truing up would differ.

Further, as highlighted in the above paragraph, MSLDC has not claimed any additional

depreciation on account of FRP scheme.


Table 9: Depreciation for FY 2015-16

(Rs. Lakhs)

Particulars

Approved in

Case No. 20 of

2016

Actual

Depreciation 271.51 304.42

The details of the Fixed Assets and depreciation for FY 2015-16 have been provided in Form

F4of MTR Petition Formats.

3.2.4 Interest and Finance charges

The interest on the existing actual loan for MSLDC has been apportioned as Rs. 7.29 Lakh

for FY 2015-16from MSETCL’s Books of Accounts as in Case No. 20 of 2016.

For the purpose of estimation of Interest Cost corresponding to new loans for new Capital

Expenditure Schemes, the Hon’ble Commission in its Order dated 16 May, 2006 under the

Clause 29 had suggested to consider Interest Costs based on normative debt-equity of 70:30

in line with MERC (Multi Year Tariff) Regulations, 2011. The same approach has been

considered to calculate the addition to the normative loan amount for FY 2015-16. Further,

MSLDC has considered the weighted average interest rate of the actual loan portfolio of

MSLDC for computing the interest expenses for FY 2015-16 as per MERC MYT

Regulations, 2011. Further, in accordance with the approach adopted by the Hon’ble

Commission, the repayment of the normative loan has been considered as 10 years, with

repayment being started from the second year of loan admitted.

The details of existing loans allocated to MSLDC by MSETCL are as under:

Table 10: Details of Existing Loans allocated to MSLDC by MSETCL

(Rs. Lakh)

Sr.

No. Particulars FY 2015-16

PFC Loan No. 21603009

1 Opening Balance 73.74

2 Repayment during the Year 22.69

3 Closing Balance 51.05

4 Rate of Interest 12.25%

5 Interest Chargeable during the Year 7.29

The interest on Loan for FY 2015-16 is shown in Table as below:


Table 11: Interest on Loan

(Rs. Lakh)

Particulars

FY 2015-16

MERC Order

( Case No. 20 of 2016) Actual

Interest on Loan 202.52 305.75

MSLDC submits that the rate of Interest considered in the Petition is as per the interest rate of

the actual loan borrowed from PFC by MSETCL and which was further allocated to MSLDC.

MSLDC has enclosed the proof of actual loan allocated to MSLDC in its Revised Petition

which is annexed as Annexure 15

MSLDC humbly requests the Hon’ble Commission to approve above expenses towards

Interest on Loan. The details of the interest of loan for FY 2015-16 have been provided in

Form F5 of MTR Petition Formats.

3.2.5 Return on Equity

MSLDC has worked out the Return on Equity (RoE) for FY 2015-16 in accordance with the

Regulation 32 of the MYT Regulations, 2011. Further, 30% of the capitalization during a

year has been considered for addition in equity during a year.

MSLDC would like to submit to Hon’ble Commission that the Return on Equity for the FY

2015-16 have been calculated as per the capitalisation during the year. Further, in accordance

with the MYT Regulations, 2011, rate of 15.5% have been considered for computing RoE.

Hence, the Return on Equity would amount to Rs. 224.26 Lakh for FY 2015-16.

The Return on Equity for FY 2015-16 is shown in Table as below:

Table 12: Return on Equity

(Rs. Lakh)

Particulars

FY 2015-16

MERC Order


Return on Equity 178.99 224.26

MSLDC submits that RoE for FY 2015-16 is higher than approved RoE in Case No. 20 of

2016 because of difference of GFA, owing to disallowance in the past as compared to the

approved capitalisation by the Hon’ble Commission in Case No. 20 of 2016.


Return on Equity. The details of the Return on Equity for FY 2015-16 have been provided in

Form F10of MTR Petition Formats.


Further, as highlighted in the above paragraph, MSLDC has not claimed any additional RoE

on account of FRP scheme.

3.3 Revenue True-up for FY 2015-16

For FY 2015-16, the Hon’ble Commission in Case No. 20 of 2016 had provisionally

approved revenue of MSLDC on account of Income from Annual SLDC Fees’ of Rs. 675.72

Lakh and on account of ‘Income from Monthly SLDC Operating Charges’ of Rs. 1771.00

Lakh. During FY 2015-16, MSLDC has recovered the Fees and Charges partly (for the period

Apr-Spt. 15) as per the Order issued by Hon’ble Commission on 7 March, 2014 in Case No.

178 of 2013 and partly (for the period Oct 15 to Mar 16) as per the revenue approved under

Order issued by Hon’ble Commission on 20thOctober, 2015 in Case No. 218 of

2014.MSLDC thus in actual earned ‘Income from Annual SLDC Fees’ of Rs. 675.72 Lakh

and ‘Income from Monthly SLDC Operating Charges’ of Rs. 1884.54 Lakh, for FY 2015-16.

Further, MSLDC has earned revenue of Rs.2140.09 from Scheduling Charges and Rs. 163.20

Lakh from Rescheduling charges in FY 2015-16.

As regards income from other receipts, MSLDC has received major earning from interest on

investment made in context of the BR No. 97/12 dated 2nd February 2015, where it was

proposed that MSLDC should invest fund in flexi deposit in Bank and earn interest on such

deposits. Because of such investments made by MSLDC in the past years, MSDLC earned an

interest income of Rs. 40.78 Lakh in FY 2015-16.

Table 13: Revenue Components for FY 2015-16

(Rs. Lakh)

Particulars Approved in Case No. 20

of 2016 Petitioned

SLDC Revenue Components

Income from Annual SLDC Fees 675.72 675.72

Income from Monthly SLDC

Operating Charges

1771.00 1884.54

SLDC Scheduling Charges 1641.05 2140.09

Rescheduling Charges 160.11 163.20

Other receipts 62.36 103.88

Total Revenue 4310.24 4967.43

The details of the income earned from various sources (including other receipts) for FY 2015-

16is provided in Form F12 of MTR Petition Formats.


3.4 Summary of True-Up for FY 2015-16

In the Order in Case No.20 of 2016 dated 22 July, 2016 the provisional true-up approved for

FY 2015-16 was surplus of Rs. 778.94 Lakh. Based on the above discussion, the head wise

actual expenditure against actual receipts and surplus/ shortfall shown is summarized in the

table below:

Table 14: Final True-Up for FY 2015-16

(Rs. Lakh)

Sr.

No. Particulars

FY 2015-16

Approved in

Case No. 20 of

2016

April-March

(Audited )

True-Up

requirement

(a) (b) (c ) = (b) - (a)

1 Operating Cost Budget

2 Operation & Maintenance Expenses 2,261.39 2,182.12 (79.27)

3 Interest on Working Capital 94.92 93.11 (1.81)

4 RLDC Fees and WRPC Charges 627.03 658.35 31.32

5 Sub-total (Operating Cost Budget) 2,983.33 2,933.59 (49.74)

6 Capital Cost Budget

7 Depreciation Expenses 271.51 304.42 32.91

8 Interest on Loan Capital 202.52 305.75 103.23

9 Return on Equity Capital 178.99 224.26 45.27

10 Sub-total (Capital Cost Budget) 653.01 834.43 181.42

Add: Impact of Sharing of G&L 26.42 26.42

11 Total Expenses 3,636.34 3,794.44 158.10

12 SLDC Revenue Components

13 Income from Annual SLDC Fees 675.72 675.72 -

14 Income from Monthly SLDC

Operating Charges 1,771.00 1,884.54 113.54

15 SLDC Scheduling Charges 1,641.05 2,140.09 499.04

16 Rescheduling Charges 160.11 163.20 3.09

17 Other receipts 62.36 103.88 41.52


Sr.

No. Particulars

FY 2015-16

Approved in

Case No. 20 of

2016

April-March

(Audited )

True-Up

requirement

(a) (b) (c ) = (b) - (a)

18 Total Revenue 4,310.24 4,967.43 657.19

19 Revenue Gap/(Surplus) (673.90) (1,173.00) (499.10)

20 Holding Cost on Revenue Surplus of

FY 2014-15 (105.04) (105.04)

21 Total Revenue Gap/(Surplus) (778.94) (1278.04) (499.10)

(499.10)

Thus, on final truing up for FY 2015-16, there is surplus of Rs. 499.10Lakh, treatment of

which has been discussed in Section 7.12 of this Petition.

4 Operational performance of SLDC during the 3rd Control Period

MSLDC has been undertaking system operation for the past five decades in the State of

Maharashtra. Over time, MSLDC has proven its technical competency in managing the

system operation in the State and have strived to achieve performance excellence through,

technology adoption, man-power development along with putting in place support system and

procedures for its effective operation. SLDC is continuously working towards effectively

coping up with the fast changing operational dynamics of the power system and in

overcoming upcoming challenges.

While the subsequent chapters of this Petition presents an overview of the financial

performance of the MSLDC, under this section, MSLDC would like to specifically present its

operational performance and its efficacy of systems operation capabilities of MSLDC in the

recent past. The table below compares the operational performance of the MSLDC during the

entire period of FY 2016-17 and during the first six monthly period of FY 2017-18., for kind

appreciation of the Hon’ble Commission.

Sr.

No.

Key result Area and

Corresponding Key

Performance

Indicator

Achievement during

April-March 2017

Achievement during

April-September-2017

1 EFFICIENT GRID OPERATION AND CONTROL

A Demand & energy

catered

Max. peak demand 23055 MW on

30.03.2017 & Total energy catered

147000Mus. (Max. 501.4 Mus on

Max. peak demand 22994 MW on

11.04.2017 & Total energy catered

77632.64 Mus. (Max. 501.803 Mus on


11.04.2017) 11.04.2017)

B

To follow DSM

discipline and maintain

deviation in

permissible limit (250

MW w.e.f 30.05.2016).

Less than -250 MW -- 349 blocks

– 12%.

-250 to +250 MW -- 2071blocks –

71% (allowed as per IEGC)

Greater than 250 MW – 489 blocks

– 17 %

Less than -250 MW -- 2682 blocks

– 15.27 %.

-250 to +250 MW -- 11959blocks –

68.07 % (allowed as per IEGC)

Greater than 250 MW – 2927 blocks

– 16.66 %

C Improvement in Grid

Parameters (f)

Less than 49.90 Hz – 18.75

% of time

Between 49.90 – 50.05 Hz – 69.86%

of time

Above 50.05 Hz – 11.39

% of time

Less than 49.95 Hz – 11.115

% of time

Between 49.95 – 50.05 Hz – 77.15 %

of time

Above 50.05 Hz – 11.733

% of time

D Scheduling of power

as per contracts.

Daily scheduling as per MOD carried

out.

Daily scheduling as per MOD carried

out.

E

Development of

Scheduling Software as

per new DSM

Mechanism.

Tendering process completed and

work order will be issued for

developing Scheduling software

Work order for development of

scheduling software placed on M/s

PRDC Bangalore on date 19.05.2017.

( Work in progress)

F

Daily Reporting &

Quarterly feedback

report to STU for

Transmission

constraints,

congestion, GCC etc.

The Daily System Report (DSR) is

upgraded from time to time as per

modifications in power system

network. Modifications like, addition

of Coal & oil stock position of

MSPGCL units & IPPs, Changes in

Central sector drawl points, additions

of new generators or substations etc.,

incorporated

Daily reporting is done to all higher

authorities. Quarterly feedback report

to STU is submitted for first quarter of

FY 2017-18.

G

Coordination with

WRLDC/ GENCO/

DISCOM/ TSU/OA

Coordinated with

WRLDC/GENCO/DISCOM/TSU/OA

as & when required. OCC/TCC-

WRPC meetings participated actively.

Coordinated with

WRLDC/GENCO/DISCOM/TSU/OA

as & when required. OCC/TCC-

WRPC meetings participated actively.

2 OUTAGE MGMT. AND CONTINGENCY PLANNING

Sr.

No.

Key result Area and

Corresponding Key

Achievement during

April-March 2016

Achievement during



Performance

Indicator

A

400 KV and above

system elements in

coordination with

WRLDC/WRPC.

Total 990 No. of 400kv and above,

system elements outages provided

Total 554 No. of 400kv and above,

system elements outages provided

B 220 KV level system

elements outages .

Total 3542 No. of 220kV level

system elements outages provided.

Total 1112 No. of 220kV level system

elements outages provided.

2 ENERGY ACCOUNTING /OA/ REGULATORY and MSPC

Sr.

No.

Key result Area and

Corresponding Key

Performance

Indicator

Achievement during

April-March 2016

Achievement during


A Timely issuance of

FBSM weekly bills.

FBSM billing process is lagging

behind due to inherent problem in

billing software.

Final settlement completed till Feb

13. Further final settlement is held

up for want of finalization of

regional DSM bills by WRPC. The

matter is perused with WRPC.

Weekly FBSM Bills up to January 2016

first weeks issued. (Total 10 weekly bill

issued)

L&T being looped in for AMC of FBSM

software

B

Computation of

Transmission Loss for

the intra-state system.

Computation of losses for each

months and placed on web-site from

September 2016

Computation of losses for each months

and placed on web-site

C

Development of

comprehensive software

for FBSM

Budgetary offers are being called

for estimation & administrative

approval for the new software

SRS for Meter Data Acquisition system

& FBSM Billing completed and

scheduling is under process.

D

Development of new

web based software for

STOA.

Tendering process completed and

work order is issued for developing

Web based STOA software on 11th

May 2017

STOA Software prepared by M/s RE

Connect and is under testing.

Upon analysing the various parameters/performance indicators in the above table, one can

observe that year-on-year, SLDC is able to improve various system operational parameters

through its operational effectiveness, thereby benefitting the State of Maharashtra and its

Power Utilities at large. The following graph and table shows how the commercial burden on


the State has reduced over the past years w.r.t its unscheduled interchange (UI) transactions

with respect to the regional/national grid.

(60)

(40)

(20)

-

20

40

60

80

(2,000)

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500

Wk-

1

Wk-

5

Wk-

9

Wk-

13

Wk-

17

Wk-

21

Wk-

25

Wk-

29

Wk-

33

Wk-

37

Wk-

41

Wk-

45

Wk-

49

Wk-

53

Wk-

57

Wk-

61

Wk-

65

Wk-

69

Wk-

73

Wk-

77

Wk-

81

Wk-

85

Wk-

89

Wk-

93

Wk-

97

Wk-

10

1

Wk-

10

5

Wk-

10

9

Wk-

11

3

Wk-

11

7

Wk-

12

1

Wk-

12

5

Wk-

12

9

Wk-

13

3

Wk-

13

7

Wk-

14

1

Wk-

14

5

Wk-

14

9

Wk-

15

3

Dev

iati

on

Un

its

(MU

)

AD

evia

tio

n A

mo

un

t (I

NR

La

kh)

Weekly Deviation Units and Charges (Maharashtra) - Apr14 to Mar 17

Deviation Charges Capping Additional DMC Deviation units

Table 15: ADMC for FY 2014-15 to FY 2016-17

(Rs. Lakh)

Particulars FY 2014-15 FY 2015-16 FY 2016-17

Annual Additional Deviation

Management Charges payable by the

State

6692 5327 2265

Besides the improvement in the system operation effectiveness, SLDC is also poised to meet

the upcoming challenges and therefore has planned various schemes, which are either at the

planning stage or are under execution.

New Projects Planned/Under execution

Sr.

No. Projects Status


A

5 RTU data intégration- CTU-

STU interface points

Scheme completed for CTU-STU interface data at

Maharashtra periphery

B 80 RTUs data integration for

220 KV sub-stations

In progress. Detailed orders placed by CE(PAC). Order for

integration in existing SCADA at SLDC is placed on M/s

Siemens on rate contract basis for 150-300 RTUs within

next 3 years.

C 20 + 30 RE Pooling station

RTU under PSDF

20 DCs scheme: submitted for acceptance of Tender by

the Competent Authority.

30 DCs Scheme: PSDF approval obtained. Tender

specifications are ready.

D 75 RTU of 132 KV sub-station

PSDF proposal

The scheme is approved by PSDF but kept on hold in

view of other works for SCADA visibility.

E REMC establishment in

coordination with PGCIL

Price Bids are opened by PGCIL and PGCIL is in process

of reverse bidding.

F Establishment of Sub-SLDC

Civil infrastructure being set up by MSETCL. Initial

activities for set up of Sub-LDCs at Nashik and Pune to

be undertaken in FY 2018-19

Considering the above, the MSLDC in the present MTR Petition has proposed certain

revisions and addition in the capex plan submitted as part of its earlier MYT Petition. Further,

in order to take up upcoming challenges, HR planning and HR development is crucial. Thus

in line with the HR development plan submitted along with the MYT Petition and continuing

with the implementation of the same, additional manpower required and corresponding

review in the projection of O&M expenses have been made in the present MTR Petition.

The next chapter presents actual performance of FY 2016-17 followed by the chapter of

provisional projections of FY 2017-18 and in the subsequent chapter revised projection for

FY 2018-19 and FY 2019-20 has been presented.


