ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) BUSINESS PLAN ORDER FOR THE CONTROL PERIOD FROM FY TO FY

Transcription

1 ASSAM ELECTRICITY REGULATORY COMMISSION (AERC) BUSINESS PLAN ORDER FOR THE CONTROL PERIOD FROM FY TO Assam Electricity Grid Corporation Limited (AEGCL) Petition No. 09/2016 ASSAM ELECTRICITY REGULATORY COMMISSION A.S.E.B. Campus, Dwarandhar, G. S. Road, Sixth Mile, Guwahati Website: aerc_ghy@hotmail.com i

2 CONTENTS 1 INTRODUCTION CONSTITUTION OF THE COMMISSION AND TARIFF RELATED FUNCTIONS MULTI YEAR TARIFF REGULATIONS, NEED FOR BUSINESS PLAN ASSAM ELECTRICITY GRID CORPORATION LIMITED BUSINESS PLAN PETITION AND REGULATORY PROCEEDINGS 12 2 SUMMARY OF BUSINESS PLAN PETITION OVERVIEW OF AEGCL PEAK DEMAND & PEAK SUPPLY CAPITAL INVESTMENT PLAN TRANSMISSION LOSS TRANSMISSION AVAILABILITY 29 3 APPROVAL OF BUSINESS PLAN KEY REQUIREMENTS OF BUSINESS PLAN APPROVAL OF CAPITAL INVESTMENT PLAN TRANSMISSION LOSS TRANSMISSION AVAILABILITY AGGREGATE REVENUE REQUIREMENT 55 4 DIRECTIVES 56 ANNEXURE 1 MINUTES OF THE 20 TH MEETING OF STATE ADVISORY COMMITTEE 58 ANNEXURE 2 - THE LIST OF SCHEMES ALONG WITH DETAILS OF CAPITAL EXPENDITURE AND FUNDING PATTERN PROVISIONALLY APPROVED BY THE COMMISSION 68 2

3 LIST OF TABLES Table 2-1: Assets of AEGCL Table 2-2: Energy Requirement and Peak demand for Control Period Table 2-3: Capital Investment for Strengthening and Augmentation of existing network as submitted by AEGCL (Rs. Crore) Table 2-4: Capital Investment for as submitted by AEGCL (Rs. Crore) Table 2-5: Capital Investment for Evacuation of power as submitted by AEGCL (Rs. Crore) Table 2-6: Capital Investment for IT applications as submitted by AEGCL (Rs. Crore) Table 2-7: Capital Investment for Reduction of Losses as submitted by AEGCL (Rs. Crore) Table 2-8: Capital Investment for System Reliability and Efficiency Improvement as submitted by AEGCL (Rs. Crore) Table 2-9: Capital Investment for Metering Plan as submitted by AEGCL (Rs. Crore) Table 2-10: Capital Investment for Expansion as submitted by AEGCL (Rs. Crore) Table 2-11: Summary of Capital Investment for Control Period as submitted by AEGCL (Rs. Crore) Table 2-12: Increase in Capacity Addition and Addition Table 2-13: Summary of Funding of Capital Investment for Control Period as submitted by AEGCL (Rs. Crore) Table 2-14: Loss for Control Period as submitted by AEGCL Table 2-15: Availability for Control Period as submitted by AEGCL Table 3-1: Capital Investment and its funding for Strengthening and Augmentation of Existing as provisionally approved by the Commission (Rs. Crore) Table 3-2: Capitalisation and funding of capitalised works for Strengthening and Augmentation as provisionally approved by the Commission (Rs. Crore) Table 3-3: Capital Investment and its funding for as provisionally approved by the Commission (Rs. Crore) Table 3-4: Capitalisation and funding of capitalised works for as provisionally approved by the Commission (Rs. Crore) Table 3-5: Capital Investment for evacuation of power as provisionally approved by the Commission (Rs. Crore) Table 3-6: Capital Investment and its funding for IT Application as provisionally approved by 3

4 the Commission (Rs. Crore) Table 3-7: Capitalisation and Funding of capitalised works for IT Application as provisionally approved by the Commission (Rs. Crore) Table 3-8: Capital Investment and its funding for Reduction of transmission losses as provisionally approved by the Commission (Rs. Crore) Table 3-9: Capital Investment and its funding for System Reliability and Efficiency Improvement as provisionally approved by the Commission (Rs. Crore) Table 3-10: Capitalisation and funding of capitalised works for System Reliability and Efficiency Improvement as provisionally approved by the Commission (Rs. Crore) Table 3-11: Capital Investment and its funding for Metering Plan as provisionally approved by the Commission (Rs. Crore) Table 3-12: Capitalisation and funding of capitalised works for Metering Plan as provisionally approved by the Commission (Rs. Crore) Table 3-13: Capital Investment and its funding for Expansion as provisionally approved by the Commission (Rs. Crore) Table 3-14: Capital Expenditure for AEGCL for Control Period as provisionally approved by the Commission (Rs. Crore)... Error! Bookmark not defined. Table 3-15: Capitalisation and funding of capitalised works for AEGCL for Control Period as provisionally approved by the Commission (Rs. Crore) Table 3-16: Loss approved by the Commission

