PETITION UNDER THE ELECTRICITY ACT 2003

THE PETITIONER RESPECTFULLY SHOWETH:

 

1.       That the Petitioner (hereinafter referred to as ‘NDMC’ or ‘petitioner’) is a Municipal Council entrusted with the distribution of electricity to the consumers in the New Delhi area under Section 195 to 201 of the New Delhi Municipal Council Act 1994.

 

2.       That NDMC has the powers and obligations of a Licensee under the Indian Electricity Act 1910 in respect of the New Delhi Area.

 

3.       That under Section 200 of the New Delhi Municipal Council Act 1994, NDMC has the power to fix charges to be levied for the electricity supplied by it, subject to the provisions of any law for the time being in force.

 

4.       That NDMC filed its ARR and Tariff Petition for the Financial Year 2005-06 under Section 62 of the Electricity Act 2003 (EA 2003) and in accordance with the Delhi Electricity Regulatory Commission Comprehensive (Conduct of Business) Regulations, 2001 and the Hon’ble Commission passed its Order on the aforesaid ARR & Tariff Petition (Tariff Order) onNovember 2, 2005.

 

5.       That NDMC is filing this Petition – along with the Retail Tariff Formats, duly filled-in, and supporting documents in validation of the various estimates considered in the filing – under Section 62 of the Electricity Act 2003 (EA 2003) and in accordance with the Delhi Electricity Regulatory Commission Comprehensive (Conduct of Business) Regulations, 2001 for:

i.         Truing up its Aggregate Revenue Requirement for FY 2005-06 as approved by the Hon’ble Commission in its Tariff Order

ii.       Approval of Aggregate Revenue Requirement for FY 2006-07

iii.      Determination of Bulk Supply Tariff and Retail Supply Tariffs (RST) to be charged by NDMC from the consumers served by it in the New Delhi area for FY 2006-07

 

6.       That this Petition includes the following documents:

i.         Affidavit verifying the Petition and the Power of Attorney for filing the same (attached as (i) in Volume I of this Petition).

ii.       Demand Draft No. 940278 dated 28.3.2006 drawn on State Bank of India, New Delhi (Main) for an amount of Rs. 1.00 Lac (Rs. One Lac only) towards filing fee.

iii.      Detailed formats along-with explanatory notes (Volume II of this Petition)

iv.     Soft Copy of the Petition

 

7.       That in making the aforesaid submission, NDMC has estimated the annual tariff income from demand estimates, which have been derived from statistical modelling, as applicable to the different categories of consumers.

 

8.       That NDMC has projected the financial performance in FY 2006-07 by considering the estimated revenue expenditure based on anticipated costs, financial charges, etc., which will be involved in conducting the business activity and meeting the demand for service.

 

9.       That the double entry accounting system has yet not been implemented in NDMC. For the purpose of the reforms and efficiency in the urban governance, the Government of India (GoI) had taken up the initiative of developing a ‘National Municipal Accounting Manual’ to provide a framework of National Municipal Accounting and a simplified tool kit to the Urban Local Bodies for recording the accounting entries. This initiative was taken up during 2005-06. NDMC has decided to adopt the National Municipal Accounting Manual and NDMC’s Accounts Manual containing the accounting rules, regulations and procedures is being modified by customizing the Municipal Accounting Manual to the requirements of NDMC. Therefore, the schedule for implementation of the double entry accounting system in NDMC has undergone a change. Meanwhile, NDMC continues to follow the cash flow accounting system.

 

10.   That a number of units/offices handling activities related to the electricity function do not have separate accommodation and are being accommodated in NDMC buildings both at the headquarter office and site offices. It is proposed to charge the rent of these accommodations as expenses of the electricity function. NDMC has adopted the CPWD rates to determine the rent for these units/offices instead of market value, as the market value of such offices would be very high.

 

11.   That the information pertaining to FY 2004-05 submitted by NDMC during the regulatory process followed up by the Commission for the issue of the Tariff Order for FY 2005-06 was based on estimates of expenses as available at that time. NDMC now has more accurate information available on the expenses incurred during FY 2005-06. The same is being submitted by way of this petition.

 

12.   That the entity for supply of electricity in NDMC is considered as a department of NDMC like other departments and not as a separate commercial undertaking. Therefore, unlike other electricity utilities, the systems of obtaining actual expenses as and when incurred are not in place in NDMC. Therefore, NDMC is not in a position to provide the details of actual expenses incurred during FY 2005-06 under some expense heads. As a result, the estimates for FY 2005-06 for such expense heads are based on the budget estimates as given in NDMC’s budget for FY 2005-06. The Petitioner will endeavour to provide this information in due course.

 

13.   That the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the budget estimates for FY 2005-06 may be considered for the purpose of truing up of ARR of FY 2005-06 in case of those expense heads where actual information is not available. With the finalisation of the budget for FY 2006-07 and availability of revised estimates for FY 2005-06, the same will be submitted to the Honourable Commission for the purpose of truing up of expenses for FY 2005-06.

