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BRIHANMUMBAI ELECTRIC SUPPLY

and

TRANSPORT UNDERTAKING (BEST)

Multi Year Tariff Proposal forFirst control period

(F.Y. 2007-08, 2008-09 & 2009-10)

to

Maharashtra Electricity


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BEFORE THE HONOURABLE MAHARASHTRA ELECTRICITYREGULATORY COMMISSION

FILING NO.

CASE NO.

1.IN THE MATTER OF : Application for approval of Multi Year Tariffproposal for FY 2007-08 to FY 2009-10 underSection 29 of the Electricity RegulatoryCommission Act 1998 along with otherguidelines and directions issued by theMaharashtra Electricity Regulatory Commission

("Hon. commission"] from time to time ANDunder Part VII (Section 61 to Section (4) of theElectricity Act, 2003 read with the relevantGuidelines.

And

2.

2.IN THE MATTER OF: Brihanmumbai Electric Supply andTransport Undertaking, BEST Bhavan,Mumbai - 400001.

Affidavit verifying the petition application

I, Uttam P. Khobragade, son of Shri Patruji Khobragade, aged 55 years,having my office at BEST Bhavan, Colaba, Mumbai- 400 001 do solemnlyaffirm and state as follows:

3. I am the General Manager of Brihanmumbai Electric Supply and Transport

Undertaking, the applicant in the above matter and I am duly authorized by thesaid applicant to make this affidavit.

4. The statements made in the enclosed annexure of the applicant herein,now shown to me, are based on the information received from the concernedofficials of the Undertaking which I believe to be true.

Solemnly affirm at Mumbai on the 13th day of December, 2006, that thecontents of the above affidavit are true to my knowledge, no part of it is falseand nothing material has been concealed there from.

Identified before me Deponent


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BEFORE THE HONOURABLE MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

FILING NO.CASE NO.

1. IN THE MATTER OF

:

Application for approval of Multi Year Tariff

proposal for FY 2007-08 to FY 2009-10 underSection 29 of the Electricity RegulatoryCommission Ad 1998 along with otherguidelines and directions issued by theMaharashtra Electricity RegulatoryCommission ["Hon. commission") from time totime AND under Part VII (Section 61 to Section64) of the Electricity Act, 2003 read with therelevant Guidelines.

And

2. IN THE MATTER OF:

Brihanmumbai Electric Supply and TransportUndertaking, BEST Bhavan, Mumbai -400001.

The petitioner named above respectfully showeth

under:


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MYT proposal for first control period (F.Y. 2007-08, 2008-09 & 2009-10)

1.0 Brihanmumbai Electric Supply and Transport Undertaking hereafter referredto as 'BEST' is an Undertaking of the Brihanmumbai Mahanagarpalikaand is in the business of distribution of electricity and providing publicroad transport.

2.0 As per Proviso to Section 61 (part-VII) of the Electricity Act, 2003 and , thisapplication to determine the tariff for retail sale of Electricity under a MultiYear Tariff (MYT) framework with effect from 1 st April, 2007 for thecontrol period of three financial years i.e. 1st April, 2007 to 31st March,2010 has been prepared in accordance with the relevant provisions ofMERC ( Terms & Conditions of Tariff) Regulations, 2005, Electricity(Supply) Act, 1948 and Electricity Regulatory Commission Act, 1998.

3.0 The salient features of MYT proposal are as follows:

3.1 Power Purchase :- Component of the power purchase cost is a dominant

factor of Undertaking's MYT Proposal. The basis considered for power purchase

projections are based on the various tariff orders of the Commission in respect of

the ARRs of MIs. TPC Ltd., STU, MSEDCL & RPO.

i. Fixed charge payable to TPC-G

ii. Energy charges payable to TPC-G

iii Rebate due to usage of Hydro peaking tariff to be received

from TPC-G.iv Power purchase expenses related to supply from TPC-D.

v. Stand-by charges payable to MSEDCL

i T i i h bl t STU


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All the above components are subject to escalation as per CERCNotification dated 22nd October, 2006

Regarding serial no. iv above, we have considered that TPC-D would beprocuring the energy above quantum allotted to BEST out of TPC-G'sgeneration capacity for the control period at a rate mentioned inCommission's Order to TPC-D for FY 06-07 subject to escalation rates as

mentioned above. However, Undertaking recognizes the need for havinga long term purchase plan and is contemplating appointing a consultantfor this purpose and would submit to Commission for long term powerpurchase plan in due course.

3.2 As part of proposal the Undertaking is required to submit the sales forecastfor various tariff categories. The data for the previous five years based onthen prevailing tariff categories was re-classified in the tariff categories asper the MERC's supplementary tariff order and Compounded AggregateAverage Growth Rate (CAGR) is worked out for each category. On thebasis of this CAGR, the sales projections for control period are made.

3.3 The Undertaking is required to project the distribution losses for the abovecontrol period. The distribution loss is identified as controllable factor. Itmay be mentioned that the distribution losses of the Undertaking are one

of the lowest in India. It has been submitted to the Commission that theUndertaking's technical losses are on lower side as a result of number ofmeasures adopted by the Undertaking such as prudent network design,quality assurance on equipments, optimum loading etc. Whereas, scopeof reducing technical losses further is limited, the Undertaking recognizesthat there is a scope for reduction in commercial losses and has projecteda trajectory of reduced distribution losses in the control period as follows:

FY 2007-08 - 12%,FY 2008-09 - 11.5%FY 2009-10 - 11%.

The limitation of bringing down the technical losses further and ourcontinuous and proposed efforts for reduction of the commercial


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licensees I utilities in India It may be seen that the BEST's employeeexpenses are comparable to the lowest in the India. It also needs to bementioned that Undertaking has been carrying out all its activities . inhouse and does not outsource any of its activities. While reiteratinglong term advantages of carrying out core activities ' in-house',such as skill building and adherence to correct technicallyadministrative practices for ensuring quality of supply and reliability, weare contemplating outsourcing some of our non-core activities in agradual manner and same has been elaborated in our proposal.

3.5 Repairs & Maintenance (R&M) Expenses: It is observed that theReInstatement charges (R.I.) payable to MCGM form a major (i.e. morethan 85%) component of R & M Charges. There has been a substantialincrease in Re-Instatement charges in recent past. These are mainly paidfor the cable laying schemes for system augmentation. As such the R.I.charges should ideally be booked under Capital Expenditure buthistorically the R.I. charges are shown under R&M expenses. We areconducting exercise to segregate these R. I. charges for capital jobs / schemes and R&M purpose such as fault repairs. We request theCommission to allow us to resubmit the R&M expenses excluding the R.I.charges before or during the technical validation session for MYT petition.

3.6 Capital Expenses: The Undertaking has submitted its projection forcapital expenses for system augmentation for adhering andimplementing the reliability standards, meeting additional loads andprocurement of installation of electronic meters for ensuring adherenceto CEA regulation on meters. The expenses shown under CapitalExpenditure exclude the ReInstatement (RI.) charges payable toMCGM which are historically been shown under the head Repairs &Maintenance (R&M) expenditure and ideally should be booked underthe head Capital Expenditure. We are conducting exercise tosegregate the R.I. charges for capital jobs / schemes and R&Mpurpose such as fault repairs. We request the Commission to allow us

b i h C i l E i l di h R I h b f


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proposal. BEST would humbly submit to the Hon'ble Commission thatBEST is gradually moving towards a commercial oriented utility andhence commercial prudent practices should be instilled in its function.

4.0 BEST hereby submits the proposal for in respect of determination of tariff

for thecontrol period of three financial years to meet the ARRs for each year.

Prayer

It is therefore prayed that

The Hon'ble Commission may please consider BEST's request

in respect of determination of tariff for the control period of three

financial years i.e. 1st April, 2007 to 31st March, 2010 for retail

sale of Electricity under a Multi Year Tariff (MYT) frame work.

The Hon'ble Commission may please consider BEST's request for

revision in existing tariffs and accord approval for the same.

Place: Mumbai General Manager

Date:13.12.2006 For Brihanmumbai Electric Supply

and Transport Undertaking.


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Table of Contents

1. BACKGROUND......................................................................................................... 1

1.1. O VERVIEW OF BEST .............................................................................................. 11.2. F ILINGS BASED ON MULTI YEAR TARIFF (MYT) PRINCIPLES ................................ 2

1.3. F ILING CONTENTS ................................................................................................... 4

2. DEMAND ASSESSMENT ........................................................................................ 6

2.1. O PERATING PERFORMANCE ................................................................................... 10

2.1.1. Distribution loss..................................................... ....................................... 10

3. POWER PURCHASE.............................................................................................. 13

4. DETERMINATION OF ANNUAL REVENUE REQUIREMENT.................... 22

4.1. EMPLOYEE EXPENSES.................................................................................... 22

4.2. ADMINISTRATION AND GENERAL EXPENSES........................................ 25

4.3. REPAIRS AND MAINTENANCE...................................................................... 30

4.4. RENT EXPENSES................................................................................................ 31

4.5. INCOME TAX ...................................................................................................... 32

4.6.

