Appendix D2 by HC121106012418

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									                                                                          Appendix ‘D’

Reply to Data gaps on BEST’s Petition for approval of Aggregate Revenue Requirement
and Tariff for FY 2011-12 as per MERC (Terms and Conditions of Tariff) Regulations,
2005 (Case no. 171 of 2011)




Query MERC’s Query                     BEST’s Reply
No.

  1     Kindly provide audited /       Audited Statement of Account which includes the
        provisional Balance Sheet,     Balance sheet, Profit & Loss Account is enclosed
        Profit & Loss Account along    herewith as Annexure ‘A’.       Based on this audited
        with all the schedules of FY   accounts, BEST restated and prepared Proforma
        2010-11.                       Accounts as per the direction of MERC vide their
                                       Order dated 9-3-2006, under the Case No.4 of 2004,
                                       wherein all schedules for FY 2010-11 are given. The
                                       copy of the said Proforma Accounts duly certified by
                                       External Auditor is enclosed herewith as Annexure ‘B’.
Query MERC’s Query                        BEST’s Reply
No.

 2    Kindly provide provisional          BEST is preparing provisional Balance sheet, Profit &
      Balance Sheet, Profit & Loss        Loss A/c. as per the MERC ( Uniform Recording,
      Account along with all the          Maintenance and Reporting of             Information)
      schedules of first three quarters   Regulations, 2009 for every quarter. The copy of the
      (November 2011) of FY 2011-         same is enclosed herewith as Annexure ‘C’. The 3rd
      12.                                 quarter of FY 2011-12 is completed in the month of
                                          December 2011. As such, the said data will be provided
                                          in due course.
Query MERC’s Query                        BEST’s Reply
No.

 3    BEST has claimed transport          BEST will adopt suitable measures to reduce the deficit
      loss. The commission has to         of Transport operations. It is to be noted that the
      decide whether to allow the         deficit of Transport operation for FY 2009-10, 2010-11
      transport deficit in light of       & 2011-12, is already observed in diminishing curve i.e.
      Supreme Court Judgment in           Rs.504 crores, Rs.400 crores & Rs.324 crores
      this matter. As per the audited     respectively. In order to avoid sharp rise in the Tariff
      balance sheet of FY 2009-10,        rates, BEST has proposed to recover the said
      BEST       is    having     total   Transport deficit by creating the Regulatory asset in
      accumulated revenue deficit of      the proposed MYT Petition after Business Plan is
      Rs. 2,406.80 crores. Total          approved by the Commission.
      revenue deficit of BEST will
      continue to rise making it
      financially in viable and the
      utility will find it difficult to
      raise funds and implement
      CAPEX if the transport loss is
      not allowed in the Aggregate
      revenue requirement. However,
      allowing transport loss will
      lead to a sharp rise in tariff
      rates.
Query MERC’s Query                  BEST’s Reply
No.

4     Out of the total employee The details of Gratuity & Leave encashment for last 3
      expenses claimed by the utility, yrs is as under:
      How much is gratuity & leave
      encashment for the three years    Particulars     FY 2009-10 FY 2010-11 FY 2011-12
                                                          Actual     Actual   (Estimated)
      FY 209-10, 2010-11 & 2011-12      Gratuity           7.15       7.59        8.23
                                     Leave Encashment   2.14       1.48       2.46
Query MERC’s Query                                 BEST’s Reply
No.

 5    True up of 2009-10             Major variation between the Actual & Approved
                                     expenses in respect of Employee expenses, Interest on
      Major variation between Actual Long term loan & Return on Equity for FY 2009-10 &
      & Approved expenses for FY reasoning to that effect is given in the petition at page
      2009-10 are,                   no. 33 & 40-42.
                                  (Rs. Crore)
                     Actual   Approved    Excess

       Employee      174.76      152.44    22.32
       Expenses

       Interest on    23.31       14.68     8.63
       Long Term
       Loan

       Return on     114.38       99.16    15.22
       Equity
Query MERC’s Query                   BEST’s Reply
No.

 6    The utility has claimed actual In FY 2011-12 the BEST will now claim the normative
      interest on working capital Rs. interest on Working Capital instead of actual interest
      3.21 crore, over and above on Working Capital.
      normative interest. As per MYT
      regulation 2005, the utility can
      claim only normative interest.
Query MERC’s Query                       BEST’s Reply
No.