 

14.   That the Tariff Order for FY 2005-06 was issued by the Honourable Commission on November 2, 2005. The Honourable Commission would appreciate that the time gap between the issuance of this Order and the filing of this Petition is very small. The Petitioner has therefore, not been able to implement complete directives issued by the Honourable Commission in this Tariff Order. The Honourable Commission would also appreciate that since the entity for supply of electricity in NDMC is a department of NDMC like other departments and not a separate commercial undertaking, the requisite systems for maintenance of separate information desired by the Honourable Commission or procedures as directed by the Honourable Commission are not in place. Further, the Honourable Commission would appreciate the regulatory process in the electricity sector is new to NDMC and NDMC lacks the regulatory preparedness to cater to the regulatory information set-up.

 

On account of the above-mentioned reasons as well as the short time tenure that has elapsed between the issue of the last tariff Order and the filing of this Petition, NDMC has not been able to implement complete directives issued by the Honourable Commission. NDMC is making efforts to institute the procedures and systems required for the implementation of the directives issued by the Honourable Commission. NDMC requests the Honourable Commission to take a lenient view, considering the practical constraints and limited time gap for the compliance of directives issued by the Honourable Commission.

 

 

 

PRAYER

 

NDMC requests the Honourable Commission:

 

1.       To examine the petition as deemed appropriate and approve the accompanying Revenue Requirement for FY 2006-07 so that the Petitioner is able to earn a reasonable and justified return after due provision of all legitimate expenses.

 

2.       To determine the Retail Supply Tariff chargeable to the consumers and the Bulk Supply Tariff that will be payable to the Delhi Transco Limited for purchase of power.

 

3.       To true up the Aggregate Revenue Requirement for FY 2005-06 and any shortfall in revenue requirement arising out of this truing up exercise be allowed to be adjusted in FY 2006-07.

 

LIST OF ABBREVIATIONS

 

ARR	Annual Revenue Requirement
BST	Bulk Supply Tariff
DA	Dearness Allowance
EHT	Extra High Tension
Existing Tariff	Tariff for supply of electricity approved by DERC in Tariff Order dated November 2, 2005.
FY	Financial Year
GFA	Gross Fixed Assets
GNCTD	Govt. of National Capital Territory of Delhi
DERC/Commission	Delhi Electricity Regulatory Commission
NDMC	New Delhi Municipal Council
HT	High Tension
kVAh	Kilo Volt Ampere hour
kW	Kilo Watt
kWh	Kilo Watt Hour or Unit
MU	Million Units
NFA	Net Fixed Assets
PF	Power Factor
Rs.	Indian Rupees
T&D	Transmission and Distribution

 

 

TABLE OF C O N T E N T S

 

Sl.No.	Description	Page No.
1	ANNUAL REVENUE REQUIREMENT	7
1.1	Capital Base	7
1.2	Reasonable Return	9
1.3	Sales Projection	9
1.4	Transmission and Distribution Loss	10
1.5	Power Purchase / Energy Requirements	10
1.6	Employee Cost	11
1.7	Administration and General Expenses	12
1.8	Other Admissible Expenses	13
1.9	Allocation of Expenditure Relating to (A) Administrative Department (B) Civil Engineering Department to Electricity Supply	16
1.10	Repairs and Maintenance Expenses	18
1.11	Depreciation	18
1.12	Interest Charges	19
1.13	Non-Tariff Income	19
1.14	Annual Revenue Requirement	19
2	TARIFF PROPOSAL FOR FY 06-07	21
2.1	Expected Revenue at Existing Tariff in FY 2005-06	21
2.2	Revenue from Sale of Power at Existing Tariff in FY 2006-07	21
2.3	Revenue Deficit at Existing Tariff	21
2.4	Coverage of Revenue Gap	22
2.5	Tariff Revision Proposal For FY 2006-07	22
2.6	Revenue from Sale of Power at Proposed Tariffs	23
2.7	Additional Revenue from Tariff Hike	23
	Annexure I-Capital Works Programme	27
	Annexure II - Replacement Works	31
	Annexure III - Cost of Purchased Energy	32

1.      ANNUAL REVENUE REQUIREMENT

 

1.1     CAPITAL BASE

The Capital Base is the value of original gross fixed assets, works in progress, investment made and working capital reduced by accumulated depreciation, government loans, approved borrowings, security deposits, tariffs and dividend control reserves. The capital base is estimated at Rs. 8974.62 in FY 2005-06 and at Rs. 8920.08 in FY 2006-07 as per the summary in Table 1.1.