CAPITAL RELATED EXPENSES..................................................................... 33

4.6.1. CAPITAL EXPENDITURE............................................................................. 33

4.6.2. FUNDING OF CAPITAL EXPENDITURE................................................... 38

4 7 DEPRECIATION 39


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4.11. INTEREST ON WORKING CAPITAL ......................................................... 43

4.12. INTEREST ON INTERNAL FUNDS.............................................................. 43

4.12.1. INTEREST ON OTHER FUNDS .................................................................... 43

4.12.2. INTEREST ON CONSUMER DEPOSITS.................................................... 47

5. ANNUAL REVENUE REQUIREMENT (ARR) .................................................. 48

6. NON TARIFF INCOME ......................................................................................... 50

7. COST-OF-SUPPLY................................................................................................. 52

8. REVENUE FROM SALE OF ENERGY AND REVENUE GAP ....................... 53

9. PROPOSAL FOR REVISION IN TARIFF STRUCTURE................................. 56

10. TARIFF ORDER COMPLIANCE ..................................................................... 69


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List of Tables

Table 1 Category wise units consumption (figures in MUs) 8 Table 2 Projected sales for FY 2007-08, 2008-09 and 2009-10( figures in MU) 9 Table 3 Distribution loss forecast for 3-year control period 12 Table 4 Maximum peak demand ( figures in MVA) 15 Table 5 Employee expenses (Supply Division) ( figures in Rs. Crores ) 22

Table 6 Allocation of G.A. expenses ( figures in Rs. Crores ) 27 Table 7 Details of Administration and General Expenses (figures in Rs. Crores) 28 Table 8 Details of other costs for F.Y. 2005-06 & 2006-07 29 Table 9 Repairs and Maintenance expenses ( figures in Rs. Crores ) 30 Table 10 Details of Capital Expenditure ( figures in Rs. Crores ) 34 Table 11 Break up of 150% overheads .................................................. (figures in %) 35 Table 12 Details of Capital Expenditure at actuals from April to September 2006

( figures in Rs. Crores ) 36

Table 13 Details of Capital work in progress (figures in Rs. Crores) 38 Table 14 Capital expenditure funding ..................................... (figures in Rs. Crores) 38 Table 15 Depreciation rates (figures in %) 39 Table 16 Loan Repayment Schedule 2007-08 (figures in Rs. Crores) 41 Table 17 Loan Repayment Schedule 2008-09 (figures in Rs. Crores) 41 Table 18 Loan Repayment Schedule 2009-10 (figures in Rs. Crores) 42 Table 19 Interest charges for F.Y. 2007-08, 2008-09 and 2009-10 (figures in Rs.

Crores) 42 Table 20 Computation of interest on internal funds (figures in Rs. Crores) 45 Table 21 Annual Revenue Requirement (figures in Rs. Crores) 49 Table 22 Non tariff Income (figures in Rs. Crores) 50 Table 23 Average cost of supply (figures in Rs/kWh) 53 Table 24 Revenue from existing tariffs for three years of the control period (all

figures in Rs. Crores) 55 Table 25 New Tariff Structure for F.Y. 2007-08 (figures in Rs. Crores) 61


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ABBREVIATIONS USED

BEST Brihan Mumbai Electric Supply and Transport UndertakingA.C. Alternating CurrentA&G Administrative & General ExpensesAPDRP Accelerated Power Development and Reforms ProgrammeARR Annual Revenue RequirementBE Budget EstimatesCAGR Compounded Annual Growth RateCOS Cost of SupplyD.C. Direct CurrentDPDC District Planning and Development CouncilDPR Detailed Project ReportERC Act Electricity Regulatory Commissions Act, 1998ES Act/ ESA Electricity (Supply) Act, 1948

FY Financial YearFAC Fuel Adjustment CostHT High TensionKV KilovoltKWh Kilowatt HrKW KilowattKVA Kilo Volt AmpereLT Low TensionMCGM Municipal Corporation of Greater MumbaiMD Maximum DemandMERC Maharashtra Electricity Regulatory CommissionMOP Ministry of PowerMMRDA Mumbai Metropolitan Region Development AuthorityM Tax Maharashtra TaxMU Million Units

O&M Operation and MaintenancePF Power FactorPRC Pay Revision CommitteeRE Revised EstimatesT&D Transmission and DistributionTOD Time of Day


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1. Background

1.1. Overview of BEST

The erstwhile Bombay Electric Supply & Tramways Company started supplying electricity

to the city in 1905. Until 1926, the Company had been generating its own electricity for

distribution to its consumers. Later, the Tata Electric Companies started supplying

electricity to BEST.

The Tata Electric Companies (The Andhra Valley Power Supply Co., The Tata Power

Supply Co., and The Tata Hydroelectric Power Supply Co.) generated electricity from their

reservoirs at Bhira, Bhivpuri and Khopoli in the Western Ghats. A major portion of it was

transmitted through 110,000 Volts overhead lines to their Receiving Stations at Dharavi

and Parel. In these Receiving Stations the voltage used to be transformed to 22,000 and6,600 volts for ease of distribution. The Tata Electric Companies provided, through their

cables, electricity at requisite voltage to the industries and mills, the Railways, the Bombay

Suburban Electric Supply Company and the BEST.

In 1947, when the Company was taken over by the Municipal Corporation, the Undertaking

was buying electricity from Tatas at nine receiving points known as: Kussara, Mahim,Kingsway, Jamnadas, Suparibag, Lalbaug, Esplanade, Palton and Backbay. At all these

points, except Kussara, Kingsway and Mahim, the supply was received at 6,600 Volts. The

supply was received at 22,000 Volts and transformed through Tatas transformers to 5,500

Volts at Kussara and to 6,600 Volts at Kingsway and Mahim. From these receiving points

the cable network carried power to 247 Substations situated in different areas of the city.With the help of transformers at these substations, the voltage was further transformed to

400/230 Volts, suitable for use in the factory, shop and home. It was made available to the

consumers through a low voltage distribution network and service cables to individual


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The Undertaking is now well known in India for its service of providing electricity with

minimum interruptions and at proper voltage, at the minimum cost. It is also known for the

quick restoration of supply in the event of any faults developing in the distribution system.

In the fifty years with a municipal status, the number of substations from 247 to 1938 ; the

length of underground cables from 1,263 kilometres to 9,093 kilometres; the number of

consumers from 1,08,000 to more than 9,53,241; the number of street lamps from 2,215 to

40,119.

1.2. Filings based on Multi Year Tariff (MYT) Principles

Section 61 of the Electricity Act, 2003 empowers the State Commission (MERC in this

case) to specify the terms and conditions for the determination of tariff and specifies that in

doing so, the Commission shall inter alia be guided by multi year tariff principles (Section

61 (f)). In exercise of powers conferred under clause (zd), (ze) and (zf) of Section 181 (2)read with Sections 61 and 62 of the Electricity Act 2003 (36 of 2003) and all other

enabling powers in that behalf, the Maharashtra Electricity Regulatory Commission has

made the MERC (Terms and Conditions of Tariff ) Regulation, 2005 (Regulation).

The Regulation applies to all the Distribution Licensees in the State. In the Regulation the

Commission has laid out the principles for determination of Aggregate Revenue

Requirement (ARR). The ARR so determined for each of the businesses will form the basis

for fixation of charges for retail sale of electricity. In the Regulation, the Commission has

also laid down the procedures for filing under multi-year tariff principles. The multi-year

period is defined as the Control Period. The Honble Commission in its order dt. 20th

December, 2005 has defined first Control Period as three year period starting FY 2007-08

and continuing till the end of FY 2009-10. The current filing pertains to the First Control

Period.


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Sales Forecast and Load Forecast;

Power Procurement Plan; and

Capital Investment Plan for each of the years of the control period Estimation of Operation and Maintenance expenses (comprising of Employee expenses,

Administration & General expenses and Repair & Maintenance expenses) for each of

the years of the control period

Setting targets for distribution losses to be achieved for each of the three years of Control Period.

The Distribution licensee shall be subject to an Annual Performance Review (APR)

during the control period The Regulation also specifies the controllable and uncontrollable elements as

follows:Distribution licensee

ARR Item Controllable/ UncontrollableVariation in cost of power purchase Un controllableVariation in the number or mix of consumers or quantities of electricitysupplied to consumers

Uncontrollable

Variations in capital expenditure ControllableVariation in Technical & Commerciallosses

Controllable

Variation in working capital requirements ControllableStandards specified in the Standards of Performance Regulations

Controllable

Variations in Labour productivity Controllable

Targets are set for the controllable items while any variation in the uncontrollable

items of ARR can be claimed by the licensees in the ARR for the year succeeding the

relevant year of the Control Period when the variations occurred as part of APR exercise.


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to huge losses for the licensee. However, any gains/ losses in the Controllable items arising

out of factors beyond the control of the licensees, as stated below:

Force Majeure events

Changes in law, judicial pronouncements and Order of Central government, State

government or commission

Economy-wide influences, such as unforeseen changes in inflation rate, market-

interest rates, taxes and statutory levies

The above shall be passed on as an additional charge or rebate in ARR over such period as

may be specified in the Order of the Commission.

1.3. Filing Contents

The filing is structured in the following way:

Chapter 2 provides information related to Demand Assessment comprising of

Sales Forecast for each year

T&D loss level

Energy balance forecasted for each of the years

The sales forecast has been made for each of the years of the control period. This

forecast has been used to determine the tariff-income from retail sale of electricity forthe first year of the control period and also to estimate the energy input required for

meeting the demand for each of the years and forecast the Energy balance.


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With regards to sales forecast for the each of the three years of the control period, the saleshave been projected on the basis of 5-year CAGR, on the revised tariff slabs as introducedin the Supplementary Order dated September 26, 2006.

Prior to October-2006, BEST has been billing all its consumers as per its old tariff structureand it has maintained the Energy consumption database in tariff structure all these years.With the rationalisation of tariff structure as introduced in the Supplementary order, BESThad to format and realign the historical Energy consumption data (specifically for FY 2001-02) into new tariff structure. For the 5-year CAGR computation, we have taken the baseyears to be FY 2001-02 and FY 2006-07, also we have adopted the actual consumption for

the 6-month period of April-06 to September-06 and the forecasted consumption for theperiod November-06 to March-07. The 5-year CAGR values arrived on this basis has beenused for forecasting energy sales for FY 2007-08, 2008-09 and 2009-10.

