Summer Internship Report on ARR Projection and Power Purchase Cost Optimization for BYPL

Summer Internship Report
On
ARR PROJECTION FOR BSES YAMUNA POWER LTD FOR 3
RD
MYT
CONTROL PERIOD
AND
OPTIMIZATION OF POWER PURCHASE COST FOR BSES YAMUNA POWER
LTD USING MERIT ORDER DISPATCH MODEL

Under the Guidance of
Mr. Rajul Agarwal, AVP, Regulatory Affairs, BSES Yamuna Power Ltd
Mr. P. Sai Krishna, DGM, Regulatory Affairs, BSES Yamuna Power Ltd
Ms. Manju Mam, Director, NPTI Faridabad
At
BSES Yamuna Power Limited
Submitted by
ANIRBAN BANDYOPADHYAY
Roll No 12
MBA (Power Management)

(Under the Ministry of Power, Government of India)
Affiliated to

MAHARSHI DAYANAND UNIVERITY, ROHTAK
August, 2013
i

Declaration
I, Anirban Bandyopadhyay, Roll No. 12, student of MBA Power Management (2012 14)
at National Power Training Institute, Faridabad hereby declare that the Summer Training
Report entitled ARR PROJECTION FOR BSES YAMUNA POWER LTD FOR 3
RD
MYT
CONTROL PERIOD AND OPTIMIZATION OF POWER PURCHASE COST FOR BSES
YAMUNA POWER LTD USING MERIT ORDER DISPATCH MODEL is an original
work and the same has not been submitted to any other Institute for the award of any other
degree.
A Seminar presentation of the Training Report was made on ______________________
and the suggestions as approved by the faculty were duly incorporated.

Presentation In-Charge Signature of the Candidate
(Faculty)

Countersigned
Director / Principal of the Institute

ii

Training Completion Certificate

iii

Acknowledgement
Words could never be enough to express my true regards to all those who in some or the
other way helped me in completing this project. I cant in full measure, reciprocate the
kindness shown and contribution made by various persons on this endeavor of mine. I shall
always remember them with gratitude and sincerity. I take this opportunity to thank all those
who have been instrumental in completion of my training.
I would like to take the opportunity to thank my Project Guides Mr. Rajul Agarwal, AVP,
Regulatory Affairs, BSES Yamuna Power Ltd and Mr. P. Sai Krishna, DGM, Regulatory
Affairs, BSES Yamuna Power Ltd for their effective guidance and parental support
throughout the course of my project. I would forever be indebted to the team members of
Regulatory Affairs department Mr. Abhishek Srivastava, Ms. Prachi Jain and Mr. Vikas
Dixit. The inputs provided by them have been invaluable for the completion of my project.
I feel deep sense of gratitude towards Mr .J.S.S. Rao, Principal Director, Corporate Affairs,
NPTI, Mr. S.K. Chaudhary, Principal Director, CAMPS, NPTI, my internal project guide Ms.
Manju Mam for arranging my internship at BSES Yamuna Power Ltd, and Mr. Amit Mishra,
Asst. Director, NPTI for being a constant source of motivation and guidance throughout the
course of my internship.
Thank you all for being there for me always.

Anirban Bandyopadhyay

iv

Executive Summary
Future of power sector in India is promising, owing to its huge demand. But it has a serious
weakness in form of its distribution section. The distribution sector is the final and the most
crucial link in the electricity supply chain, and unfortunately the weakest and the most loss
making one in our country. Reeling under a huge aggregate accumulated loss of over Rs. 2.46
lakh Crore by FY 13, as stated by Mr. Montek Singh Ahluwalia, Deputy Chairman, Planning
Commission, the sector needs a complete reform, both technically and financially.
One of the major causes behind this financial distress is regular increase of power purchase
cost and irregular hike of distribution tariff. The ideal situation of a cost-reflective
distribution tariff is yet to be achieved in most parts in our country. In order to improve this
situation, timely filing of ARR-s by distribution licensees and a focus to reduce power
purchase costs should be the need of the hour.
In this report, the ARR (Aggregate Revenue Requirement) for BSES Yamuna Power Ltd, a
distribution licensee supplying power to Central & East Delhi, for 3
rd
MYT (Multi-Year
Tariff) Control Period (FY 2015-16 to FY 2017-18) has been projected. Another exercise has
been carried out to find the impact of application of Merit Order Dispatch concept on the
power purchase cost of the distribution licensee, in order to optimize the power purchase cost.
For stepwise calculation and projection of ARR, all its components including all the
uncontrollable and controllable cost factors are calculated first. The ARR as projected for 3
years of the 3
rd
MYT Control Period are Rs. 4849.68 Cr, Rs. 5666.50 Cr and Rs. 6072.58 Cr
respectively against revenue collections of Rs. 4636.27 Cr, Rs. 4890.98 Cr and Rs. 5127.65
respectively, resulting in an increasing gap between the average cost of supply and average
billing rate (at existing tariff) of Rs. 0.35/unit, Rs. 1.20/unit and Rs. 1.39/unit respectively.
This increasing revenue gap (at existing tariff) calls for a tariff hike of 4.40% in FY 2015-16,
or a hike of 13.69% in FY 2016-17, or a hike of 15.56% in FY 2017-18 to abolish the
revenue gap and achieve a cost-reflective tariff.
An analysis of the ARR show that, power purchase cost covers about 70% of the total
expenses incurred by the distribution licensee. Hence in order to optimize the power purchase
cost, impact of merit order dispatch concept was examined.
v

It was seen that, implementation of the Merit Order Dispatch model can help in reducing
power purchase cost by a minimum amount of about Rs. 100 Cr, as was examined in this
study for FY 2012-13.
In addition, if share of BYPL is reduced from the present 27.24% to 23.97% along with re-
allocation of power purchase from selected costlier power stations, it would result in a saving
of about Rs. 390 Cr, as was examined in this study for FY 2012-13.
Although this report has several limitations which are discussed later in this report, it has
thrown light on usefulness of a cost reflective tariff, and importance of reducing the power
purchase cost using merit order dispatch concept in reduction of the overall expenses.

vi

List of Abbreviations
AAD Advance Against Depreciation
A&G Administrative and General
ABR Average Billing Rate
ARR Aggregate Revenue Requirement
AT&C Loss Aggregate Technical & Commercial Loss
BYPL BSES Yamuna Power Limited
BRPL BSES Rajdhani Power Ltd
CAGR Compound Annual Growth Rate
CERC Central Electricity Regulatory Commission
COD Commercial Operation Date
CPI Consumer Price Index
CWIP Capital work in progress
DERC Delhi Electricity Regulatory Commission
DMRC Delhi Metro Railway Corporation
DGVCL Dakshin Gujarat Vij Company Limited
DJB Delhi Jal Board
DTL Delhi Transco Limited
DVB Delhi Vidyut Board
ERPC Eastern Regional Power Committee
FPA Fuel Price Adjustment
FY Financial Year
GERC Gujarat Electricity Regulatory Commission
GFA Gross Fixed Asset
GoNCTD The Government of National Capital Territory of Delhi
GSECL Gujarat State Electricity Corporation Limited
GUVNL Gujarat Urja Vikas Nigam Limited
IEX Indian Energy Exchange
IPP Independent Power Producer
LIP Large Industrial Power
MDI Maximum Demand Indicator
vii

MU Million Units
MW Mega Watt
MYT Multi Year Tariff
NDHT Non-Domestic High Tension
NDLT Non-Domestic Low Tension
NDPL North Delhi Power Limited
NPC Nuclear Power Corporation
NRLDC Northern Regional Load Dispatch Centre
O&M Operation & Maintenance
PPA Power Purchase Agreement
PXIL Power Exchange India Ltd
R&M Repairs and Maintenance
REC Renewable Energy Certificate
RLDC Regional Load Despatch Centre
R-LNG Re-gasified Liquefied Natural Gas
RoCE Return on Capital Employed
RoE Return on Equity
RPO Renewable Purchase Obligation
RRB Regulated Rate Base
SERC State Electricity Regulatory Commission
SGS State Generating Station
SLDC State Load Despatch Centre
SIP Small Industrial Power
UI Unscheduled Interchange
WACC Weighted Average Cost of Capital
WPI Wholesale Price Index

viii

List of Tables
Table 1: Some statistics on BSES Yamuna Power Ltd & BSES Rajdhani Power Ltd ........................... 8
Table 2: Tariff Schedule for BYPL consumers w.e.f. 01.08.2013 ........................................................ 18
Table 3: Allocation of power to BYPL from NTPC stations ................................................................ 21
Table 4: Allocation of power to BYPL from NHPC stations ............................................................... 21
Table 5: Allocation of power to BYPL from NPCIL stations .............................................................. 22
Table 6: Allocation of power to BYPL from other central generating stations .................................... 22
Table 7: Allocation of power to BYPL from state generating stations ................................................. 22
Table 8: Allocation of power to BYPL from future stations ................................................................ 23
Table 9: Projected synchronization / COD dates of future stations ...................................................... 23
Table 10: Renewable Purchase Obligation (as per DERC RPO & REC Framework Implementation
Regulations, 2012) ................................................................................................................................ 25
Table 11: Actual CPI & WPI growth in last 5 years preceding FY 2011-12 (base year for 2nd MYT
Control Period)...................................................................................................................................... 28
Table 12: Projected CPI & WPI for 2nd MYT Control Period ............................................................. 29
Table 13: Inflation Factor for 2nd MYT Control Period ...................................................................... 29
Table 14: Actual CPI & WPI growth in last 5 years preceding FY 2014-15 (base year for 3rd MYT
Control Period)...................................................................................................................................... 29
Table 15: Projected CPI & WPI for 3rd MYT Control Period ............................................................. 30
Table 16: Inflation Factor for 3rd MYT Control Period ....................................................................... 30
Table 17: Number of Employees (function-wise) ................................................................................. 31
Table 18: Statement of Allocation of Employee Cost between Wheeling and Retail Supply .............. 31
Table 19: Statement of Allocation of A&G Expenses between Wheeling and Retail Supply .............. 32
Table 20: Depreciation Rates and Statement of Allocation of Depreciation between Wheeling and
Retail Supply ......................................................................................................................................... 34
Table 21: Number of Consumers .......................................................................................................... 41
Table 22: Connected Load (MW) ......................................................................................................... 42
Table 23: Energy Sales (MU) ............................................................................................................... 44
Table 24: Revenue collected at existing tariff in FY 2015-16 (Rs. Cr.) ............................................... 45
Table 27: Distribution Losses (%), AT&C Loss (%) & Energy Requirement (MU) ........................... 47
Table 28: Energy availability (MU) from NTPC stations ..................................................................... 47
Table 29: Energy availability (MU) from NHPC stations .................................................................... 48
Table 30: Energy availability (MU) from NPCIL stations ................................................................... 48
Table 31: Energy availability (MU) from other central generating stations ......................................... 49
Table 32: Energy availability (MU) from state generating stations ...................................................... 49
Table 33: Energy availability (MU) from future stations ..................................................................... 49
Table 34: Energy availability (MU) from renewable sources ............................................................... 50
Table 35: Power purchase cost (Rs. Cr.) for NTPC stations ................................................................. 50
Table 36: Power purchase cost (Rs. Cr.) for NHPC stations ................................................................ 51
Table 37: Power purchase cost (Rs. Cr.) for NPCIL stations ............................................................... 51
Table 38: Power purchase cost (Rs. Cr.) for other central generating stations ..................................... 51
ix

Table 39: Power purchase cost (Rs. Cr.) for state generating stations .................................................. 52
Table 40: Power purchase cost (Rs. Cr.) for future stations ................................................................. 52
Table 41: Power purchase cost (Rs. Cr.) for renewable energy sources ............................................... 52
Table 42: Inter & Intra-State Transmission Losses (% and MU) ......................................................... 53
Table 43: Inter & Intra-State Transmission Charges (Rs. Cr.) ............................................................. 53
Table 44: Energy Balance ..................................................................................................................... 53
Table 45: Total O&M Expenses ........................................................................................................... 54
Table 46: Allocation of Employee Expense into Wheeling & Retail Supply ....................................... 54
Table 47: Allocation of A&G Expenses into Wheeling & Retail Supply ............................................. 54
Table 48: Allocation of R&M Expenses into Wheeling & Retail Supply ............................................ 55
Table 49: Capital Expenditure & Capitalization Schedule (Rs. Cr.) .................................................... 55
Table 50: Consumer Contribution (Rs. Cr.) .......................................................................................... 55
Table 51: Depreciation (Rs. Cr.) ........................................................................................................... 56
Table 52: Allocation of Opening GFA & Depreciation (Rs. Cr.) ......................................................... 56
Table 53: Allocation of Accumulated Depreciation (Rs. Cr.) .............................................................. 56
Table 54: Advance Against Depreciation (Rs. Cr.) .............................................................................. 57
Table 55: Allocation of AAD into Wheeling and Retail Supply (Rs. Cr.) ........................................... 57
Table 56: Working Capital (Rs. Cr.) ..................................................................................................... 57
Table 57: RRB (Rs. Cr.) ....................................................................................................................... 58
Table 58: RRB allocation into Wheeling & Retail Supply (Rs. Cr.) .................................................... 58
Table 59: Means of Finance (Rs. Cr.) ................................................................................................... 58
Table 60: Equity (Rs. Cr.) ..................................................................................................................... 59
Table 61: Debt (Rs. Cr.) ........................................................................................................................ 59
Table 62: WACC & RoCE (Rs. Cr.) ..................................................................................................... 59
Table 63: RoCE allocation into Wheeling & Retail Supply (Rs. Cr.) .................................................. 59
Table 64: Income Tax (Rs. Cr.) ............................................................................................................ 60
Table 65: Income Tax allocation into Wheeling & Retail Supply (Rs. Cr.) ......................................... 60
Table 66: Non-Tariff Income (Rs. Cr.) ................................................................................................. 60
Table 67: ARR (Rs. Cr.) ....................................................................................................................... 61
Table 68: ARR for Wheeling Business (Rs. Cr.) .................................................................................. 61
Table 69: ARR for Retail Supply Business (Rs. Cr.) ............................................................................ 62
Table 70: Revenue Gap & ABR at existing tariff (Rs. Cr.) .................................................................. 62
Table 71: Merit Order Dispatch Case - I ............................................................................................ 63
Table 72: Merit Order Dispatch Case - II .......................................................................................... 63
Table 73: Merit Order Dispatch Case - III ......................................................................................... 64
Table 74: Merit Order Dispatch Case - IV ......................................................................................... 64
Table 75: Merit Order Dispatch Case - V .......................................................................................... 65
Table 76: Merit Order Dispatch Case - VI ......................................................................................... 65

x

List of Figures
Figure 1: Segregation of areas under three discoms in NCT Delhi ........................................................ 7
Figure 2: Components of ARR for FY 2015-16, FY 2016-17 and FY 2017-18 ................................... 66

xi

Contents
Declaration ............................................................................................................................................... i
Training Completion Certificate ............................................................................................................. ii
Acknowledgement ................................................................................................................................. iii
Executive Summary ............................................................................................................................... iv
List of Abbreviations ............................................................................................................................. vi
List of Tables ....................................................................................................................................... viii
List of Figures ......................................................................................................................................... x
Contents ................................................................................................................................................. xi
1. INTRODUCTION .............................................................................................................................. 1
1.1 ARR determination in Electricity distribution business under MYT framework ......................... 1
1.2 Merit Order Dispatch (MOD) for optimization of power purchase cost of a distribution licensee
............................................................................................................................................................ 4
1.3 Objective of the project ................................................................................................................. 5
1.4 Significance of the project ............................................................................................................ 5
1.5 Scope of the project ...................................................................................................................... 6
1.6 Organization profile : BSES Yamuna Power Ltd ......................................................................... 6
2. REVIEW OF LITERATURE ........................................................................................................... 10
2.1 ARR determination in Electricity distribution business under MYT framework ....................... 10
2.2 Merit Order Dispatch (MOD) for optimization of power purchase cost of a distribution licensee
.......................................................................................................................................................... 12
3. RESEARCH METHODOLOGY ..................................................................................................... 14
3.1 ARR projection for BSES Yamuna Power Ltd under MYT framework for 3
rd
MYT Control
Period (FY 2015-16 to FY 2017-18)................................................................................................. 14
3.1.1 Sales Forecast ....................................................................................................................... 14
3.1.2 Calculation of revenue ......................................................................................................... 17
3.1.3 AT&C Loss, Distribution Losses, Collection Efficiency & Energy Requirement .............. 19
3.1.4 Energy availability from generating stations ....................................................................... 21
3.1.5 Power purchase cost ............................................................................................................. 25
3.1.6 Transmission Losses & Charges .......................................................................................... 26
3.1.7 Operation & Maintenance (O&M) Expenses ....................................................................... 27
3.1.8 Capital Expenditure and Capitalization ............................................................................... 33
xii