 

Table 1.1: Computation of capital base                                                        Rs. Lakhs

		FY 2005-06	FY 2006-07
		Revised estimates	Projected
1 (a)	Original Cost of Fixed asset (excluding consumers contribution)	31155	31934
(b)	Cost of intangible assets (including expenses on account of new capital issue)
( c)	The Original cost of works in Progress	274.00	506
(d)	The Amount of investment compulsorily made under para-IV of the sixth schedule together with investment made from contributions towards depreciation.
(e)	An amount on account of working capital equal to the sum of:
(e) (I)	Average cost of stores (1/ 12th of the sum of the book cost of stores, materials and supplies including fuel in hand at end of each month of the year.)	126	136
(e) (ii)	Average cash and bank balance (1/ 12th of the sum of cash and bank balances whether credit or debit and call and short term deposit at end of each month of the year.)	607	667
NA	Capitalized loss allowed by the Commission
	Sub-Total of Positive elements of Capital base (Sum of above) – A	32162	33243
(Less I)	The amounts written off or set aside on account of depreciation of fixed / intangible assets.	21568	22703
ii-a)	The amounts of any loans borrowed from organizations or institutions approved by the State Govt.	-	-
ii-b)	The amount of any debenture issued by the licensee.	-	-
NA	Part of accumulated subventions from State Government used for capital expenditure	-	-
iii)	The amounts deposited in cash with the licensee by consumers by way of security	1899	2434
iv)	The amounts standing to the credit of Tariff and Dividends Control Reserve at the beginning of the Year	-	-
v)	The amounts standing to the credit of the Development Reserve at the close of the Year	-	-
vi)	The amount carried forward (at the beginning of the Year of accounting) in the accounts of the Licensee for distribution to the consumers.	-	-
	Sub-Total of negative elements of capital Base (Sum of above) – B	23466.55	25136.97
	Net Capital Base (A-B)	9029.08	8435.48

 

The computation of capital base has been undertaken in accordance with the provisions under the Sixth Schedule and is explained below.

 

a.       The revised estimates of gross block of fixed assets as at March 31, 2006 is Rs. 31934 Lakh on the basis of the capital expenditure being undertaken in FY 2005-06. The capital expenditure programme during 2005-06 is estimated at Rs. 386 Lakhs including replacement works of Rs. 233 Lakhs. Replacement works are necessary as the distribution network of NDMC with ageing has become weak, and the existing assets need to be replaced to maintain the distribution network to a normal satisfactory level. It is expected that the entire works-in-progress and 50% of the capital expenditure works for FY 2005-06 would be completed and the assets would be put into use during the current year itself. Thus, an amount of Rs. 780 Lakhs gets transferred to the assets that are in use.

 

b.      The capital expenditure programme during FY 2006-07 is estimated at Rs. 1448 Lakhs including replacement works of Rs. 522 Lakhs. Capital expenditure to the extent of Rs. 1573 Lakhs is estimated to be completed and put into use during FY 2006-07. The Capital Expenditure includes capitalization of Employee cost. The details of capital expenditure programme for FY 2005-06 and FY 2006-07 is provided in Annexure I. The capital expenditure programme during FY 2006-07 includes replacement works planned for FY 2006-07. The revised estimates of replacement works for FY 2005-06 and the proposed replacement works for FY 2006-07 are provided in Annexure II.

 

c.       Cost of stores under capital base is estimated at average Rs. 126 Lakhs in FY 2005-06 and is projected at average Rs. 136 Lakhs.    The revised estimates for average cash/bank balances is Rs. 607 Lakhs for FY 2005-06. For FY 2006-07, average cash/bank balances are projected at Rs. 667 Lakhs. 

 

d.      The security deposit available as on April 1, 2005 was Rs. 1899 Lakhs. The security deposit as on February 28, 2006 is Rs. 2231 Lakhs and is estimated at Rs. 2434 Lakhs at the end of FY 2005-06.

 

 

 

 

1.2        REASONABLE RETURN

Reasonable return has been computed at 16% of the capital base plus 0.5% on outstanding loans as per provisions of the Sixth Schedule. NDMC requests the honourable Commission to approve the reasonable return as submitted by NDMC.

 

Table 1.2: Reasonable Return                                              Rs. Lakhs

	FY 2005-06	FY 2006-07
	Revised estimates	Projected
Return of 16% on Capital Base	1445	1350
Return of 0.5% on outstanding loans	0	0
Total Reasonable Return	1445	1350

 

1.3        SALES PROJECTION

NDMC has estimated sales of 987.32 MU during FY 2005-06 and projected sales of 1020.31 MU for FY 2006-07. The sales for FY 2005-06 have been estimated on the basis of actual sales for the period April 2005 – October 2005 and the anticipated sales during the period November 2005 – March 2006. For FY 2006-07, NDMC has used the Compounded Annual Growth (CAGR) methodology to arrive at the total sales for the year. The CAGR for the period 2000-01 to 2005-06 i.e. 3.57% has been used for this purpose. The category wise sales are estimated in proportion to the category-wise sales during FY 2004-05.