The following table gives the broad category wise break up for the electricity consumptionunder four major heads.

Table 1 Category wise units consumption (figures in MUs)

The following table gives the category wise break up for the electricity consumption.

Projected Energy Consumption

2005-06 2006-07 2006-07 2007-08 2008-09 2009-10

Category

Actual (Asprojectedin ARR2006-07)

2006-07(Actualsupto

Sept 06and

forecastfrom

Oct 06)

Forecast CAGR Forecast CAGR Forecast CAGR

Residential 1651.24 1,692.96 1,684.41 1744.09 3.54% 1810.35 3.80% 1885.07 4.13%

Commercial 1590.12 1,670.32 1,664.87 1724.43 3.58% 1786.98 3.63% 1852.77 3.68%Industrial 321.3 327.09 321.11 324.49 1.05% 328.5 1.24% 333.1 1.40%

Others 52.02 51.53 53.44 57.74 8.05% 63.69 10.30% 71.86 12.83%Total 3,614.69 3,741.89 3,723.83 3850.75 3.41% 3989.52 3.60% 4142.8 3.84%


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0-100 649.27 649.29 668.37 688.06 708.39101-300 483.28 482.23 500.23 518.98 538.53LF-1

> 300 472.62 463.96 473.84 484.14 494.890-300 366.94 368.47 378.23 388.32 398.77

301-1000 258.94 258.23 265.02 272.12 279.55LF-2> 1000 737.68 724.70 759.26 795.96 834.94

LTC-1 all units 66.66 68.45 69.11 69.78 70.46C(D) all units 1.72 1.44 1.43 1.42 1.41

0-300 26.76 26.68 26.31 25.97 25.65

301-1000 33.07 32.88 32.78 32.70 32.64LTP-1 > 1000 106.36 109.28 114.12 119.26 124.72LTP-2 all units 5.45 5.82 4.86 4.07 3.40

SL all units 34.04 36.57 36.22 35.89 35.57E all units 0.93 1.12 1.03 0.95 0.88T all units 12.99 15.63 20.41 26.80 35.37

TS ( R ) all units 3.57 0.12 0.08 0.05 0.04HTP-1 all units 0.45 1.23 1.26 1.30 1.34HTP-2 all units 19.26 20.84 21.46 22.09 22.75HTP-3 all units 273.03 274.72 282.36 290.22 298.31HTP-4 all units 85.32 75.93 75.90 75.98 76.17HTP-5 all units 103.54 106.24 118.48 135.46 159.01

Total 3741.90 3723.83 3850.75 3989.52 4142.80

Table 2 Projected sales for FY 2007-08, 2008-09 and 2009-10( figures in MU)

Domestic or Residential : The domestic and residential consumption is expected to growwith an increase in population, vertical growth of city, growth in per capita income andchanging lifestyle with regard increased usage of electronic gadgets. The trend shows anincreasing demand in this category. This growth trend is expected to continue.

Commercial : The commercial consumption is expected to grow with increase in GDPgrowth in the Services sector and increased commercial activity. South Mumbai, being acommercial area to a large extent, the demand growth is expected to continue growing at anincreasing YOY rate during the projection period.

Industrial : The industrial demand shows a decrease in the rate of growth. There has been a


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2.1. Operating performance

2.1.1. DISTRIBUTION LOSS

The petitioner would like to submit that the Honble Commission had directed theundertaking to carry out the study to segregate the Distribution Losses. The Undertakingcarried out in depth study of its network and also load flow study of its typical network andarrived at technical losses of 7.52% and same has been informed to Commission vide ourletters dated 31st May 2006, 22nd August 2006, 31st August 2006 and 1st November 2006.

The Undertaking also attempted to compare the loss levels in the other cities in India fromthe secondary sources (i.e. tariff petition and orders). It may be highlighted that thedistribution losses of BEST are one of the lowest in the country (except AEC). Comparisonof T&D (or AT&C) losses for different utilities in India is shown in the graph below.

Source: Individual tariff orders of the Commission. Depending of the availability of dataperiod under consideration is FY 2004-05 and FY 2005-06.

f

T&D loss levels

32.97%

28.50%

27.05%

26.37%

25.03%

21.00%19.50%

19.20%

18.50%

15.50%

15.36%

13.20%

13.20%

12%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

MSEDCL

HESCOM

MESCOM

APNPDCL

APSPDCL

CESC

BEST


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over the years and as such, the scope for reducing the technical losses further is very less.The balance is commercial losses and Undertaking has been making intensified andfocused efforts for reduction of commercial losses which include following measures:-

Adoption of monthly billing.

Clearing the backlog of stopped and defective meters and thereafter ensuringprompt replacement of defective meters.

Replacement of electro magnetic meters by static meters in a time bound manner.

Adoption of automatic meter reading methods etc.

We have informed the Commission about these proposed measures vide our letter dated31st August 2006 and 1st November 2006.

BEST would again like to restate that it has achieved this performance (i.e. low level of losses) through continuous network up-gradation and efficient operational practices. In itslicensed area of distribution, electricity is supplied through underground cables, whichgenerally results in lower loss levels. BEST licensee area has a low incidence of losses andalso the incidence of theft and tampering of the meters is less.

The Honble Commission in the Tariff order for FY 2005-06 has approved the followingdistribution losses:

F.Y. 2005-06

ParticularsARR Petition Revised data of BEST

MERCApproval

Distributionlosses 12.5% 12.4% 12.4%


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Distribution loss (%)F.Y.2005-06

(Actuals)

Units Purchased (MUs) 4,155.53

Dist. Loss (MUs) 540.84

Units Sold (MUs) 3,614. 69

Distribution Loss (%) 13.02%

In the ARR and Tariff Petition for FY 2006-07, BEST has proposed distribution losses of

12.4%. During the 3-year MYT period BEST proposes to reduce distribution lossesgradually and attain 11% by F.Y. 2009-10, at the end of the first control period of MYT.For FY 2007-08 the distribution loss has been proposed at 12%, for FY 2008-09 at 11.5%and FY 2009-10 at 11.0%. BEST requests the Honble Commission to approve theDistribution loss levels for the three year control period. Based on the above distributionloss levels, the input energy required for the above three years is as given below:

Particulars

F.Y.2006-07

(As projectedin ARR 2006-

07)

F.Y. 2007-08

(proposed)

F.Y. 2008-09

(proposed)

F.Y. 2009-10

(proposed)

Units Purchased (MUs) 4,269.29 4375.85 4507.93 4654.82

Dist. Loss (MUs) 527.40 525.10 518.41 512.03

Units Sold (MUs) 3,741.89 3850.75 3989.52 4142.80

Distribution Loss (%) 12.4% 12% 11.5% 11%Table 3 Distribution loss forecast for 3-year control period

BEST would like to submit to the Honble Commission that as per the existing practiseBEST is adopting bimonthly billing system and accordingly the loss levels are measured.BEST has proposed these targets based on the realistic achievement of them under thecircumstances, future plan and the time frame in hand.

BEST would further like to submit to the Honble Commission that BEST in the past withits maximum endeavour had attempted to bring down the losses to achievable levels.Therefore, the Commission would appreciate that the options for reducing the technicalloss level have more or less exhausted.

Further BEST would also like to submit that they are in the process of installing electronic


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3. Power Purchase

BEST procures power from the Tata Power Company Limited to meet its demand. Thereceiving voltages for BEST are 110 kV and 22/33 kV. BEST had a power purchaseagreement with TPCL which is under renegotiation. Based on actual energy purchases forFY 2004-05 and FY 2005-06 the expenses have been projected for April 2006 to March2007. The same has been submitted in the ARR for FY 2006-07.

It may be noted that TPCL was billing BEST based on the principle agreed in the powerpurchase agreement. However, subsequent to the tariff order issued by the HonbleCommission dated 3 rd October 2006, TPCL has started billing based on the directivesspecified in the tariff order. Further, BEST would like to highlight the following points:

Order dt. 29 th September-2006 on Determination of Transmission tariff for Intra-state Transmission System (InSTS) for FY 2006-07 (Case no. 31 of 2006). TheHonble Commission has incorporated annual transmission charges payable byBEST to STU of Rs. 102.33 crores

Order dt. 16 th August 2006 on Long term Development of Renewable EnergySources and associated Regulatory (RPS) Framework. A roadmap has beenprovided regarding quantum of renewable energy to be procured by distributionlicensee.

Financial year Minimum %age

specifiedF.Y 2006-07 3%F.Y 2007-08 4%F.Y 2008-09 5%F.Y 2009-10 6%

The Honble Commission vide its Order on ARR for F.Y. 2006-07 of TPC G &TPC -D have incorporated the following: Fixed charges for an amount of Rs. 162.59 Crores Energy charges for an amount of Rs. 1000 Crores for the energy allocated to

BEST


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With regard to the point 5), BEST would like to submit to the Honble Commission thatgoing forward BEST would endeavour to adopt a holistic power purchase plan for

meeting its energy and peak requirements. The power plan envisaged would be separatefor short to medium term, long term and for also procurement under RPO throughcompetitive bidding route. The petitioner would like to submit that BEST is in theprocess of appointing consultant for carrying out the study on procurement strategy andfor the bid process management.

Meanwhile, since it is an uncontrollable expenditure for BEST, the petitioner hasprojected power purchase cost based on the past trend and by adopting some escalation

factors/rates approved by the Central Electricity Regulatory Commission (CERC) forthe evaluation of bids.