5 Abbreviations A&G ABT ACCC ACSR ADB AEGCL AERC APDCL APDRP APGCL APR ARR ASEB BTPS CEA CGS CTU D/C DPR DSM EHV EPC ERS FY GoA GoI HTLS JICA kv kva kw kwh LKHEP LOA Administrative & General Availability Based Tariff Aluminium Conductor Composite Core Aluminium Conductor Steel-reinforced Cable Asian Development Bank Assam Electricity Grid Corporation Limited Assam Electricity Regulatory Commission Assam Power Distribution Company Limited Accelerated Power Development and Reforms Programme Assam Power Generation Corporation Limited Annual Performance Review Annual Revenue Requirement Assam State Electricity Board Bongaigaon Thermal Power Station Central Electricity Authority Central Generating Station Central Utility Double Circuit Detailed Project Report Demand Side Management Extra High Voltage Engineering Procurement & Construction Emergency Restoration System Financial Yearx` Government of Assam Government of India High Temperature Low Sag Japan International Cooperation Agency kilo Volt kilo Volt Ampere kilo Watt kilo Watt Hour Lower Kopili Hydro Electric Project Letter of Award 5

6 MAT MOP MU MW MYT NERPSIP NTPC OEM OPGW PGCIL PSDF R&M ROE ROW Rs. SAC S/C STU SLDC TBCB TVS Minimum Alternate Tax Ministry of Power Million Unit Mega Watt Multi-Year-Tariff North Eastern Region Power System Improvement Project National Thermal Power Corporation Original Equipment Manufacturer Optical Ground Wire Power Grid Corporation of India Limited Power System Development Fund Repairs and Maintenance Return on Equity Right of Way Rupees State Advisory Committee Single Circuit State Utility State Load Dispatch Centre Tariff Based Competitive Bidding Technical Validation Session 6

7 ASSAM ELECTRICITY REGULATORY COMMISSION Guwahati Present Shri Naba Kumar Das, Chairperson Shri Dipak Chakravarty, Member Shri Subhash C. Das, Member Petition No. 09/2016 Assam Electricity Grid Corporation Limited (AEGCL) - Petitioner ORDER (Passed on September 1, 2016) (1) The Commission notified the Assam Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2015 (MYT Regulations, 2015) on June 2, (2) As per Regulation 6 of the MYT Regulations, 2015, the Generating Company, Licensee, SLDC Business and Distribution Licensee shall file Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition. However, considering the first time of preparation & filing of Business Plan by AEGCL, the Commission vide letter dated August 29, 2015 directed AEGCL to file Business Plan by November 1, (3) Meanwhile, the Ministry of Power (MoP), Government of India (GoI) and Department of Power, Government of Assam jointly finalised the 24x7 'Power for All' document for the State of Assam on October 9, (4) Thereafter, AEGCL filed petition for condonation of delay and requested for extension of time for filing of Business Plan till December 31, The Commission granted time extension up to November 30, 2015 and directed AEGCL to submit the 7

8 Business Plan for the three-year Control Period from FY to on or before November 30, (5) AEGCL filed the Business Plan Petition for the Control Period from FY to FY on December 12, 2015 along with a Petition for condonation of delay. (6) The Commission carried out preliminary analysis of the Business Plan Petition submitted by AEGCL as mentioned above and observed that the Business Plan Petition was not as per requirement of MYT Regulations, Thereafter, AEGCL was directed to submit the revised Business Plan incorporating all the observations and clarifications sought by the Commission from AEGCL by February 12, 2016 and the same was submitted on March 7, (7) The Commission conducted the Technical Validation Session on the Business Plan Petition on April 26, The Commission directed AEGCL to submit the Supplementary Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters. (8) Based on the discussions held during the Technical Validation Session and after incorporating the additional information/clarifications, AEGCL filed a revised Business Plan Petition on May 18, The revised Business Plan Petition is considered as base for all the analysis and hereinafter referred as Business Plan Petition for AEGCL. (9) The meeting of the State Advisory Committee (constituted under Section 87 of the Act) was convened on July 7, 2016 and the Business Plan Petition of APDCL was discussed with the Members of State Advisory Committee and the views & comments were taken into consideration. (10) The Commission conducted a Hearing on the matter on July, 26, (11) The Business Plan Petition of AEGCL was registered as Petition No. 9/2016 and admitted. (12) The Commission notes that AEGCL has also submitted projected Aggregate Revenue Requirement for the Control Period for FY to as part of Business Plan Petition. However, the same is not considered at this stage. (13) The Commission, now in exercise of its powers vested in it under Sections 61 and 62 of the Act and all other powers enabling it in this behalf and taking into consideration 8

9 the submissions made by the Petitioner, provisionally approves the Business Plan for AEGCL for the Control Period from FY to for the purpose of submission of MYT Petition. The final approval shall be accorded at the time of issuance of MYT Order. (14) The Commission directs AEGCL to file the MYT Petition for the Control Period from FY to within two (2) months from the date of issue of this Order. (15) The MYT Petition shall include the forecast of Aggregate Revenue Requirement for FY to, true-up for FY and FY , actual of FY (6 months), and projected tariff for FY and. Sd/- (S. C. Das) Member, AERC Sd/- (D. Chakravarty) Member, AERC Sd/- (N. K. Das) Chairperson, AERC 9