 

Table 1.3: Consumer Category wise Energy Sales                                                  (MU)

S. No.	Category	2002-03	2003-04	2004-05	2005-06	2006-07
1	Domestic	(Actual)	(Actual)	(Actual)	(Re. Esti.)	(Proj.)
	a. Single Delivery Point	46.241	49.491	51.7	54.67	55.43
	b. Separate Delivery Point	120.966	117.798	121.25	121.39	130.01
	c. domestic Power	26.136	23.657	22.66	21.10	24.30
2	Non domestic
	a. Single Phase	56.172	53.283	53.43	52.11	57.29
	b. Three Phase	148.24	150.423	162.08	169.48	173.79
3	Mixed Load
	a. Supply at 11 kV (HT)	283.337	285.294	326.07	349.80	349.62
	b. (i) Supply  on LT  where supply is given from NDMC sub-station	6.704	6.842	7.28	7.59	7.81
	b. (ii) Supply  on LT  where applicant provides built up space for sub-station	188.006	190.62	195.61	199.53	209.74
4	Small Industrial Power (SIP)	0.302	0.291	0.32	0.33	0.34
5	Public Lighting	7.479	7.492	7.51	7.53	8.05
6	Others	3.43	3.39	3.68	3.81	3.95
	Total	887.013	888.581	951.59	987.32	1020.31

 

1.4        TRANSMISSION AND DISTRIBUTION LOSS

The Honourable Commission has approved target Transmission and Distribution (T&D) loss level of 11.60% for FY 2005-06. As against this, the T&D losses for FY 2005-06 are estimated at 11.5%. The Honourable Commission would appreciate that NDMC’s network is of old vintage and little efforts have been made towards strengthening and refurbishment of system in the past.Therefore, there are practical constraints at present beyond the reasonable control of NDMC to further reduce the technical losses in the system.

 

NDMC would like to highlight that commercial losses by way of theft are negligible in NDMC’s area. While some commercial losses do occur on account of non-performing and under performing meters, the magnitude of these losses is minimal. Further, in view of the already low level of T&D losses, NDMC submits that the T&D losses be maintained at the current level of 11.5% for FY 2006-07.

 

1.5        POWER PURCHASE / ENERGY REQUIREMENT

The Honourable Commission has in its tariff order for NDMC for FY 2005-06 approved the ARR on the basis of energy requirement of 1126.31 MUs i.e. 1251 MkVAh. As against the energy requirement considered by the Honourable Commission, NDMC has consumed 1155.23 MkVAh between April 2005 and February 2006. Further, NDMC has estimated its energy requirement for FY 2005-06 at 1239 MkVAh. For FY 2006-07, NDMC has projected energy requirement of 1281 MkVAh to meet the projected energy sales of 1020.31 MU at 11.5% T&D loss. 

 

Table 1.4: Energy requirement

	FY 2005-06	FY 2006-07
	Revised estimates	Projected
Sales projections (MU)	987.32	1020.31
Sales projections (MkVAh)	1097.02	1133.68
T&D losses (%)	11.5	11.5
Energy Required (MkVAh)	1239	1281

 

The power purchase cost for FY 2005-06 has been estimated at Rs. 31847.85 Lakh as against Rs. 32164 Lakh approved by the Honourable Commission. NDMC would like to submit that the power purchase cost for the energy consumed during the period April 2005 – February 2006 is Rs. 29691 Lakh. The same can be seen in Annexure III. For FY 2006-07, NDMC has projected the power purchase cost at the prevailing BST of Rs.2.57/kVAh.

 

Here, NDMC would like to submit that NDMC does not own any generating stations and the entire energy requirement is met by purchasing power from Delhi Transco Ltd. at the rates fixed by the Honourable Commission.  NDMC is not contemplating to procure power from any other source during FY 2006-07.

 

The projected power purchase cost for the FY 2006-07 has been summarized in table 1.5.

 

Table 1.5: Power Purchase Cost

	FY 2005-06	FY 2006-07
	Revised estimates	Projected
Energy Purchased (MkVAh)	1239	1281
BST (Rs/kVAh)	2.57	2.57
Meter Rent (Rs.)	14790	14790
Total variable cost (Rs. Lakhs)	31846	32922
Total fixed cost (Rs.)	177480	177480
Power Purchase Cost (Rs. Lakhs)	31848	32923

 

1.6        EMPLOYEE COST

The expense head of employee cost involves cost of manpower in service and terminal benefits payable to them. Cost of manpower in services includes salary and allowances, bonus, LTC and honorarium. Terminal benefits are payable to retiring employees and includes pension, death cum retirement gratuity as well payments to the family of deceased employee.