5 True-up for FY 2016-17

MSLDC humbly submit that Audited Accounts and Allocation Statement for FY 2016-17

that have been finalized & attached to the Petition as Annexure- 2. MSLDC therefore seeks

true up of all components for FY 2016-17 as per the Audited Accounts/principles laid down

in the Multi Year Tariff Regulation, 2015 of the Commission on MSLDC’s Budget, as

applicable for various heads of expenditure/revenue. Further, all computations are also

presented in spreadsheet data formats stipulated by the Commission for submission of MYT

Petition, which are separately submitted in a computer readable file along with this Petition.

The same has also been attached to the Petition as Annexure- 1.

MSLDC has provided detailed rationale for truing up and key issues in the subsequent

paragraphs.

5.1 Operation & Maintenance

In accordance with the MYT Regulations, 2015 the actual Operations and Maintenance

Expenses based on the Audited Accounts is Rs. 1994.06 Lakh for FY 2016-17. The actual

Operations and Maintenance is marginally on the higher side as against Rs. 1963.11 approved

by the Hon’ble Commission in Case No. 20 of 2016.

MSLDC also submits that as explained in 3.1.1(a), the Training Expenses of Rs. 7.55 Lakh is

now included in the A&G Expenses for FY 2016-17. To this extent, variation exists in

claimed and Audited figures of Employee expenses as well as A&G expenses.

The breakup of the actual Operation and Maintenance expenses incurred by MSLDC is as

shown in the Table below:

Table 16: Breakup of Operation and Maintenance Expenses for FY 2016-17

Rs. Lakh

Sr. No. Particulars Actual

1 Employee Expenses 1354.66

2 Administration and General Expenses 522.41

3 Repairs and Maintenance Expenses 116.98

Total Operation and Maintenance Expenses 1994.06



Audited Accounts are summarized in Table as below:


Table 17: Operation and Maintenance Expenses for FY 2016-17

(Rs. Lakh)



True-Up

Requirement

Operation and Maintenance

Expenses 1963.11 1994.06 30.95

MSLDC humbly request the Hon’ble Commission to approve Operation and Maintenance




“8.4 ……





11;”


corresponding to approved value are categorised as controllable expenses. Thus impact of

sharing of gains/loss has been considered on this account for FY 2016-17 and the same is

presented in the following table.

Table 18: Sharing of Gains and Loss on account of O&M Expenses for FY 2016-17

(Rs. Lakh)

Particulars

O&M Expenses Approved under Case No. 20 of 2016 1963.11

Actual O&M expense 1994.06

Total Gain/(Loss) on account of controllable factors (30.95)

Sharing proposed (20.63)

5.2 Interest on Working Capital


under Regulation 31 specifies as under:

“31.5 MSLDC

(a) The working capital requirement of the MSLDC shall cover:

(i) Operation and maintenance expenses for one month;


(ii) One-and-a-half-month equivalent of the expected revenue from levy

of Annual Fixed Charges:

Provided further that for the purpose of Truing-up for any year, the working

capital requirement shall be re-computed on the basis of the values of

components of working capital approved by the Commission in the Truing-up

before sharing of gains and losses;

(b) Rate of interest on working capital shall be on normative basis and shall

be equal to the Base Rate as on the date on which the Petition for

determination of Fees and Charges is filed, plus 150 basis points:

Provided that for the purpose of Truing-up for any year, interest on working

capital shall be allowed at a rate equal to the weighted average Base Rate

prevailing during the concerned Year plus 150 basis points.”

MSLDC has considered the aforementioned methodology specified in the MYT Regulations,

2015 for calculation of IoWC for FY 2016-17. MSLDC has computed IoWC, for FY 2016-17

by taking one month’s Operation and Maintenance expenses and 1.5 months’ receivables. For

computing receivables, MSLDC has considered the AFC excluding impact of sharing of

gains and losses. Further, MSLDC submits that there is no actual loan borrowed for meeting

its working capital requirements.

As regards interest rate, MSLDC has considered the same as approved under Case No. 20 of

2016 which is a rate equivalent to 150 basis point margin over the State Bank of India (SBI)

Base Rate as specified under the MYT Regulations, 2015 and the same works out to 10.80%.

The IoWC computation for MSLDC for FY 2016-17 are shown in the table below:


(Rs. Lakh)

Particulars Approved in

Case No. 20 of

2016

Claimed True-Up

Requirement

Interest on Working Capital 37.70 27.41 (10.29)

MSLDC humbly requests the Hon’ble Commission to allow claimed IoWC for FY 2016-17.

The detailed computation of normative interest on working capital has been given in the

Form 6 of MTR Petition Formats.


5.3 RLDC Fees & WRPC Charges

The RLDC Fees and WRPC Charges for the FY 2016-17 as per the Audited Accounts are Rs.

632.31 Lakh.


(Rs. Lakh)


No. 20 of 2016

Actual True- Up

Requirement

RLDC Fees 378.25 622.31

WRPC Secretariat Charges 10.37 10.00

Total 388.62 632.31 243.69

Hon’ble Commission in Case No. 20 of 2016 had considered impact of truing up order by

CERC in the matter of RLDC fee for the past years and computed holding cost of surplus

which was adjusted while allowing such charges to SLDC for FY 2016-17. However,

MSLDC has incurred Rs. 622.31 Lakhs towards RLDC fee in the corresponding year,

resulting a variation from that allowed under Case No. 20 of 2016.

Accordingly, MSLDC requests the Hon’ble Commission to approve RLDC Fees and WRPC

Charges claimed for FY 2016-17. The details of RLDC Fees and WPRC Charges are also

provided in Form F7 of MTR Petition Formats.

5.4 Capitalization

Hon’ble Commission approved capitalisation of Rs. 687.26 Lakh for FY 2016-17in Case No.

20 of 2016. However, upon completion of the FY 2016-17, the actual capitalisation was Rs.

185.17 Lakh. The breakup of actual capitalisation as DPR and Non-DPR schemes is as shown

in the Table below:

Table 21: Capitalization for FY 2016-17

(Rs Lakh)

Sr.

No. Project Title

Actual

Capitalization

DPR Schemes

1 Hardware/Software for SCADA system 22.40

2 Office Equipments ( Servers, PCs, Printers, Laptop, Xerox m/c,

Firewalls, Routers, LAN Components, cables, switches etc.) 55.04

3 Erection, Testing & Commissioning of 22/0.44 kV indoor type S/S 149.20


Sr.

No. Project Title

Actual

Capitalization

for New Building of SLDC at MSLDC Kalwa

4 Disaster Recovery System/Back Up 36.12

Total DPR 262.76

Non-DPR Schemes

5

Infrastructure Development (Interior & Furnishing, Air

Conditioning, Security Systems, Testing equipments & tools,


22.17

Total Non-DPR 22.17

Total Schemes Capitalization 284.93

MSLDC submits that actual Capitalisation in FY 2016-17 is lower than the Capitalisation

approved by the Hon’ble Commission in Order in Case No. 20 of 2016. The decrease in

capitalisation in FY 2016-17 is attributable to reduced capitalisation towards few schemes

that were proposed during FY 2016-17, which however are getting capitalised in the

subsequent years. MSLDC humbly requests the Hon’ble Commission to allow the actual

capitalisation of Rs. 284.93 Lakh for FY 2016-17.

Regarding schemes under Sr. No. 2 and Sr. No. 4, it is submitted that the schemes are being

formulated by clubbing various similar nature low value schemes based on earlier directions

of the Hon’ble Commission of clubbing non-DPR schemes to form DPR scheme. While some

assets under this scheme has already been made capitalised during FY 2016-17,

corresponding capitalisation has been claimed. MSLDC however intends to submit a DPR

prepared for such scheme and shall be submitted to Hon’ble Commission for in-principle

approval. As some assets have actually been capitalised during FY 2016-17, under the

scheme, MSLDC request the Hon’ble Commission to approve the capitalisation claimed

against such schemes during the year.

As regards the scheme, “Erection, Testing & Commissioning 22/0.44 kV Indoor Type S/S for

New Building of SLDC at MSLDC Kalwa”, capitalisation was claimed during FY 2015-16 as

well as in FY 2016-17, based on the accounting/internal practice followed by MSLDC

despite the fact that final commissioning of the scheme happened only during FY 2015-16.

However, based on the provisions of the MYT Regulations, 2011 and MYT Regulations,

2015, the capitalisation towards the entire scheme is now claimed only in FY 2016-17, where

the indoor substation was fully commissioned. To this extent, it may be noted that the


capitalisation/asset addition in the audited TB for FY 2015-16 and TB for FY 2016-17 would

differ.

The details of the actual Capitalisation for FY 2016-17 are provided in Form F 3.3 of the

MTR Petition Formats, submitted along with this filing.

5.5 Depreciation

MSLDC submits that the actual depreciation for FY 2016-17 has been computed considering

the depreciation rates in accordance with the MERC MYT Regulations, 2015 in the books of

accounts of MSETCL and the same has been considered for the assets of MSLDC. The assets

related to MSLDC have been identified along with the depreciation on the same.

MSLDC in its Petition under Case No. 20 of 2016 has claimed a depreciation of Rs. 546.30

Lakh against which the Hon’ble Commission approved depreciation of Rs. 350.92 Lakh in

the said Order. Against the same, MLSDC submits that the depreciation for FY 2016-

17claimed for truing up is Rs.343.48Lakh.

For the asset Computer Software/IT equipment, depreciation has been computed based on the

rate approved by the Hon’ble Commission (@15%) in the MYT Regulations and as stipulated

in the Order in Case No. 20 of 2016. The working of the depreciation for the asset Computer

Software/IT equipment are now enclosed along with the MYT formats under work sheet

‘Computer Software Depre.’. To this extent of separate depreciation considered for Computer

Software/IT equipment, the depreciation in Form-4 and audited allocation statement differ.

Thus, the variation in the value considered in Form4 (Rs. 343.48 Lakhs) and that in the

allocation statement is owing to considering the separate depreciation working for the asset

Computer Software/IT equipment.

Besides, the actual depreciation reported for FY 2016-17 in the audited allocation statement

considers impact of actual capitalisation of the DPR scheme indoor substation in the year.

However, based on the provisions of the MYT Regulations, 2011 and MYT Regulations,

2015, the capitalisation towards the entire scheme is now claimed in the FY 2016-17, where

the indoor substations were fully commissioned. In this context the present claim of

depreciation for truing up would vary from the audited TB for FY 2016-17.

It is humbly submitted that the actual depreciation for FY 2016-17 considers the impact of

the Computer Software which is recognised as ‘IT Equipment’ with a depreciation rate of

15% in accordance with the MYT Regulations, 2015 by the Hon’ble Commission in Case No.

20 of 2016.



(Rs. Lakh)

Particulars

FY 2016-17

MERC Order


True-Up

Requirement

Depreciation 350.92 343.48 (7.44)

MSLDC humbly requests the Hon’ble Commission to allow the actual depreciation of Rs.

343.48Lakh. The details of the actual Depreciation for FY 2016-17 are provided in Form F4

of the MTR Petition Formats, submitted along with this filing.

5.6 Interest & Financial Charges

The interest on the existing actual loan for MSLDC has been apportioned as Rs. 4.55 Lakh

for FY 2016-17from MSETCL’s Books of Accounts as in Case No. 20 of 2016.

For the purpose of estimation of Interest Cost corresponding to new loans for new Capital

Expenditure Schemes, as per Regulation 26 of MYT Regulations. 2015, the Interest Costs

based on normative debt-equity ratio of 70:30. The same approach has been considered to

calculate the addition to the normative loan amount for FY 2016-17. Further, MSLDC has

considered the weighted average interest rate of the actual loan portfolio of MSLDC for

computing the interest expenses for FY 2016-17 as per MERC MYT Regulations, 2015.

Further, in accordance with the approach adopted by the Hon’ble Commission, the repayment

of the normative loan has been considered as 10 years, with repayment being started from the

second year of loan admitted.

MSLDC submits that the rate of Interest considered in the Petition for FY 2016-17 is as per

the actual loan borrowed from PFC by MSETCL, part of which was allocated to MSLDC.

MSLDC has enclosed the documentary proof of existing loan in its Revised Petition which is

annexed as Annexure 15.



(Rs. Lakh)

Sr. No. Particulars FY 2016-17

PFC Loan No. 21603009

1 Opening Balance 51.05

2 Repayment during the Year 22.69

3 Closing Balance 28.36


Interest Chargeable during the Year 4.55


Interest on Loan for FY 2016-17 shown in Table as below:

Table 24: Interest on Loan

(Rs. Lakh)

Particulars

FY 2016-17

MERC Order


True-Up

Requirement

Interest on Loan 207.90 284.93 77.03

MSLDC submits that higher interest vis-à-vis approved in Case No. 20 of 2016 is on account

of higher interest rates of normative loan considered in line with interest rate of actual loan of

MSETCL allocated to MSLDC.MSLDC humbly requests the Hon’ble Commission to

approve above expenses towards Interest on Loan.

The details of the interest of loan for FY 2016-17 have been provided in Form F5 of MTR

Petition Formats.

5.7 Return on Equity



“28 Return on Equity

28.1 ...

28.2 Return on equity for the Transmission Licensee, Distribution Wires Business

and MSLDC shall be allowed on the equity capital determined in accordance

with Regulation 26 for the assets put to use, at the rate of 15.5 per cent per

annum in Indian Rupee terms, and for the Retail Supply Business, Return on

Equity capital shall be allowed on the amount of equity capital determined in

accordance with Regulation 26 at the rate of 17.5 per cent per annum in

Indian Rupee terms.

28.3 The return on equity shall be computed in the following manner:

(a) Return at the allowable rate as per this Regulation, applied on the amount

of equity capital at the commencement of the Year; plus

(b) Return at the allowable rate as per this Regulation, applied on 50 per cent

of the equity capital portion of the allowable capital cost, for the investments

put to use in Generation Business or Transmission Business or Distribution

Business or MSLDC, for such Year.”

MSLDC would like to submit to Hon’ble Commission that the Return on Equity for the FY

2016-17 has been calculated as per the capitalisation during the year. Further, in accordance


with the MYT Regulations, 2015, rate of 15.5% has been considered for computing RoE.

Hence, the Return on Equity would amount to Rs.236.67Lakh for FY 2016-17.

The Return on Equity for FY 2016-17 is shown in Table as below:

Table 25: Return on Equity

(Rs. Lakh)

Particulars

FY 2016-17

MERC Order


True-Up

Requirement

Return on Equity 202.98 234.44 31.46

MSLDC submits that RoE for FY 2016-17 is higher than approved RoE in Case No. 20 of

2016 because of difference of GFA, owing to disallowance in the past as compared to the

approved capitalisation by the Hon’ble Commission in Case No. 20 of 2016.


Return on Equity. The details of the Return on Equity for FY 2016-17 have been provided in


5.8 Reactive Energy Charges Paid / Income from Reactive Energy Charges

The Annual Fixed Charges to be levied by the MSLDC as per the MYT Regulations, 2015

also has following components:

a) Reactive Energy Charges paid to Generators/TSUs

b) Income from Reactive Energy Charges

The Hon’ble Commission in Case 20 of 2016 had directed MSLDC to carry out its

responsibilities with regard to reactive energy as specified in the MYT Regulations, 2015

with regard to levy/compensation of reactive energy charges, maintain accounts for the

purpose and include or propose income/expenses from such charges for the determination of

AFC at the time of MTR.

In view of the above, MSLDC has taken up the issue of reactive energy balance and reactive

energy pool settlement in the Grid Co-ordination Committee meeting. As directed by the

GCC Chairman in the 78th GCC meeting a Committee was constituted to formulate draft

mechanism for settlement of reactive energy pool and infrastructure requirement thereof.

MSLDC shall operate reactive pool account on the same lines as DSM pool account. The

framework for the same will be submitted to Hon’ble Commission for kind perusal and

approval.The Committee shall deliberate on reactive power measurement infrastructure


including metering, AMR and software. The Committee shall deliberate on the following

aspects related to reactive energy measurement and settlement.

The mechanism for measurement and settlement of reactive power energy account for the

following which shall be deliberated by the Committee and solutions shall be evolved.

a) Condenser mode operation of Koyna HPS,

b) Injection/drawl of reactive power at G<>T interface,

c) Injection/drawl of reactive power at T<>D interface,

d) Operation of reactive pool account &

e) Approval for mechanism from Hon’ble MERC

The above initiative is underway and pending finalization of evolution of the reactive energy

balance and reactive energy pool settlement mechanism, MSLDC has not proposed any

income/expense under this heads for the FY 2016-17. However, as discussed in the GCC, a

mechanism for operating reactive energy pool and commercial settlement mechanism will be

finalized and submitted to Hon’ble Commission for approval.

5.9 Income Tax

It is respectfully submitted that MSLDC has no separate corporate existence i.e., it is not a

separate Company and is being operated by the Government Company, i.e., MSETCL. It is

also submitted that the Government Company i.e., MSETCL, is also being regulated by this

Hon’ble Commission. Further, MSLDC respectfully submits that the expenditure/income

pertaining to SLDC activities is accounted separately in line with the Hon’ble Commission

directives in the original Budget Order, for the purpose of regulatory reporting.