The parameters for each component is as enumerated below:

a) Fixed charges payable to TPC - G

Fixed charges payable to TPC-G is linked to the system demand forecast byBEST. For FY 2006-07 the Honble Commission has approved fixed cost of Rs. 162.59 crores. BEST has projected the demand charges payable to TPC-G are estimated at Rs. 2.04 crore per MVA.

CERC has notified the annual escalation rates vide its notification dated 26 th October 2006. The notification specifies the annual escalation of 5.37% forcapacity charge component.

BEST has projected the maximum non-coincident demand for each of theyears based on the load-factor of FY 2006-07 and then estimated the fixedcharges to be paid by BEST

The actual maximum demand as recorded on monthly basis for FY 2002-03 toFY 2004-05 is given in the table below.

Financial Year

Month 2003-04

2004-

05

2005-

06April 697 740 768May 714 777 762June 756 743 806July 693 709 749

A 687 689 731


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Maximum non-coincident peak

demand for theyear

756 777 806

Table 4 Maximum peak demand ( figures in MVA)

Based on the Maximum Demand and the load factor for the past few years theMD is forecasted for future.

2002-

03

2003-

04

2004-

05 2005-06EnergyInput 3781.48 3882.88 3962 4155

MaximumDemand 740 756 777 806

Loadfactor 58.33% 58.63% 58.21% 58.85%

For an energy input requirement of 4269.29 MUs, the load factor for F.Y. 2006-07 is projected at 58.51%. It may be noted that it is assumed that the load factorfor the coming years would behave/remain same since most of the growth isenvisaged in the residential and commercial areas only.

Based on the load factor of 58.51% the maximum demand projected for threeyears of the control period is as enumerated.

Parameters F.Y. 2007-08 F.Y. 2008-09 F.Y. 2009-10

Input energyrequired (inMUs)

4375.85 4507.93 4654.82

Load factor 58.51% 58.51% 58.51%

Maximum


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charges

Fixed cost (inRs. crore / MVA)

0.21 0.23 0.24

Fixed chargespayable to TPC- G (in Rs.crore)

175.60 190.61 207.39

b) Energy charges payable to TPC - G

Energy charges payable to TPC-G is linked to the energy allocated to BEST.For F.Y. 2006-07 the Honble Commission has allocated 3684 MUs of energyfrom TPC-G to BEST at rate of Rs. 2.72 per unit. BEST has forecasted that

there shall be no change in the allocation of units allotted to Distributionlicensees in Mumbai.

CERC has notified the annual escalation rates vide its notification dated 26 th October 2006. The notification specifies the annual escalation of 6.61% forenergy in case of captive coal mine source. The same is assumed in ouranalysis. It may be noted that escalation rate for imported coal would be more.However, critical information about the TPC coal arrangement that is required

to arrive at the escalation rate is not available. Based on the above the energy charges payable to TPC G for the next three

years is as enumerated below


Energy allotted fromTPC G (in MUs) 3684 3684 3684

Energy charges asspecified in TPC G


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Energy chargespayable to TPC - G (in

Rs. crore)

1068.28 1138.90 1214.18

c) Rebate due to usage of Hydro-peaking tariff

The Honble Commission has provided for rebate due to usage of Hydro-peaking tariff for an amount of Rs. 42.62 crores for F.Y. 2006-07. BEST has

forecasted that there shall be no change in the allocation of rebate due to usageof hydro-peaking tariff to Distribution licensees in Mumbai and has retained Rs.42.64 crores only as rebate for each of the three years of the control period.

d) Charges payable to TPC-D for supply of power from other sources

BEST purchases all its power from TPC-G to meet its requirements. The HonbleCommission in the tariff order of TPC G for F.Y. 2006-07 has estimated 4352

MUs (ex-bus) of energy to be consumed by BEST, where as only 3684 MUs hasbeen allocated from TPC G. All requirements beyond 3684 are to be purchasedby TPC D from any other sources. BEST has projected energy requirements of 4375.85MUs in F.Y. 2007-08, 4507.93 MUS for F.Y. 2008-09 and 4654.82 MUsfor F.Y. 2009-10. BEST estimates that there shall be no change in the allocatedcapacity from TPC G to Distribution licensees in Mumbai region and all energyrequirements beyond 3684 MUs shall be arranged by TPC D from other sources.

CERC has notified the annual escalation rates vide its notification dated 26 th October 2006. BEST has considered an weighted average comprising of 30% tobe allotted to fixed charge component and 70% to be allotted to energy chargecomponent. The notification specifies the annual escalation of 5.37% for fixedcharges and 6.61% for energy in case of captive coal mine source. In such ascenario the weighted average arrived is (0.3 * 5.37 + 0.7 * 6.61) = 6.24%

Based on the above the energy charges payable to TPC G for the next threeyears is as enumerated below


Energy allotted from TPCG (in MUs) 3684 3684 3684


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Charges forecasted forfuture years

Rs. 4.69/ unit Rs. 4.98/ unit Rs. 5.29/ unit

Charges payable to TPC - Dfor supply from othersources (in Rs. crore)

324.14 410.10 513.35

BEST would like to reiterate that going forward we are contemplating topurchase power through competitive bidding route for arriving at the efficientprice as mentioned at page 14 and 15.

e) Stand-by charges payable to MSEDCL

The Honble Commission in the Tariff Order of TPC-D for F.Y. 2006-07 hasapproved Stand-by charges to be paid by BEST to MSEDCL for an amount of Rs. 121.50 crores. Standby charges are linked to the system demand forecastedby BEST. The maximum Non CPD forecasted for F.Y. 2006-07 is 798 MVA,based on which the applicable rate for computation being Rs. 0.15 crore perMVA

CERC has notified the annual escalation rates vide its notification dated 26 th October 2006. The notification specifies the annual escalation of 5.37% forcapacity charge component. Since capacity charge component relates to systemdemand, BEST has adopted this rate as specified by CERC for projecting theMVA charges payable for the next three years.

The maximum demand for each of the years has been projected on the load-factor of F.Y. 2006-07 and estimated the standby charges to be paid toMSEDCL by BEST


Maximumdemandforecasted (inMVA)

854 880 908

Escalationfactor


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Standby chargespayable to

MSEDCL (inRs. crore)

131.22 142.44 154.98

f) Transmission charges payable to STU

The Honble Commission has approved annual transmission charges payable by

BEST to STU vide its order dt. 29th

September 2006 on Determination of Transmission tariff for Intrastate Transmission system (InSTS). For F.Y. 2006-07BEST has to pay transmission charges of Rs. 102.33 crores to MSETCL.Transmission charges are linked to the system demand forecasted by BEST. Themaximum Non CPD forecasted for F.Y. 2006-07 is 798 MVA, based on which theapplicable rate for computation being Rs. 0.13 crore.

CERC has notified the annual escalation rates vide its notification dated 26 th October 2006. The notification specifies the annual escalation of 5.37% forcapacity charge component. Since Transmission capacity charge componentrelates to system demand, BEST has adopted this rate as specified by CERC forprojecting the MVA charges payable for the next three years.

The maximum demand for each of the years has been projected on the load-factor of F.Y. 2006-07 and estimated the Transmission charges to be paid toMSETCL by BEST


Maximumdemandforecasted (in

MVA)

854 880 908

Escalationfactorconsidered forT i i

5.37% 5.37% 5.37%


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payable toMSETCL (inRs. crore)

g) Renewable Purchase obligation

The Honble Commission in the Order dt. 16 th August 2006 on Long termDevelopment of Renewable Energy Sources and associated Regulatory (RPS)Framework, has provided a roadmap regarding quantum of renewable energy to beprocured by distribution licensee. It has specified the following percentage of inputenergy as minimum purchases to be sourced from renewable sources.

Financial yearMinimum %age

specified

Energy input

(in MUs)

RPS

quantum (inMUs)F.Y 2006-07 3% 4269.29 NAF.Y 2007-08 4% 4375.85 175.03F.Y 2008-09 5% 4507.93 225.40F.Y 2009-10 6% 4654.82 279.29

The Order on RPS has provided charges of Rs. 3.30 / unit for F.Y. 2006-07

MERC order on wind projects dated 22 nd March 2004 has approved theescalation rate of Rs.0.15 per unit for every year. BEST has assumed the similarrate for escalation during the projection period.

Based on the above the RPS charges payable for the next three years is asenumerated below

Parameters F.Y. 2006-07 F.Y. 2007-08 F.Y. 2008-09 F.Y. 2009-10

RPS units (in MUs) 175.03 225.40 279.29


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4. Determination of Annual Revenue Requirement

4.1.Employee Expenses

The employee expenses for the supply division have been considered based on theexpenses that are identified for the supply division. The employee expenses for FY 2006-07 (projected) and forecasts for the next three years of the first control period are shown inthe table below.

Particulars 2006-07(projections)2007-08

(projections)2008-09


(projections)

Basic Salary 38.76 40.84 43.03 45.35

Dearness Allowance (DA) 34.63 36.49 38.45 40.51

House Rent Allowance 7.06 7.44 7.84 8.26

Conveyance Allowance 0.31 0.33 0.34 0.36

Leave Travel Allowance 1.20 1.26 1.33 1.40

Earned Leave Encashment 1.52 1.60 1.69 1.78

Overtime Payment 3.49 3.68 3.87 4.08

Bonus/Ex-Gratia Payments 4.49 4.73 4.99 5.25

Interim relief and balance PRC 9.35

Provident Fund Contribution 10.72 11.30 11.90 12.54

Gratuity Payment 3.67 3.87 4.07 4.29

Cost of bus token/passes 2.10 2.21 2.33 2.46

Employee Expenses 117.30 113.75 119.86 126.29

Table 5 Employee expenses (Supply Division) ( figures in Rs. Crores )


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The detailed assumption for working of employee expenditure for FY 2006-07 is providedbelow:

Salaries, wages and Allowance Employee on the rolls of the Undertaking on 1 st April of the Budget year.