 

As mentioned in the prayer to this Petition, the entity for supply of electricity in NDMC is considered as a department of NDMC like other departments and not as a separate commercial undertaking. Therefore, unlike other electricity utilities, the practice of maintaining separate records of expenses for electricity sector is not presently followed in NDMC. As a result, the estimates of employee cost for FY 2005-06 are based on the budget estimates reasonably and justifiably allocated to the electricity utility, as given in NDMC’s budget for FY 2005-06. The Petitioner requests the Honourable Commission to consider this estimate for the purpose of truing up of ARR of FY 2005-06 as against the approved expenditure of Rs. 6071.28 Lakhs (before capitalisation).

 

For FY 2006-07, NDMC has adopted the component wise CAGR for FY 2000-01 to FY 2005-06 to project the various components of employee cost for FY 2006-07, except in case of the bonus to be paid to employees. It has been assumed that the payment of bonus will be in the proportion to the salary and allowance during FY 2005-06. Table 1.6 summarises the break-up of employee expenses. This table also indicates the revised estimates of employee costs for FY 2004-05.

 

Table 1.6: Employee Expenses                                                                     Rs. Lakhs

S. No.	Particulars	FY 2004-05	FY 2005-06	FY 2006-07	CAGR FY 2000-01 to FY 2005-06
		Revised estimates	Revised estimates	Projected
1	Salary and Allowances	3,944.53	5,245.81	5748.21	9.58%
2	Contribution to PF	4.17	4.45	5.14	15.45%
3	Pension and Terminal Benefits	820.39	905.64	1000.62	10.49%
4	Ex-gratia	59.66	70.80	72.26	2.07%
5	Bonus	2.17	2.86	3.13
6	LTC	11.57	16.20	18.82	16.16%
7	Honararium/OTA	8.90	16.00	16.70	4.37%
8	Total	4,851.39	6,261.76	6,864.88

 

As mentioned in the ARR and Tariff Petition for the Financial Year 2005-06, the practice of capitalisation of employee cost has not been pursued in NDMC. The direct and indirect expenses relating to construction are not being separately maintained in NDMC. However, from FY 2005-06, NDMC has proposed capitalisation of cost of employees involved and associated with capital expenditure in respect of transmission and distribution network. It is proposed that capitalisation of the employee cost be continued at 10% for FY 2006-07. 

 

Table 1.7: Employee expenses after capitalization         Rs. Lakhs

	FY 2005-06	FY 2006-07
	Revised estimates	Projected
Gross Employee Cost	6,261.76	6,864.49
Less capitalization	626.18	686.45
Net Employee Cost	5,635.58	6,178.04

1.7        ADMINISTRATION AND GENERAL EXPENSES

Administration and General (A&G) expenses include expenses on computerisation, communication, security and other expenses. A&G expenses for FY 2005-06 have been estimated at Rs. 51.18 Lakh. For FY 2006-07, these expenses are anticipated to increase to Rs. 64.45 Lakh. The estimates for FY 2005-06 have been determined on the basis of actual expenses incurred during part of the year and the projections for the remaining part of the year. The estimates for FY 2006-07 have been determined keeping in mind the various schemes being implemented in NDMC and the expected expenditure as determined during the discussions leading to the finalisation of the budget proposals of NDMC for FY 2006-07, being noted to the Council for approval.

 

In particular, NDMC would like to highlight that the extent of computerization is increasing in all departments of NDMC. The computerisation would require investments for the purchase of hardware and software for the electricity department as well. Further, NDMC is also implementing the ABT regime. The implementation of ABT would lead to an increase in costs of wireless communication.

 

NDMC requests the Honourable Commission to approve the A&G expenses as submitted by NDMC.

 

Table 1.8: A&G Expenses                                                    Rs. Lakhs

S. No.	Particulars	FY 2004-05	FY 2005-06	FY 2006-07
		Revised estimates	Revised estimates	Projected
1	Computerization	0.10	0.30	0.50
2	Purchase of vehicles	11.58	12.00	18.00
3	Wireless communication	0.00	0.10	1.25
4	Telephone	30.69	27.38	34.80
5	Furniture	1.63	7.70	9.30
6	Security & others	5.79	4.00	4.20
7	Total	49.80	51.48	68.05

 

1.8        OTHER ADMISSIBLE EXPENSES

As shown in Table 1.9, other admissible expenses are estimated at Rs. 4092 Lakhs for FY 2005-06 and are expected to increase to Rs. 4175.60 Lakhs during FY 2006-07. The major sub-heads under this expense and the details of the expenses incurred under these sub-heads in the current year and the ensuing year is enumerated below:

 

Rent Rates and Taxes

The Honourable Commission is aware that there are no separate buildings for NDMC’s electricity offices. All electricity offices/sub-stations/service stations are located in NDMC buildings. As a result, the asset value of these buildings is not included in the value of assets relating to electricity supply. However, the rent for such accommodation would have to be included in the expenses of the electricity function of NDMC to determine the true cost of electricity supply to the consumers. NDMC therefore, proposes to charge rent for the electricity offices/sub-stations/service stations of NDMC located in NDMC’s buildings as an expense of the electricity department.