10 1 Introduction 1.1 Constitution of the Commission and Tariff Related Functions The Assam Electricity Regulatory Commission (hereinafter referred to as the AERC or the Commission ) was established under the Electricity Regulatory Commissions Act, 1998 (14 of 1998) on February 28, The Commission is mandated to exercise the powers conferred under Section 181 of the Electricity Act, 2003 (36 of 2003) (hereinafter referred to as the Act or the EA, 2003 ) and to exercise the functions conferred on it under Section 86 of the Act from June 10, Under Section 61 of the Act in the determination of tariffs, the Commission is to be guided by the following: (a) The principles and methodologies specified by the Central Commission for determination of the tariff applicable to generating companies and transmission licensees; (b) The electricity generation, transmission, distribution and supply are conducted on commercial principles; (c) The factors, which would encourage competition, efficiency, economical use of the resources, good performance, Optimum investments, and other matters which the State Commission considers appropriate for the purpose of this Act; (d) The interests of the consumers are safeguarded and at the same time, the consumers pay for the use of electricity in a reasonable manner; (e) That the tariff progressively reflects the cost of supply of electricity at an adequate and improving level of efficiency and also gradually reduces cross subsidies; (f) The National Electricity Plans formulated by the Central Government including the National Electricity Policy and Tariff Policy. 1.2 Multi Year Tariff Regulations, The Commission, in exercise of the powers conferred under Section 61 read with Section 181(2) (zd) of the Act, has notified the Assam Electricity Regulatory Commission (Terms and Conditions for determination of Multi Year Tariff) Regulations, 2015 (hereinafter referred as MYT Regulations, 2015 ) on June 2, These Regulations are applicable for determination of Tariff for Generation,, SLDC, Wheeling and Retail Supply for the Control Period of three financial years from April 1, 2016 onwards up to March 31, These Regulations 10

11 are applicable to all existing and future Generating Companies, Licensees and Distribution Licensees within the State of Assam Regulation 6 of the MYT Regulations, 2015 requires the Generating Company, Licensee, SLDC Business and Distribution Licensee to file the Business Plan for the entire Control Period by 1 st July of the year preceding the first year of the Control Period, i.e., before the filing of Multi Year Tariff (MYT) Petition However, considering that AEGCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed AEGCL to file Business Plan Petition by November 1, From the oral submission of AEGCL during the Technical Validation Session, it is understood that SLDC is yet to start independent functioning commercially and financially. Therefore, the Commission deems it fit to consider SLDC embedded in AEGCL Business Plan for this Control Period. However, the Commission directs AEGCL to complete the process of segregation of SLDC from AEGCL and to file separate Business Plan Petition for SLDC for the next Control Period. 1.3 Need for Business Plan The objective of the Business Plan is to ensure that the Generating Company and Licensees prepare a long-term plan for the critical aspects of their business, mainly, capital investment, performance improvement, sales projections, power purchase planning and contracting, etc., and also provide various scenarios for these aspects for consideration of the Commission The Generating Company and Licensees are required to file a detailed Business Plan based on the operational norms and trajectories of performance parameters specified in the MYT Regulations 2015, for each year of the Control Period, for the Commission's approval The approved Business Plan shall form the basis for the forecast of Aggregate Revenue Requirement and expected revenue from existing tariff for each year of the Control Period as per Regulation 4.2(iii) of the MYT Regulations, Regulation 6.3 of the MYT Regulations, 2015 specifies the essential components of 11

12 the Business Plan of Licensee as under: 6.3 The business plan for transmission licensee shall be based on proposed generation capacity addition and future load forecasts of the state and should contain among other things the following: (i) future plans/ performance targets of the company including efficiency improvement measures proposed to be introduced (ii) plans for meeting reactive power requirements; (iii) plan for reduction in transmission losses; (iv) plan for improvement in quality of transmission service and reliability; (v) metering arrangements; (vi) Plan for reduction in per MW transmission cost, (vii) financial statements (which include balance sheet, profit and loss statement and cash flow statement)- current and projected (at least for the period of control period duration) along with basis of projections; (viii) any other new measure to be initiated by the Licensee e.g. IT initiatives etc. 1.4 Assam Electricity Grid Corporation Limited The Assam Electricity Grid Corporation Limited (AEGCL) is the successor corporate entity of the erstwhile Assam State Electricity Board (ASEB) formed pursuant to the notification of the Government of Assam, notified under sub-sections (1), (2), (5), (6) and (7) of Section 131 and Section 133 of the Act, for the purpose of transfer and vesting of functions, properties, interests, rights, obligations and liabilities, along with the transfer of personnel of the ASEB to successor entries AEGCL is a Company incorporated with the main object of transmission of electricity in the State of Assam and is a State Utility under the various provisions of the Act. AEGCL owns and operates the transmission system previously owned by ASEB. AEGCL has started functioning as a separate entity from December 10, Business Plan Petition and Regulatory Proceedings Considering that AEGCL was preparing and filing the Business Plan for the first time, the Commission vide letter dated August 29, 2015 directed AEGCL to file Business Plan Petition by November 1, Meanwhile, the Ministry of Power (MoP), Government of India (GoI) and Department of Power, Government of Assam jointly finalised the 24x7 'Power for All' document for the State of Assam on October 9,