DA Calculated based on the last three years trend of the fixed average DA Indexi.e. Mumbai Consumer Price Index. In order to fix and adopt DA payable to staff the data of last 3 years DA index is analysed to find out average monthly increase inDA index and thereafter fixed DA index of future year is determined.

Contribution to PF Calculated on 12% of Basic Pay + DA

Gratuity Calculated on No. of staff to be retired. Initially it was charged toGeneral Administration and then allocated to supply & transport division.

Cost of bus token & passes Calculated at Rs. 189/- per person per month.However, it has a contra effect it is also shown in the income of Bus Division.

LTA Calculated on basis of the Basic Pay on a grading scale.

For FY 2007-08, FY 2008-09 and FY 2009-10, BEST has projected expenses of Rs. 113.75Crores, Rs.119.86 Crores and Rs.126.29 Crores. The detailed assumption for working of employee expenditure for the control period is provided below:

CERC has notified the annual escalation rates vide its notification dated 22 nd November 2006. The notification specifies the annual escalation of 5.37% for fixedcharge component.

Since employee cost component relates to inflation and the system demand, BESThas adopted this rate as specified by CERC for projecting the employee costpayable for the next three years. However, it does not include impact of wage

agreement, if it takes place during the control; period, the same will be added at thetime of truing up exercise.


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BEST would like to submit that the employee expenses of BEST are comparable and ratherlower than the other utilities in India. The comparison of utilities is shown in the graph

below.

Source: Individual tariff orders of the Commission. Depending of the availability of dataperiod under consideration is FY 2004-06.

BEST would also like to submit that if the cost towards outsourcing of work is included inemployee expenditure for other utilities, the employee cost would be even higher. This isespecially true for private utilities that rely heavily on outsourcing of activities. BESTwould like to submit that BEST has a long history of providing excellent services to itsconsumer and is working under certain constraints. Traditionally, all the activities arecarried out internally and same culture is followed in BEST.

The petitioner would further like to reiterate that during the public hearing process, therewas a contention from authorized consumers representative that as compared to theneighbouring utilities, the Undertaking has high employee expenditure ratio. It wasUndertakings contention, which was expressed during the public hearing that historicallythe Undertaking has been carrying out all its activities in house whereas the neighbouring

tiliti b d ti g th d f t i g f d ti g f th i ti iti

Employee Expenses (Rs.per unit)

0.45

0.39

0.39

0.33

0.33

0.32

0.30

0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 0.45 0.50

MESCOM

CESC

HESCOM

BEST

GESCOM

NDPL

MSEDCL


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administrative reasons, this consultancy assignment has not come through. Meanwhile,preliminary studies are carried out at our end and it is observed that there is a room foroutsourcing of non-core activities such as maintenance of telecommunication systems,activities regarding refrigeration, air-conditioning being carried out for the entireUndertaking by our Consumer Advisory Services Department may be outsourced. It is alsofelt that the expenditure on activities of installation and maintenance of street lighting onbehalf of MCGM may need to be deleted from employee expenses as the income derivedfrom these activities, as the charges received from MCGM is shown as non-tariff income.

However, it is felt that it is essential to carry out core activities of distribution licensee InHouse as it ensures continuity of prudent and correct technical and administrative

practices and procedures and is instrumental in development of skilled manpower with corecompetence for future which can not be developed overnight. We are studying this matterfurther and would be reverting to the Commission shortly.

It is to mention that the Undertaking has In House facilities for quality assurance whereeach and every transformer and also other equipments are tested not only for electricalcharacteristics but also for guaranteed losses and have a full fledged meter testinglaboratory where each and every meter is tested as per the Indian Standards before their

installation at consumer premises.The Honble Commission is requested to approve the estimated employee expenses for thecontrol period.

4.2.Administration and general expenses

These expenses include items such as rent rates and taxes, insurance, printing andstationary, advertisement, etc. The grouping of expenses in the direct expenses headsprovide in the ARR formats is not identical with divisional income / expense statement inthe Administration report. Therefore, though the total aggregate expenses match in the twocases; due to different classification used for each expense head in the ARR Formats / Administrative Report, a head wise comparison is not possible.


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n addition to the direct expenses attributable to the supply division, the generaladministration expenses of the undertaking are allocated to the supply and the transportdivision. The allocation of General Administration expenses for FY 2005-06 was carriedbased on the criteria mentioned in the table below. The criteria were arrived by consideringthe number of staff members employed, number of vehicles allotted etc.

However, BEST has decided to change the method of allocation of General Administrationexpenses, except for activities relating to time keeping and security & vigilance (as boththese departments are functioning in each and every depot premises), from FY 2006-07 toSupply & Transport division by applying the proportion of expenditure incurred by eachdivision..

A statement for working of allocation of G.A. expenses for FY 2006-07 is as given belowtable (S.No.9).

(all figures in Rs. crores)

S.no. Particulars Amount

1 Total expenditure of the Undertaking 2824.15

(less) total expenditure of G.A. (137.19)

2686.942 Total expenditure of Supply division 1535.94

Percentage to total expenses 57%

Particulars Transport Supply

Security & Vigilance 75% 25%

Civil Engineering Department &ITO 55% 45%

Timekeeping, personnel, welfare,medical etc.

84% 16%

EDP Dept. 40% 60%

Legal, Audit, Cash & Accounts 50% 50%


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5 Allocation of expenditure

Allocation to Supply division (at 58%)(a) 65.66

Allocation to Transport division 49.536 Allocation of expenses related to Time-keeping

Supply division (at 16%) .(b) 0.67Transport division (at 84%) 3.56

7 Allocation of expenses related to Security & VigilanceSupply division (at 25%) .(c) 4.44

Transport division (at 75%) 13.32

8 Total of expenses allocated to Supply division (a + b + c) 70.77

(less) Amount already considered under Form no. 3.2 (S.no. 9 & 18) (4.44)9 Net General Administration expenses to be allocated 66.33

Table 6 Allocation of G.A. expenses ( figures in Rs. Crores )

For FY 2007-08, FY 2008-09 and FY 2009-10, the assumption for working of A&Gexpenditure for the control period is provided below:

CERC has notified the annual escalation rates vide its notification dated 22 nd November 2006. The notification specifies the annual escalation of 5.37% for fixedcharge component. Since increase in the A&G expenses will be primarily due toinflation index, BEST has adopted this rate as specified by CERC for projecting theA&G cost payable for the next three years.

Share of A&G expenses is also assumed to increase in a similar fashion.

The table below gives the details of the administration and general expenses directlyincurred and allocated to Supply Division) for the control period.


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*The other costs details for F.Y. 2005-06 (at actuals) and for F.Y. 2006-07 (proposed) areas given below:

(in Rs. Crore)FY 2006-2007

ParticularsF.Y. 2005-

06(Actual)

April-06to Sep-

06(Actuals)

Oct-06 toMar-07

(Projected)Total

Clothing 0.2271 0.1231 0.1319 0.2550Hire & Servicing of Office Equipment, etc. 0.3865 0.0578 0.3497 0.4075Contingencies 0.8163 0.0027 0.0186 0.0213Accident Compensation to Staff 0.0076 0.0004 0.0096 0.0100Materials (Including for Buses) 0.03 0.013 0.0615 0.0745Stock Adjustment 0.0246 0 0.06 0.0600Dead Stock 0.0606 0.075 0.1095 0.1845Receiving and Distribution Sub-Stations 4.4531 2.7716 2.6284 5.4000Mains and Aerial Mains 10.0206 6.5225 24.3675 30.8900

Street Lighting 2.0513 1.1916 1.0084 2.2000Meters Installations 1.4967 0.5755 1.0245 1.6000Meter Testing 0.223 0.125 0.118 0.2430Consumers Advisory Services 0.0896 0.0163 0.0642 0.0805Rebate on Advance Payment 0.1518 0.0776 0.0774 0.1550Miscellaneous and General Expenses 1.7935 0.9076 4.5658 5.4734Inspection and License Fees 1.4648 0.8408 0.1592 1.0000Motor Vehicle and Third Party Insurance Fund 0.0112 0 0.01 0.0100Free Issue of Petrol to Officers 0.4486 0.2016 0.3484 0.5500Provision for Obsolescence of Stores 0.03 0 0.02 0.0200Power Factor Discount 18.8218 10.3551 7.6449 18.0000

Total 42.6087 23.8572 42.7775 66.6347Less : Reinstatement charges considered for 3.3. 3.00 0 25.00 25.00

Less : Exp. At Sr. No. 2, 8 already considered inForm 3.3 2.44 0 3.09 3.09

Total 37.17 23.86 14.69 38.54


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Excess of reinstatement charges is not included in the analysis.

It is observed that the Reinstatement charges (R.I.) payable to MCGM form a major (i.e.more than 85%) component of R&M changes. There has been a substantial increase in Re-instatement charges in the recent past. These charges are mainly paid for the cable layingschemes for system augmentation. BEST is conducting a comprehensive exercise tosegregate these R.I, charges into two categories, namely, R.I. charges related to Capitalexpansion projects and R.I charges related to fault repairs that would be part of R&Mexpenses.

BEST requests the Honble Commission to allow it to re-submit the revised R&M expenses

so as to present the facts in proper perspective.