 

NDMC is aware that this rent should be calculated at reasonable and justified rates. Accordingly, the rent charged by NDMC for the buildings owned by NDMC and let out to Ministries and other Government Offices i.e. Rs. 675/= per sq. m. per month has been used to arrive at the figures for rent for FY 2005-06. The rent for FY 2005-06 has been worked out at Rs. 3949.15 Lakhs. For FY 2006-07, NDMC has continued with the rent of Rs. 3949 Lakhs.  

 

NDMC would like to draw the attention of the Honourable Commission to the fact that NDMC has decided to adopt the National Municipal Accounting Manual. NDMC’s Accounts Manual is being modified by customizing the Municipal Accounting Manual to the requirements of NDMC. The modification of NDMC’s Accounting Manual recognises the fact that the activities of the NDMC which are commercial or quasi-commercial in nature are required to be placed on a self-sustaining basis. This includes the activities of a) Estate Department, b) Municipal Housing Department and, c) Municipal Office Buildings being maintained by the Civil Engineering Department, which must pay for their maintenance and renewal through rent, license fee, notional rent (in case of municipal buildings occupied by different departments/functionaries).

 

With the implementation of the new Accounting Manual of NDMC, the electricity department would be required to pay rent for the electricity offices/sub-stations/service stations located in NDMC buildings and the same would be shown as expenses of the electricity department in NDMC’s budget and books of account. In light of this fact, NDMC requests the Honourable Commission to consider the rent for the accommodations of the electricity department as part of the expenses of the electricity function of NDMC and approve the rent claimed by NDMC for the electricity department.

 

Legal charges

Legal charges are budgeted for inter alia meeting costs to be incurred for protecting the Council’s legal rights before the Honourable Civil Courts. At the same time, there is an ongoing litigation with Reliance Energy Ltd. on their application for distribution and retail supply licence in NDMC’s area for supply of electricity. The Honourable Commission is aware of the background of this on-going litigation. NDMC, therefore, has no option but to defend/protect its legal rights against the aforesaid litigation and in the process has incurred and will be incurring such expenses

 

Accordingly, the revised estimates for legal charges for FY 2005-06 are Rs. 30 Lakh. For FY 2006-07, legal charges are budgeted on an estimated basis since NDMC, at this stage, cannot precisely indicate the tenure of the proceedings.

 

Audit fees

The Audit fees for FY 2005-06 is estimated at Rs. 25 lakhs and is conservatively estimated to increase to Rs. 30 lakhs.

 

Processing fee payable to DERC and consultancy fees

The provision for processing fees, payable to DERC on the ARR and Tariff Petition and consultancy charges are estimated at Rs.30 lakhs for FY 2005-06.  For FY 2006-07, these charges are estimated at Rs. 52 lakhs. This is primarily on account of increase in consultancy charges to be paid by NDMC. NDMC proposes to outsource assignments for (a) development of a plan for system improvement, improvement in metering system, load management in short term as well as in the long term in the ABT regime, cost effective load management, etc. and (b) for evaluation of the existing distribution system with the objective of bringing about supply and demand side improvements to improve the system reliability level. NDMC also proposes to outsource the mapping of distribution assets to the pole level. NDMC is in the process of holding discussions with agencies technically equipped for performing these assignments.

 

Consumer Forum

The expenses under this head include expenses incurred towards the Consumers Grievance Redressal Forum as well as the ombudsman’s office. NDMC has estimated Rs. 35 Lakhs under this head for FY 2006-07.

 

Provision for bad and doubtful debts

The arrears outstanding for more than 3 years in respect of electricity supply were about 1054 lakhs in 2004-05. This has been assessed to increase by about Rs. 55 Lakhs during FY 2006-07. NDMC proposes to make a provision for bad and doubtful debts @ 5% for FY 2005-06 as well as for FY 2006-07. NDMC therefore, requests the Honourable Commission to approve the provision for bad and doubtful debts at Rs. 52.70 lakhs for FY 2005-06 and at Rs. 55.5 Lakhs for FY 2006-07.

 

Implementation of software to meet DERC’s requirements for information filing under RIMS

The Honourable Commission would appreciate that the software systems available with NDMC are not of the level required for the purpose of implementation of RIMS, as mandated by the Honourable Commission. Therefore, NDMC has estimated that NDMC would have to incur one-time expenses of Rs. 30 Lakhs to implement the software systems required for the purpose of RIMS.

 

NDMC requests the Honourable Commission to approve the above expenses submitted by NDMC.