It is respectfully submitted that there is neither separate filing of Income Tax Returns in

respect of MSLDC nor allocation/claim of Income Tax towards MSLDC by MSETCL.

However, in future if such allocation/claims are formulated the MSLDC shall be able to

claim in future period in accordance with provisions outlined under MERC MYT Regulations

over control period. MSLDC humbly request the Commission to kindly grant liberty to

undertake the same then.

In view of above, MSLDC has not claimed Income Tax for the for FY 2016-17

5.10 Non-Tariff Income




“95.1 The amount of Non-Tariff Income relating to the MSLDC as approved by the

Commission shall be deducted from the Aggregate Revenue Requirement in

determining the Fees and Charges of the MSLDC:

Provided that the MSLDC shall submit full details of its forecast of Non-Tariff

Income to the Commission in such form as may be stipulated by the

Commission.

95.2 The Non-Tariff Income shall include:

a) Income from sale of scrap;

b) Income from investments;

c) Interest income on advances to suppliers/contractors;

d) Income from rental from staff quarters;

e) Income from sale of tender documents;

f) Any other Non-Tariff Income:

Provided that the interest earned from investments made out of Return on

Equity of the MSLDC shall not be included in Non-Tariff Income.”

MSLDC submits that the increase in the Non-Tariff Income for FY 2016-17 is due to the

interest income earned on the Investment made by MSLDC in the past years. Vide BR No.

97/12 dated 2nd February, 2015 and subsequent note approved by MSETCL management

dated 14 July, 2015, it was proposed that MSLDC should invest fund in flexi deposit in Bank

and earn interest on such deposits. On account of such investments made by MSLDC in the

past years, MSDLC earned an interest income of Rs. 210.63 Lakh. In addition to the above,

MSLDC has received ‘discount on prompt payment to Vendor’ in FY 2016-17 which

amounts to Rs. 32.34 Lakh. In addition to the above, MSLDC has considered income from

miscellaneous receipts towards non-tariff income for FY 2016-17.

MSLDC humbly requests Hon’ble Commission to allow Non-Tariff Income considering the

actuals. The details of the Non- Tariff Income for FY 2016-17 provided in Form F11of MTR

Petition Formats.

Table 26: Non-Tariff Income for FY 2016-17

(Rs. Lakh)

Particulars

FY 2016-17

MERC Order


True-Up

Requirement

Non-Tariff Income 17.18 262.63 245.45


5.11 Income from Open Access Charges

As per the Regulations formulated in the Multi Year Tariff Regulation 2015, MSLDC

submits that the actual income from Open Access Charges of Rs. 2546.65 Lakh for FY 2016-

17 which includes Scheduling and Rescheduling Charges, as against Rs 1010.36 lakh

approved by the Hon’ble Commission for FY 2016-17.

MSLDC has also received applications for REC, for which a total application processing fee

of Rs. 16.63 Lakhs is received and the same is subsumed under Income from Open Access

for FY 2016-17.

Table 27: Income from Open Access charges for FY 2016-17

(Rs. Lakh)

Particulars

FY 2016-17

MERC Order


True-Up

Requirement

Income from open access charges 1010.36 2546.65 1536.29

MSLDC submits that there has been increase in the short term Open Access applications in

FY 2016-17 and hence increase in revenue on this account. MSLDC humbly requests the

Hon’ble Commission to approve Income from Open Access charges based on actual Audited

Accounts.

The details of the Income from Open Access for FY 2016-17 provided in Form F12 of MTR

Petition Formats.

5.12 Income from Monthly Operating Charges

MSLDC has received actual income from Monthly Operating Charges of Rs. 1698.50 Lakhs

for FY 2016-17 as against approved Monthly Operating charge of Rs. 1452.05 Lakh for FY

2016-17. MSLDC submits that Monthly Operating Charges for FY 2016-17 also includes

Semi-Annual fees Rs.246.45 Lakh, which was collected by MSLDC from April 2016 to June

2016, before the publication of the Order of Case 20 of 2016.

Table 28: Income from Monthly Operating Charges for FY 2016-17

(Rs. Lakh)

Particulars FY 2016-17


MERC Order

( Case No. 20 of 2016) Estimated

Prov. True-

Up

Requirement

Income from Monthly Operating

charges

1484.17 1698.50 214.33

The details of the Monthly Operating Charges for FY 2016-17 is provided in Form F12 of MTR

Petition Formats.


In the Commission’s Order, in Case No.20 of 2016 dated 22 July 2016 the ARR forecast for

FY 2016-17 was 1484.17 Lakh. Based on the above discussion, the head wise actual

expenditure against actual receipts and surplus/ shortfall shown is summarized in the table

below:

Table 29: Final True-Up for FY 2016-17

(Rs. Lakh)

Sr.

No. Particulars

FY 2016-17

Approved in Order

20 of 2016

April to

March

(Audited)

Truing Up

Requirement

1 Operation & Maintenance

Expenses 1963.11 1994.06 30.95

2 Depreciation Expenses 350.92 343.48 (7.44)


4 Interest on Working Capital 37.70 27.41 (10.29)


6 Reactive Energy Charges paid to

Generators/TSUs 0.00 0.00 0.00

7 Income Tax 0.00 0.00 0.00

8 Total Revenue Expenditure 2948.25 3282.19 333.94


10 Total Expenditure for MSLDC 3151.24 3516.63 365.39

11 Less: Non-Tariff Income 17.18 262.63 245.45

12 Less: Income from Open Access

charges 1010.36 2546.65 1536.29

13 Less: Income from Reactive

Energy Charges 0.00 0.00 0.00

Gross AFC 2123.70 707.35 (1416.35)

Add: Impact of sharing of G&L (20.63)

Less: Adjustment of Surplus 639.53 0.00

14 Annual Fixed Charges for

MSLDC 1484.17 686.72 (797.45)


Sr.

No. Particulars

FY 2016-17

Approved in Order

20 of 2016

April to

March

(Audited)

Truing Up

Requirement

Revenue approved/actual 1484.17 1698.50 214.33

Standalone Revenue

gap/(surplus) 0.00 (1011.78)

Thus, on final truing up for FY 2016-17, there is surplus of Rs. (1011.78) Lakh, treatment of

which has been discussed in Section 7.12of this Petition.


6 Provisional True-Up for FY 2017-18

As per the MTR Petition Formats stipulated by the Hon’ble Commission, MSLDC

considered actual unaudited expenses from April 2017 to September 2017 (6 months) for FY

2017-18 and estimates for various expenses and revenue for balance months for FY 2017-18.

6.1 Operation & Maintenance

Regulation 93.1 to 93.4 of the MYT Regulations, 2015 provides for projection of O&M

expense on a normative basis for MSLDC. The relevant extract of the Regulations is

reproduced as under.

“93.1 The Operation and Maintenance expenses for the MSLDC shall be computed

in accordance with this Regulation.

93.2 The Operation and Maintenance expenses shall be derived on the basis of the

average of the Trued-up Operation and Maintenance expenses after

adding/deducting the share of efficiency gains/losses, for the three Years

ending March 31, 2015, excluding abnormal Operation and Maintenance

expenses, if any, subject to prudence check by the Commission.

93.3 The average of such Operation and Maintenance expenses shall be considered

as Operation and Maintenance expenses for the Year ended March 31, 2014,

and shall be escalated at the escalation rate of 5.72% to arrive at the

Operation and Maintenance expenses for the base Year commencing April 1,

2015.

93.4 The O&M expenses for each subsequent Year shall be determined by

escalating the base expenses determined above for FY 2015-16, at the

inflation factor considering 60% weightage for the actual point to point

inflation over Wholesale Price Index numbers as per Office of Economic

Advisor of Government of India in the previous Year and 40% weightage for

the actual Consumer Price Index for Industrial Workers as per Labour

Bureau, Government of India in the previous Year, as reduced by an efficiency

factor of 1%, to arrive at permissible O&M expenses for each Year of the

Control Period:

Provided that a different efficiency factor may be stipulated by the

Commission from time to time:

Provided further that at the time of Truing-up the O&M expenses for the

different Years during the Control Period, the inflation factor considering

60% weightage for the actual point to point inflation over Wholesale Price

Index numbers as per Office of Economic Advisor of Government of India in


the concerned Year and 40% weightage for the actual Consumer Price Index

for Industrial Workers as per Labour Bureau, Government of India in the

concerned Year, as reduced by an efficiency factor of 1% or any other value

as may be stipulated by the Commission from time to time, shall be

considered.”

The revision to aforementioned Regulatory provisions were made by Hon’ble Commission

vide the MERC (Multi Year Tariff) (First Amendment) Regulations, 2017. The said

amendment is reproduced as under:

“93.1 The Operation and Maintenance expenses for the MSLDC shall be computed in

accordance with this Regulation.

93.2 The Operation and Maintenance expenses shall be derived on the basis of the

Final Trued-up Operation and Maintenance expenses after adding/deducting the

sharing of efficiency gains/losses, for the year ending March 31, 2016, excluding

abnormal expenses, if any, subject to prudence check by the Commission, and shall be

considered as the Base Year Operation and Maintenance expenses.

93.3 The Operation and Maintenance expenses for each subsequent year shall be

determined by escalating these Base Year expenses for FY 2015-16 by an inflation

factor with 20% weightage to the average yearly inflation derived based on the

monthly Wholesale Price Index of the past five years as per the Office of the

Economic Advisor, Government of India and 80% weightage to the average yearly

inflation derived based on the monthly Consumer Price Index for Industrial Workers

(all-India) for the past five years as per the Labour Bureau, Government of India, as

reduced by an efficiency factor of 1% or as may be stipulated by the Commission from

time to time, to arrive at the permissible Operation and Maintenance expenses for

each year of the Control Period:

Provided that, in the Truing-up of the Operation and Maintenance expenses for any

particular year of the Control Period, an inflation factor with 20% weightage to the

average yearly inflation derived based on the monthly Wholesale Price Index of the

past five years (including the year of Truing-up) and 80% weightage to the average

yearly inflation derived based on the monthly Consumer Price Index for Industrial

Workers (all-India) of the past five years (including the year of Truing-up), as

reduced by an efficiency factor of 1% or as may be stipulated by the Commission from

time to time, shall be applied to arrive at the permissible Operation and Maintenance

Expenses for that year.”

As per the aforementioned amendment, for projection of O&M expense over the Control

Period, base year O&M expense to be considered as FY 2015-16 trued-up O&M expense


upon which appropriate escalation factor as prescribed in the aforesaid provision with CPI:

WPI weightage for 80: 20 has to be considered. The O&M expense for FY 2015-16 after

adjusting for sharing of gains and losses works out to Rs. 2155 Lakhs. The escalation factor

arrived at based on the aforesaid provision is 7.34% without considering an efficiency factor

of 1% and 6.34% with an efficiency factor of 1%. Accordingly, the O&M expense for FY

2017-18 works out to the following.


(Rs. Lakh)

Particulars

FY 2017-18

MERC Order

(Case No. 20 of 2016)

Revised Projection as

per MYT Amendment

O&M expenses 2021.42 2476.58

*Expenses worked out on normative basis and notified amendment

Premise for projection of O&M expense for FY 2017-18 to FY 2019-20 in the MTR

Petition

MSLDC would like to humbly submit that O&M expense for the years FY 2017-18 to FY

2019-10, would be influenced by the following key factors which would not have been

factored while deriving norms for MSLDC.

a) Increase in number of Employees owing to sanction of additional number of

employees: Vide Board Resolution No. 118/12 dated July 15, 2017, the proposal

placed by CE, SLDC before the Board, and sanction was accorded for the additional

staff requirement. As per the same, additional 41 employees have been sanctioned to

SLDC, out of which 15 employees are expected by March 31st 2018, another 15

employees in FY 2018-19 and balance 11 in FY 2019-20. The copy of the above

referred BR is enclosed as Annexure-6. The increase in 41 employees from the

prevailing strength of 109 employees over the period till FY 2019-20 years (15 out of

41 employees to get added in FY 2017-18, another 15 to get added in FY 2018-19 and

balance 11 to get added in FY 2019-20) will impact the O&M expense significantly

and therefore it is requested to be considered on realistic projection basis.

b) Impact of Wage Revision due on April 2018: The wage revision agreement in done

once in five years which is also required to be conserved as part of projection of

employee expense as it is uncontrollable factor and is not captured in inflation. The

next wage revision in due w.e.f. from April 2018. Accordingly, the same has to be

factored in projection of O&M expense for FY 2018-19.


c) Impact of annual inflation: Over and above the impact on O&M expense due to the

above referred factors, the increase in O&M expenses due to inflation has to be

factored in while projecting O&M expenses for the period from FY 2017-18 to FY

2019-20.

In view of the above factors, following methodology and escalation factors has been

considered for projection of employee expense for the period from FY 2017-18 to FY 2019-

20.

O&M heads FY 2017-18 FY 2018-19 FY 2019-20

Employee Expense Q3 expense

considered same as

Q2 expense.

Q4 escalated over

Q3 based on prorate

increase in employee

Considers a) Impact

of increase in no. of

sanctioned

employees from 129

to 144 in the year

b) Impact of Wage

revision due w.e.f

April 2018

c) Inflation (5 year

average CPI)

Considers a) Impact

of increase in no. of

sanctioned

employees from 144

to 155 in the year

b) Inflation (5 year

average CPI)

A&G Expense For A&G heads

dependant on no. of

employees, Q4

escalated over Q3

based on prorate

increase in employee

For A&G heads

independent of no.

of employees, Q4

considered same as

Q3, which is in-turn

considered same as

Q2.

For A&G heads

dependant on no. of

employees,

considers effect of

increase in number

of employees during

the year and the

annual inflation

factor (5-year

average inflation

with WPI: CPI

weightage of 60:40)

For A&G heads

independent of no.

of employees, only

increase owing to

inflation is

considered

For A&G heads

dependant on no. of

employees,

considers effect of

increase in number

of employees during

the year and the

annual inflation

factor (5-year

average inflation

with WPI: CPI

weightage of 60:40)

For A&G heads

independent of no.

of employees, only

increase owing to

inflation is

considered

R&M Expense Projected on need Increase owing to Increase owing to


basis inflation (5-year

average WPI) is

considered.

inflation (5-year

average WPI) is

considered.

In this context, the expense of FY 2017-18 is projected as below.

Employee Expenses

For estimating employee expenses for FY 2017-18, MSLDC has considered the actual

expenses for the first 6 months i.e., from April 2017 to September 2017 (Q1&Q2), the

projected employee expense for the next three months i.e., from October 2017 to December

2017 (Q-3) over which, the number of employees are expected to remain same as that of H1

of FY 2017-18, and the projected employee expense for subsequent 3 months of the FY

2017-18 (Q-4), by escalating the Q-3 estimated employee expense on a prorate basis

considering that the sanctioned no. of post of 129 (excluding 26 no. outsourced post) would

get filled by 31st March 2018.The increase in number of employees from 109 in Q3 to 129

employees in Q4 considers 5 employees getting added due to the filling up of existing

sanctioned posts and additional 15 employee expected to join during the period as a result of

the additional staff sanctioned as per the Board Resolution No. 118/12 dated July 15, 2017.

The employee expense estimated for FY 2017-18 is shown in the Table below:

Table 31: Employee Expenses for FY 2017-18

(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Apr-Sep

(Actual)

Oct-Mar

(Estimated)

April - March

(Estimated)

1 Employee Expenses 674.18 736.03 1,410.21

MSLDC humbly requests the Hon’ble Commission to approve the estimated employee


The details of Employee Expenses are provided in Form F2.2 of MTR Petition Formats.

Administrative and General Expenses

A&G expenses basically depends of few parameters which are directly associated with

number of employees (electricity, water, telephone, conveyance, training, IT equipment

related, Printing & stationary and Office expense) and few parameters which are independent

of the number of employees (rent, insurance, bank charges etc.). For estimating A&G


expenses for FY 2017-18, MSLDC has considered the actual expenses for 6 months i.e., from

April 2017 to September 2017. For balance part of FY 2017-18, MSLDC considered the

expenses on prorate basis guided on the factors dependent or independent on the estimated no

of employees to be added for the remaining half of the year.

The A&G expenses projected for FY 2017-18 vis-à-vis approved in Case No. 20 of 2016 is

shown in Table below:

Table 32: A&G Expenses for FY 2017-18

(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Apr-Sep

(Actual)

Oct-Mar

(Estimated)

April - March

(Estimated)

2 A&G Expenses 215.22 327.79 543.02

MSLDC humbly requests the Hon’ble Commission to approve the estimated A&G expenses

as claimed in this Petition.

The details of A&G Expenses are provided in Form F2.3 of MTR Petition Formats.

Repairs and Maintenance Expenses

For estimating R&M expenses for FY 2017-18, MSLDC has considered the actual expenses

for 6 months i.e. from April 2017 to September 2017. For balance part of FY 2017-18,

MSLDC estimated the expenses based on pending R&M work. Further, pertaining to future

plans of upgradation of Plants, machinery and buildings etc. the estimated expense for Plant

and machinery is on the higher side, whereas, the expenses for office equipment has been

kept same for H1 and H2 as per actuals.