4.4.Rent expenses

BEST has decided to make recovery of rent in respect of premises occupied by Supplybranch in the Bus Depots and Bus Stations, because of the initial cost of acquisition of landand the cost of construction of Depots wherein the Supply branch also uses all the assets atthese places. The area of premises occupied by the Supply branch in Bus depots & Bus

station and the rent charged to the Supply branch is as enumerated in Appendix-1. For FY2006-07, the rent expenses to be paid by the Supply branch is Rs. 26.45 crores, as indicatedin our ARR and Tariff petition for F.Y. 2006-07.

For the three years of the control period the rent charges payable to Supply division shallbe escalated by the escalation charge considered in case of fixed charges related to powerpurchase expenses. Hence, the rent charges shall be escalated by 5.37% for each of theyears.

(all figures in Rs. crore)

Rent chargespaid by supplydivision toTransportdivision in F.Y.

2006-07

Escalation rateconsidered


2007-08


2008-09


2009-10

26.45 5.37% 27.87 29.37 30.94


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4.5.Income tax

As per the Income Tax Act under Section 10(20), the income of local authority isexempted. The said provision is reproduced as below:

10(20) the income of a local authority which is chargeable under the headIncome from house property, Capital gains or Income from other sources or from atrade or business carried on by it which accrues or arises from the supply of a commodity

or services [(not being water or electricity) within its own jurisdictional area or from thesupply of water or electricity within or outside its own jurisdictional area].

(Explanation For the purpose of this clause, the expression local authority means

i) Panchayat as referred to in clause (d) of article 243 of the Constitution; orii) Municipality as referred to in clause (e) of article 243 P of the Constitution,

oriii) Municipal Committee and District Board, legally entitled to, or entrusted by

the Government with, the control or management of a Municipal or localfund, or

iv) Cantonment Board as defined in Section 3 of the Cantonments Act, 1924 (2of 1924)


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4.6.Capital Related Expenses

4.6.1. Capital ExpenditureBEST is undertaking major works for augmentation of its distribution network. Theinvestment is a part of the efforts of BEST to provide efficient and reliable electricity to itsconsumers. The details of capital expenditure, for the previous year F.Y.2005-06, F.Y.2006-07 and for the next three years of the control period is as given below:

Sectoral Outlay

2005-

06(actual)

2006-07

(projected)

2007-08

(projected)

2008-09

(projected)

2009-10

(projected)

Extension to existing 22kvsubstations. New 22kv/ 33kvup gradations.

10.91 33.86 37.35 50.76 51.35

110kv RSS at Senapati BapatMarg 0.36 24.98 - - -

110kv RSS at Wadala truck terminus - - - - 5.00

6.6kv/ 11kv substations,extensions and alterations toexisting substations and sitesfor new substations

20.16 29.51 56.37 56.10 56.10

Laying of High Voltage andLow Voltage cables, servicecables and street lightingcables

20.03 33.50 34.50 34.60 34.71

Meters 3.34 7.97 - -

Purchase of Street LightingLamps 1.16 1.71 1.71 1.88 2.07

Batteries 0.29 - - - -

Electronic meters and Test


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Computerisation, digitisationand TSP 0.80 7.43 3.43 0.40 0.10

Generating Station - 0.15 15.00 5.00 -

Furniture and officeequipment, Tools &Equipments etc

0.83 1.67 5.80 1.67 5.80

Civil Engineering Works 1.29 0.84 1.33 0.84 1.33

Motor Vehicles 0.36 2.58 6.67 2.58 6.67

Sub Total 63.41 170.24 284.07 252.63 255.49

Share of General Administration 0.37 0.82 1.78 0.80 0.76

Grand Total 63.78 171.06 285.85 253.43 256.25

Table 10 Details of Capital Expenditure ( figures in Rs. Crores )BEST has submitted its projection for Capital expenditure for system augmentation foradhering and implementing the reliability standards, meeting additional loads andprocurement & installation of electronic meters for ensuring adherence to CEA regulationson meters. The expenses shown under Capital expenditure exclude the Re-instatement(R.I.) charges payable to MCGM. Which are historically been shown under the headRepairs & maintenance (R&M) expenditure and ideally should be booked under the head

Capital Expenditure. BEST is conducting a comprehensive exercise to segregate the R.I.charges for capital jobs / schemes and R&M purpose such as fault repairs. We request theHonble Commission to allow us to resubmit the Capital expenses including the R.I.charges so as to present the facts in proper perspective.

BEST would like to highlight that it does not have any practice of capitalising of Interestduring construction (IDC) and other related expenses to the assets, as generally done underthe Companies Act 1956The practice followed by BEST Undertaking for accounting of capital expenses is as follows:

The material cost is booked as per transactions registered value based on average cost of the material purchased during the year. Labour cost is booked by considering basic + D.A.of employees. Besides material and labour, indirect material cost is also booked at the rate


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staff, etcTransport expenses 4Capital and Occupancy Charges, etc 19Share of general administration 22Total 150

Table 11 Break up of 150% overheads (figures in %)

The Undertaking only accounts the base costs of the assets and apportioned overheadexpenses, as explained above.

Further, the general administration capital expenditure has been allocated between thesupply and the transport businesses based on allocation percentages derived from ratio of expenditure incurred for the two divisions.

Several new capital expenditure have been planned in the 3-year control period, the majorplans being;

Installation of Electronic meters and test benches as per CEA regulation

Commissioning of new RSS and DSS for Textile mill development and for Dharavimakeover plan.

For three years of the control period, BEST has projected the capital expansion that hasprovisions for increase in energy consumption due to Textile mill land development andDharavi makeover plan envisaged by Govt. of Maharashtra. This additional demand shallinto system from F.Y. 2009-10, for which BEST envisages to undertake major expansionof its distribution infrastructure in F.Y. 2007-08, 2008-09 and 2009-10. Scheme wisedetails of proposed capital expenditure for 2006-07 are provided in Appendix 2.

The details of actual capital expenditure for the six months ended September 2006 for2006-07 are as follows:

BudgetHead

Description Cum. Expenditure uptoSeptember '06 (Rs. in

Crores)


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47/4 110 KV Receiving S/S 0.01

47/5 Remote Control (SCADA) -

47/6 Computerisation 3.10

48/13 Cable & Mains (HV / LV) 2.06

48/14 Service Mains 0.18

48/15 Street Lighting Cables 0.20

48/16 Meters 2.32

48/17 Purchase of Street Lighting Lamps 0.14

48/18 Electronic Meters 2.49

48/19 Generating Station -Misc. (M.V. Total Equip, Furniture &Equipment) 0.83

Total 37.19

Table 12 Details of Capital Expenditure at actuals from April to September 2006 ( figures in

Rs. Crores )

Over the years, there are well laid down procedures and parameters for preparation of capital schemes for electricity distribution system. These are broadly classified in twocategories (1) to meet the bulk load and anticipated load growth (2) to remove the overloads in the systems and to built up redundancy in the system in such a manner that in theevent of failure of any equipment /cable network, the supply can be restored promptlywithout extended duration of Nil/ off supply. Apart from this network criteria, capital

schemes are also prepared for replacement of old and absolute equipments which havecompleted their mere life and also to adopt new technology such as different circuittechnology, transformer technology and control technology such as SCADA etc.

The schemes thus prepared on the above guidelines are well documented. The schemes are


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consisting of senior technical and financial personnel. Finally the tender for above 10 lacsare approved by BEST Committee. As such there is total transparency in the procurementprocess.

Schemes involving Capital Expenditure are prepared to meet the load requisitioned bythe applicants, as well as to take care of anticipated load growth by upgrading the systemparameters suitably. The execution of these capital schemes mainly depends on thepermissions from appropriate authorities such as, MCGM, for taking major excavations onfootpaths and carriage ways of roads, for laying underground cables. In addition to this, theapproval from MCGM authorities is also required for Building Plans for civil works, forcommissioning of new Receiving Stations and Distribution Substations and or extensionsand alterations to existing receiving stations and substations etc.

Some of the schemes which are planned for the year could not get executed for want of thepermissions from appropriate authorities. Also, sometimes, due to not availability of equipments/ materials in time, due to non delivery of materials by Suppliers etc, theexecution gets delayed from the scheduled period. Hence, generally actual capitalexpenditure differs with Budgeted Provision for capital works.

Generally in some of the Government Organizations due to non/insufficient capitalprovision, execution of the capital scheme works gets deferred/ postponed. In order toavoid such situation in our organization, the Undertaking makes budget provision at higherside, for all the schemes to achieve required target of execution. The work generally nevergets postponed in the Undertaking for want of budget provision, unlike other organization.

In terms of project wise details on Capital Works in progress (CWIP) under the existing

practices of the undertaking the same are not readily available on a project level. CWIPdetails are available on a consolidated basis and not on individual basis. For FY 2006-07,complete details shall be available after the end of the financial year, however, projectionshave been made for the MYT control period by assuming the same portion of workscapitalised as to the sum of opening CWIP and Capital Investments made during 2005-06,which is 86.64%

The broad data available for the period FY 2000-01 to FY 2005-06 is shown below:

Year Opening.CWIP

Capex inthe Year

Total WorksCapitalized

WorksCapitalizedfrom CWIP

ClosingCWIP

2000-01 12.69 59.85 52.36 5.2 20.18


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2007-08 24.16 285.85 268.60 - 41.40

2008-09 41.40 253.43 255.46 - 39.38

2009-10 39.38 256.25 256.14 - 39.48Table 13 Details of Capital work in progress (figures in Rs. Crores)

4.6.2. Funding of capital expenditure

The capital expenditure of BEST is primarily funded by its internal funds and partiallythrough external borrowings.

