Summary of Annual Revenue Requirement and Tariff Revision Petition for the year 2005-06

5.1       2005-06 SUMMARY

5.1.1    Annual Revenue Requirement

The Punjab State Electricity Board has filed its Revenue Requirement as a vertically integrated utility for the year 2005-06. The Board has projected aggregate revenue requirement for an amount of Rs. 9704 crores. This covers the total expenses of Rs. 9498 crores and return of Rs. 206 crores on net fixed assets. The expected revenue projected at the current tariff rates including subsidy from GoP, is Rs. 7195 crores and non - tariff income is projected at Rs.340 crores. The Board has worked out a revenue gap of Rs. 2169 crores. The Board has proposed to cover this gap by revenue surplus carried over from previous year (Rs. 291 crores), additional  revenue from proposed tariff (Rs. 1002 crores) and creation of Regulatory Asset (Rs. 876 crores). A summary of Annual Revenue Requirement as filed by the Board is given below in Table 5.1.

Table - 5.1

Annual Revenue Requirement for the year 2005-06

 (Rs. Crores)

* Net of capitalization.

The major items of expenses are Fuel cost (25%), power purchase cost (38%), employees cost (18%) and interest charges (10%).

5.1.2    Energy Projections

            The Board in its ARR has projected energy sales and energy availability for the year 2005-06 as given below in Tables 5.2 and 5.3.

Table - 5.2

Energy Sales for 2005-06

(MU)

Table - 5.3

Energy Availability for 2005-06

 (MU)

5.1.3    Proposed Tariffs

a) Existing and Proposed Tariffs

The Board has filed proposals for revising tariff to meet the Revenue requirement for the year 2005-06. The existing and proposed tariff rates are given in Annexure-I to this Chapter.

b) Salient Features of the Proposed Tariff

i)                    Two part tariff structure has been proposed for all consumer categories except for agriculture. Fixed charges are proposed to be levied on sanctioned load of the consumer except for LS, MES, Bulk Supply and Railway Traction consumers. Demand charges for LS, MES, Bulk supply and Railway Traction consumer are proposed to be levied on contract demand.

ii)         Monthly minimum charges are proposed to be discontinued for all categories except temporary supply.

iii)         Differential agriculture tariff  has been proposed for submersible pumpsets and monoblock pump sets. Tariff for submersible pump sets is proposed to be 24% higher than tariff of monoblock pumpsets on the plea that consumption by submersible pumpsets is higher by 24% than consumption by monoblock pumpsets.

iv)        A new domestic slab of 0-30 units has been proposed for the marginal / economically weaker consumers. The second domestic slab stands revised to 31-100 units.

v)         Domestic slab of 101-300 units and slab of above 300 units are proposed to be merged.

vi)                 The Board has proposed to abolish the 10% rebate for its Rural domestic consumers in view of proposed coverage of all the villages under urban pattern supply by June 30, 2005.

vii)               A rebate for higher voltage has been proposed for all categories of consumers connected at 11 KV or above except Railway Traction at the following rates.

viii)       Tariff applicable on temporary connection consumers is proposed to be increased by 15% for all categories.

ix)        The Board has intimated that fixed costs constitute 40% of the total costs while variable costs constitute the balance 60% of total costs. On introduction of the proposed 2-part tariff structure, the Board has estimated revenue recovery through fixed charges at 19% of total revenues, while revenue recovery from energy charges will be 81%.

x)         Any other charges which are being collected by the Board will be continued at the existing rates.

c) Revenue from Existing and Proposed Tariffs

The Board has projected the revenue from various consumer categories with reference to the existing and proposed tariffs as given below in Table 5.4.

Table 5.4

Revenue from Existing and Proposed Tariff Rates

The Board has worked out additional revenue requirement of Rs. 1878 crores for the year 2005-06 after adjustment of revenue surplus of Rs. 291 crores from the previous year i.e. 2004-05. In its tariff proposals, the Board has proposed to capture an amount of Rs. 1002 crores through tariff revision and remaining gap of Rs. 876 crores is proposed to be carried forward as Regulatory Asset subject to approval of the Commission.

5.2       2004-05 Review

The Board has given revised estimates for Aggregate Revenue Requirement and Revenue for the year 2004-05. In the revised estimates the costs under various heads are different from those approved in the Tariff Order of the Commission. The Board has worked out revenue gap of Rs. 1431 crores for the years 2004-05 regarding which the Board has stated that recovery mechanism needs to be evolved separately. Revised Revenue Requirement for the year 2004-05 is analysed in Chapter-3 of this Tariff Order.

5.3       2003-04 True Up

The Board has given actual Aggregate Revenue Requirement and Revenue for the year 2003-04 and has indicated a revenue gap of Rs. 45 crores. True up for the year 2003-04 is discussed in Chapter - 2 of this Tariff Order.

5.4       Expenses for the year 2002-03

In its presentation dated April 11, 2005, the Board has claimed prior period expenditure of Rs. 63.54 crores and other debits of Rs. 10.31 crores relating to the year 2002-03. The Board has stated that the prior period expenses are bonafide expenses incurred by the Board in the previous years that could not be booked in the respective year because of reasons on which the Board has no control.

Annexure-I

Existing & Proposed Tariff Structure

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