1. REVIEW PETITION IN TARIFF ORDER FY18
KERALA STATE ELECTRICITY BOARD LIMITED

2. KSERC TARIFF ORDER DATED 17.04.2017
Financial Year
Revenue Gap/Surplus (KSERC)
Revenue Gap (KSEB)
Rs Cr (Gap)
Rs Cr.
Rs Cr (Surplus)
Rs Cr.
Allowed only partial recovery of Revenue Gap
Rs Cr, after adjusting the surplus
Tariff revision for an additional revenue of Rs. 550 Cr
Differences are in respect of
purchase of power, interest and finance charges, O&M expenses etc
adversely affect KSEBL finances and obligations to provide quality power

3. DIFFERENCES Particulars 2016-17 Rs Cr 2017-18
Cost of Generation & power purchase
(fuel cost of BDPP& KDPP only)
Interest and Finance charges
Depreciation
-60.46
O&M expenses
RoE
-52.49
Total ARR
Less :Non Tariff income
+10
Net ARR
Revenue from Tariff
-19.31
Revenue gap(-) /surplus(+)

4. POWER PURCHASE Approval: 2016-17 - Rs.7752.76 crore
Not approved any cost towards :
Power purchase from sources like RGCCPP, Kayamkulam, Kasargod Solar park
REC worth Rs.15 Cr purchased (FY17)
Power procurement proposed through DBFOO – not fully approved
Power purchase is an uncontrollable cost
Hon’ble Commission may kindly true up the actual power purchase cost along with carrying cost, for and subject to prudence check

5. O&M and RoE O&M expenses KSEBL requests
Determined as per Tariff Regulations 2014
– which are inadequate to recover genuine expenditure of KSEBL
- Matter has been presented during the framing of Regulations itself
KSEBL requests
To Review the amounts allowed
under O&M expenses
and Return on equity

6. INTEREST & FINANCIAL CHARGES
FINANCIAL YEAR
KSERC APPROVAL
KSEB SUBMISSION
Difference
Rs Cr
Rs Cr Rs
Rs Cr
Rs Cr Rs
Difference:
interest on additional borrowings
interest on PF,
interest on security deposit
interest on overdrafts availed
- make good approved and un-bridged revenue gap

7. Interest on additional borrowings
Assessed interest on Rs.3753 Cr only towards loans and bonds as on
No interest approved for additional borrowings proposed for capital investments
Reasoning that KSEBL has not filed any application for investment approval
KSEBL, vide ARR & ERC petition for , submitted details Rs 1353 crore of CI
Achieved a progress of Rs crore (92%)
Capital Investment Plan for FY 17 (Rs crore) submitted on
Reviewed on
KSEBL filed additional details directed by Hon Commission on
Actual CI for is about Rs crore

8. Interest on additional borrowings
T&D loss reduction targets fixed:
0.30% for and 0.25% for
Other statutory obligations
Targets can be achieved only by undertaking required capital works
CI Plan FY18
GBU & DBU already submitted ;
TBU being prepared and will be submitted soon
Hon Commission may please approve:
CI Plans, additional borrowings & interest thereon : Rs.165 Cr for FY18

9. Interest on overdrafts
Rs.240 crore was disallowed on interest on overdrafts for the years and
Stating that KSEB Ltd has not submitted sufficient details for assessing working capital
Disallowed interest on overdraft, treating it as working capital
This amount is not entirely for working capital requirement of current year
Huge amount of overdraft is a reflection of debt financing of approved and un bridged revenue gaps of previous years. Till the approved unbridged revenue gap is Rs crores

10. Un-bridged approved revenue gap
Year
APPROVED
ACTUAL
DIFFERENCE
ORDER DATE
Up to FY11
424.11
FY10
107.90
FY11
204.70
FY12
547.16
&
FY13
866.17
&
FY14
460.98
637.54
FY15
479.28
Total
(All in Rs. Cr.) 

