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Analysis of OPTCL’s ARR and Transmission tariff for FY 2011-12

Analysis of OPTCL’s ARR and Transmission tariff for FY 2011-12

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Analysis of OPTCL’s ARR and Transmission tariff for FY 2011-12

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  1. Analysis of OPTCL’s ARR and Transmission tariff for FY 2011-12 By: World Institute of Sustainable Energy, Pune (Consumer Counsel) 4th February, 2011

  2. Proposal of OPTCL

  3. Proposed Revenue Requirement for FY 11-12 (Rs Cr) Total gross requirement: 1578.69 Rs Crore

  4. Analysis of ARR and Transmission Tariff

  5. Transmission loss

  6. Employee cost incl. terminal benefits (Rs Cr.) *Including payment of differential pension and pensionary benefits

  7. Employee cost incl. terminal benefits (contd.) Submission • OPTCL has requested 241% rise in employee cost including terminal benefit in ARR of FY 2011-12 • Basic Pay + GP: Yearly escalation of 3% shall be allowed over the Commissioned approved amount of 2010-11 • DA: The DA proposed for 2011-12 (63%) seems to be on higher side and therefore may be reviewed • HRA: The HRA Proposed for 2011-12 (20% ) may be reviewed according to Govt norms • Terminal benefit: may be finalized as per independent valuation report

  8. R&M and A&G Expenses (Rs Cr.)

  9. R&M and A&G Expenses (contd. Submission • The approved and actual R&M expenses in last few years reveal that OPTCL actually incurred less than 50% expenditure on R&M (except 2009-10); therefore, consumer should not be burdened with excessive projected R&M expenses • As per OPTCL Business Plan 5.5% yearly escalation in A&G expenses shall be allowed to pass through in ARR (i.e. Rs. 15.97 Cr against projection of Rs 38.34 Cr for FY 2011-12)

  10. O&M Expenses as per CERC Projected O&M: 1084.29 Rs Crore (Employee:952.06, R&M:93.89, A&G:38.34); whereas as per CERC Regulation it can be reduced by nearly 50%

  11. Loan liability Observation: • OPTCL has proposed new loans of 903.82 Crore @11% to be availed in FY 2011-12 • OPTCL has reported State Govt (cash loan) balance of the tune of Rs 2 Cr. And requested to allow Rs 0.26 Cr as a interest component of that in the ARR Submission • New loan interest 68.94 Cr shall not to be passed through in the ARR of FY 2011-12 • Interest on State Govt. (Cash loan) should be kept in abeyance as per Govt directive

  12. Capex Plan Observation: The reasons for variation in expenses under O&M and telecom reported in earlier capex plan and ARR submission need to be verified

  13. Gross fixed asset and depreciation

  14. Gross fixed asset and depreciation Submission: • Consumer counsel has calculated the Gross Fixed Asset by taking reference 0f OERC actual and approved GFA as on 1.04.2009 and 1.04.2010 respectively • After addition the yearly addition (09-10 & 10-11 as given in ARR), the GFA arrived are lower than that claimed by OPTCL • Commission may consider the GFA as determined in the previous slide

  15. Return on equity, Reserve & others Observation: • Equity claimed by OPTCL: Rs 160.07 Cr – 60.07 (old) + 48.05 (received) + 51.94 (expected) Submission: • Commission shall not allow RoE on ol d equity and expected equity base • Reasonable RoE = 48.05 * 15.5% = Rs 7.45 Cr (claimed RoE - Rs 24.81 Cr) • Disallow the claim for further Contingency reserve • Interest on working capital, bad debts and pass through expenses shall not be pass through in ARR

  16. Summary of ARR (2011-12)

  17. Proposed Transmission tariff

  18. Open access charges

  19. Summary • OPTCL has claimed a hike of 192% in transmission tariff which will increase the cost of electricity at consumer end • The increase in transmission tariff is resulted due to higher claim of OPTCL in following components: • Employee cost incl. terminal benefits and pension/R&M expenses/ A&G expenses/ Interest on new loan and old state govt. loans/ Gross fixed asset and depreciation/ RoE, Contingency reserve, Interest on working capital and pass through expenses • Commission may consider the submission of consumer counsel and reduce the transmission tariff at reasonable level

  20. Thank you