 7    The utility has claimed ‘Power     Methodology of calculating the Power Factor
      Factor Incentive’ of Rs. 26.13     Incentive, the same is calculated as per the Tariff
      crore & Rs. 44.27 crore for FY     schedule issued by the MERC in various orders of the
      2007-08        &        2008-09    respective years.
      respectively under the head
      ‘Other Expenses’. The utility
      may provide the mythology of
      calculating     this    amount.
      Whether such incentive is
      allowed as per MYT 2005
      regulation? The commission
      has to approve this expenditure.
Query MERC’s Query                        BEST’s Reply
No.

 8    The utility has claimed             The methodology of calculating the Incentive for
      ‘Incentive for reduction of         reduction of Distribution losses is already given in the
      distribution losses’ of Rs. 13.89   Petition at page no. 51 and same is as per the MERC
      crore. The utility may provide      (Terms & Conditions of Tariff) Regulations, 2005 as
      the mythology of calculating        per the Section 19.1.
      this amount. Whether such
      incentive is allowed as per MYT
      2005        regulation?       The
      commission has to approve this
      expenditure.
Query MERC’s Query                      BEST’s Reply
No.

 9    The utility has claimed ‘Power    The Power factor incentive is enjoyed by various
      Factor Incentive’ of Rs. 45.12    consumers as per the Tariff schedule given by the
      crore under ‘Other Expenses’      Commission in the various orders whereas Incentive
      as well as ‘Incentive for         for reduction in Distribution losses is as per the
      reduction in distribution loss’   MERC (Terms & Conditions of Tariff) Regulations,
      of Rs. 13.89 crore. Kindly        2005 under Section 19.1.
      elaborate on the difference
      between the two incentives as
      per MYT regulation 2005 and
      how both can be claimed in
      same year.
Query MERC’s Query                                  BEST’s Reply
No.

 1    True up of FY 2010-11

  i   Major variation between Actual                Major variation between the Actual & Approved
      & Approved expenses for FY                    expenses in respect of Employee expenses, Interest on
      2010-11 are,                                  Long term loan, Contribution to Contingency Reserve
                          (Rs. Crore)               & Return on Equity for FY 20010-11 & details of the
                       Actual   Approved   Excess   same are already given in the Petition at page no. 66-
                                                    69, 75-78 & 81.      It is to be noted that the Actual
       Employee        316.79     275.41    41.37
       Expenses                                     Employee expenses for FY 2010-11 is Rs.199.32 crs.
       Interest on      34.72      28.17     6.55
                                                    and not Rs.316.79 crs.        The approved figure of
       Long Term                                    Employee expenses in the APR order of FY 2009-10
       Loan
                                                    under the case no. 95 of 2009 is Rs. 165.38 crs. Thus
       Contribution      7.77       3.88     3.89   the difference is Rs. 33.94 crs. for which detail
       to
       contingency                                  reasoning is already given in page no. 66-69 of the
       reserve
                                                    Petition.
       Return     on   121.42      99.16    22.26
       Equity                                       In case of Actual Interest of Long term loan for FY
                                                    2010-11 is Rs.13.15 crs. as against approved figure is
                                                    Rs. 16.71 crs. However, in the observation the said
                                                    figure is mentioned as Actual Rs. 34.72 crs. and
                                                    approved figure Rs. 28.17 crs. which seems to be
                                                    wrong.
                                                    Regarding Contribution to Contingency Reserve, the
                                                    same has been clarified at internal page no.81 of the
                                                    Petition. The issue of providing 0.5% Contribution to
                                                    Contingency Reserve on the Opening GFA instead of
                                                    0.25% as per the Commission’s Order            dated
                                                    12/9/2010 was already before the APTEL and hence
                                                    BEST continued to provide Contribution to
                                                    Contingency Reserve upto 0.5% on Opening GFA
                                                    which is as per the MERC’s Regulations, 2005.
                                                    Similarly, issue of disallowing 30% equity in case of
                                                    Return on Equity was also before the APTEL.
Query MERC’s Query                   BEST’s Reply
No.