The funding of capital expenditure is given in the table below:

Funded By 2006-07(projections)2007-08



(projections)

Consumer contribution 3.18 3.18 3.18 3.18

APDRP Loan (50%of total APDRP)

APDRP Grant (50%of total APDRP)

Loan from Banks / Financial institutionand other externaldebt

60.00 100.00 80.00 80.00

Internal Sources 107.88 182.66 170.05 173.06

TOTAL 171.06 285.84 253.23 256.24

Table 14 Capital expenditure funding (figures in Rs. Crores)

BEST estimates that the consumer contribution shall additionally increase for all the threeyears at a constant amount of Rs. 3.18 crore. In case of loans from banks/financialinstitutions for F.Y. 2007-08 BEST shall raise loan of Rs. 100 crore and for F.Y. 2008-09


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Particulars OpeningBalance Addition RepaymentClosingBalance

PublicLoan 4.60 0.00 1.11 3.49

MMRDA(MegacityProject)

5.55 0.00 3.74 1.81

DPDC 2.39 0.00 0.16 2.23

APDRPLoan 36.13 0.00 0.95 35.18

Bank Loan 60.00 100.00 0.00 160.00

Total 108.67 100.00 5.96 202.71

Table 16 Loan Repayment Schedule 2007-08 (figures in Rs. Crores)

F.Y.2008-09 (Rs Crores)


PublicLoan 3.49 0.00 0.75 2.74


1.81 0.00 1.39 0.42

DPDC 2.23 0.00 0.16 2.07

APDRPLoan 35.18 0.00 0.95 34.23

Bank Loan 160.00 80.00 3.75 236.25


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PublicLoan 2.74 0.00 1.74 1.00


0.42 0.00 0.42 0.00

DPDC 2.07 0.00 0.16 1.91

APDRPLoan 34.23 0.00 1.25 32.98

Bank Loan 236.25 80.00 18.34 297.91

Total 275.71 80.00 21.91 333.80

Table 18 Loan Repayment Schedule 2009-10 (figures in Rs. Crores)

The interest expenses on the above loans are detailed as under:

Particulars F.Y. 2007-08 F.Y. 2008-09 F.Y. 2009-10

Interest on loans 19.31 26.12 32.54

Bank commission 0.0014 0.0014 0.0014

Miscellaneousloan charges 0.0025 0.0025 0.0025

Total 19.31 26.13 32.54Table 19 Interest charges for F.Y. 2007-08, 2008-09 and 2009-10 (figures in Rs. Crores)


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Particulars F.Y. 2006-07 F.Y. 2007-08 F.Y. 2008-09 F.Y. 2009-10

Bad-debts write off projected (in Rs. crore) 6.19 7.91 8.25 5.41

BEST humbly requests the Honble Commission to approve the bad-debts write-off amountfor each of the years of the control period as indicated above.

4.11. Interest on Working Capital

The working capital needs of the Undertaking are met through internal resourcesTherefore interest on working capital has not been claimed.

4.12. Interest on Internal Funds

4.12.1. Interest on other funds

The Honble Commission as per the section 76.1 of MERC (Terms and Conditions of Tariff) Regulations 2005 allows for the following return on equity in any Financial Year:

1. Prescribed Return on Equity on 100% of the opening Regulatory Equity in theFinancial Year; and

2. Additional Return on Equity, as per the prescribed rate, on 50% of the incrementalRegulatory Equity deployed in that year in the electricity distribution business(based on the approved capital cost).

BEST is not governed by the Companies Act, 1956 and does not have equity in thetraditional sense. The funding is mainly done through internal resources of the corporationwith the approval of BEST Committee and Bombay Municipal Corporation, as per Section460 II of the Mumbai Municipal Corporation Act, 1888. The Honble commission vide itsOrder dt. November 8, 2006 in regard to case no. 32 of 2006 has allowed Interest at the rateof 6% on the funds utilised by the BEST.

In view of this, BEST is claiming Interest on Internal Funds in this petition. Thecomputation of the Interest on Internal Funds is provided below.


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(as perMERC order

on reviewpetition)

2007-08 2008-09 2009-10

Assets:

Net Fixed Assets 726.24 878.05 1124.83 1313.90 1489.74

Other Assets 632.83 632.83 632.83 632.83 632.83

Sub Total (A) 1,359.071,510.88 1,757.66 1,946.73 2,122.57

Less:

Amount Investedoutside the business 3.62 3.62 3.62 3.62 3.62

Long Term Loans

Mega City 10.80 5.55 1.81 0.42 0.00

Public Loans 4.60 4.60 3.49 2.74 1.00

DPDC 2.55 2.39 2.23 2.07 1.91

APDRP 37.99 36.13 35.18 34.23 32.98

Loan from Bank 0.00 60.00 160.00 236.25 297.91

Liabilities

Deposits 299.05 299.05 299.05 299.05 299.05

Current Liabilities 165 74 165 74 165 74 165 74 165 74


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Sub Total (B) 772.11824.84 918.88 991.88 1,049.97

Total Assets Used (A)- (B )

586.96686.04 838.78 954.85 1,072.62

GovernmentAssistance / Grants 56.52 56.52 56.52 56.52 56.52

Other deposits 31.30 31.30 31.30 31.30 31.30

Other funds (GEF,BEST staff) 191.24 191.24 191.24 191.24 191.24

Total Assets Used / Internal Funds

includingGovernment

Assistance

866.02965.10 1,117.84 1,233.91 1,351.66

Interest on InternalFunds (at 6%)

51.9657.91 67.07 74.03 81.10

Incremental InternalFunds Utilised 159.34 109.47 115.80

Interest on InternalFunds (at 6%) 4.78 3.28 3.47

Total 51.9662.69 70.35 77.50

Table 20 Computation of interest on internal funds (figures in Rs. Crores)

The computation of the Interest on Internal Funds is based on the following methodology.

1. BEST proposes to claim 6% of return on 100% of the Internal Funds, as on the

3. The opening Net Fixed Assets for first Financial Year of the control period is


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3. The opening Net Fixed Assets for first Financial Year of the control period iscomputed as under:

a. Opening Fixed Assets of the Supply division (as per Form 4)

b. Add: Opening Capital Work in Progress of the Supply division (as per Form5.4)

c. Less: Opening Accumulated Depreciation Supply division (as per Form 4)

d. To arrive at the opening Net Fixed Assets for the subsequent Financial Year

in the control period, the petitioner has assumed the following: The sum of Capital Investment for that Financial Year plus the opening CWIP in that

year would be added to the opening Gross Fixed Assets, in the ratio of fixed assetscapitalized to investment sum of opening CWIP in FY 20005-06 (i.e. 86%).

The closing CWIP is a result of opening CWIP plus capital investments during theFinancial Year net of work capitalized.

The depreciation of the Financial Year is added to the opening accumulateddepreciation.

BEST humbly submits that in line with the section 76.1.3 of the of MERC (Termsand Conditions of Tariff) Regulations 2005, any under recovery or over recovery of Interest on Internal Funds on account of variation in the annual allowable capitalcost from the approved level shall be attributed to the same controllable or

uncontrollable factors as have been resulted in such capital cost variation. The samemay be accounted for in the Annual Performance Review.

4. The opening other assets is computed as under:

a. Opening Total Assets of the Supply division

b. Less: Opening Net Fixed Assets of the Supply division

However, as the Total Assets of the Supply Division cannot be forecasted, we havein the petition assumed that the other fixed asset would remain the same as on 1 st of April 2006. BEST humbly submits that, any variation may be attributed asuncontrollable in the Annual Performance Review.


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Interest on consumer


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Interest on consumersecurity deposit (in Rs.crore)

11.70 11.70 11.70 11.70

5. Annual Revenue Requirement (ARR)

Based on the above discussions the following are the details of the Annual RevenueRequirement for the MYT Control period .

Control Period (Forecast)

S.no. Particulars

2007-08 2008-09 2009-10

1 Power Purchase Expenses 1585.77 1774.73 1988.65

2 Operation & Maintenance Expenses 283.14 298.34 314.37

2.1 Employee Expenses 113.75 119.86 126.29

2.2 Administration & General Expenses 138.95 146.41 154.282.3 Repair & Maintenance Expenses 30.44 32.08 33.80

3 Depreciation, including advance againstdepreciation* 54.22 66.83 78.42

4 Interest on Long-term Loan Capital 19.31 26.12 32.54

4.1 Interest on Normative Debt 0.00 0.00 0.00

4.2 Interest on Internal Funds 62.49 70.35 77.17

5 1 Interest on Consumer security deposits 11 70 11 70 11 70

department in Bus depots 27.87 29.37 30.94


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8 Income Tax - - -

9 Transmission Charges paid toTransmission Licensee 115.31 125.17 136.19

11 Stand-by charges payable to MSEDCL 131.22 142.44 154.98

10 Contribution to contingency reserves

11 Adjustment for profit/loss on accountcontrollable/uncontrollable factors

12 Total Revenue Expenditure 2,298.93 2,553.31 2,830.36

13 Return on Equity Capital 0.00 0.00 0.00

14 Aggregate Revenue Requirement 2298.93 2553.31 2830.36

15 Less: Non Tariff Income 46.21 46.21 46.21

16 Less: Income from wheeling charges

17 Less: Income from Other Business

18 Less: Receipt on account of CrossSubsidy Surcharge

19Less: Receipt on account of additionalsurcharge on charge of wheeling

Aggregate Revenue Requirement


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Details of the heads of non tariff income are as under:

Particulars Explanation

Contract Charges This consists All in hire charges for the street lighting polesowned by BEST and maintenance charges for street lightingpoles owned by MCGM. The said charges are based on theexpenses of the Undertaking for providing and maintainingstreetlights and other public lighting on behalf of MCGM.The rates are fixed on per lamp basis. These charges arebilled to individual wards of MCGM on monthly basis for theno. of lamps in the system.