11. DEPRECIATION Approved depreciation on fixed assets as on 01.04.2014.
Fixed assets added in FY15 to FY17 has not been considered
Hon Commission may kindly consider the additions to fixed assets during the period while truing up

12. CROSS SUBSIDY SURCHARGE
Determination of Cross Subsidy Surcharge deviates
from the regulations and National Tariff Policy
Weighted average cost of power purchase(C) adopted
ISTC counted twice
Separate cross subsidy surcharge is fixed for embedded open access consumers
Limiting CSS to 20%

13. Transmission Charge counted twice
“Intra State transmission charges” (Rs Cr) included in
weighted average cost of power purchase ‘C’
As well in the Wheeling Charge ‘D’
When the “Intra State transmission charges” (Rs Cr) is excluded from the calculation of weighted average cost of power purchase, the revised weighted average cost of power purchase will be Rs 3.17 per unit
This error needs to be rectified. Otherwise the transmission charges of 0.37 per unit may be deducted from the factor D .

14. CROSS SUBSIDY SURCHARGE (Embedded Customers)
NO PROVISION under the EA, 2003
NO Provision National Tariff Policy, 2016
No Provision in Regulations
NO OTHER State Commission has allowed
In CSS formula, Tariff ‘T’ includes Fixed Charges
APTEL ORDER 178 / 2011 / (Reliance Vs MERC)
Tariff of subsidizing consumers is generally in two parts i.e. fixed charges and energy charges and therefore, the term tariff is the effective tariff for that category of consumers
APTEL ORDER (181/2015/ )

15. DEMAND CHARGES & CROSS-SUBSIDY
demand charges are NOT SUFFICIENT to recover
the fixed cost incurred to cater embedded consumers.
The revenue from demand charges covers only %
The remaining fixed cost is recovered in energy charges
THEREFORE the removal of demand charges in term “T”
DEFEATS the principle and purpose CSS

16. 20 % Limitation on CSS
This limitation has to be applied after the Tariff is within 20% of CoS
Full loss due to Open access DOES NOT GET recovered.
In Kerala 55 % of total consumption is subsidized to the extent of 32%.
Under recovery of CSS : Rs 1.34 per unit.
Significant loss: OA in is 435 MU against 145 MU in
Insufficient CSS recovery results in net loss of Rs 1.34 per unit
Request :
Include the demand charges also in CSS formula
revise the cross subsidy surcharge
Remove 20 % limitation

17. Additional Surcharge
Embedded customers draw open access power from day-ahead market
KSEBL cannot forecast this drawal and plan power purchase.
Utility plan jeopardized, operational constraints, financial burden
KSEBL has to always keep the capacity ready
But forced to surrender
Loss cannot be recovered without Asc
Loss to the utility due to open access considering the cross subsidy surcharge approved by Commission and in absence of additional surcharge is Rs 2.17 per unit.

18. Additional Surcharge OA Regulation-41 on Asc
Capacity continues to be stranded
Loss Calculation within 15 days
Consumer wise calculation
Open Access Drawal fluctuates considerably.
Computation of stranded cost very difficult on case to case basis.
Not be practicable : Cost incurred for OA not consumer specific.
Request : Repeal Regulation-41 and allow calculation on yearly basis.

19. Power Factor Incentive
PF incentive DOUBLED in the Tariff order.
Commission Public Notice did not propose to revise PF incentive
Industrial Consumers Association demanded it
KSEBL had objected proposal
Commission hiked the doubled the incentive WITHOUT A SPEAKING ORDER ON KSEB OBJECTIONS
This, if an error, may be corrected.

20. KSEBL OBJECTIONS PF level to be increased to 0.95
As per CEA (Technical Standards for Connectivity to the Grid) Regulations, 2007, Part IV, Para 2
Incentive be withdrawn
The full cost of compensation has been incentivized by KSEBL Over 12 years.
Now it is an over compensation
Increase penalty
Penalty rate is not sufficient deterrent effect (2%)
Such schemes be made a part of Tariff Orders

21. Incentive hike – impact
Category
Revenue increase
Present PF
Net Revenue increase
0.25%
Net cash out flow
Net 0.25% HT
6.99
-5.20
1.79
-2.60
2.60
4.39
EHT
3.41
-2.57
0.83
-1.29
1.29
2.12
Total
10.40
-7.77
2.62
-3.89
3.89
6.51
Shortfall in revenue is 3.89 crores for May 2017
ie; around Rs crores annually