3.1.9 Depreciation ......................................................................................................................... 34
3.1.10 Advance Against Depreciation (AAD) .............................................................................. 35
3.1.11 Working Capital ................................................................................................................. 35
3.1.12 Regulated Rate Base (RRB) ............................................................................................... 36
3.1.13 Means of Finance ............................................................................................................... 38
3.1.14 Return on Capital Employed (RoCE) ................................................................................ 38
3.1.15 Income Tax ........................................................................................................................ 39
3.1.16 Non Tariff Income ............................................................................................................. 39
3.1.17 Determination of ARR ....................................................................................................... 39
3.2 Merit Order Dispatch (MOD) for optimization of power purchase cost of BYPL ..................... 40
4. RESULTS & DISCUSSION ............................................................................................................. 41
4.1 ARR projection for BSES Yamuna Power Ltd under MYT framework for 3
rd
MYT Control
Period (FY 2015-16 to FY 2017-18)................................................................................................. 41
4.1.1 Sales Forecast ....................................................................................................................... 41
4.1.2 Revenue collected at existing tariff ...................................................................................... 45
4.1.3 AT&C Loss, Collection Efficiency, Distribution Losses & Energy Requirement .............. 47
4.1.4 Energy availability from generating stations ....................................................................... 47
4.1.5 Power purchase cost ............................................................................................................. 50
4.1.6 Transmission Losses & Charges .......................................................................................... 53
4.1.7 Energy balance ..................................................................................................................... 53
4.1.8 Operation & Maintenance (O&M) Expenses ....................................................................... 54
4.1.9 Capital Expenditure and Capitalization ............................................................................... 55
4.1.10 Depreciation ....................................................................................................................... 56
4.1.11 Advance Against Depreciation (AAD) .............................................................................. 57
4.1.12 Working Capital ................................................................................................................. 57
4.1.13 Regulated Rate Base (RRB) ............................................................................................... 58
4.1.14 Means of Finance ............................................................................................................... 58
4.1.15 Return on Capital Employed (RoCE) ................................................................................ 59
4.1.16 Income Tax ........................................................................................................................ 60
4.1.17 Non-Tariff Income ............................................................................................................. 60
4.1.18 Aggregate Revenue Requirement (ARR) ........................................................................... 61
4.1.19 Revenue Gap & Average Billing Rate at existing tariff, and proposed tariff hike ............ 62
4.2 Merit Order Dispatch (MOD) for optimization of power purchase cost of BYPL ..................... 63
5. SUMMARY & CONCLUSION ....................................................................................................... 66
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6. LIMITATIONS OF STUDY ............................................................................................................ 68
7. FUTURE SCOPE & RECOMMENDATIONS ................................................................................ 70
8. BIBLIOGRAPHY ............................................................................................................................. 71

[ 1 ]

1. INTRODUCTION
1.1 ARR determination in Electricity distribution business under MYT
framework
The electricity supply chain can be broadly divided into three main businesses, namely
generation, transmission and distribution. Each of these three businesses has some inherent
cost components, which the business incurs in its day-to-day operations. In order that the
business survives, these costs have to be recovered on a regular and structured basis by
earning revenue. Revenue is earned through the route of a structured tariff schedule,
designated for the specific kind of business and for the specific kind of consumers served.
Calculation of ARR or Aggregate Revenue Requirement is the prime necessity for
determination of tariff. ARR refers to the revenue requirement by the generating company or
the transmission or distribution licensee for recovery, through tariff, of the allowable
expenses and return on capital pertaining to its licensed business, in accordance with the
regulations specified by CERC or the concerned SERC.
Prior to FY 2007-08, the tariff determination process in NCT Delhi was exercised in yearly
basis. According to this system of tariff determination, the Generating Company or Licensee
(Distribution or Transmission) was required to submit an annual filing of expected revenues
from various charges, or the ARR, and the Delhi Electricity Regulatory Commission or
DERC after scrutinizing and validating every part of the ARR filed, approves wholly or
partly the tariff proposed by the licensee. However this system of annual tariff determination
was too unpredictable.
Accordingly, an incentive based Multi Year Tariff (MYT) determination process was
designed with the intention to make the tariff setting exercise more predictable and to impart
greater regulatory certainty to the process of tariff determination. A Multi Year Tariff (MYT)
framework is defined as a framework for regulating the Generating Company or licensees
over a period of time wherein the principles of regulating the returns/profits of licensees and
the trajectory of individual cost and revenue elements of the Utility are determined in
advance. The concept of MYT gives an element of certainty to all stakeholders. The basic
premise is that tariffs would not fluctuate beyond a certain bandwidth unless there are force
[ 2 ]

majeure conditions. The consumer would have a fair idea of what to expect in the next three
to five years and the Utility would also be able to plan its business having known the
principles for tariff determination for the control period. Multi Year Tariff does not imply
that the Regulatory Commissions need to fix an identical tariff, year after year, throughout
the control period though, of course, there is no bar if the Regulatory Commission chooses to
do so. It is more likely that the Regulatory Commission would fix the guidelines which would
determine the retail tariffs and having fixed the guidelines, it is expected that the tariffs would
operate within a certain band.
The shift from an annual tariff determination exercise to MYT framework is expected to
bring the following benefits:
i. Provide Regulatory Certainty to the investors and consumers by promoting
transparency, consistency and predictability of regulatory approaches thereby
minimizing perceptions of regulatory risk.
ii. Ensure financial viability of the sector to attract investments and safeguard
consumers.
iii. Provide incentivisation framework to reward performance, promote efficiency and
competition.
iv. Address risk sharing mechanism between utility and consumers based on controllable
and uncontrollable factors.
DERC has defined the periodicity that will apply for a number of years for MYT Framework
called the Control Period. The first control period was of five financial years starting from FY
2007-08 to FY 2011-12. The second or current control period is of three financial years
starting from FY 2012-13 to FY 2014-15. For the purpose of this project work, the third
control period is also assumed to be of three financial years starting from FY 2015-16 to FY
2017-18.
The ARR and tariffs for generation, transmission, retail supply business and the network
business of distribution licensees would be determined for each year of the Control Period at
the beginning of the Control Period. The MYT framework shall inter alia consist of the
parameters within the control of Utilities. The MYT framework shall be finalized considering
[ 3 ]

all the parameters duly specifying targets for these parameters under the control of the
licensees. Some of the critical parameters in the distribution business are as follows:
i. Volume of Energy Sales Individual consumers decide the quantity and the pattern of
their consumption, which would be influenced by demand side management
measures, energy efficiency, weather conditions, industrial activity, etc. It shall also
be determined by the consumer mix of the Licensee.
ii. Power purchase cost This is the most significant cost for any Distribution Licensee,
driven by external factors such as fuel price changes, exchange rate fluctuations,
inflation, etc.
iii. System Losses Losses incurred due to technical and commercial loss, are considered
to be within the Licensees control, and are expected to be handled by the licensee.
iv. Operating Costs O&M Expenses are considered to be within the control of
licensees, and it is expected to run its operations in an efficient manner with suitable
allocation of costs between different heads, based on its individual requirements.
v. Financing Costs The network of the licensee in Delhi is being upgraded and
expanded to meet the rapidly increasing demand for power. The cost of financing the
expansion in network is a significant expense for the licensee.
While considering regulated nature of power industry, it is useful to consider the split of costs
into those that the management of the company can control and those it cannot. The
Regulations seeks to provide the owners and management of a company with incentives to
cut costs that are under their control and to insulate them from abnormal profits and losses
arising from costs that are outside their control.
DERC stipulates the following factors as un-controllable factors for a distribution licensee:
i. Force Majeure Events, such as natural disaster or fire;
ii. Changes in law, judicial pronouncements and Orders of the Central Government,
State Government or Commission;
iii. Economy-wide influences, such as unforeseen changes in inflation rate, market-
interest rates, taxes and statutory levies;
iv. Cost of power purchase;
v. Change in consumer mix;
[ 4 ]

vi. Quantum of energy sales.
The Utilities shall not bear the burden of items that are considered beyond their control or
uncontrollable, and the consequent financial gain or loss shall be adjusted in the annual
revenue requirement.
The following factors are stipulated as controllable factors for a distribution licensee:
i. AT&C Loss;
ii. Distribution losses;
iii. Collection efficiency;
iv. O&M Expenses;
v. Return on Capital Employed;
vi. Depreciation;
vii. Quality of Supply.
Targets shall be set for such controllable factors at beginning of each control period. Any
financial loss arising from the performance falling short of the targets in these controllable
items shall be borne by the licensee and not be included in the ARR. Any financial gain
arising from performing better than targets shall be as per the incentive mechanism specified
in the Regulations.
1.2 Merit Order Dispatch (MOD) for optimization of power purchase cost
of a distribution licensee
Cost incurred by a distribution licensee for purchasing power covers about 70% of its total
cost. Any reduction in power purchase cost would help in reduction of the total cost of the
distribution business to a great extent. The distribution licensee purchases power from one or
more sources that may be both short term and long term. Electricity purchased from the long
term sources are those purchased from power plants through long term PPAs. Short term
sources include purchasing power through short term PPAs, power purchased from power
exchanges, power purchased through banking route or unscheduled power purchase (UI).
One way of reducing the power purchase cost is to purchase power from the long term
sources following a merit order dispatch principle, wherein priority will be given to the
[ 5 ]

cheaper long term sources while purchasing power from them. Power will be purchased first
from those sources that will provide power at a cheaper rate. Then the remaining power will
be purchased from the costlier sources. The distribution licensee has to draw power from
various long term sources according to the cost of the power supplied by those sources or
power plants. This will help in reducing the power purchase cost, and subsequently the
overall cost of the distribution licensee.
1.3 Objective of the project
Two objectives are served in this project work:
i. Projection of ARR for third MYT Control Period (FY 2015-16 to FY 2017-18) for
BSES Yamuna Power Ltd (BYPL) this includes projection of all the controllable
and uncontrollable expenses incurred by BYPL and calculation of ARR;
ii. Optimization of Power Purchase Cost by applying the Merit Order Dispatch (MOD)
principle this includes calculation of power purchase costs from individual power
plants, and sorting them according to ascending order of their variable costs. Some
specific types of power plants, namely hydro-electric plants, nuclear plants and
renewable energy plants are excluded from merit order regime.
1.4 Significance of the project
Under the present scenario of financial distress experienced by most of the distribution
companies in India, it is important that the distribution tariff should be cost reflective, and
regulatory assets should be abolished gradually. For that purpose, a proper projection of ARR
is of utmost importance, as based on this ARR, the Commission would determine the tariff.
In case of wrong projection or improper estimation, the calculated tariff may end up at a
figure far away from the actual incurred cost. Besides the Commission may also find it
inadequate to validate a filed ARR that is calculated with vague assumptions without any
through study. So it is essential that the ARR projections are made with all the factors taken
into account up to the highest possible extent. This will help the distribution licensee to
justify its filings before the Commission, and subsequently to have a cost reflective tariff.
Moreover, in a mission to reduce the overall cost, the distribution licensee should first focus
on reducing power purchase cost, as it alone covers 70% of the total cost. One way of
[ 6 ]

reducing the power purchase cost is to apply merit order dispatch principle. In this project
work, an attempt is made to find the benefit of following the MOD principle in terms of
money. The saving in cost is found out by calculating the difference between the power
purchase cost without merit order dispatch model and that with merit order dispatch. This
project work will show a way to the distribution licensee to reduce its power purchase cost
with help of the MOD model.
1.5 Scope of the project
The project work is carried out to estimate the ARR for the third MYT control period (FY
2015-16 to FY 2017-18) and to examine the impact of MOD model on power purchase cost
for BSES Yamuna Power Ltd, which is a distribution licensee supplying power to Central &
East Delhi.
In this context, the ARR is projected for:
i. Wheeling Business; and
ii. Retail Supply Business
of the distribution licensee, i.e. BYPL.
1.6 Organization profile : BSES Yamuna Power Ltd
Following the privatization of Delhis power sector and unbundling of the Delhi Vidyut
Board (DVB) in July 2002, the business of power distribution in NCT Delhi was divided into
three Distribution Companies by the name of Central-East Delhi Electricity Distribution
Company Ltd, South-West Delhi Electricity Distribution Company Ltd and North-North
West Delhi Electricity Distribution Company Ltd. Through a competitive bidding process,
these three discoms were rechristened under the Transfer Scheme Rules (effective from July
1, 2002) as BSES Yamuna Power Ltd (BYPL), BSES Rajdhani Power Ltd (BRPL), and
North Delhi Power Ltd (NDPL) respectively by forming Joint Venture between GoNCTD
and Reliance Infra (for BYPL and BRPL), and GoNCTD and Tata Power (for NDPL) with
51% of equity shares in each of the three discoms owned by the private investors.
[ 7 ]

BYPL distributes power to an area spread over 200 sq kms with a population density of 6750
per sq km. Its 13.5 lakh customers are spread over 14 districts across Central and East areas
including Chandni Chowk, Daryaganj, Paharganj, Shankar Road, Patel Nagar, G T Road,
Karkardooma, Krishna Nagar, Laxmi Nagar, Mayur Vihar, Yamuna Vihar, Nand Nagri and
Karawal Nagar.
Since taking over distribution, BSES singular mission has been to provide reliable and
quality electricity supply. BSES has invested over Rs 4500 Cr. on upgrading and augmenting
the infrastructure which has resulted in a record reduction of AT&C losses. From a high of
63.1 % AT&C losses in BYPL area in 2002 the losses have come down to 17.83% a record
reduction of 45.3%.

Figure 1: Segregation of areas under three discoms in NCT Delhi

[ 8 ]

Table 1: Some statistics on BSES Yamuna Power Ltd & BSES Rajdhani Power Ltd
Sl No Particulars Unit
BYPL (East &
Central)
BRPL (South &
West)
1 Area sq km 200 750
2
Customer Density (as of
Mar 13)
Cons /
sq km
6750 2465
3
Total Registered Customers
(as of Mar 13)
Million 1.35 1.85
4 Peak Demand (FY 13) MW 1461 2338

Vision of BSES:
i. To be amongst the most admired and most trusted integrated utility companies in the
world.
ii. To deliver reliable and quality products and services to all customers at competitive
costs, with international standards of customer care- thereby creating superior value
for all stakeholders.
iii. To set new benchmarks in: standards of corporate performance and governance,
through the pursuit of operational and financial excellence, responsible citizenship
and profitable growth.