 

Table 1.9: Other Admissible Expenses                                Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1	Rent, Rates and Taxes	3949	3949
2	Legal charges	25	30
3	Audit fees	25	30
4	Fee payable to DERC and consultants	30	46
5	Consumer Forum	10	35
6	Provision for bad and doubtful debts	52.70	55.45
7	Implementation of software to meet DERC’s requirements for information filing under RIMS		30
8	Total	4091.85	4175.60

 

1.9        ALLOCATION OF EXPENDITURE RELATING TO (A) ADMINISTRATIVE DEPARTMENT (B) CIVIL ENGINEERING DEPARTMENT TO ELECTRICITY SUPPLY

The Honourable Commission is aware that NDMC has a separate Administrative Department consisting of NDMC Board, Finance Department, General Administration, Law Department, Public Relations, Staff and Labour welfare, Vigilance Department, Auto workshop, Information and Technology, Engineer in Chief etc. There is a separate Civil Engineering Department and the services of this department are utilised for civil portion of electrical works. Thus, the services of the Administrative Department and Civil Engineering Department are common for all the functions carried out by the NDMC and the expenditure pertaining to these Departments is allocated to all the functions.  So far the function of electricity has not been separated from the NDMC and it was considered as part of NDMC functions. Now that the electricity supply needs to be looked into separately as a distribution licensee and as such the expenditure in respect of Administrative Department and Civil Engineering Department needs to be allocated reasonably and justifiably to the electricity supply.

 

In its ARR and tariff petition for FY 2005-06, NDMC had proposed to allocate 30% of the expenses on these departments to electricity supply.  In the tariff order for FY 2005-06, the Honourable Commission had allocated 19% of expenses of the administrative department to electricity supply. The Honourable Commission also considered an amount of Rs.1000 Lakh towards the allocation of expenses of Civil Department to electricity supply. Further, the Honourable Commission had directed that the cost of works carried out by civil engineering department for electricity department should be separately booked and the complete details of such works and associated costs at the end of the year be provide to the Honourable Commission.

 

The Honourable Commission would appreciate that since the last Tariff Order was issued on November 2, 2005, the time gap between the issuance of this Order and the filing of this Petition is very small. Further, the civil engineering department and electricity department being two separate departments within NDMC, building regulatory preparedness within departments not subject to the regulatory environment of the electricity sector is a time consuming process. In view of these factors, NDMC has not been able to implement the above directive of the Commission at present. NDMC assures the Honourable Commission that NDMC is making efforts to institute the procedures and systems required for the implementation of the directives issued by the Honourable Commission.

 

NDMC would like to highlight that the benefits of Shiv Shankran Scales were extended to the employees specifically working in the electricity department of NDMC and also to common categories of employees working in other departments of NDMC. The employees working in other departments of NDMC are presently being paid salaries as per the provisions of the Fifth Pay Commission. As such, employees working in the electricity department are comparatively better paid employees as compared to their counterparts working in other departments, and also entitled for other better allied benefits/facilities based on higher pay structure, emergency duties performed by them, allotment of municipal accommodations, official working space, official vehicles, telephone/mobile phone facilities, advances paid to employees, medical facilities, etc. Further, the allocation of 30% expenditure of these departments is also justified considering that while allocating the expenses of 30%, the indirect expenses having monetary/commercial value as incurred for the smooth functioning of these departments has not been taken into account.

 

While NDMC feels that 30% of the expenses on the Administrative Department and Civil Engineering departments should be allocated to electricity supply, NDMC is aware that it has not been able to compile the information desired by the Honourable Commission. Therefore, NDMC has considered the amount of Rs. 3922 Lakhs (as approved by the Honourable Commission in the last tariff order) towards the functioning of these departments during FY 2005-06 and FY 2006-07. NDMC submits to the Commission to approve the allocation of these expenses incurred on the Administrative Department and Civil Engineering departments to electricity supply.

 

 

Table 1.10: Allocation of expenses of Administrative and Civil Engineering Departments to Electricity Supply                                                                        Rs. Lakhs

Particulars	FY 2005-06	FY 2006-07
	Revised estimates	Proposed
Allocation of expenses of Administrative and Civil Engineering Departments to Electricity Supply	3922	3922

 

1.10    REPAIRS AND MAINTENANCE EXPENSES

These expenses include expenses on repairs and maintenance of transformers, capacitor banks, lines, switchgears, cable network etc., vehicles, furniture & fixtures, office equipment, etc. R&M expenses in FY 2005-06 have been estimated at Rs. 1,513.15 Lakh on the basis of actual expenses incurred during part of the year and the projections for the remaining year.

 

R&M charges are estimated to increase to Rs. 1607 Lakh in FY 2006-07, representing an increase of 6.25% over the current year. NDMC would like to submit that NDMC has a vintage and weak distribution network, which warrants a higher degree of maintenance to ensure reasonable availability, reliability and quality of supply. Further, the Honourable Commission would appreciate that there has been an inflationary trend in prices of raw materials required for R&M activities. Therefore, NDMC submits to the Commission to approve the R&M charges for FY 2005-06 and FY 2006-07, without any disallowance.