The R&M expenses projected for FY 2017-18 vis-à-vis approved in Case No. 20 of 2016 is

shown in Table below:

Table 33: R&M Expenses for FY 2017-18

(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Apr-Sep

(Actual)

Oct-Mar

(Estimated)

April - March

(Estimated)

1 R&M Expenses 69.29 123.71 193.00

MSLDC humbly requests the Hon’ble Commission to approve the estimated A&G expenses

as claimed in this Petition.


The details of Repair and Maintenance Expenditure are provided in Form F2.4 of MTR

Petition Formats.

Operation and Maintenance (O&M) expenses



audited account are summarized in Table as below:


(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Approved in Case

No. 20 of 2016

April - March

(Estimated)

Provisional True-

Up Requirement

O&M Expenses

1 Employee Expenses 1,410.21

2 A&G Expenses 543.02

3 R&M Expenses 193.00

Total O&M

Expenses 2,021.42 2,146.23 124.81



“8.4 ……





11;”


corresponding to approved value are categorised as controllable expenses. Thus, impact of

sharing of gains/loss has been considered on this account for FY 2017-18.


The methodology specified in the MERC MYT Regulations, 2015 has been considered for

calculation of interest on working capital for FY 2017-18. It is respectfully submitted that the

interest on working capital shall be payable on normative basis notwithstanding that MSLDC

has not taken any working capital loan from any outside agency.

Further, MSLDC submits that there is no actual loan borrowed for meeting its working

capital requirements.


For FY 2017-18, the interest rate approved by the Hon’ble Commission for calculation of

interest on Working Capital in the Order in Case No. 20 of 2016 has been considered. The

Interest on Working Capital approved by the Hon’ble Commission for FY 2017-18 in Case

No. 20 of 2016 and normative interest on Working Capital is shown in Table below:


(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Approved in Case

20 of 2016 Estimated

True Up

Requirements

1

Working Capital

Requirement 403.40 470.37

1.1 Rate of Interest (% p.a.) - SBI

Base Rate plus 150 basis

points

10.80% 10.17%

1.2 Interest on Working

Capital 43.57 47.83 4.26


RLDC Fees and Charges for FY 2017-18, has estimated same as that approved under Case

No. 20 of 2017.


(Rs. Lakh)

Particulars Approved in

Case 20 of 2016

Estimated

RLDC Fees 701.32 701.32

WRPC Secretariat Charges 11.05 11.05

Total 712.36 712.36

Accordingly, MSLDC requests the Hon’ble Commission to proposed RLDC Fees and WRPC

Charges for FY 2017-18.

The details of RLDC Fees and WPRC Charges are also provided in Form F7 of MTR

Petition Formats.

6.4 Capital Expenditure Plan and Capitalization

The Hon’ble Commission in Case No. 20 of 2016 has approved capitalisation amount of Rs.

526.50 Lakh for FY 2017-18. MSLDC has now revised its capitalization estimates for FY

2017-18 considering capitalization anticipated of various existing as well as new schemes


during the year. Accordingly, for the purpose of provisional truing up of FY 2017-18,

MLSDC propose a revised estimate for capitalisation to the tune of Rs. 495.98 Lakh.

Capital Expenditure and Capitalization towards DPR and Non DPR schemes are presented in

the table below.

Table 37: Revised Capex and Capitalisation for FY 2017-18

(Rs. Lakh)

Schemes Status of In-

principle Approval

Capital

Expenditure Capitalization

A) DPR schemes

Enhancement of real time data

acquisition- DPR

Establishment of real time data

acquisition from 80 nos. of 220 kV

substations at SLDC Kalwa Approved 150.00 75.00

Hardware/Software for SCADA

system Approved 30.00 24.99

Infrastructure Development-DPR

Office Equipments ( Servers, PCs,

Printers, Laptop, Xerox m/c,

Firewalls, Routers, LAN

Components, cables, switches etc.) Yet to be Submitted 80.00 40.00

Construction of Compound Wall and

widening and asphalting of road Yet to be Submitted 70.00 35.00

Erection, Testing & Commissioning

of 22/0.44 kV indoor type s/s for

New Building of SLDC at MSLDC

Kalwa Approved 0.00 0.00

NEW DPR Schemes

IT Security Yet to be Submitted 15.00 7.50

B) Non-DPR Schemes


acquisition

20.00 10.00

Energy accounting System

17.00 58.23

Off line System

30.00 15.00

Infrastructure Development

(Interior & Furnishing, Air

Conditioning, Security Systems,

Testing equipments & tools,


145.00 97.17

Total 557.00 362.89


In FY 2017-18, SLDC is proposing the following new DPR schemes:

Table 38: Revised Capex and Capitalisation for FY 2017-18

(Rs. Lakh)

Project Code Status of In-principle

approval Total Capital Outlay

NEW DPR Schemes

IT Security Yet to be Submitted 155.00

Capitalization of non-DPR schemes over the Control Period

As regards capitalization towards non-DPR schemes, the Hon’ble Commission has specified

Regulation 23.6 of MERC MYT Regulations, 2015, which is reproduced as below:

“

The amount of capitalisation against non-DPR schemes for any Year shall not exceed

20% or such other limit as may be stipulated by the Commission through an Order, of

the amount of capitalisation approved against DPR schemes for that Year:

Provided that the Commission may allow capitalisation against non-DPR schemes for

any Year in excess of 20% or such other limit as may have been stipulated by the

Commission through Order, on a request made by the Generating Company or

Licensee or MSLDC.”

MSLDC would like to again humbly submit here that a significant portion of schemes

capitalised within MSLDC are of low value schemes (less than Rs. 100 Lakhs), and includes

capitalisation of items procured on a continuous basis such as Furniture for Office, Fire

Alarm System, Battery Sets with Charger, Online STOA software/hardware, Office

equipment including Servers, PCs, Printers, Laptop, Xerox machine, Firewalls, Routers, LAN

Components, cables, switches, etc. Thus, considering the varied and intermittent nature of

asset addition of lower value, it is difficult to prepare a DPR for the same.

In view of the above, and in accordance with the provision of the MYT Regulations, 2015, it

is humbly requested that, the Hon’ble Commission may please allow the capitalization

proposed towards non-DPR scheme as claimed in the present Petition and not apply the

criteria of 20% in case of MSLDC.

MSLDC humbly requests the Hon’ble Commission to approve the revised Capital

Expenditure and Capitalisation submitted above for FY 2017-18.


6.5 Depreciation



“27.1 The Generating Company, Licensee, and MSLDC shall be permitted to

recover depreciation on the value of fixed assets used in their respective

Businesses, computed in the following manner:

(a) The approved original cost of the fixed assets shall be the value base for

calculation of depreciation:

Provided that the depreciation shall be allowed on the entire capitalised

amount of the new assets after reducing the approved original cost of the

retired or replaced or de-capitalised assets.

(b) Depreciation shall be computed annually based on the straight line method

at the rates specified in the Annexure I to these Regulations:

Provided that the Generating Company or Licensee or MSLDC shall ensure

that once the individual asset is depreciated to the extent of seventy percent,

remaining depreciable value as on 31st March of the year closing shall be

spread over the balance Useful Life of the asset including the Extended Life,

as provided in this Regulation:

...”

MSLDC submits that depreciation for FY 2017-18 has been computed considering the

depreciation rates in accordance with the MERC MYT Regulations, 2015 and based on the

capitalisation projected during the year. While computing the Depreciation for FY 2017-18,

SLDC has considered the depreciation towards the asset Scheme-Computer software/IT

Equipment and corresponding depreciation with a rate of 15% as approved by the Hon’ble

Commission in Case No. 20 of 2016.

The projected Depreciation for FY 2017-18 is Rs. 346.69 Lakh as against the Commission’s

approved depreciation of Rs. 415.34 Lakh in Order in Case No. 20 of 2016. The revised

depreciation for FY 2017-18 estimated lower as compared to approved depreciation in Case

No. 20 of 2016 due to reduced capitalisation in the past years.



(Rs. Lakh)

Particulars

FY 2017-18

MERC Order

(Case No. 20 of 2016) Revised Estimate

Depreciation 415.34 346.69

Accordingly, MSLDC humbly requests to approve the projected depreciation for FY 2017-

18. The details of the Fixed Assets and depreciation for FY 2017-18 have been provided in





“

29.1 The loans arrived at in the manner indicated in Regulation 26 on the assets

put to use shall be considered as gross normative loan for calculation of

interest on loan:

Provided that in case of retirement or replacement or de-capitalisation of

assets, the loan capital approved as mentioned above, shall be reduced to the

extent of outstanding loan component of the original cost of such assets based

on documentary evidence.

29.2 The normative loan outstanding as on April 1, 2016, shall be worked out by

deducting the cumulative repayment as admitted by the Commission up to

March 31, 2016, from the gross normative loan.

29.3 The repayment during each year of the Control Period from FY 2016-17 to FY

2019-20 shall be deemed to be equal to the depreciation allowed for that year.

29.4 Notwithstanding any moratorium period availed, the repayment of loan shall

be considered from the first year of commercial operation of the Scheme and

shall be equal to the annual depreciation allowed.

29.5 The rate of interest shall be the weighted average rate of interest computed on

the basis of the actual loan portfolio at the beginning of each year:

Provided that at the time of Truing-up, the weighted average rate of interest

computed on the basis of the actual loan portfolio during the concerned year

shall be considered as the rate of interest:

Provided further that if there is no actual loan for a particular year but

normative loan is still outstanding, the last available weighted average rate of

interest for actual loan shall be considered:

Provided also that if the Generating Company or the Licensee or the MSLDC,

as the case may be, does not have actual loan even in the past, the weighted


average rate of interest of its other Businesses regulated by the Commission

shall be considered:

Provided also that if the Generating Company or the Licensee or the MSLDC,

as the case may be, does not have actual loan, and its other Businesses

regulated by the Commission also do not have actual loan even in the past,

then the weighted average rate of interest of the entity as a whole shall be

considered:

Provided also that if the entity as a whole does not have actual loan, then the

Base Rate at the beginning of the respective year shall be considered as the

rate of interest for the purpose of allowing the interest on the normative loan.

29.6 The interest on loan shall be computed on the normative average loan of the

year by applying the weighted average rate of interest:

Provided that at the time of Truing-up, the normative average loan of the

concerned year shall be considered on the basis of the actual asset

capitalisation approved by the Commission for the year.

29.7 The above interest computation shall exclude interest on loan amount,

normative or otherwise, to the extent of capital cost funded by Consumer

Contribution, Deposit Works, Grants or Capital Subsidy.

29.8 The finance charges incurred for obtaining loans from financial institutions

for any Year shall be allowed by the Commission at the time of Truing-up,

subject to prudence check.

29.9 The excess interest during construction on account of time and/or cost overrun

as compared to the approved completion schedule and capital cost or on

account of excess drawl of the debt funds disproportionate to the actual

requirement based on Scheme completion status, shall be allowed or

disallowed partly or fully on a case to case basis, after prudence check by the

Commission:

Provided that where the excess interest during construction is on account of

delay attributable to an agency or contractor or supplier engaged by the

Generating Entity or the Transmission Licensee, any liquidated damages

recovered from such agency or contractor or supplier shall be taken into

account for computation of capital cost:

Provided further that the extent of liquidated damages to be considered shall

depend on the amount of excess interest during construction that has been

allowed by the Commission.

29.10 The Generating Company or the Licensee or the MSLDC, as the case may be,

shall make every effort to re-finance the loan as long as it results in net

savings on interest and in that event, the costs associated with such re-

financing shall be borne by the Beneficiaries and the net savings shall be

shared between the Beneficiaries and them in the ratio of 2:1, subject to

prudence check by the Commission:

Provided that the Generating Company or the Licensee or the MSLDC, as the

case may be, shall submit documentary evidence of the costs associated with

such re-financing:


Provided further that the net savings in interest shall be calculated as an

annuity for the term of the loan, and the annual net savings shall be shared

between the entity and Beneficiaries in the specified ratio.

29.11 Interest shall be allowed only on the amount held in cash as security deposit

from Transmission System Users, Distribution System Users and Retail

consumers at the Base Rate as on 1stApril of the Year for which the interest is

payable, plus 150 basis points:

Provided that at the time of Truing-up, the interest on the amount of security

deposit for the year shall be considered on the basis of the actual interest paid

by the Licensee during the year, subject to prudence check by the

Commission.”

The debt requirement for the proposed capital expenditure in the FY 2017-18 is envisaged to

be funded by normative loans only, and no additional loan allocation from MSETCL has

been considered as of now. However, for the purpose of computation of interest expense for

FY 2017-18, interest expense pertaining to normative loan as well as outstanding actual loan

allocated by MSETCL, has been considered. For the purpose of estimation of Interest Cost

corresponding to new loans for Capital Expenditure Schemes in FY 2017-18, MSLDC has

considered Interest Costs based on normative debt-equity of 70:30 in line with MYT

Regulations, 2015. The same has been considered to calculate the addition to the normative

loan amount during FY 2017-18. Further, MSLDC has considered the weighted average rate

interest of the actual loan portfolio for computing the interest expenses for FY 2017-18.

Further, in accordance provisions of the MERC MYT Regulations, 2015, the repayment of

loan has been considered equivalent to depreciation claimed during the respective years of

the Control Period.

MSLDC has enclosed the documentary evidence of Actual Loan borrowed for Long Term

Loan, in Annexure 15. Further, there is only one long term loan borrowed from PFC, hence,

MSLDC has considered the actual Interest Rate w.r.t. PFC Loan.



(Rs. Lakh)

Sr.

No.


Loan No. 21603009

1 Opening Loan 28.36

2 Repayment during the year 22.69

3 Closing balance 5.67



Sr.

No.


5 Interest Chargeable during the year 2.19

The interest on Loan for FY 2017-18 is shown in Table as below:

Table 41: Interest on Loan for FY 2017-18

(Rs. Lakh)

Particulars

FY 2017-18

MERC Order

(Case No. 20 of 2016) Revised Estimate

Interest on Loan 212.04 231.27




“28 Return on Equity

28.1 ...

28.2 Return on equity for the Transmission Licensee, Distribution Wires Business

and MSLDC shall be allowed on the equity capital determined in accordance

with Regulation 26 for the assets put to use, at the rate of 15.5 per cent per

annum in Indian Rupee terms, and for the Retail Supply Business, Return on

equity capital shall be allowed on the amount of equity capital determined in

accordance with Regulation 26 at the rate of 17.5 per cent per annum in

Indian Rupee terms.

28.3 The return on equity shall be computed in the following manner:

(a) Return at the allowable rate as per this Regulation, applied on the amount

of equity capital at the commencement of the Year; plus

(b) Return at the allowable rate as per this Regulation, applied on 50 per cent

of the equity capital portion of the allowable capital cost, for the investments

put to use in Generation Business or Transmission Business or Distribution

Business or MSLDC, for such Year.”

MSLDC has worked out the Return on Equity (RoE) for Control Period from FY 2017-18 in

accordance with the aforementioned Regulations. RoE projected for FY 2017-18 is based on

the opening equity and the equity added owing to the projected Capitalisation during the year.

MSLDC has considered RoE at rate of 15.5% on the opening equity as well as on 50% of the

equity contribution during year, which is 30% of the asset addition during the year. The

projected RoE for FY 2017-18 is shown in the table below:


Table 42: Return on Equity for FY 2017-18

(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

MERC Order

(Case No. 20 of 2016) Estimated

Provisional

True-Up

requirement

Return on Equity

Computation

1 Return on Regulatory Equity at

the beginning of the year 241.06

2 Return on Regulatory Equity

addition during the year 8.44

Total Return on Equity 231.20 249.50 18.30

MSLDC humbly requests the Hon’ble Commission to approve above Return on Equity as

projected for FY 2017-18.

The details of the Return on Equity for FY 2017-18 have been provided in Form F10 of

MTR Petition Formats.

6.8 Reactive Energy Charges

In context of the detailed rationale provided in earlier chapter regarding Reactive Energy

income/expense, and since the mechanism for reactive energy settlement is being discussed

and finalized under the GCC meetings, MSLDC has not claimed any income/expense under

this heads for FY 2017-18.

6.9 Income Tax

In context of MSLDC’s submissions regarding Income Tax in the previous chapters, MSLDC

has not claimed Income Tax for the FY 2017-18.




“95.1 The amount of Non-Tariff Income relating to the MSLDC as approved by the

Commission shall be deducted from the Aggregate Revenue Requirement in

determining the Fees and Charges of the MSLDC:


Provided that the MSLDC shall submit full details of its forecast of Non-Tariff

Income to the Commission in such form as may be stipulated by the

Commission.

95.2 The Non-Tariff Income shall include:

a) Income from sale of scrap;

b) Income from investments;

c) Interest income on advances to suppliers/contractors;

d) Income from rental from staff quarters;

e) Income from sale of tender documents;

f) Any other Non-Tariff Income:

Provided that the interest earned from investments made out of Return on

Equity of the MSLDC shall not be included in Non-Tariff Income.”