13 1.5.3 Thereafter, AEGCL filed petition for condonation of delay and requested for extension of time for filing of Business Plan till December 31, The Commission granted time extension of time till November 30, 2015 and directed AEGCL to submit the Business Plan for the three-year Control Period from FY to on or before November 30, AEGCL filed the Business Plan Petition for the Control Period from FY to FY on December 12, 2015 along with a petition for condonation of delay The Commission carried out preliminary analysis of the Business Plan Petition submitted by AEGCL as mentioned above and observed that the Business Plan Petition was not as per requirement of MYT Regulations, Thereafter, AEGCL was directed to submit the revised Business Plan incorporating all the observations and clarifications sought by the Commission from AEGCL by February 12, 2016 and the same was submitted on March 7, The Commission conducted the Technical Validation Session on the Business Plan Petition on April 26, The Commission directed AEGCL to submit the Supplementary Petition, duly approved by the Board of Directors, giving the realistic Business Plan after incorporating all revisions in technical and financial parameters Based on the discussions held during the Technical Validation Session and after incorporating the additional information/clarifications, AEGCL filed a revised Business Plan Petition on May 18, The revised Business Plan Petition is considered as base for all the analysis and hereinafter referred as Business Plan Petition for AEGCL AEGCL submitted the following prayers in its MYT Business Plan Petition: " To admit and approve the Business Plan for the Business of the AEGCL for the Control Period (FY 16 to FY 19) in accordance with Regulation 4.2 and 9.2 of the Assam Electricity Regulatory Commission (Multi Year Tariff) Regulations, " The meeting of the State Advisory Committee (constituted under Section 87 of the Act) was convened on July 7, 2016 and the Business Plan Petition of APDCL was 13

14 discussed with the Members of State Advisory Committee and the views & comments were taken into consideration. The minutes of the meeting are appended to this Order as Annexure The Commission conducted the hearing on the matter on July 26, During the hearing, AEGCL submitted the copy of the Board Resolution approving the revised Business Plan duly certified by the Company Secretary The Business Plan Petition of AEGCL was registered as Petition No. 9/2016 and admitted The Commission enquired from AEGCL whether it is feasible to achieve Power For All initiative by GOA and GOI by the capital investment proposed in the Business Plan submitted for the period from FY to. AEGCL confirmed that the Investment proposed in the Business Plan is adequate to meet the Power For All objective. 14

15 2 Summary of Business Plan Petition 2.1 Overview of AEGCL AEGCL was formed as a registered Company under the Companies Act, 1956 in 2004, after unbundling of the erstwhile ASEB. AEGCL, a State Utility (STU) is responsible for maintenance of the intra-state transmission network, future planning in consultation with the Distribution Licensee, State Generating Company and is responsible for evacuation of power from Generating Stations located in the State as well as other States/Regions through Central Utility s (CTU) interface points within the State AEGCL submitted the details of Assets in FY as shown in the following table: Table 2-1: Assets of AEGCL Sl. No. Particulars FY Transformation Capacity (MVA) 1 400/220 kv 630 MVA 2 220/132 kv 2090 MVA 3 220/33 kv 100 MVA 4 132/66 kv 110 MVA 5 132/33 kv 2700 MVA 6 132/11 kv 32 MVA 7 66/33 kv 204 MVA Total 8802 MVA Line length kv lines 7.2 ckt-km kv lines 1466 ckt-km kv lines 2823 ckt-km kv lines 554 ckt-km 12 Total ckt-km 2.2 Peak Demand & Peak Supply AEGCL has projected the energy consumption by considering the category-wise CAGR for the 12 th Plan period and projected the energy requirement and peak load for the Control Period as shown in the following Table: Table 2-2: Energy Requirement and Peak demand for Control Period Particulars FY Energy Consumption (MU) T&D Loss (MU)

16 Particulars FY T&D Loss (%) 22.19% 21.89% 21.40% Energy Requirement (MU) Peak Load (MW) Capital Investment Plan AEGCL submitted the Capital Investment Plan under various heads such as Strengthening of existing network, expansion of transmission network, plan for evacuation of power, IT application, reduction of losses, system reliability and efficiency improvement, metering plan, network expansion and reactive power management. AEGCL has projected the total investment of Rs Crore during the Control Period from FY to FY AEGCL has projected the capacity addition of MVA and network addition of ckt-km based on this investment It may be noted that AEGCL has only submitted the capital expenditure against each Scheme and has not submitted the scheme-wise capitalisation, except for some Ongoing projects AEGCL submitted that the total investment proposed is in line with Power for All roadmap and sufficient for meeting Power for All roadmap objectives. The details of the projects have been discussed below: Strengthening AEGCL submitted that the present network has the capacity to handle 1628 MW peak load, which will increase to 1900 MW after commissioning of all On-going projects. AEGCL submitted that it has considered the present constraints in transmission network while planning for the schemes related to Strengthening & Augmentation. Some of the constraints as highlighted by AEGCL are: a) The Lower Assam districts mainly Kamrup (Rural), Nalbari, Baksa, Barpeta, and Dhubri are facing load shedding to the tune of 50 MW due to constraints in network. b) Some of the critical corridors like BTPS Dhaligaon 132kV D/C line, LTPS- Mariani 132kV S/C line, and Sonabil Depota 132kV S/C line are more than 30 years old. These lines require strengthening through replacement with efficient conductors like High Temperature Low Sag (HTLS). 16