Mission of BSES:
i. To attain global best practices and become a world-class utility.
ii. To provide: uninterrupted, affordable, quality, reliable, safe and clean power to our
customers.
iii. To achieve excellence in: service, quality, reliability, safety and customer care.
iv. To earn: trust and confidence of all customers and stakeholders by exceeding their
expectations, and make the company a respected household name.
v. To work with vigour, dedication and innovation keeping total customer satisfaction as
the ultimate goal.
vi. To consistently achieve: high growth with the highest levels of productivity.
vii. To be: a technology driven, efficient and financially sound organization.
[ 9 ]

viii. To be a responsible corporate citizen nurturing human values and concern for society,
the environment and above all, people.
ix. To contribute: towards community development and nation building.
x. To promote a work culture that fosters individual growth, team sprit and creativity to
overcome challenges and attain goals.
xi. To encourage: ideas, talent and value systems.
xii. To uphold the guiding principles of: trust, integrity and transparency in all aspects of
interactions and dealings.

[ 10 ]

2. REVIEW OF LITERATURE
2.1 ARR determination in Electricity distribution business under MYT
framework
As per Electricity Act 2003, Section 62 (1):
The Appropriate Commission shall determine the tariff in accordance with the provisions of
this Act for
(a) supply of electricity by a generating company to a distribution licensee:
Provided that the Appropriate Commission may, in case of shortage of supply of
electricity, fix the minimum and maximum ceiling of tariff for sale or purchase of
electricity in pursuance of an agreement, entered into between a generating company and
a licensee or between licensees, for a period not exceeding one year to ensure reasonable
prices of electricity;
(b) transmission of electricity ;
(c) wheeling of electricity;
(d) retail sale of electricity:
Provided that in case of distribution of electricity in the same area by two or more
distribution licensees, the Appropriate Commission may, for promoting competition
among distribution licensees, fix only maximum ceiling of tariff for retail sale of
electricity.
As per Electricity Act 2003, Section 62 (5):
The Commission may require a licensee or a generating company to comply with such
procedures as may be specified for calculating the expected revenues from the tariff and
charges which he or it is permitted to recover.
Clause 8.1 (1) of National Tariff Policy states that:
[ 11 ]

This (Multi Year Tariff Framework) would minimize risks for utilities and consumers,
promote efficiency and appropriate reduction of system losses and attract investments and
would also bring greater predictability to consumer tariffs on the whole by restricting tariff
adjustments to known indicators on power purchase prices and inflation indices. The
framework should be applied for both public and private utilities.
Clause 2.1(b) of Regulation A2 of DERC (Terms & Conditions for Determination of
Wheeling Tariff & Retail Supply Tariff) Regulations, 2011 defines ARR as:
Aggregate Revenue Requirement or ARR means for each Financial Year, the costs
pertaining to the Licensed business which are permitted, in accordance with these
Regulations, to be recovered from the tariffs and charges determined by the Commission.
Clause 7.3 of Regulation A7 of DERC (Terms & Conditions for Determination of Wheeling Tariff &
Retail Supply Tariff) Regulations, 2011 explains Business Plan Filings as a part of Multi-Year Filings
for the Control Period as:
The Distribution Licensee shall file for the Commissions approval, on 1
st
April of the year
preceding the first year of the Control Period or any other date as may be directed by the
Commission, a Business Plan approved by the Board of Directors.
Retail Supply Tariff) Regulations, 2011 explains Tariff Filings as a part of Multi-Year Filings for the
Control Period as:
The Distribution Licensee shall file an application for approval of Wheeling Tariff and
Retail Supply Tariff for each year of the Control Period, not less than 120 days before the
commencement of the first year of the Control Period or such other date as may be directed
by the Commission.
Clauses 4.1 & 4.2 of Regulation A4 of DERC (Terms & Conditions for Determination of Wheeling
Tariff & Retail Supply Tariff) Regulations, 2011 state that:
4.1 : The Commission shall adopt Multi Year Tariff framework for approval of ARR and
expected revenue from tariffs and charges.
[ 12 ]

4.2 : The Multi Year Tariff framework shall be based on the following:
(a) Business Plan of the Distribution Licensee for the entire Control Period to be
submitted to the Commission for approval, prior to the start of the Control Period;
(b) Applicants forecast of expected Wheeling Tariff and Retail Supply Tariff for each
year of the Control Period, based on reasonable assumptions of the underlying
financial and operational parameters, as submitted in the Business Plan;
(c) Trajectory for specific parameters shall be stipulated by the Commission, where the
performance of the applicant is sought to be improved through incentives and
disincentives;
(d) Annual review of performance shall be conducted based on the actual vis--vis the
approved forecast and categorization of variations in performance into controllable
factors and uncontrollable factors;
(e) The Distribution Licensees performance vis--vis the AT&C loss targets specified by
the Commission shall be appropriately incentivize / penalise; and
(f) Variation in revenue / cost on account of uncontrollable factors like sales, power
purchase and controllable factors - RoCE and Depreciation shall be trued up
annually.
of a distribution licensee
Clause 8.2.1 (1) of National Tariff Policy states that:
All power purchase costs need to be considered legitimate unless it is established that the
merit order principle has been violated or power has been purchased at unreasonable rates.
Para 11 of Regulation 6.5 of the CERC (Indian Electricity Grid Code) Regulations states that:
Since variation of generation in run-of-river power stations shall lead to spillage, these
shall be treated as must run stations. All renewable energy power plants, except for biomass
power plants, and non-fossil fuel based cogeneration plants whose tariff is determined by the
CERC shall be treated as MUST RUN power plants and shall not be subjected to merit
order dispatch principles.
[ 13 ]

Retail Supply Tariff) Regulations, 2011 state that:
While approving the cost of power purchase, the Commission shall determine the quantum
of power to be purchased from various sources in accordance with the principles of merit
order schedule and dispatch based on a ranking of all approved sources of supply in the
order of their variable cost of power purchase.
Gujarat Electricity Regulatory Commission (GERC) in its MYT tariff order dated Sep 6,
2011 for Dakshin Gujarat Vij Company Limited (DGVCL) stated in Para 6.8.12 that:
GUVNL, in order to optimize the power purchase costs, has worked out a comprehensive
merit order dispatch (MOD), as shown below:
- The dispatch from individual generating station is worked out, based on merit order
of variable cost of each generating unit.
- NPC power plants, renewable sources, captive power plants and hydro power plants
have been considered as must run power plants. Hence, they have been excluded from
merit order calculations.
- R-LNG spot gas based power plants PLF is considered at 30% for FY 2011-12 and @
5% for the FY 2012-13 onwards due to high variable costs. The power purchase from
these plants has been capped by GUVNL in order to minimize the impact of higher
variable cost of generation from these plants.
- During merit order dispatch, at least 50% availability of each plant has been
considered to take care of the peak loads and peak seasons.
- Fixed cost and variable cost for GSECL plants have been taken as approved by the
Commission for the control period in the Order dated 31
st
March, 2011.
- For IPPs and central sector stations, fixed cost and variable costs are taken as per
actuals of FY 2009-10.

[ 14 ]

3. RESEARCH METHODOLOGY
3.1 ARR projection for BSES Yamuna Power Ltd under MYT framework
for 3
rd
MYT Control Period (FY 2015-16 to FY 2017-18)
The steps for ARR projection are discussed below in details.
3.1.1 Sales Forecast
The Licensee shall forecast sales for each customer category and sub-categories for each year
of the Control Period in their filings, for the Commissions review and approval. The
Commission shall examine the forecasts for their reasonableness and consistency based on
growth in the number of consumers, pattern of consumption, losses and demand of electricity
in previous years and anticipated growth in the next year and any other factor, which the
Commission may consider relevant and approve the sales forecast with such modifications as
deemed fit for each year of the Control Period.
3.1.1.1 Forecast of Number of Consumers
1) 2
nd
Control Period (FY 2012-13 to FY 2014-15):
Here the projection for number of consumers for FY 2013-14 & FY 2014-15 has been
carried out from actual figures for FY 2007-08 to FY 2012-13.
A. Domestic Lighting / Fan & Power:
(a) Up to 2 KW Load: After implementation of MDI since 2011, number of
consumers in this category has shown a declining trend. The % decrease was
high (-20.21%) from FY 2010-11 to 2011-12, as revision of connected load
was started from FY 2011-12. Since then, it has been a continuous practice.
Following this, the % decrease from FY 2011-12 to 2012-13 was -5.26%.
Considering this practice will continue in years to come, the % change in
number of consumers in this category has been taken as -5.26%.
(b) 2 to 5 KW Load: Same as (a). The % effective growth rate is taken as 24.47%
(YoY growth rate from FY 2011-12 to FY 2012-13). In addition, a year-wise
declining factor in consumer growth rate has been considered keeping in mind
the high consumer density in BYPL area, and a probable upcoming saturation
in terms of consumer growth. For calculating this declining factor, the year-
[ 15 ]

wise decline in growth rate in the number of consumers under category
'Domestic lighting / fan and power' has been considered.
(c) Above 5 KW Load: Same as (b). The % effective growth rate is taken as
17.94% (YoY growth rate from FY 2011-12 to FY 2012-13).
B. Domestic Lighting / Fan & Power on 11 KV single delivery point for CGHS: 5
year CAGR (FY 2012-13 over 2008-09) has been taken as the effective growth
rate.
C. Non-Domestic Low Tension (NDLT): 5 year CAGR (FY 2012-13 over 2008-09)
has been taken as the effective growth rate.
D. Non-Domestic High Tension (NDHT): There is much deviation in YoY variation
in growth rates. Hence 3 year CAGR (FY 2012-13 over 2010-11) has been taken
as the effective growth rate for the coming years.
E. Small Industrial Power (SIP): Projected growth has been taken as 0%, as change
in consumers in this category will depend upon Govt. policies and cannot be
predicted based on previous years' figures.
F. Large Industrial Power (LIP): Projected growth has been taken as 0%, as change
G. Agricultural Consumers: Projected growth has been taken as 0%, as it cannot be
H. Mushroom Cultivation: Projected growth has been taken as 0%, as it cannot be
I. DMRC: 5 year CAGR (FY 2012-13 over 2008-09) has been taken as the effective
growth rate.
J. Own Consumption: Growth rate is taken same as that for NDLT consumers.
K. DJB: Projected growth has been taken as 0%.
L. 11 KV - Worship / Hospital: 5 year CAGR (FY 2012-13 over 2008-09) has been
taken as the effective growth rate.
M. DVB Staff: 5 year CAGR (FY 2012-13 over 2008-09) has been taken as the
effective growth rate.
2) 3
rd
Control Period (FY 2015-16 to FY 2017-18):
[ 16 ]

For 3rd Control period, growth rates have been majorly taken equal to the prevailing
growth rate in the previous control period, i.e. 3 yr CAGR figures (for FY 2014-15
over FY 2012-13).
A. Domestic Lighting / Fan & Power:
(a) Up to 2 KW Load: 3 year CAGR (FY 2014-15 over 2012-13) has been taken
as the effective growth rate.
(b) 2 to 5 KW Load: 3 year CAGR (FY 2014-15 over 2012-13) plus a year-wise
declining factor has been taken as the effective growth rate.
(c) Above 5 KW Load: 3 year CAGR (FY 2014-15 over 2012-13) plus a year-
wise declining factor has been taken as the effective growth rate.
B. Domestic Lighting / Fan & Power on 11 KV single delivery point for CGHS: 3
year CAGR (FY 2014-15 over 2012-13) has been taken as the effective growth
rate.
C. Non-Domestic Low Tension (NDLT): 3 year CAGR (FY 2014-15 over 2012-13)
D. Non-Domestic High Tension (NDHT): 3 year CAGR (FY 2014-15 over 2012-13)
E. Small Industrial Power (SIP): Projected growth has been taken as 0%, as change
F. Large Industrial Power (LIP): Projected growth has been taken as 0%, as change
G. Agricultural Consumers: Projected growth has been taken as 0%, as it cannot be
H. Mushroom Cultivation: Projected growth has been taken as 0%, as it cannot be
I. DMRC: 3 year CAGR (FY 2014-15 over 2012-13) has been taken as the effective
growth rate.
J. Own Consumption: 3 year CAGR (FY 2014-15 over 2012-13) has been taken as
the effective growth rate.
K. DJB: Projected growth has been taken as 0%.
L. 11 KV - Worship / Hospital: 3 year CAGR (FY 2014-15 over 2012-13) has been
taken as the effective growth rate.
[ 17 ]

M. DVB Staff: 3 year CAGR (FY 2014-15 over 2012-13) has been taken as the
effective growth rate.
3.1.1.2 Forecast of Connected Load (MW)
Forecasting of connected load for different consumer categories is done in the same way as
number of consumers.
3.1.1.3 Forecast of Energy Sales (MU)
Forecasting of energy sales (MU) is done in two parts.
First the future values of energy sales (MU) are forecasted based on projected values of
number of consumers & connected load. For this purpose, the sales growth rate in any
consumer category has been considered as the geometric mean of the growth rates in number
of consumers & connected load for the same consumer category. Accordingly the sales
figures for various years are projected.
The future values of energy sales are projected again in a different way using CAGR
technique. This is done in the same way as that in case of projecting number of consumers.
The final forecasted figures of energy sales are obtained by taking average of the projected
sales figures from CAGR method, and the projected sales figures obtained from the number
of consumers & connected load data.
3.1.2 Calculation of revenue
Based on the consumer-wise energy sales (MU) data, the revenue collected (Rs. Cr.) can be
projected at the existing tariff schedule effective from 01.08.2013 as declared by DERC in its
tariff order dated 31.07.2013.