The income from investments expected pertaining to the investments made during past years

in accordance with BR 97/12dated 2nd February, 2015 and subsequent note approved by

MSETCL management dated 14 July 2015, constitutes the major portion of the Non-tariff

income projected for FY 2017-18. The details of the Non- Tariff Income for FY 2017-18

have been provided in Form F11 of MTR Petition Formats.

Table 43: Non-Tariff Income for FY 2017-18

(Rs. Lakh)

Particulars

FY 2017-18

MERC Order


True-Up

Requirement

Non-Tariff Income 17.18 213.88 196.70

MSLDC humbly requests the Hon’ble Commission to approve above expenses towards Non-

Tariff Income.

6.11 Income from Open Access Charges& Monthly Operating Charges

MSLDC has estimated income from Open Access Charges of Rs. 1187.85 Lakh for FY 2017-

18 against approved in Case 20 of 2016 of Rs. 1077.31 Lakhs. The same has been estimated

based on the on actual revenue earned during first half of FY 2017-18 from Scheduling

charges and Rescheduling charges.


Table 44: Income from Open Access charges for FY 2017-18

(Rs. Lakh)

Particulars

FY 2017-18

MERC Order


Prov. True-

Up

Requirement

Income from open access charges 1077.31 1187.85 110.54

6.12 Income from Monthly Operating Charges

MSLDC has estimated income from Monthly Operating Charges for FY 2017-18 at the same

level as that of approved in Case No. 20 of 2016.

Table 45: Income from Monthly Operating Charges for FY 2017-18

(Rs. Lakh)

Particulars

FY 2017-18

MERC Order


Prov. True-

Up

Requirement

Income from Monthly Operating

Charges

1879.60 1879.60 0.00


Based on the above discussion, the head-wise projected expenses for FY 2017-18 for

provisional true up is summarised in Table below:

Table 46: Summary of Provisional True-up of FY 2017-18

(Rs. Lakh)

Sr.

No. Particulars

FY 2017-18

Approved in

Order 20 of

2016

April to March

(Estimated)

Provisional

Truing Up

Requirement

1 Operation & Maintenance Expenses 2021.42 2146.23 124.81

2 Depreciation Expenses 415.34 346.69 (68.65)


4 Interest on Working Capital 43.57 47.83 4.26



Sr.

No. Particulars

FY 2017-18

Approved in

Order 20 of

2016

April to March

(Estimated)

Provisional

Truing Up

Requirement


Generators/TSUs 0.00 0.00 0.00

7 Income Tax 0.00 0.00 0.00

8 Total Revenue Expenditure 3404.72 3484.38 79.66


10 Total Expenditure for MSLDC 3635.93 3733.88 97.95

11 Less: Non-Tariff Income 17.18 213.88 196.70


charges 1077.31 1187.85 110.54

13 Less: Income from Reactive Energy

Charges 0.00 0.00 0.00

Gross AFC 2541.45 2332.15 (209.30)

15 Less: Adjustment of Surplus 661.84 0.00

16 Annual Fixed Charges for MSLDC 1879.60 2332.15 452.55

17 Revenue approved/actual 1879.60 1879.60 0.00

18 Stand-alone Revenue gap/(surplus)

452.55

Thus, on Provisional Truing up for FY 2017-18, there is gap of Rs. 452.55 Lakh, treatment of which

have been considered as part of the claim for FY 2018-19 and FY 2019-20.


7 Revised ARR for FY 2018-19 to FY 2019-20

7.1 Operation &Maintenance

As per the recently proposed amendment in MYT Regulations, 2015 reproduced under

previous chapter for FY 2017-18, for projection of O&M expense for MSLDC over the

Control Period, base year O&M expense to be considered as trued-up O&M expense FY

2015-16 on which appropriate escalation factor as prescribed under the amended provision

with CPI: WPI weightage for 80: 20 has to be considered. The O&M expense for FY 2015-16

after adjusting for sharing of gains and losses works out to Rs. 2208 Lakhs. The escalation

factor arrived at based on the aforesaid provision is 7.34% and 6.34 % after considering an

efficiency factor of 1%. Accordingly, the O&M expense for FY 2017-18 works out to the

following.

Table 47: O&M Expenses for Control Period

(Rs. Lakh)

Particulars

FY 2018-19 FY 2019-20

MERC Order

(Case No. 20 of

2016)

Revised

Projection as per

MYT

Amendment*

MERC

Order

(Case No.

20 of 2016)

Revised

Projection as

per MYT

Amendment*

O&M expenses 2081.45 2633.65 2143.27 2800.68

* Expenses worked out on normative basis and as per amendment

Premise for projection of O&M expense for FY 2018-19 and FY 2019-20 in the MTR

Petition

MSLDC would like to humbly submit that O&M expense for the years FY 2018-19 to FY

2019-10, would be influenced by the following key factors, which would not have been

factored while deriving norms for MSLDC.

a) Increase in number of Employees owing to sanction of additional number of

employees: Vide Board Resolution No. 118/12 dated July 15, 2017, the proposal

placed by CE, SLDC before the Board, and sanction was accorded for the additional

staff requirement. As per the same, additional 41 employees have been sanctioned to

SLDC, out of which 15 employees are expected by March 31st 2018, another 15

employees in FY 2018-19 and balance 11 in FY 2019-20. The copy of the above

referred BR is enclosed as Annexure-6. The increase in 41 employees from the

prevailing strength of 109 employees over the period till FY 2019-20 years (15 out of

41 employees to get added in FY 2017-18, another 15 to get added in FY 2018-19 and

balance 11 to get added in FY 2019-20) will impact the O&M expense significantly

and therefore it is requested to be considered on realistic projection basis.


b) Impact of Wage Revision due on April 2018: The wage revision agreement in done

once in five years which is also required to be considered as part of projection of

employee expense as it is uncontrollable factor and is not captured in inflation. The

next wage revision in due w.e.f. from April 2018. Accordingly, the same has to be

factored in projection of O&M expense for FY 2018-19. The impact of wage revision

in FY 2018-19 is expected to be 20% in line with MSETCL MTR Petition, over

employee expense of FY 2017-18.

c) Impact of annual inflation: Over and above the impact on O&M expense due to the

above referred factors, the increase in O&M expenses due to inflation has to be

factored in while projecting O&M expenses for the period from FY 2017-18 to FY

2019-20.

In view of the above factors, following methodology and escalation factors has been

considered for projection of employee expense for the period from FY 2018-19 to FY 2019-

20.

O&M heads FY 2018-19 FY 2019-20

Employee Expense Considers a) Impact of increase in

no. of sanctioned employees from

129 to 144 in the year

b) Impact of Wage revision due

w.e.f April 2018

c) Inflation (5 year average CPI)

Considers a) Impact of increase in

no. of sanctioned employees from

144 to 155 in the year

b) Inflation (5 year average CPI)

A&G Expense For A&G heads dependant on no.

of employees, considers effect of

increase in number of employees

during the year and the annual

inflation factor (5-year average

inflation with WPI: CPI weightage

of 60:40)

For A&G heads independent of

no. of employees, only increase

owing to inflation is considered

For A&G heads dependant on no.

of employees, considers effect of

increase in number of employees

during the year and the annual

inflation factor (5-year average

inflation with WPI: CPI

weightage of 60:40)

For A&G heads independent of

no. of employees, only increase

owing to inflation is considered

R&M Expense Increase owing to inflation (5-year

average WPI) is considered.

Increase owing to inflation (5-

year average WPI) is considered.

Escalation Rates considered for projection of Employee, A&G and R&M expenses for FY

2018-19 to FY 2019-20.


Escalation factor considered for Employee Expense projection

Employee Expense projection FY 2018-19 FY 2019-20

Escalation Factor owing to increase in

employee 11.63% 7.64%

Inflation Factor (5 year Avg CPI) 7.23% 7.23%

Wage Revision w.e.f April 2018 20% 0%

Total Escalation rate 38.86% 14.87%

Escalation factor considered for A&G Expense projection

For A&G heads dependent on no. of employees)

FY 2018-19 FY 2019-20

Escalation Factor owing to increase in

employee 11.63% 7.64%

Inflation Factor (5 year Avg of WPI:CPI as

60:40) 4.88% 4.88%

Total Escalation rate 16.51% 12.52%

For A&G heads independent on no. of employees)

Inflation Factor (5 year Avg of WPI:CPI as

60:40) 4.88% 4.88%

Escalation factor considered for R&M Expense projection

R&M Expense projection FY 2018-19 FY 2019-20

Inflation factor (5-year average WPI) 3.31% 3.31%

Based on the above, the O&M expense for FY 2018-19 and FY 2019-20 has been projected

as shown in the following table:

Table 48: Detailed O&M Expenses for Control Period

(Rs. Lakh)

Sr.

No. Particulars

FY 2018-19 FY 2019-20

Approved in

Case No. 20

of 2016

FY 2018-19

Approved in

Case No. 20

of 2016

FY 2019-20

Projected

Projected

1 O&M Expenses

2 Employee Expenses

1958.25

2249.51

3 A&G Expenses

606.42

669.08

4 R&M Expenses

223.89

229.97

5 Total O&M Expenses 2,081.45 2,788.56 2,143.27 3,148.55


MSLDC humbly requests the Hon’ble Commission to approve above O&M expenses for the

Period. FY 2018-19 & FY 2019-20.

The details of O&M Expenses are provided in Form F2 of MTR Petition Formats.




“31.5 MSLDC

(a) The working capital requirement of the MSLDC shall cover:

(i) Operation and maintenance expenses for one month;

(ii) One-and-a-half-month equivalent of the expected revenue from levy

of Annual Fixed Charges:

Provided further that for the purpose of Truing-up for any year, the working

capital requirement shall be re-computed on the basis of the values of

components of working capital approved by the Commission in the Truing-up

before sharing of gains and losses;

(b) Rate of interest on working capital shall be on normative basis and shall

be equal to the Base Rate as on the date on which the Petition for

determination of Fees and Charges is filed, plus 150 basis points:

Provided that for the purpose of Truing-up for any year, interest on working

capital shall be allowed at a rate equal to the weighted average Base Rate

prevailing during the concerned Year plus 150 basis points.”

MSLDC has considered the aforementioned methodology specified in the MYT Regulations,

2015 for calculation of IoWC for FY 2018-19 to FY 2019-20.

For computing the interest on working capital for future years, MSLDC has considered the

interest rate of 10.80 % same as that approved under Case No. 20 of 2016.

The Working Capital and interest computation for MSLDC for FY 2018-19 to FY 2019-20

are shown in the table below:

Table 49: Interest on Working Capital for Control Period

(Rs. Lakh)

Sr.

No. Particulars

Approved in

Case No.20 of 2016

Ensuing Years

(Projected)

FY

2018-19

FY

2019-20

FY

2018-19

FY

2019-20


1

Interest on Working Capital

Requirement

414.10 421.65 623.00 720.51

1.1 Rate of Interest (% p.a.) - SBI Base

Rate plus 150 basis points 10.80% 10.80% 9.45% 9.45%

1.2 Interest on Working Capital 44.72 45.54 58.87 68.09

The normative IoWC projected are higher compare to approved in Case No. 20 of 2016,

owing to increase in revised O&M expense and revised receivables projected in the present

MTR Petition. MSLDC humbly requests the Hon’ble Commission to approve Interest on

Working Capital for the Control Period on normative basis. The detailed computation of

normative interest on working capital has been given in the Form 6 of MTR Petition

Formats.


RLDC fees and charges has been considered at the same level as approved by the Hon’ble

Commission in Case 20 of 2016.

Table 50: RLDC Fee & WRPC Charges for Control Period

(Rs. Lakh)

Sr.

No. Particulars

Case 20 of 2016 Ensuing Years

FY 2018-

19

FY 2019-

20 FY 2018-19 FY 2019-20

Approved Approved Projected Projected

1 RLDC Fees and Charges

April to March 747.51 796.75 747.51 796.75

2 WRPC Charges

WRPC Secretariat

Charges 11.78 12.55 11.78 12.55

Total - RLDC Fees and

WRPC Charges 759.29 809.31 759.29 809.31

Accordingly, MSLDC requests the Hon’ble Commission to proposed RLDC Fees and WRPC

Charges for FY 2018-19 and FY 2019-20. MSLDC shall approach the Commission with the

actual numbers at the time of Review or Truing up.

The details of RLDC Fees and WPRC Charges are also provided in Form F7of MTR Petition

Formats.


7.4 Capital Expenditure Plan and Capitalisation

Managing the grid is becoming increasingly complex considering the large number of players

connected to it and the associated transactions involved. The task of a grid operator is

growingly challenging owing to the paradigm changes expected in the Indian Grid with large

scale integration of Renewable Energy projects to the grid, establishment of ancillary services

market, managing large scale grid connected storage solutions, operating and settlement of

spinning reserve market etc. A robust metering and communication infrastructure with real-

time data transfer capability at all levels of grid is of utmost importance so as to monitor and

control the gird in the most efficient manner in these growing challenging situations. Further,

with the growing complexities in the grid, a more de-centralized approach of controlling and

management is expected to be more effective.

In this context, so as to overcome these challenges, MSLDC has planned for various schemes

for implementation in the new Control Period during the 3rd Control Period FY 2016-17 to

FY 2019-20 and submitted to the Hon’ble Commission for approval vide our MYT Petition

in Case No. 20 of 2016. Over almost 2 years since start of 3rd Control Period, MSLC

capitalized various schemes and implementation of various other schemes are under

implementation. Considering the actual capitalization achieved in the past period and the

progress made so far, there has been some revision in the capitalization proposed during the

ensuing years viz. FY 2018-19 to FY 2019-20.

In addition to the various ongoing DPR and non-DPR schemes, MLSDC envisages capital

expenditure and capitalization towards several new schemes during FY 2018-19 and FY

2019-20 including establishment of sub-SLDCs at Nashik and Pune. The schemes so planned

have been clubbed together under the following broad heads depending on the nature of such

schemes:

a) Enhancement of real time data acquisition

b) Energy accounting System

c) Off line System

d) Infrastructure Development

Proposed Establishment of Sub-LDCs

Maharashtra system grid is expanding at faster pace, interconnection points with CTU are

also increasing as per CTU plan. Further, number of TSUs including full open access

consumers is also increasing. These TSUs are spread all over the geographical area and

connected to grid at 220/132 kV voltage level. Hence, it is envisaged that more decentralized

management and control of generation and load is required for effective grid operations.

Other states like Gujarat, Karnataka, Uttar Pradesh and Madhya Pradesh are operating their

respective SLDCs with three to four Sub-LDCs. In this context, MSLDC is contemplating to


set up new Sub-LDCs at locations viz., Nashik and Pune. It is planned to take up the

feasibility study and initial survey towards setting up these sub-LDCs. However, detailed

estimate is yet to be prepared for such scheme. MSLDC is preparing proposal on the same for

in-principle approval of MSETCL Management. After in principle approval to the scheme,

the proposal shall be put up to the Board of MSETCL for approval. Upon approval of the

Board, MSLDC shall submit the DPR for approval of the Hon’ble Commission in due course.



“90.1 The MSLDC shall submit a detailed capital investment plan, financing plan

and physical targets for each Year of the Control Period based on the

operational requirements prescribed by the Commission and

recommendations of various Committees constituted for looking into matters

related to strengthening and ring fencing of the State Load Despatch Centres

by the Ministry of Power, Government of India or any such other statutory

authorities, to the Commission for approval, as a part of the Multi-Year

Aggregate Revenue Requirement for the entire Control Period.

90.2 The Capital Investment Plan shall be a least cost plan for undertaking

investments and shall cover all capital expenditure projects of a value

exceeding Rs. One crore or any other limit as may be stipulated by the

Commission from time to time and shall be in such form as may be stipulated

by the Commission.

90.3 The Capital Investment Plan shall be accompanied by such information,

particulars and documents as may be required showing the need for the

proposed investments, alternatives considered, cost/benefit analysis and other

aspects that may have a bearing on the MSLDC Fees and Charges.

90.4 The Commission shall consider the Capital Investment Plan along with the

Multi-Year Aggregate Revenue Requirement for the entire Control Period

submitted by the MSLDC taking into consideration the prudence of the

proposed expenditure and estimated impact on MSLDC Fees and Charges.

90.5 The MSLDC shall submit, along with the Petition for determination of

Aggregate Revenue Requirement or along with the Petition for Mid-term

Performance Review, as the case may be, details showing the progress of

capital expenditure projects, together with such other information, particulars

or documents as the Commission may require to assess such progress.”

While proposing the capital expenditure plan, MSLDC has taken due care to club together

various schemes of similar nature and proposed several new DPR schemes. DPR for those

new schemes are under preparation and shall be submitted in due course for kind


consideration and necessary approval. Further, there were certain schemes whose estimated

value is less than the threshold value of Rs. 100 Lakh specified by the Hon’ble Commission

which has been shown as non-DPR schemes.

Following table presents the revised capital expenditure and capitalization plan of MSLDC

during the period from FY 2018-19 to FY 2019-20.