17 c) Some of the Substations are radially connected with a single circuit only. d) Power & Auto transformers of some of the critical sub-stations have mostly completed their insulation life and are also being operated at critical load AEGCL submitted that the total project cost against the new Strengthening & Augmentation schemes is Rs Crore, to be initiated during the Control Period. These projects include the project under NERPSIP 2 nd Tranche and AEGCL Plan. Some of the projects initiated by Ministry of Power in 2009 like NERPSIP 1 st Tranche have been considered under AEGCL Plan, but till date there is no clarity regarding the funding pattern The North Eastern Region Power System Improvement Programme (NERPSIP) 2 nd Tranche projects are extremely essential for system strengthening. The projected cost for the NERPSIP 2 nd Tranche projects is Rs Crore. AEGCL has proposed that under this scheme, Rs Crore will be invested during FY & Rs Crore during and the remaining investment will be done beyond the Control Period. AEGCL has considered the funding of capital investment from the Asian Development Bank (ADB)/Japan International Cooperation Agency (JICA) and equity The balance amount of Rs Crore (Rs crore - Rs crore) is to be arranged either from ADB or JICA. Out of this Rs Crore, AEGCL has proposed the capital investment of Rs Crore in and Rs Crore in. It is observed that there is difference in submissions made by AEGCL regarding capital investment for NERPSIP projects. The list of schemes showing the investment of Rs Crore has been considered. The remaining investment is considered beyond the Control Period. AEGCL has already initiated preliminary discussions with both ADB and JICA and is preparing Detailed Project Reports (DPRs) for the projects planned AEGCL in its Business Plan Petition has submitted the list of schemes related to sub-station, transmission lines and bays for projects under NERPSIP 2 nd Tranche and AEGCL Plan AEGCL has also considered on-going projects, which have commenced before the beginning of the Control Period and targeted to be completed in FY AEGCL has considered the capital investment of Rs Crore in FY for 17

18 such on-going projects. The summary of Capital Investment proposed by AEGCL for strengthening and augmentation of existing network is summarised in the following Table: Table 2-3: Capital Investment for Strengthening and Augmentation of existing network as submitted by AEGCL (Rs. Crore) FY FY FY Total Particulars Capital Investment Funding of Capital Investment Grant Equity Loan Total AEGCL submitted that the Government of India and Government of Assam have prepared 24x7 Power for All document with a view to provide reliable power to existing consumers as well as electrification of rural and left out households in the State. The document mentions that still 46% rural households are yet to be electrified. The new load centres are already identified in the document and accordingly, the expansion of transmission network for catering to the demand has been considered. AEGCL has considered project cost of these new projects to be initiated during the Control Period as per 24x7 'Power for All' roadmap as Rs Crore. The proposed Capital Investment during the Control Period is Rs Crore in and Rs Crore in, and the remaining expenditure will be incurred beyond the Control Period AEGCL has also submitted the schemes for expansion of transmission network under NERPSIP 2 nd Tranche separately. AEGCL has proposed total project cost of these projects as Rs Crore. AEGCL has considered the phasing of capital investment of these projects as Rs Crore in and Rs Crore in, and the remaining expenditure will be incurred beyond the Control Period AEGCL has also considered Capital investment on on-going projects which have commenced before the beginning of the Control Period and will be completed 18

19 during the Control Period. The Capital investment of these on-going projects is considered to be Rs Crore in FY and Rs Crore in FY The summary of Capital Investment proposed by AEGCL for is summarised in the following Table: Table 2-4: Capital Investment for as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total Plan for Evacuation of Power AEGCL has considered the transmission schemes for evacuating power from State Generators and from Central Utility s interface. AEGCL has proposed evacuation plan for Lower Kopili HEP (LKHEP), for which APGCL has proposed the target of completion by FY AEGCL submitted that evacuation plan for upcoming generators must be completed well ahead, since transmission project always takes sizable time because of forest clearance and Right of Way (ROW) issues Assam will get 500 MW Bhutan power in a phased manner in the Control Period with quantum of 123 MW from Mangedechhu in FY , 173 MW from Punatchangshhu-II in and 204 MW from Punatchangshhu-I in FY Further, NTPC-Bongaigaon will generate at full capacity by and Assam's share of 381 MW is to be evacuated from CTU s interface points. The proposed evacuation plan will be able to evacuate Bhutan, Central Generating Station power and LKHEP DPR for this project will be submitted to ADB through the Government of Assam and Government of India. The sanction of fund is expected by the end of FY

20 17 and funds will be available by mid of. The total fund requirement is Rs Crore and equity portion will be Rs Crore, i.e., 28.04% The completion of evacuation system for LKHEP will take 36 months from Zero date, however, 400 kv Rangia may be completed by FY and accordingly financial phasing plan has been considered AEGCL has proposed total project costs for new projects for evacuation of power as Rs Crore. AEGCL has considered the phasing of such investment as Rs Crore in and Rs Crore in, and the remaining expenditure will be incurred beyond the Control Period The summary of Capital Investment proposed by AEGCL for Evacuation of power is summarised in the following Table: Table 2-5: Capital Investment for Evacuation of power as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total IT Application AEGCL has drawn 644 km of Optical Ground Wire (OPGW) by replacing existing transmission line ground wire for establishment of communication link as follows: a) BTPS S/S Dhaligaon S/S Bornagar S/S Nalbari S/S Rangia S/S Sishugram S/S Kahilipara S/S Sarusajai S/S Samaguri S/S. b) Rangia S/S Sipajhar S/S Rowta S/S Depota S/S Sonabil S/S Samaguri S/S. c) Tinsukia S/S Dibrugarh S/S Behiating S/S The Power Grid Corporation of India Ltd. (PGCIL) has drawn 401 km of OPGW using AEGCL transmission line network and communication links, which are as 20