 ii   The utility has claimed actual In FY 2011-12 the BEST will now claim the normative
      interest on working capital Rs. interest on Working Capital instead of actual interest
      1.59 crore, over and above on Working Capital.
      normative interest. As per MYT
      regulation 2005, the utility can
      claim only normative interest.
Query MERC’s Query                         BEST’s Reply
No.

 iii   The utility has claimed             Methodology of calculating the “Incentive for
       ‘Incentive for reduction of         reduction of distribution losses” is already given in the
       distribution losses’ of Rs. 30.20   Petition at page no. 85 & 86 and same is claimed as
       crore. The utility may provide      per the MERC (Terms & Conditions of Tariff)
       the mythology of calculating        Regulations, 2005 as per Section 19.1.
       this amount. Whether such
       incentive is allowed as per MYT
       2005        regulation?       The
       commission has to approve this
       expenditure.
Query MERC’s Query                      BEST’s Reply
No.

 iv   The utility has claimed ‘Power    Power Factor Incentive is enjoyed by various
      Factor Incentive’ of Rs. 46.72    consumers as per the Tariff schedule given by the
      crore under ‘Other Expenses’      Commission in their order dated 12/9/2010 whereas
      as well as ‘Incentive for         Incentive for reduction in Distribution losses is as per
      reduction in distribution loss’   the MERC (Terms & Conditions of Tariff)
      of Rs. 30.20 crore. Kindly        Regulations, 2005 under Section 19.1.
      elaborate on the difference
      between the two incentives as
      per MYT regulation 2005 and
      how both can be claimed in
      same year.
Query Query                         BEST’s Reply
No.

      Aggregate           Revenue
      Requirement of FY 2011-12

  a
      Kindly provide actual expenses
      incurred under each expense The actual expenses incurred under each expense
      head till November 2011 head for H1 of FY 2011-12 is given in the revised
      (Power purchase, employee, petition.
      etc).
Query Query                               BEST’s Reply
No.

 b    The utility has claimed carrying    It is not correct that due to under recovery from the
      cost of Rs. 170.34 crore due to     sale of electricity there was a deficit. It is to be noted
      delay in recovery of revenue        that after taking into consideration the actual sale of
      deficit. However, it may be         electricity, the Revenue gap was determined by the
      noted that the deficit (Rs.         Commission in truing up exercise of FY 2006-07 &
      276.38 crore & Rs. 225.79           2007-08 under case no. 73 of 2007 & case No.118 of
      crore) was due to under             2008 respectively and allowed to carry over Revenue
      recovery from sale of electricity   gap in the subsequent years with a spread over of 12
      and not disallowance by             months period. The same has been claimed in the
      commission. The same fact has       Petition by the BEST in lieu of APTEL Judgment
      also been mentioned in the case     dated 6-2-2009 passed in Appeal No. 36 of 2008
      laws pointed out by the utility.    reported in 2009 ELR (APTEL) 880. The carrying
      As such the carrying cost has       cost has been calculated till March 20011 only
      been calculated till March 2011     because in FY 2009-10, BEST observed the Revenue
      on the entire deficit rather than   gap of Rs. 178.50 crs. & surplus of Rs.14.73 crs. by
      the differential amount (Actual     recovering previous year revenue gap till the end of
      – Approved). Also, it may be        March, 2011. Hence carrying cost is calculated upto
      noted that there is revenue         March, 2011.
      surplus (excluding transport
      loss) of Rs. 14.73 crore since
      March 2010, so how can the
      carrying cost be calculated on
      the entire revenue deficit due to
      under recovery which has been
      recovered till March 2010. As
      such the commission has to
      approve this expenditure.
Query MERC’s Query                BEST’s Reply
No.

  c   The utility has claimed actual In FY 2011-12 the BEST will now claim the
      interest on working capital normative interest on Working Capital instead of
      instead of normative interest on actual interest on Working Capital.
      working capital as per MYT
      2005 regulation.
Query MERC’s Query                     BEST’s Reply
No.

 d    The utility has claimed ‘Power   The Power Factor Incentive and its methodology is
      Factor Incentive’ of Rs. 46.72   as per the Tariff schedule allowed by the
      crore under ‘Other Expenses’.    Commission as per the Order dated 12.9.2010 under
      The utility may provide the      the case no. 95 of 2009.
      mythology of calculating this
      amount.

								
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