[ 18 ]

Table 2: Tariff Schedule for BYPL consumers w.e.f. 01.08.2013
TARIFF SCHEDULE W.E.F. 01.08.2013 (AS DETERMINED BY DERC IN ITS TARIFF ORDER DATED
31.07.2013)
SL
NO
CATEGORY FIXED CHARGES
ENERGY
CHARGES
1 Domestic
1.1 Domestic Lighting / Fan and Power

a. Upto 2 KW connected load

0 - 200 Units 40 Rs/month 390 Paisa/KWh



Above 800 Units 40 Rs/month 700 Paisa/KWh
b. 2 to 5 KW connected load




Above 800 Units 100 Rs/month 700 Paisa/KWh
c. Above 5 KW connected load

0 - 200 Units 20 Rs/KW/month 390 Paisa/KWh



Above 800 Units 20 Rs/KW/month 700 Paisa/KWh
1.2 Single delivery point on 11KV for CGHS

First 55% 20 Rs/KW/month 580 Paisa/KWh

Next 40% 20 Rs/KW/month 680 Paisa/KWh

Balance 5% 20 Rs/KW/month 700 Paisa/KWh
2 Non-Domestic
2.1 Non-Domestic Low Tension (NDLT)

Up to 10 KW 100 Rs/KW/month 790 Paisa/KWh

> 10 KW (11 KVA) to 100 KW (108 KVA) 115 Rs/KVA/month 760 Paisa/KVAh

Above 100 KW (108 KVA) (400 V)
(No supply on LT for load>215 KVA)
150 Rs/KVA/month 890 Paisa/KVAh
2.2 Non-Domestic High Tension (NDHT)

For supply at 11KV and above (for load greater
than 108KVA)
3 Industrial
3.1
Small Industrial Power (SIP) (<200 KW / 215
KVA)


> 10 KW (11KVA) to 100 KW (108KVA) 90 Rs/KVA/month 700 Paisa/KVAh

Above 100 KW (108 KVA) (400 V)
[ 19 ]

3.2
Industrial power on 11KV Single Point
Delivery for group of SIP consumers
3.3
Large Industrial Power (LIP)
(Supply at 11KV and above)
4 Agriculture 20 Rs/KW/month 275 Paisa/KWh
5 Mushroom Cultivation 40 Rs/KW/month 550 Paisa/KWh
6 Public Lighting
6.1 Metered

Street Lighting

700 Paisa/KWh

Signals & Blinkers

700 Paisa/KWh
6.2 Unmetered

Street Lighting

750 Paisa/KWh

Signals & Blinkers

750 Paisa/KWh
7 Delhi Jal Board

Supply at LT


> 10 KW (11KVA) to 100 KW (108KVA) 90 Rs/KVA/month 700 Paisa/KVAh

Above 100 KW (108 KVA) (400 V)

Supply at 11KV and above 125 Rs/KVA/month 660 Paisa/KVAh
8 Delhi International Airport Ltd 150 Rs/KVA/month 710 Paisa/KVAh
9 Railway Traction 150 Rs/KVA/month 610 Paisa/KVAh
10 DMRC (Supply at 220 KV & 66 KV) 125 Rs/KVA/month 550 Paisa/KVAh
11 Advertisements & Hoardings 500 Rs/month/hoarding 1000 Paisa/KVAh

3.1.3 AT&C Loss, Distribution Losses, Collection Efficiency & Energy
Requirement
AT&C Loss shall be measured as the difference between the units input into the distribution
system for sale to all its consumer and the units realized wherein the units realized shall be
equal to the product of units billed and collection efficiency, provided that units billed shall
include the units realized on account of theft measured on actual basis i.e. number of units
against which payment of theft billing has been realized.
AT&C Loss = (Units input into the distribution system for sale to all its consumer Units
realized)
Units Realized = Units Billed Collection Efficiency

[ 20 ]

Distribution losses shall be measured as the difference between the net units input into the
distribution system for sale to all its consumer and sum of the total energy billed in its
License area in the same year.
Distribution Losses = (Net units input into the distribution system for sale to all its consumer
Sum of the total energy billed in its License area in the same year)
Collection efficiency shall be measured as ratio of total revenue realized to the total revenue
billed in the same year, provided that revenue realization from electricity duty and late
payment surcharge shall not be included for computation of collection efficiency.
Collection Efficiency
Total revenue realized (Rs. Cr.)
Total revenue billed (Rs. Cr.)
= 100%
Hence it can be written as
AT&C Loss (%) = 100% - Collection Efficiency (%) (100% - Distribution Losses (%))

The quantum of power purchase is decided by the expected sale of energy by the Licensee, as
well as the targeted loss levels. Higher expected sales require a greater quantum of power to
be purchased. Similarly, higher loss levels also require a proportionately greater amount of
power purchase by the Licensee because it needs to meet the expected sales (in MU) after
accounting for various losses in the process of supplying electricity. The energy sale for each
year is grossed up by the distribution loss level for the year, to arrive at the required quantum
of power purchase for that year in the following manner:
Quantum of power purchase (MU)
Energy Sales (MU)
(100% - Distribution Loss(%))
=
Distribution losses for FY 2012-13, FY 2013-14 & FY 2014-15 are taken as specified by
DERC in its tariff order for FY 2013-14 dated 31.07.2013. Average declining rate of
distribution losses over FY 2013-14 & FY 2014-15 has been taken as the declining rate for
the 3rd Control Period. The collection efficiency for future is taken as 99.50%. AT&C loss is
calculated from distribution loss & collection efficiency figures.
[ 21 ]

3.1.4 Energy availability from generating stations
Energy availability (MU) to BYPL from various generating stations is calculated based on
allocation of power to BYPL (in MW) from those generating stations (as per long term
PPAs), and % energy availability for past 3 years.
Table 3: Allocation of power to BYPL from NTPC stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 ANTA GAS
419.33 2.86% 11.99
2 AURAIYA GAS
663.36 2.96% 19.62
3 BTPS
705.00 28.46% 157.45
4 DADRI GAS
829.78 2.99% 24.77
5 FARAKKA
1600.00 0.38% 6.06
6 KAHALGAON
840.00 1.65% 13.89
7 NCPP
840.00 28.46% 186.19
8 RIHAND I
1000.00 2.72% 27.24
9 RIHAND II
1000.00 3.43% 34.32
10 SINGRAULI
2000.00 2.04% 40.86
11 UNCHAHAR-I
420.00 1.56% 6.53
12 UNCHAHAR-II
420.00 3.05% 12.80
13 UNCHAHAR-III
210.00 3.76% 7.90
14 KAHALGAON STAGE-II
1500.00 2.86% 42.86
15 Talcher
1000.00 0.00% 0.00
16 Dadri Ext
980.00 20.43% 200.21
17 Aravali Power Corporation Ltd
1500.00 3.21% 48.17

Table 4: Allocation of power to BYPL from NHPC stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 BAIRA SIUL
180.00 3.00% 5.39
2 CHAMERA-I
540.00 2.15% 11.62
3 CHAMERA-II
300.00 3.63% 10.89
4 DHAULIGANGA
280.00 3.60% 10.08
5 DULHASTI
390.00 3.49% 13.63
6 SALAL
690.00 3.17% 21.84
[ 22 ]

7 TANAKPUR
94.20 3.49% 3.29
8 URI
480.00 3.01% 14.44
9 SEWA-II
120.00 3.63% 4.36

Table 5: Allocation of power to BYPL from NPCIL stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 RAPS - 5 & 6
440.00 3.46% 15.21
2 NPCIL NAPS
440.00 2.91% 12.80

Table 6: Allocation of power to BYPL from other central generating stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 TEHRI HEP
1000.00 2.81% 28.06
2 Koteshwar
400.00 2.69% 10.74
3 NJPC (SATLUJ)
1500.00 2.58% 38.69
4 TALA HEP
1020.00 0.80% 8.17
5 DVC (Mejia #6)
250.00 3.20% 8.01

Table 7: Allocation of power to BYPL from state generating stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 Rajghat
135.00 28.46% 38.42
2 GAS TURBINE
270.00 28.46% 76.83
3 Pragati -I
330.00 28.46% 70.75

[ 23 ]

Table 8: Allocation of power to BYPL from future stations
SL
NO
SOURCE
INSTALLED
CAPACITY
(MW)
TOTAL
SHARE OF
BYPL (%)
TOTAL
SHARE OF
BYPL (MW)
1 Chamera-III
231.00 3.47% 8.01
2 Parbati III
520.00 2.20% 11.44
3 Uri II
240.00 2.16% 5.18
4 Pragati -III, Bawana
1370.20 19.30% 264.45
5 Mejia TPS Extn
1000.00 23.84% 238.40
6 Chandrapur Extn
500.00 21.79% 108.95
7 Koderma TPS
1000.00 21.11% 211.10
8 Koldam HEP
800.00 2.96% 23.68
9 Rihand-III
500.00 3.59% 17.97
10 Sasan UMPP(6*660)
3960.00 3.10% 122.76
11 Barh -II(2*660 )Mw
660.00 1.30% 8.58

Except future power stations, the % energy availability from all the existing power stations
for FY 2013-14 & FY 2014-15 are taken as the average of % energy availability for last 3
years. Further, % energy availability for 3rd control period for individual power stations is
taken as the average % energy availability in the 2nd control period for that station.
For future power stations, the % energy availability is projected according to their projected
synchronization / COD dates.
Table 9: Projected synchronization / COD dates of future stations
SL
NO
GENERATING
STATION
PROJECTED
SYNCHRONIZATION
DATE
REMARKS
SOURCE OF
INFORMATION
1
Chamera-III
(3x77 MW)
Unit #1: June 2012
Unit #2: Aug 2012
Unit #3: Oct 2012
Actual dates
CEA targetted generation
capacity addition in 2012-
13
2
Parbati-III
(4x130 MW)
Unit #1: Aug 2013
Unit #2: Aug 2013
Unit #3: Dec 2013
Unit #4: Dec 2013
Parbati-III will be operational
at 50% capacity till 2017, due
to delay in upstream Parbati-II
project. Till then, it will not
generate more than 1000 MU
in a year. Design energy of
Parbati-III is 1963 MU
(@60% PLF)
CEA status of hydro
electric projects under
execution;

http://www.tribuneindia.c
om/2013/20130615/himac
[ 24 ]

hal.htm#6
3
Uri-II
(4x60 MW)
Unit #1: Sep 2013
Unit #2: Sep 2013
Unit #3: Oct 2013
Unit #4: Oct 2013
Design energy of Uri-II is
1123.76 MU
CEA status of hydro
execution;

http://www.greaterkashmi
r.com/news/2013/Jun/16/
prime-minister-to-
inaugurate-uri-ii-power-
project-on-kashmir-visit-
32.asp
4
Koderma TPS
(2x500 MW)
Unit #1: Jul 2011
Unit #2: Feb 2013
Expected energy availability is
assumed to be 85%

5
Koldam
(4x200 MW)
2014-15 Design energy is 3054 MU
CEA status of hydro
execution
6
Rihand-III
(2x500 MW)
Unit #5 (500 MW)
synchronization date:
19.05.2012
assumed to be 85%
CEA MONTHLY
REPORT ON BROAD
STATUS OF THERMAL
POWER PROJECTS IN
THE COUNTRY May-
2013
7
Sasan UMPP
(6x660 MW)
Unit #3 (660 MW)
synchronization date:
30.03.2013.
Expected
synchronization dates of
remaining units:
Unit #4: Nov 2013
Unit #2: Feb 2014
Unit #1: Jun 2014
Unit #5: Sep 2014
Unit #6: Jan 2015
assumed to be 85%.

8
Barh-II
(2x660 MW)
Unit #4: Oct 2013
Unit #5: Sep 2014
assumed to be 85%
CEA MONTHLY
REPORT ON BROAD
STATUS OF THERMAL
POWER PROJECTS IN
THE COUNTRY May-
2013

[ 25 ]

Pragati-III Bawana, Mejia-TPS & Chandrapur Extn energy availability figures are taken to be
equal to that in 2012-13.
For meeting RPO and purchasing renewable energy, targets set by DERC as mentioned in
DERC RPO & REC Framework Implementation Regulations, 2012 are followed.
Table 10: Renewable Purchase Obligation (as per DERC RPO & REC Framework
Implementation Regulations, 2012)
RPO (% of total energy consumption) Solar Non-Solar Total
2013-14 0.20% 4.60% 4.80%
2014-15 0.25% 5.95% 6.20%
2015-16 0.30% 7.30% 7.60%
2016-17 0.35% 8.65% 9.00%
2017-18 (estimated) 0.40% 10.00% 10.40%

Energy availability (MU) from various generating stations can be calculated by multiplying
the % projected energy availability to the energy sent out from the various generating stations
according to the MW power allocated to BYPL.
3.1.5 Power purchase cost
Cost of purchasing power from various generating stations consists of fixed charges, variable
charges and other charges (like income tax, ED, cess etc).
Fixed charges paid by BYPL to any generating station (except hydro power plants) can be
calculated as:
Fixed Charges (Rs. Cr.) = (% share of BYPL) (Annual Fixed Charges of the station)
Actual Plant Availability Factor (%)

Normative Plant Availability Factor (%)
| |
|
\ .

For hydro power plants, fixed charges can be calculated as:
[ 26 ]

Fixed Charges (Rs. Cr.) = 0.5 (% share of BYPL) (Annual Fixed Charges of the station)
Actual Plant Availability Factor (%)

Normative Plant Availability Factor (%)
| |
|
\ .

Annual fixed charges for NTPC, NHPC, SGS, Tehri HEP, Koteshwar & NJPC (Satluj) are
obtained from their respective tariff orders.
Actual energy charge rates (Rs/KWh) ex-bus for NTPC & SGS for FY 2012-13 are obtained
from the bills raised by individual generating stations, and projections for further years are
made by assuming 5% escalation in energy charges / variable charges each year. This
escalation is accounted for as FPA.
Energy charge rates (Rs/KWh) for hydro power plants can be calculated as:
Energy Charge Rate (Rs/KWh)
( ) 0.5 Annual Fixed Charges of the station in Rs. Cr. 10
Design Energy (MU) (100% %Aux Cons) (100% % Free Energy for Home State)

=

For nuclear power plants, single-part tariffs (Rs/KWh) for different stations are obtained from
Dept. of Atomic Energy website and a 5% escalation is assumed year wise. This escalation is
accounted for as FPA.
For future power plants, due to absence of any information regarding fixed or variable
charges, a single part tariff (Rs/KWh) is considered on the basis of similar existing power
plants.
For renewable energy sources (solar and non-solar), the average market clearing price
through power exchanges (IEX & PXIL) is considered as the single part tariff (Rs/KWh).
3.1.6 Transmission Losses & Charges
Intra-state transmission loss is taken as 1.21% as per DTL letter no
F.DTL/207/DGM(SO)/201213/170 dated 28.06.2012.
[ 27 ]

In absence of consolidated data of regional transmission losses for eastern grid, the average
eastern regional transmission loss for eastern grid is calculated by taking mean of the weekly
transmission loss data as reported in ERPC website in its weekly UI & congestion charge
account from 04.06.2012 to 15.07.2013. Transmission loss for northern grid is calculated by
taking mean of last 52 weeks (28.05.2012 to 26.05.2013) transmission loss data of northern
grid, as reported in NRLDC annual report for FY 2012-13.
The average inter-state transmission loss is calculated by taking mean of the average eastern
grid & northern grid transmission losses.
Base inter-state (PGCIL) transmission charge is taken as Rs. 210.48 Cr for FY 2013-14 as
approved by DERC in its tariff order for BYPL. Subsequently a 5% escalation is considered
year-wise. Base inter-state (DTL) transmission charge is taken as Rs. 150 Cr for FY 2013-14
as approved by DERC in its tariff order for DTL, wherein it is mentioned that allocation of
monthly charges toward BYPL is Rs. 12.50 Cr.
3.1.7 Operation & Maintenance (O&M) Expenses
As per DERC MYT Regulations 2011, Operation and Maintenance (O&M) expenses of a
distribution licensee include:
(a) Employee expenses Salaries, wages, pension contribution and other employee costs;
(b) Administrative and General (A&G) expenses which shall also include expense related
to raising of loans;
(c) Repairs and Maintenance (R&M) expenses; and
(d) Other miscellaneous expenses, statutory levies and taxes (except corporate income
tax).
The O&M expenses for the Base Year shall be approved by the Commission taking into
account the latest available audited accounts, business plan filed by the Licensees, estimates
of the actuals for the Base Year, prudence check and any other factor considered appropriate
by the Commission.
O&M expenses permissible towards ARR for each year of the Control Period shall be
determined using the formula detailed below:
[ 28 ]

O&M
n
= (R&M
n
+ EMP
n
+ A&G
n
) * (1 X
n
)
Where,
i. R&M
n
= K * GFA
n-1
;
ii. EMP
n
+ A&G
n
= (EMP
n-1
+ A&G
n-1
) * (INDX);
iii. INDX = 0.55 * CPI + 0.45 * WPI;
iv. X
n
is an efficiency factor for n
th
year. Value of X
n
shall be determined by the
Commission in the MYT Tariff order based on Licensees filing, benchmarking,
approved cost by the Commission in past and any other factor the Commission feels
appropriate;
v. EMP
n
Employee Costs of the Licensee for the n
th
year;
vi. A&G
n
Administrative and General Costs of the Licensee for the n
th
year;
vii. R&M
n
Repair and Maintenance Costs of the Licensee for the n
th
year;
viii. K is a constant (could be expressed in %). Value of K for each year of the Control
Period shall be determined by the Commission in the MYT Tariff order based on
Licensees filing, benchmarking, approved cost by the Commission in past and any
other factor considered appropriate by the Commission;
i. INDX - Inflation Factor to be used for indexing. Value of INDX shall be a
combination of the Consumer Price Index (CPI) and the Wholesale Price Index (WPI)
for immediately preceding five years before the base year.
Table 11: Actual CPI & WPI growth in last 5 years preceding FY 2011-12 (base year for
2nd MYT Control Period)
YEAR
CPI
(OVERALL)
% CPI
GROWTH
YoY
WPI
(OVERALL)
% WPI
GROWTH
YoY
2005-06 117.12