Sales Service -Electricity DutyCollection Charges

These are charges towards Electricity duty collected on behalf of Government of Maharashtra at a rate of Rs. 45 per 100consumers.

Sales Service -Other Receipts

This mainly consists of delayed payment charges(DPC) at arate of 0.5% per week in consumer electric bill. However, anamnesty scheme has been introduced in 2006-07 andtherefore DPC has not been forecasted for the MYT control

period. In addition to this reconnection charges, cut outcharges, requisition charges, service call charges, checkingand testing of installation meters at the rate prescribed underthe schedule of miscellaneous charges

Hire and repair of electricalappliances

The Undertaking is having consumer advisory and servicesdepartment who deals with Repair and Maintenance of Electric Appliances given on hire to the officers of the

Undertaking as well as to the outside parties. The recoveryagainst the said maintenance charges is done as per the actualexpenses incurred by the Undertaking.

Miscellaneous This includes three heads i.e. Rent of building and land,

2. Advertisement Receipts This consists of Advertisement Receipts received from highest bidder on


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Advertisement Receipts received from highest bidder onmonthly guaranteed revenue on Kiosks i.e.

Advertisement on Street lighting poles.3. Other receipts This consists the discount on bulk

power purchase of electricity received from TATA, cashdiscount received from various suppliers, penaltyrecovered from the suppliers/employees etc. The accounthead "Sales Service - Other Receipts" includes theincentive amount on power purchased. The expenses inForm 1 reflect net power purchase cost and thereforeincentive amount on power purchased has been reducedfrom the Non Tariff Income (i.e. Form 11). Hence theNon Tariff Income as per Form 11 and the figure in theAdministrative report differ to that extent.

Share of GeneralAdministration.receipt

This consists of share of General Administration Receiptswherein interest on deposit and investment, sale of scrapmaterial (net) rent of building and land, apprentice premium

received from the Government etc.

As regards the assets of Electric Supply Division, it is clarified that no assets of the ElectricSupply division are used for any other purpose and neither are the assets of the Electric

Supply division used for generating other income except street lighting poles which areused for kiosks i.e. advertisement on street lighting poles. The rental charges of streetlighting poles are considered as non-tariff income

7. Cost-of-supply

The average cost of supply as submitted in the ARR and Tariff Petition for FY 2006-07 isRs.5.49 kWh. For the three years of the control period the cost of supply projected for eachyear is as given below:


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For LTP-1 category, the increase in no. of meters has been projected at2 17% for all the three years 2 17% is the 5-year CAGR growth of energy


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2.17% for all the three years. 2.17% is the 5-year CAGR growth of energyconsumption units in LTP-1 category

For category C(D), E, T and TS(R) no income from fixed charges has beenprojected

For categories like LTC-1, LTP-2, SL, HTP-3, HTP-4 and HTP-5 fixedincome accrued on the basis of demand recorded at the installed meters. Forthese categories the Demand has been projected on the basis of load factorrecorded across these categories in F.Y.2006-07. The diversity factor across

these categories is as given below:

Particulars LTC-1 LTP-2 SL HTP-3 HTP-4 HTP-5EnergyConsumption(in Mus)

67.19794 6.47026 36.570432 256.48201 79.245898 119.34496

Demand (in`000 kVA) 201.57 21.946 90.445 700.657 311.71 231.558Diversityfactor 3.806% 3.366% 4.616% 4.179% 2.902% 5.884%

The diversity factor as attained across these categories has been considered for projectionof demand for the three years of the control period.

Loadfactor

Projected EnergyConsumption (in Mus)

Projected Demand (in `000kVA)

Category F.Y.2005-06(actual)

F.Y.2007-

08

F.Y.2008-

09

F.Y.2009-

10

F.Y.2007-08

F.Y.2008-09

F.Y.2009-10

LTC-1 3.806% 69.11 69.78 70.46 207.31 209.32 211.36LTP-2 3.366% 4.86 119.26 3.40 16.48 404.51 11.53SL 4.616% 36.22 35.89 35.57 89.58 88.76 87.97HTP-3 4.179% 282.36 290.22 298.31 771.35 792.82 814.92HTP-4 2.902% 75.90 75.98 76.17 298.55 298.86 299.61HTP-5 5.884% 118.48 135.46 159.01 229.88 262.83 308.52

The category wise estimated revenue for each of the years of the control period is providedbelow:


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below:


Tariff Category

2006-07(As

projectedin ARR)

F.Y. 2006-07(Actuals

upto Sept 06and forecastfrom Oct 06)

F.Y. 2007-08(projected)



BPL

LF-1 333.74 330.42 339.37 348.68 358.36LF-2 749.38 741.90 770.16 799.99 831.48

LTC-1 31.04 31.74 33.33 33.65 33.97C(D) 1.89 1.59 1.57 1.56 1.55

LTP-1 77.11 78.51 80.91 83.47 86.21LTP-2 2.26 2.38 2.11 1.76 1.47

SL 13.38 14.19 14.28 14.15 14.02E 0.15 0.18 0.16 0.15 0.14T 11.04 13.28 17.35 22.78 30.06

TS ( R ) 0.61 0.02 0.01 0.01 0.01

HTP-1 0.10 0.24 0.24 0.25 0.26

HTP-2 6.74 7.29 7.51 7.73 7.96HTP-3 113.25 113.81 119.13 122.37 125.70

HTP-4 29.18 27.0727.94 27.97 28.03

HTP-5 26.03 26.57 29.31 33.03 38.20Total (in Rs. Crore) 1395.89 1389.18 1443.37 1497.55 1557.46

Table 24 Revenue from existing tariffs for three years of the control period (all figuresin Rs. Crores)

The Aggregate Revenue Requirement of BEST for FY 2007-08, 2008-09 and 2009-10 isRs. 2252.92 Cr, Rs 2507.50 Cr and Rs 2784.55 Cr (as provided in Form-1). Thus therevenue gap for all three years is as given below:



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a) The existing tariff schedule of the Undertaking has five tariff categories in HTtariffs. It is proposed to rationalize HT tariff categories to two tariff categories as


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follows :-

In the license area, there are a number of important defence installations withtheir large residential complexes. It is, therefore, proposed to have a separateHTP category meant for residential bulk defence consumption. Therefore, HTtariff category under the heading HTP-Defence is proposed for above purposeand rest of the existing HT categories are covered under HTP General category.As such, this will be in line with the HT tariff categories with the neighbouringutilities.

In the existing tariff schedule, there is disciplinary charge levied to consumerson exceeding their contract demand. It is proposed to introduce in Sr. No. 3 of the notes "Billing Demand" about such disciplinary charges. "If a consumerexceeds his Contract Demand, the demand in excess of Contract Demand shallbe charged at the rate of 150% of the demand charges". It is also proposed that"Demand Charges for those consumers who have not registered their ContractDemand, will be applied on basis of their sanctioned load".

b) In our previous tariff, there was a tariff category 'Standby Tariff'. This tariff wasmeant for standby supply utilized for fire fighting and dedicated supply purpose.As per the statutory requirement, the supply for such installation is required to begiven from separate sources and adequate network capacity is required to be keptspare for this purpose. Our network capacity to that extent is kept reserved for suchinstallation and can not be utilized elsewhere. As such, in our previous tariff schedule, the billing for this tariff category was on the basis of connected load i.e.

sanctioned load and consumption if any and billing was on whichever was higher.However, in MERC's Supplementary Tariff Order dated 26th September, 2006, thistariff was clubbed with Temporary Supply (T) with billing based on connectionbasis and consumption. As the applications of temporary supply and the abovestandby tariff supply as described above are entirely different, we propose to re-introduce this tariff as separate tariff category at Sr.No.12 with heading 'Standby(SB)' in our Proposed Tariff Schedule.

c) The energy consumption data has been forecasted for the three years of the controlperiod as per the Tariff structure issued in the Supplementary order dt. September26, 2006. The category T(Temporary) as existing in the prevailing tariff structurehas been split into two categories SB & T(Temporary) in proportion to the actualconsumption recorded for TS & SB categories in F Y 2005 06 The computation of

TS1 4.87 35.14%


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SB2 8.99 64.86% 13.24 17.38 22.94

T(Temporary) 3 7.17 9.42 12.43

Total 13.87

All the above changes are to be undertaken in the revised tariff structure shall be

applicable for all the three years of the control period.

a) Tariff Proposal for F.Y. 2007-08

The tariff proposal for F.Y. 2007-08 shall be so as to bridge the revenue gap of Rs. (- 809.35) crore. The tariff income for F.Y. 2007-08 based on existing tariff is Rs. 1443.37 crore.The proposed tariff shall be of

= Rs. 1443.37 (-809.35) crore = Rs. 2252.72 crore BEST submits a revised Tariff structure to attain revenue income of Rs. 2253.43 crore, thedetails of the proposed tariff structure is given below;

S.no. Consumer

Category

Demand charge (Rs /

connection/ monthor Rs. / kVA/ month

Energy

Charge(paise / kWh)

RkVah

charges(paise / RkVah)

Projected

revenues(in Rs.crores)

Single Threephase

1 BPL Rs. 3 /

connection / month

45 -

2 LF 1 739.53

0 - 100 Rs. 30 / connectio

230 -


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connection / month

101 300 Rs. 50 / connection / month

450 -

> 300 (onlybalance units)

Rs. 100 / connection / month

Rs. 100 / connection / month

670 -

3 LF - 2 1043.15

0 - 300 Rs. 200 / connection / month

560

301 1000 Rs. 200 / connection / month

645

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