1. Analysis of ARR & Tariff Proposal 2011-12 of SLDC Consumer Counsel

2. Presentation Outline  SLDC’s Proposed ARR for 2011-12  Comparison with previous ARR  Analysis, observations and suggestion on ARR parameters  Conclusion

3. Proposed ARR for 2011-12 SL No ItemCost (Cr) 1Return on Equity0 3Interest on Loan0 4Depreciation312.036 5 O&M expenses215.78 6HR Expenses611.572 7Interest on Working Capital 31.02 Total1170.408

4. Comparison of ARR Sr No PerticularsApproved (2009-10 ) Approved ( 2010-11) Proposed (2011-12) 1Employee cost including compensation395.00364.92611.572 2Additional compensation for ABT during 2010-11 150.0085.00- 3R&M expenses100.00201.80215.780 4A&G expenses (including certification of SLDC personnel) 115.0075.00- 5Depreciation6.0027.80312.036 6Interest on loan000 7Interest on WC022.3331.020 8ROE000 Total766.00 (excluding Rs 200 lakh for EACC) 776.851170.408 ( 150% rise)

5. Comparison of Annual SLDC charges Sr No ParticularsUnitApproved ( 2010-11) Per annum Proposed (2011-12) Per annum 1ARR of SLDC776.851170.408 2System Operation ChargeLacs621.48936.327 3Market Operating ChargeLacs155.37234.082 2SOC for Intra-state transmission licenseeLacs62.1593.633 3SOC & MOC for Generating Stations and sellers Lacs357.35421.347 4SOC & MOC for DISCOM & Buyers CESU NESCO WESCO SOUTHCO Lacs 357.357 113.83 90.82 110.71 41.99 421.347 134.283 100.828 134.157 52.078

6. Analysis of ARR and Suggestions

7. Observations & suggestions Depreciation  An amount of Rs 17.536 lacs towards depreciation of assets in unified Load Dispatch Center & offices in SLDC may be consider in the ARR  However, depreciation claimed towards recovery of total capital expenditure of Rs 294.5 lacs to be spent in 2011-12 shall not be allowed since it is not in line with the provisions under OERC SLDC Regulation, Sept 2010. O&M expenses  The proposed O&M expenses Of Rs 215.78 lacs seems to be on higher side and shall not be approved by the Commission. SLDC could not able to spent the approved O&M charges (201 lacs) in FY 2010-11& therefore the O&M charges shall be computed as per OERC Regulation : 5.72% escalation over actual O&M expenditure of 2010-11

8. Observations & suggestions Human Resources expenses  Since FY 2009-10, the SLDC is failed to recruit the requisite 86 number of staff to manage the day to day SLDC operations therefore the proposed Human resource expenses of 611.572 lacs for FY 2011-12 shall be approved after verifying the current status of availability of staff at SLDC Interest on Working Capital  Proposed working capital of 264.01 shall be reduced based on the approved O&M & Human resource expenses

9. Some more observations IssueStatus Transfer of assets of Sub –SLDC at Bhubneshwar, Meramundali, jayanagar, & Bhudipadar to SLDC No definite time frame is suggested by OPTCL Functioning of EASSC of SLDCCommission has directed to establish the EASSC and commence the operations wef 01.04.2010 and also have approved fund for EASSC since 2008-09. However EASSC is not operational till date SLDC should headed by Chief load dispatcher in the rank of Director and the should supported by requisite staff (86 No) The HR information pertaining to 2009- 10,2010-11 reveal the present strength of SLDC 48 without Chief load dispatcher Non compliance of the direction of Hon Commission

10. In Conclusion  The SLDC is consider as ‘Brain’ of power system operation.  SLDC is responsible for optimum scheduling and dispatch of electricity, carrying out real time operations for grid control and dispatch of electricity etc..  Non functioning of SLDC at the full strength will affect the power system operations and increases the cost of electricity.  The SLDC has committing delay in implementing the orders of Hon Commission

11. In Conclusion  Therefore before approving the ARR of 2011-12 the Hon. Commission should verify the status of work, actual expenditure vis a vis projected cost in previous ARR and avoid the unnecessary items / cost to be pass through in the ARR and to the end consumers  The Commission may consider above facts before approving the ARR for FY 2011-12

12. Thank You