Table 51: Projected Capitalization for FY 2018-19

(Rs. Lakh)

Capex Scheme

Status of in-

principle

approval

Capital


a) DPR schemes


acquisition- DPR

Establishment of real time data

acquisition from 80 nos. of 220 kV

substations at SLDC Kalwa Approved 150.00 150.00

Hardware/Software for SCADA system Approved 210.00 120.00


Office Equipments ( Servers, PCs,

Printers, Laptop, Xerox m/c, Firewalls,

Routers, LAN Components, cables,

switches etc.)

Yet to be

Submitted 80.00 80.00


widening and asphalting of road

Yet to be

Submitted 150.00 110.00

Disaster Recovery System/Back Up

Yet to be


IT Security

Yet to be


Fire Alarm/Fire Fighting System Approved 150.00 150.00

Battery Sets with Charger

Yet to be

Submitted 115.00 115.00

Establishment of Sub-LDC at Pune and

Nasik(Excluding Expenditure on Civil

Infrastructure)

Yet to be


Backup Control Centre/ICCP data Links

Yet to be

Submitted 100.00 100.00

Supply, Installation, Testing and

Commissioning of 20 DCs at RE Pooling

Stations Approved 52.50 52.50

b) Non-DPR Schemes

Enhancement of real time data acquisition 60.00 40.00

Energy accounting System 37.00 27.00


Capex Scheme

Status of in-

principle

approval

Capital


Off line System 20.00 25.00

Infrastructure Development (Interior

& Furnishing, Air Conditioning, Security

Systems, Testing equipments & tools,

Furniture, Auxiliary supplies, etc.) 230.00 187.50

WAM/PMU based system 30.00 15.00

Cyber security and data security 20.00 10.00

Total DPR and Non DPR (a+b) 1584.50 1279.50

Table 52: Projected Capitalization for 2019-20

(Rs. Lakh)

Capex Scheme Status of

approval

Capital


a) DPR schemes


acquisition- DPR

Establishment of real time data acquisition

from 80 nos. of 220 kV substations at

SLDC Kalwa Approved 150.00 150.00

Hardware/Software for SCADA system Approved 260.00 235.00

Energy Accounting Systems - DPR

New FBSM Software/hardware

Yet to be

Submitted 600.00 600.00


Office Equipments ( Servers, PCs, Printers,

Laptop, Xerox m/c, Firewalls, Routers,

LAN Components, cables, switches etc.)

Yet to be

Submitted

70.00 75.00


widening and asphalting of road

Yet to be


Disaster Recovery System/Back Up

Yet to be


Back up Control Centre/ICCP data links

Yet to be


IT Security

Yet to be


Fire Alarm/Fire Fighting System Approved 118.00 118.00

Battery Sets with Charger

Yet to be


Establishment of Sub-LDC at Pune and

Nasik(Excluding Expenditure on Civil

Yet to be

Submitted 350.00 200.00


Capex Scheme Status of

approval

Capital


Infrastructure)

Supply, Installation, Testing and

Commissioning of 20 DCs at RE Pooling

Stations Approved 52.50 52.50

b) Non-DPR Schemes

Enhancement of real time data acquisition

20.00 40.00

Energy accounting System

21.00 29.00

Off line System

10.00 15.00

Infrastructure Development (Interior &

Furnishing, Air Conditioning, Security

Systems, Testing equipments & tools,


120.00 175.00

WAM/PMU based system

0.00 15.00

Cyber security and data security

20.00 20.00

Total DPR & Non DPR schemes (a+b)

2001.50 2014.50

Capitalization of non-DPR schemes over the Control Period

As regards capitalization towards non-DPR schemes, MSLDC would like to requested that,

the Hon’ble Commission may please allow the capitalization proposed towards non-DPR

scheme be allowed as claimed in the present Petition and not apply the criteria of 20% in case

of MSLDC in line with the detailed rationale provided under the previous chapters.

MSLDC humbly requests the Hon’ble Commission to approve the Capital Expenditure and

Capitalisation submitted above for FY 2018-19 to FY 2019-20.

7.5 Depreciation

MSLDC has calculated depreciation for the Period from FY 2018-19 to FY 2019-20 in

accordance with the MERC MYT Regulations, 2015 and based on the projected capitalisation

during each year of the Control Period. The depreciation for the Control Period from FY

2018-19 to FY 2019-20 has been estimated as shown in Table below:

Table 53: Depreciation Estimated for New Control Period

(Rs. Lakh)

Particulars

FY 2018-19 FY 2019-20

Approved in

Case 20 of 2016 Projected

Approved in


Depreciation

Expenses

448.75 383.48 479.92 398.12


The reduction in depreciation expense are owing to lower capitalisation projected during the

year compared to approved capitalisation in Case No. 20 of 2016. Accordingly, MSLDC

requests to approve the projected depreciation for FY 2018-19. The details of the Fixed

Assets and depreciation for the Control Period from FY 2018-19 to FY 2019-20 have been

provided in Form F4 of MTR Petition Formats.


The debt requirement for the proposed capital expenditure in the FY 2018-19 and FY 2019-

20 is envisaged to be funded by normative loans only, and no additional loan allocation from

MSETCL has been considered as of now. However, for the purpose of computation of

interest expense for FY 2017-18, interest expense pertaining to normative loan as well as

outstanding actual loan allocated by MSETCL, has been considered. For the purpose of

estimation of Interest Cost corresponding to new loans for Capital Expenditure Schemes in

FY 2018-19 and FY 2019-20, MSLDC has considered Interest Costs based on normative

debt-equity of 70:30 in line with MYT Regulations, 2015. The same has been considered to

calculate the addition to the normative loan amount during FY 2017-18. Further, MSLDC has

considered the weighted average rate interest of the actual loan portfolio for computing the

interest expenses for FY 2018-19 and FY 2019-20. Further, in accordance provisions of the

MERC MYT Regulations, 2015, the repayment of loan has been considered equivalent to

depreciation claimed during the respective years of the Control Period.



(Rs. Lakh)

Sr. No. Particulars FY 2018-19

Loan No. 21603009

1 Opening Loan 5.67

2 Repayment during the year 5.67

3 Closing balance 0.00


5 Interest Chargeable during the year 0.31

The interest on Loan for FY 2018-19 and FY 2019-20 is shown in Table as below:

Table 55: Interest on Loan for FY 2018-19 to FY 2019-20

(Rs. Lakh)

Particulars FY 2018-19 FY 2019-20


MERC Order

(Case No. 20 of

2016)

Revised

Estimate

MERC Order

(Case No. 20 of

2016)

Revised

Estimate

Interest on Loan 194.23 185.23 161.87 267.22

The variation in loan expense are owing to difference in capitalisation projected during the

respective years compared to approved capitalisation in Case 20 of 2016. Accordingly,

MSLDC requests to approve the projected loan expenses for FY 2018-19 and FY 2019-20.

The details of interest expenses from FY 2018-19 to FY 2019-20 have been provided in

Form F5of MTR Petition Formats.


MSLDC has worked out the Return on Equity (RoE) for Control Period from FY 2018-19 to

FY 2019-20 in accordance with the MERC MYT Regulations, 2015. RoE projected for the

Control Period from FY 2018-19 to FY 2019-20 is based on the projected year-wise

Capitalisation. MSLDC has considered RoE at rate of 15.5% on the opening equity as well as

on 50% of the equity contribution during year, which is 30% of the asset addition during the

year. The projected RoE for period from FY 2018-19 to FY 2019-20 is shown in the table

below:

Table 56: Return On Equity estimated for FY 2018-19 & FY 2019-20

(Rs. Lakh)

Particulars

FY 2017-18 FY 2018-19

Approved in


Approved in


1 Return on

Equity 249.02 287.68 259.90 364.27

The increase in RoE projected over the approved RoE is owing to the difference in Opening

Equity considered by MSLDC and allowed in Case No. 20 of 2016 for respective years.

MSLDC humbly requests the Hon’ble Commission to approve above Return on Equity as

projected for Control Period form FY 2018-19 to FY 2019-20.

The details of the Return on Equity for Control Period form FY 2018-19 to FY 2019-20 have

been provided in Form F10of MTR Petition Formats.

7.8 Reactive Energy Charges paid / Income from Reactive Energy Charges

In context of the detailed rationale provided in earlier chapter regarding Reactive Energy

income/expense, and since the mechanism for reactive energy settlement is being discussed

and finalized under the GCC meetings, MSLDC has not claimed any income/expense under

this heads for FY 2018-19 and FY 2019-20.


7.9 Income Tax

In context of MSLDC’s submissions regarding Income Tax in the previous chapters, MSLDC

has not claimed Income Tax for the period FY 2018-19 to FY 2019-20.


Regulation 95 of the Maharashtra Electricity Regulatory Commission (Multi Year Tariff)

Regulations, 2015 specifies provision for non-tariff income for MSLDC. The projected non-

tariff income for period from FY 2018-19 to FY 2019-20 is shown in the table below:

Table 57: Non-Tariff Income estimated for FY 2018-19 & FY 2019-20

(Rs. Lakh)

Sr.

No. Particulars

FY 2018-19 FY 2019-20

Approved in


Approved in


1 Income from

Investments 175.00

150.00

2 Discount received

on prompt

payment to

Vendor

6.78

6.78

3 Miscellaneous

receipts 6.38

6.38

Total 17.18 188.88 17.18 163.88

The income from investments expected pertaining to the investments made during past years

in accordance with BR 97/12 dated 2nd February, 2015 and subsequent note approved by

MSETCL management dated 14 July 2015, constitutes the major portion of the Non-tariff

income projected for FY 2018-19 and FY 2019-20. While projecting the same, reduction is

expected in interest income, due to liquidation of deposits in these years for meeting

operational requirements. As regards other heads of non-tariff income, the same are projected

at the same level of FY 2017-18, for projection purpose.

The details of the Non- Tariff Income for Control Period form FY 2018-19 to FY 2019-20

have been provided in Form F11of MTR Petition Formats.

MSLDC humbly requests the Hon’ble Commission to approve above expenses towards Non-

Tariff Income.

7.11 Income from Open Access Charges

MSLDC has estimated income from Open Access Charges for FY 2018-19 and FY 2019-20

at the same level as approved by the Hon’ble Commission under Case 20 of 2016.

Table 58: Income from Open Access Charges for FY 2018-19 & FY 2019-20


(Rs. Lakh)

Particulars

FY 2018-19 FY 2019-20

Approved in Case

20 of 2016 Projected

Approved in Case

20 of 2016 Projected

Income from

OA charges 1149.28 1149.28 1226.64 1226.64

7.12 Impact of truing up and provisional truing up

The impact of true up of FY 2015-16 and FY 2016-17, and provisional true up of FY 2017-18

is summarised as below.

Table 59: Impact of truing up Amortized over FY 2018-19 to FY 2019-20

(Rs. Lakh)

Particulars

FY

2018-19

FY

2019-20

Projected Projected

Add: Revenue gap/surplus of FY 2015-16 after final truing-up

(a) (499.10)

Add: Revenue gap/surplus of FY 2016-17 after truing-up (b) (1011.78)

Add: Revenue gap/surplus of FY 2017-18 after provisional

truing-up (c) 452.55

Additional impact due to past period expense &

gap/(surplus) = (a)+(b)+(c ) (1,058.33)

Amortization of Surplus over FY 19 and FY 20 (529.16) (529.16)

Net Annual Fixed Charges for MSLDC 2595.80 3135.88

To avoid significant impact in a single year, which would rather affect the operation of

SLDC, it is proposed to amortise the surplus over FY 2018-19 and FY 2019-20. MSLDC

humbly requests the Hon’ble Commission to approve above charges.

7.13 Summary of ARR for Control Period from FY 2018-19 to FY 2019-20

Based on the above discussion, the head wise projected expenses for Control Period from FY

2018-19 to FY 2019-20 is summarised in Table below:

Table 60: Summary of Annual Fixed Charges for FY 2018-19 to FY 2019-20

(Rs. Lakh)

Sr.

No. Particulars

FY 2018-19 FY 2019-20

Approved in

Order 20 of

2016

Projected

Approved in

Order 20 of

2016

Projected

1 Operation & Maintenance

Expenses 2081.45 2788.56 2143.27 3148.55


Sr.

No. Particulars

FY 2018-19 FY 2019-20

Approved in

Order 20 of

2016

Projected

Approved in

Order 20 of

2016

Projected

2 Depreciation Expenses 448.75 383.48 479.92 398.12

3 Interest on Loan Capital 194.23 185.23 161.87 267.22

4 Interest on Working Capital 44.72 58.87 45.54 68.09

5 RLDC Fees and WRPC Charges 759.29 759.29 809.31 809.30


Generators/TSUs 0.00 0.00 0.00 0.00

7 Income Tax 0.00 0.00 0.00 0.00

8 Total Revenue Expenditure 3528.45 4175.44 3639.91 4691.29

9 Return on Equity Capital 249.02 287.68 259.90 364.27

10 Total Expenditure for

MSLDC 3777.47 4463.13 3899.80 5055.56

11 Less: Non-Tariff Income 17.18 188.88 17.18 163.88


charges 1149.28 1149.28 1226.64 1226.64

13 Less: Income from Reactive

Energy Charges 0.00 0.00 0.00 0.00

Gross AFC 2611.02 3124.97 2655.99 3665.04

Add: Impact of sharing of

G&L

Less: Adjustment of Surplus 685.83 0.00 711.62 0.00

14 Annual Fixed Charges for

MSLDC 1925.19 3124.97 1944.36 3665.04

Revenue approved/actual 1925.19 3124.97 1944.36 3665.04

Standalone Revenue

gap/(surplus) 0.00

0.00

15

Add: Revenue gap/surplus of FY

2015-16 after final truing-up (a) (499.10)

16


2016-17 after truing-up (b) (1011.78)

17


2017-18 after provisional truing-

up (c)

452.55

18

Additional impact due to past

period expense & gap/(surplus)

= (a)+(b)+(c )

(1058.33)

19 Amortization of Surplus over

FY 2018-19 and FY 2019-20 (529.16) (529.16)

20 Net Annual Fixed Charges for

MSLDC (14)-(21) 2595.80

3135.88


8 Sharing of MSLDC Charges

As per Regulation 96.1 of the MERC MYT Regulations, 2015, the MSLDC Charges payable

by the Transmission System Users shall be computed on the basis of average of Coincident

Peak Demand (CPD) and Non-Coincident Peak Demand (NCPD). The data for CPD &

NCPD for the period from October 2014 to December-2015 is submitted in the petition.

In this context, the proviso to Regulations 96.1 of the MYT Regulations, 2015 is reproduced

below:

“The MSLDC Charges payable by the Transmission System Users shall be computed

in accordance with the following formula:

AFC(u)(t) = AFC(t) X ([Base TCR(u)](t) / ∑[Base TCR(u)](t))

Where,

AFC(u)(t) = MSLDC Charges to be shared by the Beneficiary (u) for the Yearly

period (t);

AFC(t) = Total MSLDC Charges to be shared by the Beneficiaries for the

Yearly period (t);

Base TCR (u) = [CPD(u)(t) + NCPD(u)(t)] /2

Where,

Base TCR represents the Base Transmission Capacity Right of each Beneficiary (u)

for the Yearly period (t);

CPD (u)(t) = Average Coincident Peak Demand of the Beneficiary (u) for the

Yearly period (t);

NCPD (u)(t) = Average Non-Coincident Peak Demand of the Beneficiary (u) for the

Yearly period (t):

Provided that the Allotted Capacity for long-term Open Access Users, excluding

partial long-term Users, shall be considered in lieu of the average monthly CPD

and NCPD for calculating the Base TCR for Open Access consumers.”

In line with the MYT Order in Case No. 20 of 2016, MSLDC has proposed sharing of

MSLDC charges among the following TSUs.

Table 61: List of TCRs sharing MSLDC Charges for FY 2016-17

Transmission System Users

MSEDCL

TPCL-D

REL-D

BEST

M/s. Mindspace Business Parks Pvt. Ltd. (MBPPL)

Indian Railway-Maharashtra

M/s. Indo Rama Synthetics Ltd. (IRSL)


Table 62: Base Transmission Capacity Rights for FY 2016-17 and sharing

Transmission System Users MW

(Avg. of CPD & NCPD)

In %

MSEDCL 16106 83.20%

TPCL-D 780 4.03%

REL-D 1360 7.03%

BEST 785 4.05%

MBPPL 14 0.07%

Indian Railway- Maharashtra 305 1.57%

IRSL 10 0.05%

Total 19359 100.00%

For estimating the Base transmission capacity right for the State for future years of the

Control Period the projected Base Transmission Capacity Right for FY 2016-17 has been

escalated by 5%.