21 follows: a) BTPS S/S Agia S/S Boko S/S Kukurmara S/S Sarusajai S/S b) Mariani S/S LTPS S/S NTPS Tinsukia S/S. c) Balipara (PGCIL) Gohpur S/S Some substations, which are mostly radial with trunk line, are not connected by OPGW. Hence, AEGCL has proposed OPGW communication links for such substations, which requires replacement of km of transmission line ground wire by OPGW. AEGCL has envisaged the following benefits of this project: a) All the EHV substations will come under Fibre Optic network and there will be good communication backbone. b) Authentic Real time data will be received. c) Option for remote operation and control of the EHV substation will be available in future. d) 6 pairs out of 24 pairs of Fibre Optic are more than sufficient for communication and tele protection system. e) Increase in reliability, efficiency and availability as faster decision can be made. f) All townships within the State will be covered. g) Demand Side Management (DSM) application can be implemented. h) Option for leasing of fibre will be available AEGCL has proposed the total project cost of Rs Crore for new projects to be initiated during the Control Period. AEGCL has considered the phasing of such investment as Rs Crore in, Rs Crore in and Rs Crore in FY AEGCL has also considered the capital investment of Rs Crore in FY and Rs Crore in for On-going projects, which have commenced before the beginning of the Control Period and will be completed by FY The summary of Capital Investment proposed by AEGCL for IT applications is summarised in the following Table: 21

22 Table 2-6: Capital Investment for IT applications as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total Reduction of Losses For reduction in transmission losses, AEGCL has proposed the following schemes for capacity augmentation by low loss HTLS conductor: a) 220 kv Kukurmara-Sarusajai D/C line b) 132 kv Sonabil-Depota S/C line c) 132 kv LTPS-Mariani S/C line d) 132 kv BTPS-Dhaligaon S/C line The total cost of these schemes is projected as Rs Crore for transmission line length of 175 ckt-km, which is considered as Rs Crore in and Rs Crore in FY The summary of Capital Investment proposed by AEGCL for these schemes is summarised in the following Table: Table 2-7: Capital Investment for Reduction of Losses as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total System Reliability and Efficiency Improvement AEGCL has considered the up-gradation and renovation of EHV substations older than 8 years for increasing the reliability and efficient operation. It has submitted a 22

23 DPR to the Ministry of Power (MoP), Government of India (GoI) in FY , for sanction of Rs Crore against Power System Development Fund (PSDF) for up-gradation of existing obsolete switchgear equipment and introduction of IEC based numerical protective relays in 48 numbers of EHV substations, which include existing three sub-stations at generating stations, viz. Namrup, Lakwa and KLHEP. AEGCL has submitted the detailed list of EHV substations included in the said DPR. The GoI has sanctioned the fund in two separate Orders of Rs Crore in May 2015 and Rs Crore in October The State level taxes and expenditure towards local automation system of Rs Crore is excluded from the PSDF fund. The tripartite agreement between nodal agency of PSDF, Government of Assam and AEGCL was signed in February 29, 2016 and the first instalment of Rs Crore against Letter of Award (LOA) issued to vendors regarding procurement of switchgear equipment like Circuit Breakers of various voltage levels, etc. The time of completion of this project is eighteen (18) months from the date of signing of aforementioned agreement, i.e., September AEGCL, as a part of system efficiency improvement, has considered modern technology as a part of disaster management like Tower collapse, etc., through Emergency Restoration System (ERS). It consists of set of poles, which can be installed within a day and transmission line can be restored from next day. AEGCL has procured two sets of ERS, which have been placed at Kahilipara and Mariani. AEGCL is planning for four sets of ERS towers at Dhaligaon, Tezpur, Tinsukia and Silchar in order to reduce transportation time AEGCL has also considered the capital investment of Rs. 224 Crore in FY and Rs Crore in towards On-going projects, which have been initiated before the Control Period and projected to be completed in The summary of Capital Investment proposed by AEGCL for these schemes is summarised in the following Table: Table 2-8: Capital Investment for System Reliability and Efficiency Improvement as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment 23