104.47

2006-07 125.00 6.73% 111.35 6.59%
2007-08 132.75 6.20% 116.63 4.74%
2008-09 144.83 9.10% 126.02 8.05%
2009-10 162.75 12.37% 130.81 3.80%
2010-11 179.75 10.45% 143.32 9.56%
AVERAGE

8.97%

6.55%

[ 29 ]

Source: CPI data Labour Bureau, Govt of India, http://labourbureau.nic.in/;
WPI data Office of the Economic Advisor to the Govt of India, Ministry of
Commerce & Industry, http://eaindustry.nic.in/
Table 12: Projected CPI & WPI for 2nd MYT Control Period
YEAR
CPI
(OVERALL)
% CPI
GROWTH
YoY
WPI
(OVERALL)
% WPI
GROWTH
YoY
2011-12
(Base
Year)
195.87 8.97% 152.71 6.55%
2012-13 213.44 8.97% 162.71 6.55%
2013-14 232.58 8.97% 173.36 6.55%
2014-15 253.45 8.97% 184.71 6.55%

Table 13: Inflation Factor for 2nd MYT Control Period
INFLATION FACTOR FOR 2ND
CONTROL PERIOD
YEAR
WTD
AVG
INDEX
ESCALATION
FACTOR
2010-11 163.36

2011-12 176.45 1.08
2012-13 190.61 1.08
2013-14 205.93 1.08
2014-15 222.52 1.08

Table 14: Actual CPI & WPI growth in last 5 years preceding FY 2014-15 (base year for
3rd MYT Control Period)
YEAR
CPI
(OVERALL)
% CPI
GROWTH
YoY
WPI
(OVERALL)
% WPI
GROWTH
YoY
2008-09 144.83

126.02

2009-10 162.75 12.37% 130.81 3.80%
2010-11 179.75 10.45% 143.32 9.56%
2011-12 194.83 8.39% 156.13 8.94%
2012-13 215.17 10.44% 167.62 7.36%
2013-14 228.33 6.12% 171.87 2.54%
AVERAGE

9.55%

6.44%

[ 30 ]

Source: CPI data Labour Bureau, Govt of India, http://labourbureau.nic.in/;
WPI data Office of the Economic Advisor to the Govt of India, Ministry of
Commerce & Industry, http://eaindustry.nic.in/
Table 15: Projected CPI & WPI for 3rd MYT Control Period
YEAR
CPI
(OVERALL)
% CPI
GROWTH
YoY
WPI
(OVERALL)
% WPI
GROWTH
YoY
2014-15
(Base
Year)
250.14 9.55% 182.94 6.44%
2015-16 274.04 9.55% 194.72 6.44%
2016-17 300.22 9.55% 207.26 6.44%
2017-18 328.89 9.55% 220.60 6.44%

Table 16: Inflation Factor for 3rd MYT Control Period
YEAR
WTD
AVG
INDEX
ESCALATION
FACTOR
2013-14 202.92

2014-15 219.90 1.08
2015-16 238.34 1.08
2016-17 258.38 1.08
2017-18 280.16 1.08

3.1.7.1 Employee Expenses
Base year for 3
rd
MYT Control Period is taken as FY 2014-15. Employee expenses in the
base year is taken as the same as approved by DERC in its MYT tariff order dated
13.07.2012. Employee expenses for subsequent years are found out by multiplying the
escalation factor to the previous years expenses.
Also it has been assumed that 7
th
Pay Commission will come into force with effect from
01.01.2016, and there will be an expected 3-fold hike in pay scale with respect to the 6
th
Pay
Commission. Effect of the 7
th
Pay Commission has been implemented in the employee
expenses calculation by considering that 75% of the employee cost is covered by FRSR
employees who will be under the 7
th
Pay Commission regime, and rest 25% of the employee
cost is covered by Non-FRSR employees, expenses of whom are assumed to escalate as per
the escalation factor.
[ 31 ]

For the purpose of allocation of employee expenses into Wheeling and Retail Supply, first the
net employee expenses are allocated into the different employee functions in proportion of
the number of employees in the respective function to the total number of employees. FY
2014-15 is considered as base year for number of employees. Number of employees for that
year is taken from DERC MYT tariff order dated 13.07.2012. A year-on-year increase
(average of year-on-year increase for previous three years) is applied to FY 2014-15 expenses
to find out expenses for subsequent years.
Table 17: Number of Employees (function-wise)
PARTICULARS FY 2015-16 FY 2016-17 FY 2017-18
O&M 3505 3748 4009
Technical Services 190 203 217
Business 2070 2214 2367
Shared 865 924 988
Total 6630 7090 7581

Then the function-wise expenses are allocated to wheeling & retail supply businesses based
on the allocation statement submitted by BYPL in its MYT petition for 1
st
Control Period.

Table 18: Statement of Allocation of Employee Cost between Wheeling and Retail
Supply
FUNCTIONS WHEELING
RETAIL
SUPPLY
O&M 90% 10%
Technical Services 90% 10%
MRBD 0% 100%
Business 0% 100%
Shared 50% 50%

3.1.7.2 Administrative & General (A&G) Expenses
Base year for 3
rd
MYT Control Period is taken as FY 2014-15. A&G expense in the base year
is taken as the same as approved by DERC in its MYT tariff order dated 13.07.2012. A&G
[ 32 ]

expenses for subsequent years are found out by multiplying the escalation factor to the
previous years expenses.
For the purpose of allocation of A&G expenses into Wheeling and Retail Supply, individual
components of A&G expense are apportioned into wheeling & retail supply based on
allocation statement submitted by BYPL in its MYT Petition for 1
st
Control Period.
Table 19: Statement of Allocation of A&G Expenses between Wheeling and Retail
Supply
FUNCTIONS WHEELING
RETAIL
SUPPLY
Administrative Expenses

Rent rates and taxes 50% 50%
Insurance 80% 20%
Revenue Stamp Expenses Account 50% 50%
Consultancy Charges 10% 90%
Technical Fees and Other Professional Charges 50% 50%
Conveyance And Travel 64% 36%
DERC License fee 50% 50%
Vehicle related expenses 64% 36%
Other Expenses

Fee And Subscriptions Books And Periodicals 50% 50%
Printing And Stationery 30% 70%
Advertisement Expenses 30% 70%
Contributions/Donations To Outside Institute/Association 10% 90%
Electricity Charges To Offices & Establishments 50% 50%
Water Charges 50% 50%
Entertainment Charges 50% 50%
Miscellaneous Expenses 50% 50%
Legal Charges 10% 90%
Auditor's Fee 50% 50%
Material Related Expenses 90% 10%

3.1.7.3 Repair & Maintenance (R&M) Expenses
K factor for 3
rd
MYT Control Period is taken as 3.11%, which has been approved by DERC
for 2
nd
Control Period in its MYT tariff order dated 13.07.2012.
Revised opening GFA figures are taken for FY 13, 14 & 15 as per DERC tariff order for FY
2013-14 dated 31.07.2013.
[ 33 ]

Total R&M expenses is apportioned into wheeling and retail supply business by 92.84% and
7.16% respectively as per DERC MYT tariff order dated 13.07.2012, in absence of detailed
asset-wise R&M allocation figures.
3.1.7.4 Efficiency Factor
Efficiency factor for each year of the 3
rd
MYT Control Period is taken as 4%, which has been
fixed by DERC for FY 2014-15 in its MYT tariff order dated 13.07.2012.
3.1.8 Capital Expenditure and Capitalization
The Commission shall approve capital investment plan of the Licensees for the Control
Period commensurate with load growth, distribution loss reduction and quality improvement
proposed in the Business Plan.
Capital investment plan submitted by the Licensee shall also provide details of ongoing
projects that will spill into the Control Period and new projects that will commence during
the Control Period but may extend beyond the Control Period.
However at this point of time, due to unavailability of any concrete capital investment plan in
BYPL for FY 2015-16 onwards, the Capital Expenditure for each year of the 3rd MYT
control period has been taken as Rs 230 Cr (approved provisionally by DERC in its MYT
tariff order dated 13.07.2012 for 2nd control period). DERC would true-up the capital
investment for each year at the end of each year of the Control Period based on the actual
capital investment carried out by BYPL.
Capitalization schedule for each year of the 3rd MYT control period has been taken as Rs 230
Cr. For fresh capital investment during the control period, 50% capitalization on fresh
investment is assumed to be taken up in the year, and the remaining 50% capitalization in the
next year. Capitalization for each year is subject to true-up at the end of each year of the
Control Period based on the actual capital investment made and schemes commissioned by
BYPL.
Opening consumer contribution and capitalization figures for FY 13, 14 & 15 are taken as per
the revised figures as stated by DERC in its tariff order dated 31.07.2013. For subsequent
[ 34 ]

years, i.e. the 3rd Control Period, the capitalization figures are taken as Rs 23.69 Cr, same as
the base year, i.e. FY 2014-15.
3.1.9 Depreciation
Depreciation is calculated for each year of the Control Period, on the amount of Original Cost
of the Fixed Assets considered for calculation of the Regulated Rate Base of the
corresponding year, provided that depreciation is not allowed on assets funded by consumer
contribution (i.e., any receipts from consumers that are not treated as revenue) and capital
subsidies/grants.
Depreciation shall be calculated annually, based on the straight line method, over the useful
life of the asset. The base value for the purpose of depreciation shall be original cost of the
asset. The residual value of assets shall be considered as 10% and depreciation shall be
allowed to a maximum of 90% of the original cost of the asset. Land is not a depreciable
asset and its cost shall be excluded while computing 90% of the original cost of the asset.
Asset wise depreciation and their allocation into wheeling & retail supply businesses are done
based on the following data, wherein depreciation rates for various assets are approved by
DERC, and allocation of GFA into Wheeling & Retail Supply was submitted by BYPL in its
MYT Petition for 1
st
Control Period.
Table 20: Depreciation Rates and Statement of Allocation of Depreciation between
Wheeling and Retail Supply
SL
NO
ASSET CLASS
DEPRECIATION
RATE (%)
ALLOCATION
FOR
WHEELING
(%)
ALLOCATION
FOR RETAIL
SUPPLY (%)
A Land & Land rights 0.00%

B Building and Civil Works

1 Office Building 1.80% 64.00% 36.00%
2 Temporary Structure 1.80% 100.00% 0.00%
3 Others 1.80% 100.00% 0.00%
4 Other Civil Works 1.80% 100.00% 0.00%
C Plant & Machinery

1 Transformer +100kVa 3.60% 100.00% 0.00%
2 Transformer -100kVa 3.60% 100.00% 0.00%
3 Switchgears, Control gear & 3.60% 100.00% 0.00%
[ 35 ]

Protection
4 Batteries 18.00% 100.00% 0.00%
D Line Cable Networks etc.

1 Overhead lines up to 11kV 3.60% 100.00% 0.00%
2 Underground cables up to 11kV 2.57% 100.00% 0.00%
3 Lightening Arrestors (Station Type) 3.60% 100.00% 0.00%
4 Communication equipment 6.00% 50.00% 50.00%
5 Meters 6.00% 0.00% 100.00%
6 Vehicles 18.00% 64.00% 36.00%
7 Furniture & fixtures 6.00% 64.00% 36.00%
8 Office Equipments 6.00% 64.00% 36.00%
9 Computers 6.00% 50.00% 50.00%
10 Motor and Pump 6.00% 64.00% 36.00%
11 Fault Locating Equipment 18.00% 100.00% 0.00%
12 Any other items 3.60% 100.00% 0.00%

3.1.10 Advance Against Depreciation (AAD)
The Distribution Licensee is entitled to Advance Against Depreciation (AAD), computed in
the manner given hereunder:
AAD = Loan (raised for capital expenditure) repayment amount based on loan repayment
tenure, subject to a ceiling of 1/10th of loan amount minus depreciation as calculated
on the basis of these Regulations
Advance Against Depreciation shall be permitted only if the cumulative repayment up to a
particular year exceeds the cumulative depreciation up to that year, provided that Advance
Against Depreciation in a year shall be restricted to the extent of difference between
cumulative repayment and cumulative depreciation up to that year.
Allocation of AAD into wheeling and retail supply is done as per allocation of GFA.
3.1.11 Working Capital
As per DERC MYT Regulations 2011, working capital for wheeling business of electricity
shall consist of
(a) Receivables for two months of Wheeling Charges.
[ 36 ]

Working capital for retail supply of electricity shall consist of
(a) Receivables for two months of revenue from sale of electricity;
(b) Less: Power purchase costs for one month;
(c) Less: Transmission charges for one month; and
(d) Less: Wheeling charges for two month.
3.1.12 Regulated Rate Base (RRB)
The Regulated Rate Base (RRB) shall be used to calculate the total capital employed which
shall include the original cost of assets and working capital, less the accumulated
depreciation. Capital work in progress (CWIP) shall not form part of the RRB. Consumer
Contribution, capital subsidies / grants shall be deducted in arriving at the RRB. The RRB
shall be determined for each year of the Control Period at the beginning of the Control Period
based on the approved capital investment plan with corresponding capitalization schedule and
normative working capital.
The Regulated Rate Base (RRB) for the i
th
year of the Control Period shall be computed in the
following manner:
RRB
i
= RRB
i-1
+ AB
i
/2 + WC
i

Where,
AB
i
: Change in the Regulated Rate Base in the i
th
year of the Control Period. This
component shall be the average of the value at the beginning and end of the year as
the asset creation is spread across a year and is arrived at as follows:
AB
i
= Inv
i
D
i
CC
i
;
Where,
Inv
i
: Investments projected to be capitalized during the i
th
year of the Control Period
and approved;
D
i
: Amount set aside or written off on account of Depreciation of fixed assets for the
i
th
year of the Control Period;
[ 37 ]

CC
i
: Consumer Contributions, capital subsidy / grant pertaining to the AB
i
and
capital grants/subsidies received during i
th
year of the Control Period for
construction of service lines or creation of fixed assets;
RRB
i-1
: Regulated Rate Base for the Financial Year preceding the i
th
year of the Control
period. For the first year of the Control Period, RRB
i-1
shall be the Regulated Rate Base for
the Base Year i.e. RRB
0
;
RRB
0
= OCFA
0
AD
0
CC
0
;
Where;
OCFA
0
: Original Cost of Fixed Assets at the end of the Base Year available for use
and necessary for the purpose of the Licensed business;
AD
0
: Amounts written off or set aside on account of depreciation of fixed assets
pertaining to the regulated business at the end of the Base Year;
CC0: Total contributions pertaining to the OCFA
0
, made by the consumers, capital
subsidy / grants towards the cost of construction of distribution/service lines by
the Distribution Licensee and also includes the capital grants/subsidies received
for this purpose;
WC
i
: Change in normative working capital requirement in the i
th
year of the Control Period,
from the (i-1)
th
year. For the first year of the Control Period (i=1), WC
1
shall be
taken as the normative working capital requirement of the first year.
For the purpose of allocating the RRB into wheeling & retail supply, following methods are
adopted:
(a) OCFA allocated as per GFA allocation;
(b) Depreciation allocated as per GFA allocation;
(c) Investment capitalized as per GFA allocation;
(d) Consumer Contribution has been considered fully for Wheeling business.
[ 38 ]

3.1.13 Means of Finance
For the purpose of projecting future funding requirement, a normative debt-equity ratio of
70:30 has been considered on the asset capitalized each year after utilizing the consumer
contribution.
3.1.14 Return on Capital Employed (RoCE)
Return on Capital Employed (RoCE) shall be used to provide a return to the Distribution
Licensee, and shall cover all financing costs, without providing separate allowances for
interest on loans and interest on working capital.
Return on Capital Employed (RoCE) for the year i shall be computed in the following
manner:
RoCE = WACC
i
RRB
i