MSLDC submits that based on the approved MSLDC Charges for the 3rd Control Period as

per InSTS Order (Case No. 91 of 2016) the CAGR of Base TCR for the 3rd Control Period

works out as 6.60%. Besides the annual escalation for Base TCR as per the InSTS Order for

FY 2018-19 and FY 2019-20 works out to 6.13% and 6.14%. The same may vary based on

revised demand projection approved for the TSUs for FY 2018-19 and FY 2019-20 in their

respective MTR orders. However, for the purpose of projection Base TCR under MTR

petition, MSLDC has assumed an escalation rate of 5% on a conservative basis in its MTR

Petition for revised estimates of MSLDC Charges for FY 2018-19 and FY 2019-20.

Table 63: Projected Base Transmission Capacity Rights for FY 2018-19 to FY 2019-20

(MW)

FY 2018-19 FY 2019-20

Base Transmission Capacity Rights 21342.90 22410.05

Based on the base transmission capacity rights the sharing of MSLDC Charges works out as

under:

Table 64: Sharing of MSLDC Charges for FY 2018-19 to FY 2019-20


(Rs. Lakh)

Sharing of MSLDC Charges FY 2018-19 FY 2019-20

MSEDCL 2159.60 2608.91

TPCL-D 104.53 126.28

REL-D 182.40 220.35

BEST 105.22 127.11

MBPPL 1.89 2.29

Indian Railway-Maharashtra 40.88 49.38

IRSL 1.29 1.56

Total 2595.80 3135.88

Further, as per the MYT Regulations, 2015, MSLDC Charges per MW per month shall be

computed in accordance with the following formula:

Monthly MSLDC Charges (Rs. / MW / Month) = [AFC(u)(t) ÷ ∑i=1[Base TCR(u)] (t)] ÷ 12

Accordingly, the projected monthly MSLDC Charges works out as under:

Table 65: Proposed MSLDC Charges for FY 2018-19 to FY 2019-20

(Rs. /MW/Month)

Monthly MSLDC Charges FY 2018-19 FY 2019-20

Total MSLDC Charges (Rs. Lakh) 2595.80 3135.88

Base Transmission Capacity Right (MW) 21342.90 22410.05

Proposed MSLDC charges (Rs/MW/Month) 1013.53 1166.10

The detailed computation of sharing of MSLDC charges have been provided in Form F14 of

MTR Petition Formats. MSLDC humbly requests the Hon’ble Commission to approve the

proposed sharing of MSLDC charges and proposed monthly MSLDC charges for each year

of the Control Period.

9 Fees to be charged by MSLDC



“97. Fees to be charged by MSLDC

97.1 The MSLDC shall recover the following Fees as approved by the Commission

from time to time:

a) Registration or Connection Fees per connection from all users connecting

to the Intra-State Transmission System;


b) Scheduling Fees per day for intra-State Short-term Open Access

transactions;

c) Re-scheduling Fees for each revision in schedule after the finalization of

schedules by the MSLDC on a day-ahead basis or for non-submission of

schedule as per State Grid Code requirements;

d) Short-term Open Access Application Processing Fees;

e) Any other Fees approved by the Commission from time to time.”

9.1 Registration or Connection Fees

The Hon’ble Commission in MSLDC Budget Order in Case No. 218 of 2014 dated 20

October, 2015 has approved Registration or Connection Feesat the rate of Rs. 20,000 per

connection for connecting to the intra-state transmission system (InSTS). The registration

charges shall be a one-time fee payable at the time of registration or seeking connection to

InSTS. This will be applicable for all generating companies, distribution licensees and

transmission open access users. MSLDC humbly requests the Hon’ble Commission to allow

to continue levy and recover the said fees/charges.

9.2 Scheduling and Re-Scheduling Fees

MSLDC requests the Hon’ble Commission to retain the Scheduling Fee of Rs. 2250 per day

and Re-Scheduling Fees of Rs. 2250 per revision as approved under Case No. 20 of 2016.

9.3 Short Term Open Access Application Processing Fees

MSLDC requests the Hon’ble Commission to retain the Short Term Open Access (STOA)

Application Processing Fee of Rs.7500 per application.

9.4 Renewable Energy Certificate Processing Fees

MSLDC requests the Hon’ble Commission to retain the Renewable Energy Certificate

Processing Fee of Rs.1000 per application as approved under Case No. 20 of 2016.

MSLDC humbly requests the Hon’ble Commission to allow MSLDC to levy and recover

proposed fees and charges for the Period for FY 2018-19 to FY 2019-20.


10 Compliance to Directives

MSLDC submits its compliance to various directives of the Hon’ble Commission under Case

No. 20 of 2016.

10.1 Ring-fencing and Autonomy

Directive

The Commission notes that MSLDC has brought the comments of the Commission to the

notice of MSETCL (regarding SLDC being operated by STU is only an interim measure, ring

fencing is ultimately the decision for the State Govt. and the MSEB Holding Co. to take). The

Commission expects MSETCL to bring them to the notice of the State Government and

MSEB Holding Co. Ltd. The Commission appreciates that a separate bank account for

MSLDC has been opened as per MSETCL Board Resolution.

MSLDC Reply and Additional submission

Vide letter dated 19 January, 2016, MSLDC has brought to the notice of the MSETCL

management the earlier directions issued by the Commission in the matter, of which further

status was sought by Hon’ble Commission through the MYT Order.

As on date, notification, by State Government w.r.t formation of separate company for SLDC

as per section 32 of the EA 2003 is yet to be issued. However, pending such notification,

MSETCL has taken several initiatives in order to achieve financial and operational autonomy

to MSLDC. Some of the initiatives were already mentioned as part of the MSLDC MYT

Petition in Case 20 of 2016. The same is reproduced as following:

“…

Proposal for ring-fencing and separate Board structure has been resubmitted to the

MSETCL Board.

Separate Bank account for MSLDC has been opened as per MSETCL Board

Resolution from April, 2015. MSETCL Board has approved need-based financial

support to MSLDC.

The MSETCL Board has approved enhancement of delegation of financial powers of

the Chief Engineer, MSLDC to the level of Executive Director, MSETCL vide

Resolution dt. 16.03.2015.

The MSETCL Board has delegated powers to depute MSLDC employees for training,

workshops and seminars to the Chief Engineer, MSLDC, vide Circular dated 26 June,

2015. “

Further, additional initiatives have been taken up subsequent to issuance of MSLDC MYT

Order are as listed below:


With separate Bank Account opened for all financial transactions related to MSLDC,

operation is being carried out through MSLDC bank account without any need for

intervention/approval of MSETCL finance wing. Thus, financial autonomy is

exercised by MSLDC in this respect.

MSETCL Board has accorded approval vide BR 98/05 dated 16 March, 2015 and

issued circular thereof which is placed as Annexure 5, for enhancing financial powers

of Chief Engineer, MSLDC to the level of Executive Director, and CE, SLDC is

exercising such powers, whenever needed. For instance, in the

matter of tender published for lifting, shifting, upgradation, installation and testing of

existing APFC panel from new SLDC Building to new 22/0.44 kV indoor substation

at SLDC, Airoli, only single quotation amounting Rs. 2,90,016/- was received. The

said quotation value was beyond the authority limit of CE, (which is maximum Rs. 2

Lakhs). Exercising the powers accorded thorough above referred BR (BR 98/5),

whereby ED in consultation with CGM (F&A) is empowered for placing work order

on single quotation basis in case of urgency up to 3 Lakhs, the Order was placed by

CE, SLDC. In another instance, in case of a quotation submitted by M/s Avadh

Corporation, for outsourcing ITI electricians the competent authority has accorded

administrative approval amount of Rs. 12,46,948/-, the quoted amount was Rs.

13,69,032/- in lieu of the powers accorded to CE vide the above referred BR

exercising the powers of ED.

MSETCL has delegated CE, SLDC powers to depute MSLDC employees for

deputation to various training, workshop, seminars and employees of SLDC are

regularly deputed for training.

The MSETCL has issued a circular vide BR 118/12 dated 20 July 2017, placed in

Annexure 6, that posting or transfer of any MSLDC employee shall be effected only

after prior consent of Chief Engineer, MSLDC.

With above steps, MSETCL has strived to ensure the financial and operational

independence of MSLDC in pursuance of the directions of Hon’ble Commission.

10.2 Manpower Development

Directive

The Commission in the past had directed to submit MSLDC’s detailed approach to the

development of skilled manpower, to which response was submitted by MSLDC in Case 20

of 2016, covering plan for development of skilled manpower to improve its functioning

considering the technical and managerial competencies required for various tasks, and a

roadmap for HR development and for recruitment of capable and motivated personnel for top

and middle level management. The Commission had noted the submission made by MSLDC.


MSLDC Reply and Additional submission

In this context, MSLDC would like to apprise the Hon’ble Commission about the further

actions taken up in the matter as under. The MSETCL Board has accorded approval for

sanction of additional man power of 41 engineers/employees (including Law Officer and

Civil staff) vide B.R. No. 118/12 dated 20/07/2017(Enclosed as Annexure 6). The additional

staff requirement has been approved is two phases as under:

1) 30 Nos. in Phase –I: For various new responsibilities related to new schemes such as

URTDSM, REMC, ADMS and additional functions such as Real Time Security

Assessment, Data Management, Sub-LDC Mumbai operation in three shifts, REC

issuance etc.

2) 11 Nos. in Phase-II: For real time operation of Renewable Energy Management

Centre.

The posts will be filled up with suitable deputation from existing MSETCL establishments.

Accordingly, vide office order No. 12 dated 08.09.2017 MSETCL has diverted 15 nos. of

employees from Corporate Office and EHV project Kalwa.

Further, for the enhancement of capacity for the employees working at MSLDC, employees

are deputed for basic level training programme. All MSLDC Engineers have undergone basic

level training programme at National Power Training Institute (NPTI). Further, advanced

level training programme in the following areas have been conducted on regular basis.

a) Power system reliability

b) Power system logistics

c) Regulatory framework in Power Sector

d) Market operation

e) Renewable energy and grid integration

Given below is the statistics regarding advanced training imparted in various key areas and

respective number of employees trained since April 2015.

Sr.

No.

Area of Training Number of Employees trained

FY 15-16 FY 16-17

1 Power system reliability 11 9

2 Power system logistics 5 10

3 Regulatory framework in Power Sector 15 9

4 Market operation 0 8

5 Renewable energy and grid integration 3 15


10.3 Technology and Operational Systems Upgradation

Directive

MSLDC is not adequately prepared to meet the future challenges, especially the emerging

need for large scale RE integration. There are operational constraints such as inadequate

visibility, lack of required infrastructure, etc. MSLDC needs to schedule, monitor and

manage communication and metering infrastructure for a large number of such small

transactions. It has to be equipped for implementing automatic primary and secondary

response systems.

MSLDC also needs to re-evaluate the metering and communication infrastructure. This will

require development of infrastructure like scientific forecasting systems with the Generators

and MSLDC. Adequate balancing mechanism also needs to be developed to deal with

variable nature of RE sources. In the Report of the Technical Committee on Large Scale

Integration of RE, need for Balancing, Deviation Settlement Mechanism and related issues

issued by the Ministry of Power on 6 April, 2016, RE Generators have raised issues regarding

curtailment by SLDCs because of inability to absorb large RE quantum, evacuation issues,

and forecasting and scheduling. Hence, the Commission directs MSLDC to formulate a

detailed action plan, also highlighting financial implications in this regard.

MSLDC should update the Commission of the status of regional energy accounting, and

resolve software problems as it lags behind by 8 months. MSLDC should analyze ways to

expedite regional energy accounting, which may require outsourcing, reviewing manpower

requirements, and engaging technology partners as possible options for expediting energy

accounting.

MSLDC Reply

MSLDC in its earlier submissions in the matter had submitted its initiatives towards

continuous technology upgradation and operational system upgradation. MSLDC had stated

that it is a member of various Committees formed under WRPC (where POSOCO is also a

member), which includes the SCADA Committee of the Western Region. The SCADA

Committee regularly discusses various issues, including the issue of technology upgradation

and operation systems required for addressing present and future challenges emerging from

market and other developments. Further, MSLDC is also member of URTDSM (Unified

Real-time Dynamic State Measurement) scheme of PGCIL and closely associated in its

implementation at MSLDC. The interaction with POSOCO at all levels is a continuous

process and is going on seamlessly for addressing the day to day operational and long-term

challenges.

Further, MSLDC would like to submit specific initiatives for meeting the various challenges

highlighted in the directive by the Hon’ble Commission in the MYT Order.


Initiatives for RE integration:

Under Green Energy Corridor initiative of MoP, GoI has entrusted responsibility of

implementation of Renewable Energy Management Centre (REMC) in all RE rich

states including Maharashtra. PGCIL is nominated as Nodal Agency for REMC

implementation. Accordingly, PGCIL has prepared state-wise Detailed Project Report

(DPR) of the scheme and floated region-wise tender for competitive bids for REMC

implementation. DPR for Maharashtra during May 2016. For Western Region, Tender

process for REMC implementation is completed and is at the advanced stage of

issuance of LOI. Implementation by PGCIL includes deployment of Hardware and

REMC Application Software at Control Centre which will be funded through Grant

Benefit Scheme from Indo-German consortium. The real time data required for

REMC from RE generators/pooling stations shall be in scope of respective states to be

arranged through concerned RE Generators.

MSLDC has identified 60 nos. of RE Pooling Sub-stations connected to intra-state

transmission system. Data for 10 nos. RE Pooling Sub-stations is already available in

existing SCADA system. A scheme for 20 Nos. RE Pooling Sub-stations is under

implementation and expected to be completed by April 2018. For remaining 30 nos.

RE Pooling Sub-stations, MSETCL Board has accorded approval for implementation

through PSDF funding. Accordingly, scheme was submitted to NLDC (Nodal agency

for PSDF) and MoP has accorded approval for 90 % funding through PSDF. Tender

finalization is in progress. It is envisaged that after implementation of above schemes

all RE data from all RE pooling in Maharashtra will be available by June 2018.

Presently, real time data of about 3000 MW installed capacity of wind generators out

of 4667 MW total installed capacity is available at SLDC through wind park

developers. Further, real time data for all Solar Projects of about 800 MW, which are

commissioned in the state is available at SLDC.

Other technology upgradation initiatives (viz. AMR implementation, Open Access

processing, Scheduling process):

Automated Meter Reading (AMR) Implementation: MSETCL and MSLDC have

formulated scheme for Automatic Meter Reading System. Under this scheme a pilot

project for 25 Nos. ABT meter is completed and data is available at SLDC. Further,

under phase-1 of AMR project ABT meters at 279 locations covering all CTU-STU

interfacing points and energy injection points G<>T (except RE) is under

implementation and 211 no. of meters are reporting to MSLDC through dual SIM

GPRS modems. Under phase-II, all T<>D drawl points and RE injection interface

(about 2500 ABT Meters) will be covered.


Web-based processing of Open Access Applications: MSLDC is in the process of

development of online web-based software for STOA processing which is at the stage

of acceptance and after trial run it is expected to go live by April, 2018.

Scheduling Software: In addition, MSLDC is in process of development of web-

based scheduling software and it is at the final stage of implementation and after trial

run it is expected to go live by April, 2018.

Addressing difficulties in FBSM: MSLDC has submitted Concept Paper approved

by MSPC for implementation of DSM to Hon’ble MERC in February 2015. Further,

MSLDC had participated in various meetings with staff of commission and consultant

regarding implementation of DSM at state level, highlighted its concerns and

suggested suitable modifications from time to time.

FOR guided initiative of SAMAST implementation: A Technical Committee was

formed under the aegis of Forum of Regulators with one of the scope as

implementation of ABT at State level and for addressing related issues w.r.t to power

system operation and settlement. The said Committee adopted a report of Scheduling,

Accounting, Metering and Settlement of Transactions in Electricity (SAMAST)

prepared under the guidance of FOR, for implementation at state level. The report

outlines detail steps for progressive implementation of Deviation Settlement

Mechanism at state level. The status update of activities/progress achieved by

MSLDC so far (up to 31st October, 2017) in implementing the steps envisaged under

the SAMAST report is provided under Annexure-7 of this Petition.

Automatic Demand Response and Management: Besides, MSLDC has formulated

a scheme for implementation Automatic Demand Management System (ADMS) for

33/22/11 kV feeders emanating from MSETCL and MSEDCL sub-stations. After

administrative approval of MSETCL Board, MSLDC has submitted proposal for

funding from Power System Development Fund (PSDF). MoP has accorded approval

for 90 % funding through PSDF. DPR was submitted to Hon’ble MERC and Hon’ble

MERC has accorded in-principle approval for the schemes. MSEDCL has identified

621 nos. 33/22/11 kV feeders emanating from 63 nos. MSETCL sub-stations and 31

MSEDCL sub-stations for total quantum of 2157 MW to be automatically controlled

from MSLDC through ADMS during system emergencies. Tender finalization is in

process.

Implementation of URTDSM scheme: MSLDC is also member of URTDSM

(Unified Real-time Dynamic State Measurement) scheme of PGCIL, and

implementation at MSLDC. The URTDSM system is installed at MSLDC Control

Room and site acceptance test is to be carried out. Further, the data of 15 nos. PMUs

installed by MSETCL in different substations shall be integrated with URTDSM. The

dynamic data of PGCIL sub-stations (10 nos.) in Maharashtra and MSETCL sub-


stations where PGCIL has commissioned PMU and MSETCL sub-station with PMU

installed by MSETCL will be available in URTDSM.