24 Particulars FY Total Grant Equity Loan Total Metering Plan AEGCL has installed ABT compliant meters at Distribution Licensee s interface, i.e., LV side of power transformers and at inter-state transmission line. The meters for EHV line feeders, ICTs, HV side of power transformers and 33 kv outgoing feeders are mostly non-abt compliant and have an accuracy class of 0.5 or more. Since, Protection and Control System will be upgraded by IEC compliant numeric relays and local automation at existing 45 numbers of EHV substations and 3 numbers of generating substations, the energy meters for all type of feeders will also be replaced by communicable ABT meters. All new EHV substations commissioned in the 12 th Plan already have ABT compliant meters and only communication links are required to receive data centrally at SLDC Under PSDF, AEGCL will replace all Control and Relay panel with IEC compatible numeric relays. The summary of Capital Investment proposed by AEGCL for Metering Plan is summarised in the following Table: Table 2-9: Capital Investment for Metering Plan as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total Expansion AEGCL submitted that the transmission network in the State primarily consists of 132 kv network. The planned network growth is dependent on availability of funds. Whenever funds are available, AEGCL has to create sub-stations compromising the basic transmission criteria, i.e., N-1. Therefore, any eventuality in the system leads 24

25 to total black out at the area under that sub-station. AEGCL is planning to fill the gap in a phased manner and as per guidelines from statutory authority like CEA AEGCL has proposed the total cost of Rs Crore for various projects under network expansion to be initiated during the Control Period. AEGCL has considered the phasing of such investment as Rs Crore in and Rs Crore in, and the remaining expenditure will be incurred beyond the Control Period The summary of Capital Investment proposed by AEGCL for Expansion is summarised in the following Table: Table 2-10: Capital Investment for Expansion as submitted by AEGCL (Rs. Crore) Particulars FY Total Capital Investment Funding of Capital Investment Grant Equity Loan Total Reactive Power Management AEGCL submitted that it has not considered any investment plan for installing equipment for the required reactive power, except for 220 kv and 400 kv system. The shunt reactors are not considered for long 220 kv lines with the increase of the 220 kv system, as earlier line reactors have been installed. However, to get rid of high voltage in 400 kv sub-station, shunt reactors will be installed at bus On-going projects AEGCL has submitted the list of on-going transmission projects being undertaken by PGCIL along with their physical and financial progress Further, AEGCL submitted that the 1 st Tranche of NERPSIP Central Sector ongoing Projects being implemented by PGCIL, include 11 numbers of new sub- 25

26 stations of which 2 substations are of 220/132 kv level and rest are at 132/33 kv level. The projects also include all the associated transmission lines and network addition by, as under: a) Transformer Capacity of 690 MVA at 220/132 kv level and 494 MVA at 132/33 kv level b) line of 176 ckt-km at 220 kv level and 200 ckt-km at 132 kv level The implementing agency PGCIL will hand over the completed projects under NERPSIP to AEGCL for operation and maintenance and there shall be no further financing to meet the O&M expenses Summary of Capital Investment Plan The Capital Investment proposed by AEGCL is summarised in the following table: Table 2-11: Summary of Capital Investment for Control Period as submitted by AEGCL (Rs. Crore) Particulars Strengthening & Augmentation Plan for evacuation of power Capital Investment FY Total IT application Reduction of losses System reliability and efficiency improvement Metering Plan Expansion Grand Total The increase in capacity addition and network addition is summarised in the following Table: 26

27 Table 2-12: Increase in Capacity Addition and Addition Particulars At the beginning of Control Period Addition during the Control Period At the end of Control Period Transformation Capacity (MVA) length (ckt-km) The summary of funding of capital investment proposed by AEGCL is given in the following Table: 27

28 Table 2-13: Summary of Funding of Capital Investment for Control Period as submitted by AEGCL (Rs. Crore) Particulars FY FY Grant Equity Loan FY Total Strengthening of Existing Plan for evacuation of power IT application Reduction of losses System reliability and efficiency FY FY FY Total FY FY FY improvement Metering Plan Expansion Grand Total Total 28

29 2.4 Loss AEGCL submitted that transmission losses are high because of congested network, but there is reducing trend over the last few years. The actual transmission loss was reduced from 7.96% in FY to 3.84% in FY AEGCL has estimated the loss of 3.64% for FY AEGCL has projected the Loss trajectory for the Control Period as shown in the following Table: Table 2-14: Loss for Control Period as submitted by AEGCL Particulars FY Loss (%) 3.64% 3.50% 3.40% 2.5 Availability AEGCL submitted that it has achieved the actual Availability of 99.04% in FY It has estimated the availability of 99.14% for FY AEGCL has projected the Availability for the Control Period as shown in the following Table: Table 2-15: Availability for Control Period as submitted by AEGCL Particulars FY Availability (%) 99.45% 99.50% 99.50% 29

30 3 Approval of Business Plan 3.1 Key Requirements of Business Plan Regulation 6.3 of the MYT Regulations, 2015 specifies the various requirements of Business Plan Petition as under: 6.3 The business plan for transmission licensee shall be based on proposed generation capacity addition and future load forecasts of the state and should contain among other things the following: (i) future plans/ performance targets of the company including efficiency improvement measures proposed to be introduced (ii) plans for meeting reactive power requirements; (iii) plan for reduction in transmission losses; (iv) plan for improvement in quality of transmission service and reliability; (v) metering arrangements; (vi) Plan for reduction in per MW transmission cost, (vii) financial statements (which include balance sheet, profit and loss statement and cash flow statement)- current and projected (at least for the period of control period duration) along with basis of projections; (viii) any other new measure to be initiated by the Licensee e.g. IT initiatives etc During the scrutiny of the Petition, the Commission asked AEGCL to submit the requisite details in line with MYT Regulations, After the discussion during the Technical Validation Session and perusal of subsequent submissions made by AEGCL, it is observed that AEGCL has not submitted the plan for reduction of per MW transmission cost during the Control Period. In view of this, the Commission directs AEGCL to submit its Plan for reduction of per MW transmission cost, as a part of its MYT Petition for the Control Period Further, Regulation 9 of the MYT Regulations, 2015 specifies as under: 9 Specific trajectory for certain variables 9.1 The Commission shall stipulate a trajectory while approving the Business Plan for certain variables having regard to the reorganization, restructuring and development of the electricity industry in the State. 9.2 Provided that the variables for which a trajectory may be stipulated include, but are not limited to, c) In case of Licensee: losses, transmission system availability, etc. 30