Where,
WACC
i
- Weighted Average Cost of Capital for each year of the Control Period. It can be
calculated as:
WACC =
d e
D/ E 1
r r
1 D/ E 1 D/ E
( (
+
( (
+ +

Where,
D/E = Debt to Equity Ratio;
r
d
= Cost of debt;
r
e
= Return on Equity and shall be considered at 16% post tax;
RRB
i
- Regulated Rate Base is the asset base for each year of the Control Period based on the
capitalization and working capital.
For allocation of RoCE into Wheeling & Retail Supply, allocation of debt and equity are
done in proportion of allocation of total GFA into Wheeling & Retail Supply each year.
[ 39 ]

3.1.15 Income Tax
Tax on income, if any, liable to be paid on the Licensed business of the Distribution Licensee
shall be limited to tax on return on the equity component of capital employed. Any additional
tax other than this shall not be a pass through, and it shall be payable by the Distribution
Licensee itself.
Allocation of tax expenses into Wheeling & Retail Supply is done in the ratio of allocation of
RoCE into Wheeling & Retail Supply.
3.1.16 Non Tariff Income
Non-tariff income for 3
rd
MYT Control Period is taken as Rs. 78.95 Cr, which was approved
by DERC for 2
nd
MYT Control Period in its MYT tariff order dated 13.07.2012.
3.1.17 Determination of ARR
3.1.17.1 ARR for Wheeling Business
The Aggregate Revenue Requirement for the Wheeling Business of the Distribution
Licensees for each year of the Control Period, shall contain the following items;
(a) Operation and Maintenance expenses;
(b) Return on Capital Employed;
(c) Depreciation;
(d) Income Tax;
(e) Interest on Consumer Security Deposit;
(f) Less: Non-Tariff Income;
(g) Less: Income from Other Business; and
(h) Less: Income from wheeling of electricity.
3.1.17.2 ARR for Retail Supply Business
The Aggregate Revenue Requirement for the Retail Supply Business of the Distribution
Licensee, for each year of the Control Period, shall contain the following items;
(a) Cost of power procurement;
[ 40 ]

(b) Transmission & Load Dispatch charges;
(c) Operation and Maintenance expenses;
(d) Return on Capital Employed;
(e) Depreciation;
(f) Income Tax;
(g) Interest on Consumer Security Deposit;
(h) Less: Non-Tariff Income;
(i) Less: Income from Other Business; and
(j) Less: Receipts on account of cross subsidy surcharge and additional surcharge from
open access customers.
of BYPL
Following steps are adapted to implement Merit Order Dispatch (MOD) model and to
examine its impact on power purchase cost of BYPL:
(a) All nuclear power plants, renewable power plants and hydro power plants are
considered as must run power plants. Hence they are excluded from merit order
calculations. Whatever energy is available from those plants is drawn irrespective of
their costs.
(b) All the remaining power plants (Central & State thermal power stations) are sorted
according to their per unit variable charges. Merit order principle is complied by
giving priority to the power plants with lesser per unit variable charges.
(c) A reference variable charge is considered for those plants under merit order regime.
For those plants whose variable charges are lower than the reference variable charge,
whatever energy is available from those plants are drawn.
(d) For those plants whose variable charges are higher than the reference variable charge,
a defined % of energy (of the whole energy available from the plant) is drawn from
those plants.
(e) The reference variable charge shall preferably be the selling price of surplus power to
open market.
(f) Surplus power, if any, is sold to open market.
[ 41 ]

4. RESULTS & DISCUSSION
4.1 ARR projection for BSES Yamuna Power Ltd under MYT framework
for 3
rd
MYT Control Period (FY 2015-16 to FY 2017-18)
4.1.1 Sales Forecast
4.1.1.1 Forecast of Number of Consumers
Table 21: Number of Consumers
SL NO PARTICULARS
NUMBER OF CONSUMERS TAKING
NEW SLABS (AS PER DERC TARIFF
ORDER DATED 31.07.2013) INTO
ACCOUNT
FY 2015-16 FY 2016-17 FY 2017-18
1 Domestic 1139360 1193230 1244103
1.1 Domestic Lighting / Fan and Power 1139346 1193216 1244089
1.1.1 Upto 2 KW Load 471158 454473 438378

0 - 200 Units 359651 346914 334629

200 - 400 Units 91907 88652 85513

401 - 800 Units 15680 15125 14589

Above 800 Units 3920 3781 3647
1.1.2 2 to 5 KW Load 586532 650487 711323

0 - 200 Units 266086 295100 322698

200 - 400 Units 203927 226163 247314

401 - 800 Units 93215 103379 113048

Above 800 Units 23304 25845 28262
1.1.3 Above 5 KW Load 81655 88257 94388

0 - 200 Units 16397 17723 18954

200 - 400 Units 20016 21634 23137

401 - 800 Units 36194 39120 41838

Above 800 Units 9048 9780 10459
1.2
Domestic Lighting / Fan and Power on
11KV single delivery point for CGHS
and other similar group housing
complexes
14 14 14
1.2.1 201 - 400 Units (first 55%) 8 8 8
1.2.2 401 - 800 Units (next 40%) 6 6 6
1.2.3 Above 800 Units (balance 5%) 1 1 1
2 Non-Domestic 361867 373825 386179
2.1 Non-Domestic (Low Tension): NDLT 361598 373546 385888
2.1.1 Up to 10 KW 339181 350389 361966
2.1.2 > 10 KW to 100 KW 22251 22986 23746
[ 42 ]

2.1.3 Above 100 KW 165 171 176
2.2 NDHT (Supply at 11 KV and above) 270 280 290
3 Industrial 11663 11663 11663
3.1 SIP - Small Industrial Power 11642 11642 11642
3.1.1 Up to 10 KW 7192 7192 7192
3.1.2 > 10 KW to 100 KW 4443 4443 4443
3.1.3 Above 100 KW 7 7 7
3.2
Large Industrial Power (as per tariff
order dated 26.08.2011)
21 21 21
4 Agriculture 44 44 44
5 Mushroom Cultivation 9 9 9
6 DMRC (supply at 66 KV) 1 1 1
7 Own Consumption 199 206 213
8 DJB (supply at 11 KV) 67 67 67
9 DJB Low Tension 523 523 523
9.1 Up to 10 KW 229 229 229
9.2 > 10 KW to 100 KW 289 289 289
9.3 Above 100 KW 5 5 5
10 11 KV - Worship / Hospital 27 28 29
11 Staff 6960 6930 6900
12 Advertisement and Hoarding 175 175 175
TOTAL 1520895 1586702 1649905

4.1.1.2 Forecast of Connected Load
Table 22: Connected Load (MW)
SL NO PARTICULARS
CONNECTED LOAD (MW) TAKING
NEW SLABS (AS PER DERC TARIFF
ACCOUNT
FY 2015-16 FY 2016-17 FY 2017-18
1 Domestic 3935 4396 4921
1.1.1 Upto 2 KW Load 996 1036 1077

0 - 200 Units 735 765 796

200 - 400 Units 213 222 231

401 - 800 Units 38 39 41

Above 800 Units 9 10 10
1.1.2 2 to 5 KW Load 2243 2593 2996

0 - 200 Units 975 1127 1302

200 - 400 Units 782 904 1044

401 - 800 Units 389 450 520

Above 800 Units 97 112 130
[ 43 ]

1.1.3 Above 5 KW Load 684 756 835

0 - 200 Units 132 146 161

200 - 400 Units 152 167 185

401 - 800 Units 320 354 391

1.2
complexes
12 12 12
1.2.1 201 - 400 Units (first 55%) 7 7 7
1.2.2 401 - 800 Units (next 40%) 5 5 5
2 Non-Domestic 1780 1903 2035
2.1 Non-Domestic (Low Tension): NDLT-I 1520 1628 1743
2.1.1 Up to 10 KW 918 983 1053
2.1.2 > 10 KW to 100 KW 573 613 657
2.1.3 Above 100 KW 29 31 34
3 Industrial 216 216 216
3.1.1 Up to 10 KW 24 24 24
3.1.2 > 10 KW to 100 KW 172 172 172
3.1.3 Above 100 KW 1 1 1
3.2
19 19 19
4 Agriculture 0 0 0
6 DMRC (supply at 66 KV) 24 25 25
10 Own Consumption 6.34 6.79 7.27
12 DJB (supply at 11 KV) 69 69 69
13 DJB Low Tension 7.14 7.14 7.14
13.1 Up to 10 KW 1.3 1.3 1.3
13.2 > 10 KW to 100 KW 5.13 5.13 5.13
13.3 Above 100 KW 0.71 0.71 0.71
15 Staff 31 34 37
16 Advertisement and Hoarding 0.57 0.57 0.57
TOTAL 6104 6693 7354

[ 44 ]

4.1.1.3 Forecast of Energy Sales
Table 23: Energy Sales (MU)
SL NO PARTICULARS
ENERGY SALES (MU) TAKING NEW
SLABS (AS PER DERC TARIFF
ACCOUNT
FY 2015-16 FY 2016-17 FY 2017-18
1 Domestic 3402 3634 3859
1.1.1 Upto 2 KW Load 886 876 871

0 - 200 Units 417 413 410

200 - 400 Units 326 323 321

401 - 800 Units 114 113 112

1.1.2 2 to 5 KW Load 1879 2073 2259

0 - 200 Units 334 369 402

200 - 400 Units 686 756 824

401 - 800 Units 688 759 827

Above 800 Units 172 190 207
1.1.3 Above 5 KW Load 623 671 715

0 - 200 Units 17 19 20

200 - 400 Units 71 77 82

401 - 800 Units 427 460 491

Above 800 Units 107 115 123
1.2
complexes
14 14 14
1.2.1 201 - 400 Units (first 55%) 8 8 8
1.2.2 401 - 800 Units (next 40%) 5 5 5
2 Non-Domestic 1810 1885 1963
2.1 Non-Domestic Low Tension (NDLT) 1411 1470 1531
2.1.1 Up to 10 KW 683 711 741
2.1.2 > 10 KW to 100 KW 685 714 744
2.1.3 Above 100 KW 43 45 46
3 Industrial 337 337 337
3.1.1 Up to 10 KW 27 27 27
3.1.2 > 10 KW to 100 KW 268 268 268
3.1.3 Above 100 KW 3 3 3
3.2
39 39 39
[ 45 ]

4 Agriculture 0 0 0
6 Public Lighting 107 108 109
6.1 Street Light 107 108 109
7 DMRC (supply at 66 KV) 162 173 185
8 Enforcement 25 23 21
9 Own Consumption 74 82 89
10 DJB (supply at 11 KV) 124 124 124
11 DJB Low Tension 6.77 6.77 6.77
11.1 Up to 10 KW 1.44 1.44 1.44
11.2 > 10 KW to 100 KW 4.34 4.34 4.34
11.3 Above 100 KW 0.99 0.99 0.99
13 Staff 28 28 29
14 Advertisement and Hoarding 0.4 0.4 0.4
TOTAL 6157 6484 6808

4.1.2 Revenue collected at existing tariff
Table 24: Revenue collected at existing tariff in FY 2015-16 (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-16
FIXED
CHARGES
ENERGY
CHARGES
SURCHARGE
ON FC
SURCHARGE
ON EC
TOTAL
REVENUE
BILLED
1 Domestic 109.70 1987.49 8.78 159.00 2264.96
2 Non-Domestic 235.95 1416.85 18.88 113.35 1785.02
3 Industrial 26.11 258.01 2.09 20.64 306.86
4 Agriculture 0.01 0.06 0.00 0.00 0.07
5 Mushroom Cultivation 0.00 0.01 0.00 0.00 0.01
6 Public Lighting 0.00 75.12 0.00 6.01 81.13
7 DMRC (supply at 66 KV) 3.59 89.31 0.29 7.15 100.34
8 Enforcement 19.23
9 DJB (supply at 11 KV) 11.54 1.06 0.92 0.08 13.61
10 DJB Low Tension 0.38 5.24 0.03 0.42 6.07
11 11 KV - Worship / Hospital 5.46 63.55 0.44 5.08 74.54
12 Staff 7.14
13
Advertisement and
Hoarding
0.11 0.44 0.01 0.04 0.59
TOTAL 392.85 3897.15 31.43 311.77 4659.57

COLLECTION
EFFICIENCY
99.5%

TOTAL REVENUE
COLLECTED
4636.27

[ 46 ]

SL
NO
PARTICULARS
FY 2016-17
FIXED
CHARGES
ENERGY
CHARGES
SURCHARGE
ON FC
SURCHARGE
ON EC
TOTAL
REVENUE
BILLED
1 Domestic 118.30 2129.49 9.46 170.36 2427.61
2 Non-Domestic 262.01 1475.48 20.96 118.04 1876.49
3 Industrial 26.11 258.01 2.09 20.64 306.86
4 Agriculture 0.01 0.06 0.00 0.00 0.07
6 Public Lighting 0.00 75.12 0.00 6.01 81.13
7 DMRC (supply at 66 KV) 3.70 95.17 0.30 7.61 106.78
8 Enforcement 19.23
9 DJB (supply at 11 KV) 11.54 1.06 0.92 0.08 13.61
10 DJB Low Tension 0.35 5.30 0.03 0.42 6.10
11
11 KV - Worship /
Hospital
5.57 65.78 0.45 5.26 77.06
12 Staff 0.02
13
Advertisement and
Hoarding
0.11 0.44 0.01 0.04 0.59
TOTAL 427.69 4105.93 34.22 328.47 4915.56

COLLECTION
EFFICIENCY
99.5%

TOTAL REVENUE
COLLECTED
4890.98

SL
NO
PARTICULARS
FY 2017-18
FIXED
CHARGES
ENERGY
CHARGES
SURCHARGE
ON FC
SURCHARGE
ON EC
TOTAL
REVENUE
BILLED
1 Domestic 126.74 2266.50 10.14 181.32 2584.69
2 Non-Domestic 280.06 1523.37 22.40 121.87 1947.70
3 Industrial 26.11 258.01 2.09 20.64 306.86
4 Agriculture 0.01 0.06 0.00 0.00 0.07
6 Public Lighting 0.00 75.12 0.00 6.01 81.13
7 DMRC (supply at 66 KV) 3.81 101.50 0.30 8.12 113.74
8 Enforcement 19.23
9 DJB (supply at 11 KV) 11.54 1.06 0.92 0.08 13.61
10 DJB Low Tension 0.35 5.30 0.03 0.42 6.10
11 11 KV - Worship / Hospital 5.67 68.10 0.45 5.45 79.67
12 Staff 0.01
[ 47 ]

13
Advertisement and
Hoarding
0.11 0.44 0.01 0.04 0.59
TOTAL 454.39 4299.48 36.35 343.96 5153.41

COLLECTION
EFFICIENCY
99.5%

TOTAL REVENUE
COLLECTED
5127.65

4.1.3 AT&C Loss, Collection Efficiency, Distribution Losses & Energy
Requirement
Table 27: Distribution Losses (%), AT&C Loss (%) & Energy Requirement (MU)
DISTRIBUTION LOSS (%) & AT&C LOSS (%)
Distribution Loss (%) 13.00% 12.01% 11.09%
Collection Efficiency (%) 99.50% 99.50% 99.50%
AT&C Loss (%) 13.43% 12.45% 11.53%
Sales (MU) 6156.64 6483.66 6808.36
Energy Requirement (MU) 7076.32 7368.22 7657.52