Monthly Transmission Loss assessment through SAP-ERP: MSETCL and

MSLDC has developed a system for loss computation on monthly basis through ERP-

EAS system and Transmission System Loss figures for last month are being displayed

on MSLDC website by 20th of every month.

Action taken for resolving software issues and lag in bill generation

FBSM software was developed by M/s L&T around 8 years ago based on principles

outlined through Intra-State ABT Order by Hon’ble Commission in 2006. The

development process stared on 2009 and software development was done in

consultation with SLDC. The software was deployed for Go Live in August 2011.

The billing software shares common database with scheduling application. During the

process of daily scheduling / rescheduling activities, increased no. of scheduling

entities, manual up loading of ABT meter data and generation bills, the response time

of FBSM application increased drastically. FBSM billing data uploading and bill

generation activities could not be undertaken when scheduling activities are in

progress. Further, scheduling / rescheduling being day to day routine activity the time

slot available for billing process was limited to night hours. In addition to above

difficulties, M/s L&T stopped giving support for AMC of FBSM on the grounds on

payment issues related to development/deployment process support.

CMD MSETCL constituted a committee to address payment issues with M/s L&T.

Accordingly, all previous payment issues are resolved and M/s L&T has responded to

the tender for AMC of FBSM. Shortly AMC order will be placed on M/s L&T. Data

cleaning and debugging activities will be carried out regularly by M/s L&T during

AMC period. This will reduce sluggishness of the software response and frequency of

generation of FBSM bills will increase.

In order to increase response time, MSLDC is in process of developing new

scheduling software so that scheduling database will be independent of FBSM and

only required final implemented scheduling files will be transferred to FBSM for

billing purpose. The work is entrusted to M/s PRDC, Bengaluru and software is in

final stage of testing and will be implemented by April 2018.

MSLDC is taking all the efforts as above to reduce the delay in issuance of FBSM

bills.

As proactive measure, MSLDC has undertaken the task of preparation of Software

Requirement Specification (SRS) for new billing software, which will work on duel

mechanism i.e. FBSM and DSM.


10.4 Incentive Schemes

Directives

MSLDC should keep the Commission informed of the status of the proposal regarding

Performance linked incentives.

MSLDC Reply

The proposal for incentive schemes for MSLDC was submitted to the MSETCL management

based on the recommendations of the Gireesh Pradhan Committee and Task Force chaired by

Shri Satnam Singh. The matter was discussed in the MSETCL Board of Directors meeting on

29 June, 2015 and the proposal was deferred. As directed by the Competent Authority of

MSETCL, a modified proposal for incentive schemes was submitted to MSETCL Board.

The MSETCL Board vide B.R. No. 110/17 dated 28.07.2016 has accorded approval for

Certificate linked incentive to MSLDC engineers. Further, as per Administrative Circular No.

498 dated 07.11.2016 is enclosed as Annexure 8, MSETCL has implemented Certificate

linked incentive to MSLDC engineers as under:

1) Chief Engineer: Based on tenure and experience, CMD is competent authority for

grant of incentive.

2) SE & EE: Incentive as 15 % of basic pay with ceiling limit of Rs. 7500/- per month

on passing of Specialist Level Examination.

3) AE, Dy. EE, AEE: Incentive as 10 % of basic pay with ceiling limit of Rs. 5000/- per

month on passing of Basic Level Examination or 15 % of basic pay with ceiling limit

of Rs. 7500/- per month on passing of Specialist Level Examination.

Above incentive are applicable for maximum period of 10 years. The details of incentive

disbursed during FY 2016-17 is provided under Annexure-16.

10.5 Vacancies

Directives

MSLDC should give details of the vacancies in Pay Grade III and IV which are being

operated through outsourcing of required skills in its next Petition.

MSLDC’s Reply

Total sanction strength of MSLDC is 155 employees including recently sanctioned 15

number of posts as on November, 2017 vide BR 118/12 dated 20 July, 2017 and Office

Order No. 12dated 8 September, 2017, enclosed as Annexure 8 and Annexure 9. The Pay

Grade-wise break up is provided as under:


Sr.

No.

Sanctioned

Posts

Sanctioned

strength

Working as

on 30.11.2017

Vacancy Remark

1 Pay Grade-1 52 46 6 E.E.-5, AEE-3, MGR

(F&A)-1

2 Pay Grade-II 53 43 10 Dy. E.E. 5, AE-4, Dy.

MGR (F&A)-1

3 Pay Group-III 32 09 23 19 nos. vacant posts are

being operated through

outsourcing

4 Pay Group-IV 15 9 7 All 7 nos. vacant posts

are being operated

through outsourcing.

The Pay Grade-Wise break up under pay Group I & II includes recently diverted staff from

MSETCL

10.6 Project Planning

Directives

The Commission directs MSLDC to submit the steps planned to strengthen its regulatory,

finance and accounting capabilities, within 4 months.

MSLDC’s Reply

MSLDC would humbly request the Hon’ble Commission to condone delay in submission of

the compliance in the matter. MSLDC has taken several steps for development of manpower

as elaborated under earlier paragraphs; since issuance of earlier MYT Order. Number of

employees have been deputed for advance training course comprising regulatory framework

in power system and market operation functions in order to improve and strengthen

understanding of its team in regulatory, energy accounting, finance and accounting and other

market operation related functions. The details of employees deputed for various programmes

is tabulated as below:

Sr.

No.


FY 15-16 FY 16-17

1 Power system reliability (technical) 11 9

2 Power system logistics (technical) 5 10

3 Regulatory framework in Power Sector

(Regulatory)

15 9


Sr.

No.


FY 15-16 FY 16-17

4 Market operation (techno-commercial) 0 8

5 Renewable energy and grid integration

(Technical)

3 15

10.7 Preparedness of SLDC in handling future challenges

Directives

As per the Technical Committee Report on Large scale integration of RE, in order to

integrate the high penetration of renewables into the grid effectively, several actions have to

be taken such as frequency control, introduction of ancillary services, forecasting, scheduling,

deviation settlement mechanism, balancing mechanism, robust data telemetry and

communication systems and establishment of RE Management Centres (REMCs).

Implementation of Ancillary Services would also bring reserves in the SLDCs’ ambit

With the evolution of the market design and upcoming Regulations in order to

integrate RE, MSLDC as the System Operator needs to be equipped with technical

capabilities and follow best industry practices as used in the developed power

markets.

MSLDC has curtailment issues because of inability to absorb large quantities of RE,

and issues of evacuation, forecasting and scheduling. There are software restrictions,

one of the issues being that the software assumes that frequency will be 50 Hz and

there will be no unscheduled drawl. The software cannot do any real time Merit Order

Despatch (MOD) or curtailment analysis

Upcoming Regulations that will impact SLDC

Regulatory Framework for Forecasting of Renewable Generation and Scheduling

including Aggregators and Implementation at intra-state level (June 2016)

Regulatory Framework for Communication in Power Sector, Availability of Real

Time Data at the SLDCs/RLDCs/NLDC particularly of RE generators (June 2016)

Implementation of REMCs – (April 2017)

During the TVS, the Commission enquired whether establishment of REMCs had

been directed by the Ministry of New and Renewable Energy (MNRE) or Ministry of

Power and how requisite funds will be raised. MSLDC replied that MNRE will

possibly give 100% grant for establishment of REMC, which will help in forecasting

RE supply. However, as per the minutes of meeting of the Technical Committee held


on 10 February, 2016, shared by MSLDC, it was suggested that 50% of the Capex

will be funded through PSDF while the balance would have to be funded by the

respective SLDCs.

To face these upcoming challenges, robust communication of data from RE

Generators to MSLDC is required. MSLDC should work out the communications

system requirements for getting real time data from the Generators. The software used

at MSLDC is obsolete. The Commission advises SLDC to obtain technical support in

order to resolve software restrictions and study the possibility of getting a technology

partner on board.

MSLDC should provide to the Commission a plan covering all these aspects, with

milestones, timelines for their completion, and the approach to ensure that MSLDC is

geared to face the above challenges along with any action already taken in this regard.

The Commission is concerned about the backlog in FBSM bills which, as per MSLDC’s own

admission, are in arrears for more than 8 months. Such large arrears create uncertainty and

have a commercial impact on the entire system. The Commission directs MSLDC to take

urgent action to clear the backlog. MSLDC may consider outsourcing some of the activities

relating to the balancing and settlement bills to clear the backlog and also to ensure current,

up to date status. MSLDC to submit the status of the issue of the bills for each State Pool

Participant, with details of pendency and action plan in terms of timelines to clear the

backlog, within 3 months.

MSLDC’s Reply

MSLDC would humbly request the Hon’ble Commission to condone delay in submission of

the compliance in the matter. Further, MSLDC humbly submits that it has made detailed

submission on various steps taken and under implementation in respect of most of the

directives under this head as part of response to directives under Sr. 3 above. Based on the

initiatives listed therein, MSLDC would like to humbly submit that it has already taken

initiatives to address the upcoming challenges and to mitigate present limitation in the

system.

Regarding expediting the FBSM billing, MSLDC would like to submit the following:

An order for “Implementation of software for Balancing and Settlement Mechanism as per

Order in Case No. 42 of 2006 (ABT Order in Maharashtra)”, was placed with M/s L&T vide

LoA No. MSETCL/CO/CE(O&M)/BSM/T-4/LOA/7009 dated 30th May, 2008. Subsequently

the software was implemented and issues cropped up resulting in delay in timely issuance of

settlement bills. Following are the reasons for delay in generation of FBSM bills.

a) BSM mechanism implemented in Maharashtra is unique with several features of ex-

ante imbalance volume, price, value computation and ex-post imbalance volume,


settlement price and value computation based on merit order principles. The degree of

complexities in the mechanism is very high coupled with integration of regional UI

(gross and net) pool settlement.

b) The responsibility of operation of mechanism is entrusted on Maharashtra State

Power Committee (MSPC) by Hon’ble MERC in the ABT Order. Several meetings of

MSPC were conducted to discuss the mechanism and finalize code.

c) From August 2011, FBSM was implemented. As there was no clarity on Fixed Cost

Reconciliation (FCR), FCR module in BSM software is not tested and not used.

d) Provisional Billing related delay: The matter of delay in preparation of bills is

attributed to software issues, lack of clarity and interpretation issues on several

aspects as raised by pool members while implementing ABT Order. The issues were

discussed in various MSPC meetings for effective resolution and roadmap for

expediting the billing process.

e) Finalized Billing delay: The delay observed is attributed to WRPC’s confirmation on

provision of revised data for March-2013 onwards as finalization of FBSM bills was

pending for want of revision of UI/DSM bills by WRPC. The matter was taken up

with WRPC for finalizing the statement from March-2013 as any revision in DSM/UI

bills has its effect on our Intra-State ABT bills under FBSM. The matter was

discussed in MSPC meeting of which MoM is placed as Annexure-10 to this Petition.

Besides, as submitted under response to directive Sr. No. 3 above, MSLDC and MSETCL has

taken the following initiatives to overcome the billing issues:

The billing software shares common database with scheduling application. During the

process of daily scheduling / rescheduling activities, increased no. of scheduling

entities, manual up loading of ABT meter data and generation bills, the response time

of FBSM application increased drastically. FBSM billing data uploading and bill

generation activities could not be undertaken when scheduling activities are in

progress. Further, scheduling / rescheduling being day to day routine activity the time

slot available for billing process was limited to night hours. In addition to above

difficulties, M/s L&T stopped giving support for AMC of FBSM on the grounds on

payment issues related to development/deployment process support.

CMD MSETCL constituted a committee to address payment issues with M/s L&T.

Accordingly, all previous payment issues are resolved and M/s L&T has responded to

the tender for AMC of FBSM. Shortly AMC order will be placed on M/s L&T. Data

cleaning and debugging activities will be carried out regularly by M/s L&T during

AMC period. This will reduce sluggishness of the software response and frequency of

generation of FBSM bills will increase.


In order to increase response time MSLDC is in process of developing new

scheduling software so that scheduling database will be independent of FBSM and

only required final implemented scheduling files will be transferred to FBSM for

billing purpose. The work is entrusted to M/s PRDC, Bengaluru and software is in

final stage of testing and will be implemented by April 2018.

MSLDC is taking all the efforts as above to reduce the delay in issuance of FBSM

bills.

As proactive measure, MSLDC has undertaken the task of preparation of Software

Requirement Specification (SRS) for new billing software, which will work on duel

mechanism i.e. FBSM and DSM.

10.8 Reactive Energy Charges

Directives

MSLDC should carry out its responsibilities with regard to reactive energy as specified in the

MYT Regulations, 2015 with regard to levy/compensation of reactive energy charges,

maintain accounts for the purpose and include or propose income/expenses from such charges

for the determination of AFC at the time of MTR.

MSLDC’s Reply

MSLDC has taken up the issue of reactive energy balance and reactive energy pool

settlement in grid co-ordination committee meeting. As directed by the GCC Chairman in the

78th GCC meeting a Committee was constituted to formulate draft mechanism for settlement

of reactive energy pool and infrastructure requirement thereof. MSLDC shall operate reactive

pool account on the same lines as DSM pool account. The framework for the same will be

submitted to Hon’ble Commission for kind perusal and approval.

The Committee shall deliberate on reactive power measurement infrastructure including

metering, AMR and software. The Committee shall deliberate on the following aspects

related to reactive energy measurement and settlement.

The mechanism for measurement and settlement of reactive power energy account for

a) Condenser mode operation of Koyna HPS,

b) Injection/drawl of reactive power at G<>T interface,

c) Injection/drawl of reactive power at G<>T interface,

d) Operation of reactive pool account &

e) Approval for mechanism from Hon’ble MERC


11 Prayers

MSLDC respectfully prays the Hon’ble Commission to

1. Admit the Mid-Term Review Petition in accordance with Regulations 8.1 of the

MERC MYT Regulations, 2015.

2. Allow true up of budget cost of operations of the Maharashtra State Load Despatch

Centre (MSLDC) for FY 2015-16 based on the Audited Accounts and Allocation

Statement for the financial year, according to principles set out in previous Orders

issued by the Hon’ble Commission on MSLDC’s Budget, applicable provisions under

MERC (Multi Year Tariff) Regulations-2011 and other Regulations.

3. Allow True-up for FY 2016-17 and Provisional true up for FY 2017-18 according to

applicable provisions under MERC (Multi Year Tariff) Regulations, 2015, and other

Regulations.

4. Approve MSLDC Charges for FY 2018-19 and FY 2019-20 that would help in

recovery of consolidated ARR including revenue gap/surplus for respective years of

the Control Period.

5. Continue the various charges i.e., Short-term Open Access Application Processing

Fees, Registration or Connection Fees, Scheduling Fees/Charges and Re-Scheduling

Fees, Renewable Energy Certificate Processing Fees as approved by the Commission

in MSLDC MYT Order in Case No. 20 of 2016 dated 22 July, 2016

6. Approve the SLDC’s request for relaxation of certain parameters as sought in the

Petition, while approving this MTR Petition.

7. Condone any shortcomings/deficiencies and allow MSLDC to submit additional

information/data at a later state as may be required.

Dr. Sanjay S. Kulkarni

Chief Engineer

MSLDC

Place: Airoli, Navi Mumbai

Date: 2nd January, 2018


List of Annexure:

Annexure 1 MSLDC Multi Year Tariff Petition Formats for submission

Annexure 2 Audited accounts & allocation statement for FY 2015-16 & FY 2016-17.

Annexure 3 Broad break-up of R&M Expenditure under “Plant& Machinery”.

Annexure 4 BR 97/12 related to approval of Financial autonomy of MSLDC.

Annexure 5 Circular vide BR 98/05; Dated: 16th March, 2015

Annexure 6 BR 118/12 related to power of deputation of employees

Annexure 7 Status of SAMAST implementation in Maharashtra

Annexure 8 Administrative circular 498 related to certificate linked incentives

Annexure 9 Office order No 12 related to sanction of additional post

Annexure 10 MSPC MOM regarding discussion on resolving issues associated to FBSM.

Annexure 11 Copy of Audited certified Trial Balance for FY 2015-16 & FY 2016-17.

Annexure 12 Details of Wage Arrears disbursed during FY 2015-16.

Annexure 13 Cost Benefit Analysis of In-principle approved Schemes

Annexure 14 Details of time over-run/cost over-run, if any of the DPR schemes

Annexure 15 Correspondence from MSETCL - Actual Loan allocated to MSLDC.

Annexure 16 Details of Employee incentive allowance

Annexure 17 MoM of 1st meeting of committee constituted to evolve framework for

Reactive Power pool at State level.

Annexure 18 Correspondence with WRLDC regarding passing on of Surplus to

beneficiaries.

Documents

MSLDC Mid-Term Review Petition For For FY 2018-19 to FY ...€¦ · MSLDC Mid-Term Review Petition For Truing up of Budget Cost of Operation for FY 2015-16 & 2016-17, Provisional