31 9.3 The trajectory stipulated by the Commission in the order on Business Plan submitted by the applicant, shall be incorporated by the applicant in its forecast of Aggregate Revenue Requirement and/or expected revenue from tariff and charges under Regulation 8. (emphasis added) The specific trajectory for certain variables has been discussed in the subsequent Sections. 3.2 Approval of Capital Investment Plan As regards Capital Investment Plan, Regulation 6 of MYT Regulations, 2015 specifies as under: 6.6 The Business Plan shall also include a capital investment plan, financing plan (Loan and Grant) and physical targets. The capital investment plan shall be project/scheme wise and for each scheme/project shall include: a. Purpose of investment b. Capital Structure; c. Capitalization Schedule; d. Financing Plan including identified sources of investment; e. Details of physical parameters / targets; f. Cost-benefit analysis and payback period; g. Envisaged reduction in O&M cost/losses; h. Ongoing projects that will spill into the year under review and new projects (along with justification) that will commence but may be completed within or beyond the control period. 6.7 Purpose of investment shall include: ii. for a transmission licensee - power evacuation, system augmentation, network expansion, replacement of assets, reduction in transmission losses, improvement in transmission service and reliability of supply, reduction in per MW transmission cost, IT related projects etc Capital investment plan shall incorporate list of schemes in order of priority so as to enable the Commission to approve the schemes in that order and in case lesser amount of capital expenditure is to be approved then the schemes of lower priority could be disapproved. 31

32 6.11 The generation company and licensee shall submit all information / data required by the Commission for approval of the capital investment plan During scrutiny of the Petition, the Commission asked AEGCL to submit the schemewise details in the requisite format for various transmission works proposed during the Control Period. It is also noted that AEGCL has proposed the Capital Investment Plan in line with the 'Power for All' roadmap As regards the funding of capital structure, Regulation 32 of MYT Regulations, 2015 specifies as under: 32 Debt-equity ratio 32.1 For a project declared under commercial operation on or after April 1, 2016, a normative debt:equity ratio of 70:30 would be considered as on COD. If the equity actually deployed is more than 30% of the capital cost, equity in excess of 30% shall be treated as normative loan for the Generating Company, Licensee and Distribution Licensee. Provided that where equity actually deployed is less than 30% of the capital cost of the capitalised asset, the actual equity shall be considered for determination of tariff: Provided further that the equity invested in foreign currency shall be designated in Indian rupees on the date of each investment. Provided that any grant obtained for the execution of the project shall not be considered as part of capital structure for the purpose of debt: equity ratio. Explanation.- The premium, if any, raised by the Generating Company or the Licensee or the Distribution Licensee, as the case may be, while issuing share capital and investment of internal resources created out of its free reserve, for the funding of the project, shall be reckoned as paid up capital for the purpose of computing return on equity, provided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the Generating Station or the transmission system or the distribution system. 32

33 32.2 In case of the Generating Company, Licensee, Distribution Licensee and SLDC, if any fixed asset is capitalised on account of capital expenditure prior to April 1, 2016, debt-equity ratio allowed by the Commission for determination of tariff for the period ending March 31, 2016 shall be considered: Provided that in case of retirement or replacement of the assets, the equity capital approved as mentioned above, shall be reduced to the extent of 30% (or actual equity component based on documentary evidence, if it is lower than 30%) of the original cost of the retired or replaced asset Any expenditure incurred or projected to be incurred on or after April 1, 2016, as may be admitted by the Commission as additional capital expenditure for determination of tariff, and renovation and modernisation expenditure for life extension, shall be serviced in the manner specified in this Regulation The above said Regulation specifies the normative debt:quity ratio of 70:30 for determination of tariff. In case actual equity is less than 30% of capital cost of the capitalised asset, then actual equity shall be considered. Also, the Regulation specifies that any grant obtained for the project shall not be considered as part of capital structure for the purpose of debt: equity ratio, i.e., in other words, the normative debt:equity ratio has to be considered, after reducing the amount of grant funding AEGCL has proposed the funding of capital expenditure. The determination of tariff including ARR component such as the interest, depreciation, and RoE are dependent on the capitalisation, rather than the capital expenditure. The capitalisation are allowed only after the asset is put to use, i.e., capitalised. Hence, the Commission while provisionally approving the Capital Investment Plan, has also considered the normative funding of estimated capitalised works, along with Capital expenditure Though AEGCL has not submitted the scheme-wise capitalisation in some cases, the Commission has considered the scheme-wise capitalisation by considering the amount in the year in which the all capital expenditure is incurred and scheme is projected to be completed, i.e., put to use. 33