22. Net Revenue increase @ 0.25 % Net Revenue increase @ 0.5 %
Incentive impact
Category
Revenue
increase
0.5%
0.25%
Cash outflow
Net Revenue 0.25 %
Net Revenue 0.5 %
EHT General(A)
-0.20
-0.02
-0.01
0.01
-0.21
-0.22
EHT General(B)
0.00
-0.12
-0.06
0.06
EHT 66
1.11
-0.62
-0.31
0.31
0.80
0.49
EHT 110
1.84
-1.29
-0.65
0.65
1.19
0.55
EHT Railway traction
-0.39
-0.19
0.19
0.45
0.26
EHT 220 KV
Total
3.41
-2.57
1.29
2.12
0.83

23. Net Revenue increase @ 0.25% Net Revenue increase @ .05%
Incentive impact
Category
Revenue increase
0.5%
0.25%
Cash Out flow
Net Revenue 0.25%
Net Revenue .05%
HT I(a)
4.27
-2.54
-1.27
1.27
3.00
1.73
HT I(B)
0.02
-0.02
-0.01
0.01
0.00
HT II A
0.33
-0.19
-0.09
0.09
0.24
0.15
HT II B
1.35
-1.24
-0.62
0.62
0.73
0.11
HT III A
HT III B
HT IV
1.01
-1.18
-0.59
0.59
0.42
-0.17
HT V
Total
6.99
-5.20
-2.60
2.60
4.39
1.79

24. Incentive Penalty Pf value Rate
State
Incentive
Penalty
Pf value
Rate
Manipur
above 0.95
1% of Energy charges for every 0.01 increase
0.9 to 0.85
1% of Energy charges (EC) for every 0.01 decrease from 0.9
below 0.85
2% of Energy Charges for every 0.01 decrease from 0.9
Tamil Nadu
No Incentive
1% of EC for every 0.01 decrease from 0.9
0.85 to 0.75
1.5% of EC for every 0.01 decrease from 0.9
Below 0.75
2% of EC for every 0.01 decrease from 0.9
Gujarat
Above 0.95
Below 0.85
Orissa
Above 0.97
0.5% of EC and DC for every 0.01 increase
0.92 to 0.7
0.5% of EC and DC for every 0.01 decrease from 0.9
0.7 to 0.3
1% of EC and DC for every 0.01 decrease from 0.7
Below 0.3
2% of EC and DC for every 0.01 decrease from 0.3
Karnataka (Bescom)
Below 0.9
3 paise per unit consumed for every 0.01 decrease below 0.9
Sikkim
0.5% of Energy charges for every 0.01 increase
Below 0.95
1% of EC for every 0.01 decrease from 0.95

25. Power Factor
Power Factor is the ratio of actual power to total apparent power.
Low power factor is caused by the
Drawal of excessive reactive energy by consumers equipment .
This energy is stored in the magnetic field created
Reactive Power
Increases losses, Reduces the capacity, thus pollutes the system

26. Reactive Power Control
Utility cannot control reactive power due to consumer loads
Consumer inductive load of is responsible for the reactive power flow.
Consumers can regulate it by installing capacitors.
KSEBL do not get any additional benefit due to installation of capacitors.
But the effective capacity of the system increases due to the reduction in reactive energy. That is a relief of unnecessary burden.

27. WHY OVER COMPENSATE ?
Utility need not incentive for pf ; it is squarely consumer responsibility.
KSEBL was enforced to provide pf incentive for 12 years.
More than the FULL EXPENSES has been paid by KSEBL
The matter requires serious review
Prayer:
Increase minimum pf level to 0.95
Withdraw overcompensating incentives
Increase penalty for non-compliance

28. PRAYER APPROVAL OF ARR, ERC & TO be reviewed
Actual Expenses be considered in Truing up
CSS be corrected
Asc be allowed by removing difficulties in Regulation
PF incentive be corrected.

29. THANK YOU