4.1.4 Energy availability from generating stations
Table 28: Energy availability (MU) from NTPC stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 ANTA GAS
46.63 46.63 46.63
2 AURAIYA GAS
62.18 62.18 62.18
3 BTPS
941.68 941.68 941.68
4 DADRI GAS
98.78 98.78 98.78
5 FARAKKA
31.94 31.94 31.94
6 KAHALGAON
80.81 80.81 80.81
7 NCPP
1281.30 1281.30 1281.30
8 RIHAND -I
174.35 174.35 174.35
9 RIHAND -II
251.94 251.94 251.94
10 SINGRAULI
285.41 285.41 285.41
11 UNCHAHAR-I
45.24 45.24 45.24
[ 48 ]

12 UNCHAHAR-II
90.19 90.19 90.19
13 UNCHAHAR-III
56.45 56.45 56.45
231.26 231.26 231.26
15 Talcher

16 Dadri Ext
1242.62 1242.62 1242.62
50.07 50.07 50.07
NTPC Total
4970.85 4970.85 4970.85

Table 29: Energy availability (MU) from NHPC stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 BAIRA SIUL
17.92 17.92 17.92
2 CHAMERA-I
45.43 45.43 45.43
3 CHAMERA-II
46.12 46.12 46.12
4 DHAULIGANGA
37.40 37.40 37.40
5 DULHASTI
64.63 64.63 64.63
6 SALAL
91.38 91.38 91.38
7 TANAKPUR
12.02 12.02 12.02
8 URI
75.48 75.48 75.48
9 SEWA-II
14.41 14.41 14.41
NHPC Total
404.79 404.79 404.79

Table 30: Energy availability (MU) from NPCIL stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 RAPS - 5 & 6
108.11 108.11 108.11
2 NPCIL - NAPS
57.13 57.13 57.13
Nuclear Total
165.25 165.25 165.25

[ 49 ]

Table 31: Energy availability (MU) from other central generating stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 TEHRI HEP
93.14 93.14 93.14
2 Koteshwar
30.78 30.78 30.78
3 NJPC (SATLUJ)
173.69 173.69 173.69
4 TALA HEP
26.19 26.19 26.19
5 DVC (Mejia #6)
54.26 54.26 54.26

Table 32: Energy availability (MU) from state generating stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 Rajghat
198.08 198.08 198.08
2 GAS TURBINE
358.25 358.25 358.25
3 Pragati -I
515.34 515.34 515.34
SGS Total
1071.67 1071.67 1071.67

Table 33: Energy availability (MU) from future stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 Chamera-III
22.88 22.88 22.88
2 Parbati -III
22.00 22.00 43.19
3 Uri -II
24.27 24.27 24.27
365.06 365.06 365.06
5 Mejia TPS Extn
808.91 808.91 808.91
6 Chandrapur Extn
521.95 521.95 521.95
7 Koderma TPS
1430.38 1430.38 1430.38
8 Koldam HEP
90.40 90.40 90.40
9 Rihand-III
125.08 125.08 125.08
859.23 859.23 859.23
11 Barh -II(2*660 )Mw
58.14 58.14 58.14
Future Stations Total
4328.31 4328.31 4349.50
[ 50 ]

Table 34: Energy availability (MU) from renewable sources
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
ENERGY
PURCHASED
EX-BUS (MU)
1 Non Solar
449.43 560.84 680.84
2 Solar
18.47 22.69 27.23
Total
467.90 583.53 708.07

4.1.5 Power purchase cost
Table 35: Power purchase cost (Rs. Cr.) for NTPC stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 ANTA GAS
29.89 31.01 32.18
2 AURAIYA GAS
42.57 44.16 45.82
3 BTPS
544.33 564.68 586.06
4 DADRI GAS
63.57 65.99 68.52
5 FARAKKA
13.06 13.52 13.99
6 KAHALGAON
29.90 30.88 31.92
7 NCPP
624.70 646.66 669.73
8 RIHAND -I
42.23 43.42 44.67
9 RIHAND -II
62.19 63.93 65.75
10 SINGRAULI
56.33 58.18 60.13
11 UNCHAHAR-I
18.21 18.87 19.57
12 UNCHAHAR-II
38.23 39.55 40.93
13 UNCHAHAR-III
25.81 26.64 27.51
83.62 86.28 89.08
15 Talcher

16 Dadri Ext
662.02 682.90 704.82
58.08 59.05 60.07
NTPC Total
2394.74 2475.72 2560.74

[ 51 ]

Table 36: Power purchase cost (Rs. Cr.) for NHPC stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 BAIRA SIUL
3.17 3.17 3.17
2 CHAMERA-I
7.44 7.44 7.43
3 CHAMERA-II
14.15 14.17 14.19
4 DHAULIGANGA
11.70 11.69 11.68
5 DULHASTI
38.81 38.80 38.78
6 SALAL
17.09 17.07 17.06
7 TANAKPUR
3.26 3.26 3.26
8 URI
15.83 15.84 15.85
9 SEWA-II
6.98 6.98 6.98
NHPC Total
118.43 118.41 118.40

Table 37: Power purchase cost (Rs. Cr.) for NPCIL stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 RAPS - 5 & 6
43.22 45.37 47.63
2 NPCIL - NAPS
16.53 17.32 18.14
Nuclear Total
59.75 62.69 65.78

Table 38: Power purchase cost (Rs. Cr.) for other central generating stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 TEHRI HEP
52.12 52.34 52.57
2 Koteshwar
14.82 14.82 14.82
3 NJPC (SATLUJ)
54.19 54.40 54.62
4 TALA HEP
5.29 5.29 5.29
5 DVC (Mejia #6)
27.43 28.80 30.24

[ 52 ]

Table 39: Power purchase cost (Rs. Cr.) for state generating stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 Rajghat
126.13 130.30 134.68
2 GAS TURBINE
281.17 292.58 304.56
3 Pragati -I
273.16 283.62 294.59
SGS Total
680.45 706.49 733.83

Table 40: Power purchase cost (Rs. Cr.) for future stations
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 Chamera-III
10.36 10.36 10.36
2 Parbati -III
9.96 9.96 19.55
3 Uri -II
10.99 10.99 10.99
365.77 384.05 403.26
5 Mejia TPS Extn
308.37 323.79 339.98
6 Chandrapur Extn
219.47 230.44 241.96
7 Koderma TPS
601.44 631.52 663.09
8 Koldam HEP
40.92 40.92 40.92
9 Rihand-III
36.99 37.72 38.48
112.73 118.36 124.28
11 Barh -II(2*660 )Mw
13.39 14.06 14.77
Future Stations Total
1730.37 1812.16 1907.63

Table 41: Power purchase cost (Rs. Cr.) for renewable energy sources
SL
NO
SOURCE
FY 2015-16 FY 2016-17 FY 2017-18
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
TOTAL
CHARGES
(Rs Cr)
1 Non Solar
67.42 84.13 102.13
2 Solar
22.06 27.10 32.52
Total
89.47 111.23 134.65

[ 53 ]

4.1.6 Transmission Losses & Charges
Table 42: Inter & Intra-State Transmission Losses (% and MU)
SL
NO
PARTICULARS UNIT FY 2015-16 FY 2016-17 FY 2017-18
1 Inter-state transmission loss
% 3.00% 3.00% 3.00%
MU 353.43 356.89 361.26
2 Intra-state transmission loss
% 1.21% 1.21% 1.21%
MU 86.67 90.25 93.79

Table 43: Inter & Intra-State Transmission Charges (Rs. Cr.)
SL
NO
TRANSMISSION CHARGES (Rs Cr) FY 2015-16 FY 2016-17 FY 2017-18
1 Inter-State (PGCIL) 232.05 243.66 255.84
2 Intra-State (DTL) 165.38 173.64 182.33

4.1.7 Energy balance
Table 44: Energy Balance
SL
NO
PARTICULARS UNIT FY 2015-16 FY 2016-17 FY 2017-18
1 Energy Purchased MU 11786.83 11902.46 12048.18
2
Inter-state transmission loss
% 3.00% 3.00% 3.00%
3 MU 353.43 356.89 361.26
4 Energy Available at State periphery MU 11433.41 11545.56 11686.92
5 Energy Sales MU 6156.64 6483.66 6808.36
6
Distribution Loss
% 13.00% 12.01% 11.09%
7 MU 919.68 884.57 849.17
8 Energy Requirement at Distribution periphery MU 7076.32 7368.22 7657.52
9
Intra-state transmission loss
% 1.21% 1.21% 1.21%
10 MU 86.67 90.25 93.79
11 Energy Requirement at State periphery MU 7162.99 7458.47 7751.31
12 Energy Surplus (4 - 11) MU 4270.41 4087.09 3935.60

[ 54 ]

4.1.8 Operation & Maintenance (O&M) Expenses
Table 45: Total O&M Expenses
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Employee Expense 269.80 722.70 783.61
A&G Expense 66.30 71.88 77.93
R&M Expense 88.64 95.80 102.95
TOTAL O&M Expenses 424.74 890.37 964.50
Efficiency Improvement 4% 4% 4%
Add SVRS Pension 5.33 13.44 14.58
NET O&M Expenses 413.08 868.20 940.49

Table 46: Allocation of Employee Expense into Wheeling & Retail Supply
Net Employee Cost
(Wheeling)
152.92 409.63 444.16
Pension Liability (Wheeling) 3.02 7.62 8.26
Total - Wheeling 155.94 417.25 452.43
Net Employee Cost (Retail
Supply)
116.88 313.07 339.45
Pension Liability (Retail
Supply)
2.31 5.82 6.31
Total - Retail Supply 119.19 318.89 345.76

Table 47: Allocation of A&G Expenses into Wheeling & Retail Supply
ALLOCATION OF A&G EXPENSES (Rs Cr)
Wheeling 30.14 32.68 35.43
Retail Supply 36.16 39.20 42.50

[ 55 ]

Table 48: Allocation of R&M Expenses into Wheeling & Retail Supply
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
R&M - Wheeling 82.30 88.94 95.58
R&M - Retail Supply 6.35 6.86 7.37

4.1.9 Capital Expenditure and Capitalization
Table 49: Capital Expenditure & Capitalization Schedule (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Opening CWIP 115.00 115.00 115.00
Capital Expenditure during the year 230.00 230.00 230.00
Capitalization during the year 230.00 230.00 230.00
Investment capitalized out of opening CWIP 115.00 115.00 115.00
Investment capitalized out of fresh investment 115.00 115.00 115.00
Closing CWIP 115.00 115.00 115.00

Table 50: Consumer Contribution (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Opening Consumer Contribution (Not Capitalized) 11.84 11.84 11.84
Consumer Contribution in the Investment 23.69 23.69 23.69
Opening Consumer Contribution already capitalized 277.85 301.54 325.23
Consumer Contribution Capitalized during the year 23.69 23.69 23.69
Closing Consumer Contribution (Not Capitalized) 11.84 11.84 11.84
Closing Consumer Contribution and Grants 301.54 325.23 348.92
Average Consumer Contribution and Grants 289.70 313.39 337.08

[ 56 ]

4.1.10 Depreciation
Table 51: Depreciation (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Opening Balance of GFA 2850.25 3080.25 3310.25
Asset Additions 230.00 230.00 230.00
Reduction 0.00 0.00 0.00
Closing Balance of GFA 3080.25 3310.25 3540.25
Average GFA 2965.25 3195.25 3425.25
Less: Average Consumer Contribution 289.70 313.39 337.08
Average Asset net of Contribution 2675.56 2881.87 3088.18
Average rate of depreciation 3.70% 3.71% 3.71%
Depreciation 99.10 106.79 114.48
Accumulated Depreciation 1013.60 1120.39 1234.87

Table 52: Allocation of Opening GFA & Depreciation (Rs. Cr.)
Total GFA (Opening) 2850.25 3080.25 3310.25
GFA Wheeling 2426.36 2622.15 2817.95
GFA - Retail Supply 423.89 458.10 492.30
Total Depreciation 99.10 106.79 114.48
Depreciation - Wheeling 75.60 81.47 87.33
Depreciation - Retail Supply 23.50 25.32 27.14

Table 53: Allocation of Accumulated Depreciation (Rs. Cr.)
Wheeling

Opening Balance 723.93 799.53 881.00
Depreciation for the year 75.60 81.47 87.33
Closing Balance 799.53 881.00 968.34
Retail Supply

Opening Balance 190.57 214.07 239.39
Depreciation for the year 23.50 25.32 27.14
Closing Balance 214.07 239.39 266.54

[ 57 ]

4.1.11 Advance Against Depreciation (AAD)
Table 54: Advance Against Depreciation (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 1/10th of Opening Loan (A) 211.76 228.81 245.01
2
Debt Repayment as considered for working out
Interest on Loan(B)
193.51 228.65 246.64
3 Minimum of A & B 193.51 228.65 245.01
4 Depreciation during the year 99.10 106.79 114.48
5 Excess of Min (A,B) over Depreciation (C) 94.41 121.86 130.53
6
Cumulative Repayment of Loan as considered for
working out Interest on Loan (D)
2068.73 2297.38 2544.03
7 Cumulative Depreciation (E) 1013.60 1120.39 1234.87
8 Excess of (D) over (E) (F) 1055.13 1176.99 1309.16
9 AAD = Min (C,F) / Zero if negative 94.41 121.86 130.53

Table 55: Allocation of AAD into Wheeling and Retail Supply (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Wheeling 80.37 103.74 111.12
Retail Supply 14.04 18.12 19.41

4.1.12 Working Capital
Table 56: Working Capital (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Total Working Capital Wheeling 81.45 85.81 90.12
Total Working Capital - Retail Supply 355.71 368.88 378.19
Total Working Capital 437.17 454.69 468.32
Opening Balance 411.07 437.17 454.69
Closing Balance 437.17 454.69 468.32
Total Working Capital Requirement 26.10 17.52 13.63

[ 58 ]

4.1.13 Regulated Rate Base (RRB)
Table 57: RRB (Rs. Cr.)
SL
NO
PARTICULARS REFERENCE
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 RRB Opening A 1806.97 1845.86 1841.04
2 Investments Capitalized B 230.00 230.00 230.00
3 Depreciation C 99.10 106.79 114.48
4 AAD D 94.41 121.86 130.53
5 Consumer Contribution E 23.69 23.69 23.69
6 DAB (Change in RRB) F = B - C - D - E 12.80 (22.34) (38.70)
7 Change in Working Capital G 26.10 17.52 13.63
8 RRB Closing H = A + F + G 1845.86 1841.04 1815.98
9 RRB
i
I = A + (F/2) + G 1839.46 1852.21 1835.33

Table 58: RRB allocation into Wheeling & Retail Supply (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 RRB Opening Wheeling 1356.01 1362.62 1353.87
2 RRB Opening - Retail Supply 450.96 483.24 487.17
3 RRB Closing Wheeling 1362.62 1353.87 1331.85
4 RRB Closing - Retail Supply 483.24 487.17 484.13
5 RRB
i
Wheeling 1354.56 1360.43 1345.02
6 RRB
i
- Retail Supply 484.91 491.79 490.30

4.1.14 Means of Finance
Table 59: Means of Finance (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Capitalization 230.00 230.00 230.00
Less: Consumer Contribution for Fresh Investments 23.69 23.69 23.69
Net Capitalization 206.31 206.31 206.31
Equity 61.89 61.89 61.89
Debt 144.42 144.42 144.42

[ 59 ]

Table 60: Equity (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Opening Equity 611.48 673.37 735.26
Addition during the year 61.89 61.89 61.89
Closing Equity 673.37 735.26 797.16
Average Equity 642.42 704.32 766.21

Table 61: Debt (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Opening Loan 2117.63 2288.15 2450.08
Addition: CAPEX Loan 144.42 144.42 144.42
Addition: Working Capital Loan 26.10 17.52 13.63
Closing Loan 2288.15 2450.08 2608.13
Average Loan 2202.89 2369.11 2529.11

4.1.15 Return on Capital Employed (RoCE)
Table 62: WACC & RoCE (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 RRB
i
1839.46 1852.21 1835.33
2 Equity (Average) 642.42 704.32 766.21
3 Debt (Average) 2202.89 2369.11 2529.11
4 Rate of Return on Equity (%) 16.00% 16.00% 16.00%
5 Rate of Return on Debt (%) 10.45% 10.73% 11.01%
6 WACC
i
(%) 11.70% 11.94% 12.17%
7 RoCE 215.27 221.11 223.36

Table 63: RoCE allocation into Wheeling & Retail Supply (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 RoCE Wheeling 158.53 162.40 163.69
2 RoCE - Retail Supply 56.75 58.71 59.67

[ 60 ]

4.1.16 Income Tax
Table 64: Income Tax (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
RRB (Average) (Rs Cr) 1839.46 1852.21 1835.33
Equity (Rs Cr) 642.42 704.32 766.21
Debt (Rs Cr) 2202.89 2369.11 2529.11
% of Equity 22.58% 22.92% 23.25%
Equity Considered for Income Tax (Rs Cr) 415.32 424.46 426.74
Rate of Return (%) 16.00% 16.00% 16.00%
Return on Equity (Rs Cr) 66.45 67.91 68.28
MAT Rate (%) 20.01% 20.01% 20.01%
Income Tax (Rs Cr) 16.62 16.99 17.08

Table 65: Income Tax allocation into Wheeling & Retail Supply (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Wheeling 12.24 12.48 12.52
Retail Supply 4.38 4.51 4.56

4.1.17 Non-Tariff Income
Table 66: Non-Tariff Income (Rs. Cr.)
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
Non Tariff Income (NTI) 78.95 78.95 78.95
NTI Wheeling 11.55 11.55 11.55
NTI - Retail Supply 67.40 67.40 67.40

[ 61 ]

4.1.18 Aggregate Revenue Requirement (ARR)
Table 67: ARR (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 Power Purchase Cost 3675.72 3957.59 4248.84
2 Inter-State Transmission Charges 232.05 243.66 255.84
3 Intra-State Transmission Charges 165.38 173.64 182.33
4 O&M Expenses 430.07 903.81 979.07
a Employee Expenses 275.13 736.14 798.19
b A&G Expenses 66.30 71.88 77.93
c R & M Expenses 88.64 95.80 102.95
5 Depreciation 99.10 106.79 114.48
6 AAD 94.41 121.86 130.53
7 Return on Capital Employed 215.27 221.11 223.36
8 Income tax 16.62 16.99 17.08
9 Total ARR 4928.63 5745.45 6151.53
10 Less: Other Income/NTI 78.95 78.95 78.95
11 Aggregate Revenue Requirement 4849.68 5666.50 6072.58

Table 68: ARR for Wheeling Business (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 O&M Expenses 268.38 538.86 583.44
b A&G Expenses 30.14 32.68 35.43
c R & M Expenses 82.30 88.94 95.58
2 Depreciation 75.60 81.47 87.33
3 AAD 80.37 103.74 111.12
5 Income tax 12.24 12.48 12.52
6 Total ARR 595.12 898.95 958.10

[ 62 ]

Table 69: ARR for Retail Supply Business (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 Power Purchase Cost 3675.72 3957.59 4248.84
2 Inter-State Transmission Charges 232.05 243.66 255.84
3 Intra-State Transmission Charges 165.38 173.64 182.33
4 O&M Expenses 161.69 364.95 395.63
b A&G Expenses 36.16 39.20 42.50
c R & M Expenses 6.35 6.86 7.37
5 Depreciation 23.50 25.32 27.14
6 AAD 14.04 18.12 19.41
8 Income tax 4.38 4.51 4.56
9 Total ARR 4333.51 4846.50 5193.43

4.1.19 Revenue Gap & Average Billing Rate at existing tariff, and proposed tariff
hike
Table 70: Revenue Gap & ABR at existing tariff (Rs. Cr.)
SL
NO
PARTICULARS
FY 2015-
16
FY 2016-
17
FY 2017-
18
1 Revenue Gap at existing tariff (Rs. Cr.) (213.41) (775.52) (944.93)
2 Units Realized (MU) 6125.86 6451.24 6774.32
3 Amount Realized at existing tariff (Rs Cr) 4636.27 4890.98 5127.65
4 Average Billing Rate at existing tariff (Rs/unit) 7.57 7.58 7.57
5 Average Cost of Supply (Rs/unit) 7.92 8.78 8.96
6 Ratio of ABR to ACS 95.60% 86.31% 84.44%
7 Proposed % avg tariff hike 4.40% 13.69% 15.56%

[ 63 ]

of BYPL
Year : FY 2012-13
Defined % for costlier plants : 60%
Reference Variable Charge : Rs 3.70 / unit
Case I: All power requirement to be met from long term sources only. Surplus power will
be sold to the open market.
Table 71: Merit Order Dispatch Case - I
FY 2012-13 With Merit Order Without Merit Order
Total cost of Power Purchase 3021.46 Rs. Cr 3143.6 Rs. Cr
Reduction in Cost 122.14 Rs. Cr
Long Term Power Purchase 8387.32 MU 8765.49 MU
Short Term Power Purchase 0.00 MU 556.00 MU
Short Term Power Sale 1605.72 MU 2539.89 MU
Energy Input to Discom 6341.38 MU 6341.38 MU

Case II: All power requirement to be met from long term sources only. No power may be
drawn from costly sources, if demand is met from cheaper sources. Surplus power will be
sold to the open market.
Table 72: Merit Order Dispatch Case - II

[ 64 ]

Case III: Specified minimum power will be purchased from BTPS, Rajghat & Gas
Turbine. Balance requirement to be met through short term purchase. Surplus power will be
sold to the open market.
Table 73: Merit Order Dispatch Case - III

Case IV: Re-allocation of power purchase for selected central & state generating stations
whose variable costs are higher.
Table 74: Merit Order Dispatch Case - IV

[ 65 ]

Case V: Reallocation of BYPL share in Delhi power from 27.24% to 23.97%.
Table 75: Merit Order Dispatch Case - V

Case VI: Case IV + Case - V.
Table 76: Merit Order Dispatch Case - VI

[ 66 ]

5. SUMMARY & CONCLUSION
The ARR projection shows that ARR for 3 years of the 3
rd
MYT Control Period are
Rs. 4849.68 Cr, Rs. 5666.50 Cr and Rs. 6072.58 Cr respectively against revenue
collections of Rs. 4636.27 Cr, Rs. 4890.98 Cr and Rs. 5127.65 respectively, resulting
in an increasing gap between the average cost of supply and average billing rate (at
existing tariff) of Rs. 0.35/unit, Rs. 1.20/unit and Rs. 1.39/unit respectively.
This increasing revenue gap (at existing tariff) calls for a tariff hike of 4.40% in FY
2015-16, or a hike of 13.69% in FY 2016-17, or a hike of 15.56% in FY 2017-18 to
abolish the revenue gap and achieve a cost-reflective tariff.
Different components of the ARR for the 3 years of 3
rd
MYT Control Period are
shown below in form of pie charts:

Figure 2: Components of ARR for FY 2015-16, FY 2016-17 and FY 2017-18
[ 67 ]

It is seen that power purchase cost occupies a major portion (about 70%) of the ARR.
Hence reducing the power purchase cost can reduce the overall expenses of a
distribution licensee to a great extent.
Implementation of the Merit Order Dispatch model can help in reducing power
purchase cost by a minimum amount of about Rs. 100 Cr, as has been examined in
this study for FY 2012-13.
In addition, if share of BYPL is reduced from the present 27.24% to 23.97% along
with re-allocation of power purchase from selected costlier power stations, it would
result in a saving of about Rs. 390 Cr, as has been examined in this study for FY
2012-13.

[ 68 ]

6. LIMITATIONS OF STUDY
Projecting the future energy demand is the primary important task for ARR
calculation. However this process involves several variables, predictions of which
themselves may prove wrong with high probability.
Number of consumers and connected load are not under the control of distribution
licensee, and hence their future trajectories cannot be predicted accurately, and this
may result in erroneous results in the energy demand figures.
Quantum of power purchase from future stations had historically fallen well below the
targets specified in the tariff orders, resulting in power purchase from costly short
term sources. This was majorly due to delay in commissioning of those power stations
because of various legal and technical reasons. Hence prediction of this parameter
also poses a serious challenge toward ARR calculation.
Inflation, which is a macro-economic phenomenon and is not under control of the
distribution licensee, may lead to increase in O&M Expenses beyond the predicted
figures, resulting in loss to the licensee. The escalation factor taken to account for
inflation may prove wrong in case of inflation higher than predicted.
As of now, due to unavailability of capital expenditure schedule for FY 2015-16
onwards, capital expenditure for each year for the 3
rd
Control Period has been taken
as Rs. 230 Cr as approved provisionally by DERC in its MYT tariff order dated
13.07.2012 for 2
nd
Control Period.
Increase in interest rate on debt has been taken same as the increase from FY 14 to FY
15, as movement of interest rate cannot be predicted easily and is not under the
control of the licensee. Interest rate on fresh loan has been taken as 10%.
Working capital requirement for wheeling business includes wheeling expenses for 2
months, which is obtained from the ARR for wheeling business. However calculation
for ARR requires RoCE figure, which in turn is calculated from working capital.
Hence it results in a cyclic calculation. To avoid this, voltage wise energy sales (MU)
[ 69 ]

are calculated, and then voltage wise wheeling charges (Rs. Cr.) are calculated on the
basis of per unit voltage wise wheeling charges (Rs. / unit sales) determined by DERC
in its tariff order dated 31.07.2013. Adding all the wheeling charges give the total
wheeling expenses. Working capital is calculated from this figure.
Although Merit Order Dispatch model is a great way to reduce power purchase cost
for the licensee, it is not always under the control of licensee to choose among the
suppliers according to the price of power supplied, particularly under the condition of
shortage of power supply. Rather it is the function of the RLDC-s and the SLDC to
look after the matter and ensure merit order dispatch.
Besides the above fact, although in calculations, merit order dispatch shows huge
monetary savings, real time operations are much more complicated and involve
several unprecedented factors. Hence although apparently there may be scope of
savings, but it is the real time situation which would decide whether there is actually
scope for following merit order dispatch or not.

[ 70 ]

7. FUTURE SCOPE & RECOMMENDATIONS
Inflation is an uncontrollable factor, and its impact shall be made a pass through to the
consumers. Any increase in O&M expense due to inflation should be validated
properly and then be passed on.
True status of progress in erection and commissioning works in future power stations
including their expected synchronization date & COD should be conveyed to discoms,
so that a fair prediction can be made of the energy availability from these sources.
ARR calculation provides an insight on various expenses incurred by the licensee, and
presents an opportunity to find ways to reduce such expenses.
Although there is not much scope for discoms to implement merit order dispatch, and
it is mainly in the hands of the load dispatch centers, but discoms should focus more
and more on this concept of power procurement. Any power station supplying
electricity at high price than the average rate should not be encouraged to sell power,
unless it brings down its cost to a level similar to that of similar power plants.
Discoms should have the right to scrutinize the bills raised by generating companies,
in case the bills are abnormally high. Passing of all the costs of power generation to
discoms sometimes hide the inefficiency of the generators.

[ 71 ]

8. BIBLIOGRAPHY
[1] Central Electricity Authority, (2013), Monthly Report on broad status of Thermal
Power Projects in the Country, Thermal Power Monitoring Division, Central
Electricity Authority, New Delhi
[2] Central Electricity Authority, (2013), Status of Hydro Electric Projects under
execution
[3] Central Electricity Authority, (2013), Targeted Generation Capacity Addition During
2012-13
[4] Central Electricity Regulatory Commission, (2010), Central Electricity Regulatory
Commission (Indian Electricity Grid Code) Regulations, 2010
[5] Delhi Electricity Regulatory Commission, (2011), Concept Note on MYT
Regulations
[6] Delhi Electricity Regulatory Commission, (2012), Order on True Up for FY 2010-11,
Aggregate Revenue Requirement for FY 2012-13 to FY 2014-15 and Distribution
Tariff (Wheeling & Retail Supply) for FY 2012-13 for BSES Yamuna Power Limited
(BYPL)
Aggregate Revenue Requirement and Distribution Tariff (Wheeling & Retail Supply)
for FY 2013-14 for BSES Yamuna Power Limited (BYPL)
Aggregate Revenue Requirement and Transmission Tariff for FY 2013-14 for Delhi
Transco Limited (DTL)
[9] Delhi Electricity Regulatory Commission, (2011), Delhi Electricity Regulatory
Commission (Terms & Conditions for Determination of Wheeling Tariff & Retail
Supply Tariff) Regulations, 2011
[10] Delhi Transco Limited, (2012), Final Intra-State ABT based Energy Account for the
month of MAR 2011, Delhi Transco Limited, State Load Despatch Centre, Fax No:
F.DTL/207/20010-11/DGM(SO)/
[11] Delhi Transco Limited, (2012), Provisional Intra-State ABT based Energy Account
for the month of March-2012, Delhi Transco Limited, State Load Despatch Centre,
Fax No: F.DTL/207/20011-12/DGM(SO)/EAC/33
[12] Delhi Transco Limited, (2013), Provisional Intra-State ABT based Energy Account
for the month of March-13, Delhi Transco Limited, State Load Despatch Centre, Fax
No: F.DTL/207/20012-13/DGM(SO)/EAC/12
[13] Department of Atomic Energy, Government of India, http://dae.nic.in/
[ 72 ]

[14] Eastern Regional Power Committee, (2011), Provisional Regional Energy
Accounting (REA) of Eastern Region for the month of March 2011, Fax No:
ERPC/COM-I/REA/2011/ 53-92
ERPC/COM-I/REA/2012/ 183-223
ERPC/COM-I/REA/2013/ 147-85
[17] Eastern Regional Power Committee, Ministry of Power, http://www.eastrpc.org/
[18] Gujarat Electricity Regulatory Commission, (2011), Multi-Year Tariff Order for
Dakshin Gujarat Vij Company Limited
[19] ICRA Limited, (2013), Gas Price Hike: Impact Analysis
[20] Indian Energy Exchange, http://www.iexindia.com/
[21] Labour Bureau, Govt of India, http://labourbureau.nic.in/
[22] Ministry of Power, Government of India, (2003), The Electricity Act, 2003
[23] Ministry of Power, Government of India, (2006), National Tariff Policy
[24] Northern Regional Load Despatch Centre, (2013), Annual Report, 2012-13
[25] Northern Regional Power Committee, (2011), Final REA for the month of March,
2011, Letter No: NRPC/SE(C)/ABT-REA/2010-11/322-356, Northern Regional
Power Committee, Ministry of Power, Government of India
[26] Northern Regional Power Committee, (2012), Final REA for the month of March,
2012, Letter No: NRPC/SE(C)/ABT-REA/2012-13/221-55, Northern Regional
Power Committee, Ministry of Power, Government of India
[27] Northern Regional Power Committee, (2013), Amendments in Final REAs for the
months of January, February and March, 2013, Letter No:
NRPC/Comml/201/REA/2012-13/, Northern Regional Power Committee, Ministry of
Power, Government of India
[28] Northern Regional Power Committee, (2013), Revision of Allocation of Unallocated
Power of Central Generating Stations of Northern region, Revision #5 / 2013-14, Fax
Message No: NRPC/ OPR/ 103/ 02/ 2012-13, Northern Regional Power Committee,
Ministry of Power, Government of India
[29] Office of the Economic Advisor to the Govt of India, Ministry of Commerce &
Industry, http://eaindustry.nic.in/
[30] Power Exchange India Ltd, http://www.powerexindia.com/pxil/

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