 

Table 1.11: Repairs and Maintenance expenses

Particulars	FY 2004-05	FY 2005-06	FY 2006-07
	Revised estimates	Revised estimates	Projected
R&M expenses	1,313	1,512.85	1607.56

 

1.11    DEPRECIATION

In the last Tariff Order, the Honourable Commission directed to submit the break-up of opening block of assets and assets capitalised during the year as per the classification specified in the Appendix II to Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 while submitting the Petition for FY 2006-07. The Honourable Commission would appreciate that since the last Tariff Order was issued on November 2, 2005, the time gap between the issuance of this Order and the filing of this Petition is very small. Therefore, the Petitioner has not been able to prepare the details of fixed assets asset clarification-wise.

 

Pending preparation of assets- asset classification wise, the average rate of depreciation for distribution assets @ 3.6% has been adopted by NDMC. Further, NDMC has considered the average of opening and closing balance of fixed assets for estimating the depreciation during the year. Accordingly, the amount booked under depreciation is Rs. 1136 Lakhs in FY 2005-06 and Rs. 1178 Lakhs in FY 2006-07. NDMC requests the Honourable Commission to approve the same.

 

1.12    INTEREST CHARGES

No loans are outstanding against power during FY 2005-06. NDMC has made no fresh borrowings during FY 2005-06. Further, NDMC does not propose any borrowings for FY 2006-07. Therefore no interest expenditure is considered for FY 2006-07.

 

1.13    NON-TARIFF INCOME

The revised estimates of non-tariff income for FY 2005-06 and projections for FY 2006-07 are given below. NDMC would like to submit to the Honourable Commission that NDMC has billed Rs. 4 Crores as charges for misuse of electricity to various consumers during FY 2005-06. The same has been duly taken into account in determining non-tariff income.

 

NDMC expects that in FY 2006-07, all components of non-tariff income, except meter rent, will increase by 10% over that in FY 2005-06. NDMC requests the Honourable Commission to approve the same.

 

Table 1.12: Non-Tariff Income                                             Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1.	Meter Rent	157.60	157.60
2.	Service connection fees	14	15.4
3.	Recovery of departmental charges	188.5	207.35
4.	Recovery of storage charges	22	24.2
5.	Other Receipts	78.1	85.91
6.	Surcharge for Late Payment	41.63	45.79
7.	Misuse charges	400.00
	Total	901.82	536.25

Table 2.2: Expected revenue from existing tariff – 2006-07

 

S.No	Category	Existing Unit Rate (Average) (Rs./Kwh)	Sales	Revenue from energy charges
		With Tax	MU	Rs. Lakhs
1.1	Domestic Lighting/fan and power	3.37	55.43	1868.12
1.2	Domestic Lighting/fan and power on separate delivery points. Meters
	a) Lighting /Fan	2.60	130.01	3380.18
	b) Power	3.78	24.30	918.41
2.1	Non - Domestic - LT
	a) Singla Phase (<= 5KW)	5.27	57.29	3019.12
	b) Three Phase ( > 5KW)	5.70	173.79	9905.78
2.2	Mixed Load (High Tension) - MLHT Sanctioned Load>100 KW
a)	Supply on 11 KV
	Consolidate rate per KWH	6.38	78.97	5038.38
	In case of Two Part Tariff (P/Kvah)	4.10	270.65	11096.55
b)	I) Supply on LT (400 volts) where supply is given from NDMC Sub-Station.
	Consolidate rate per KWH	7.64	0.51	39.25
	In case of Two Part Tariff (P/Kvah)	4.88	7.29	350.02
	ii) Where the applicant provides built up space for sub-station.
	Consolidate rate per KWH	6.45	33.12	2136.48
	In case of Two Part Tariff (P/Kvah)	4.51	176.61	7965.26
3	Small Industrial Power - SIP	4.31	0.34	14.79
4	Public Lighting	3.78	8.05	304.38
5	Railway Traction
a)	Supply on 11 KV
b)	Supply on LT (400 V)
	Others	3.78	3.95	149.15
Temporary Supply
6.1	For the total Period
a)	less than 16 days
b)	More than or equal to 16 days
6.2	For religious function of traditional and established characters and cultural activities
6.3	For major construction Projects
	Total revenue			46185.86
	Revenue from demand charges  (Rs. Lakhs)			2986.85
	Revenue from minimum charges  (Rs. Lakhs)			615.53
	Total revenue excluding tax (Rs. Lakhs)			47298.82

 

Table 2.5: Expected revenue from proposed tariff – 2006-07

 

S.No	Category	Existing Unit Rate (Average) (Rs./Kwh)	Sales	Revenue from energy charges
		Without Tax	MU	Rs. Lakhs
1.1	Domestic Lighting/fan and power	3.68	55.43	2039.96
1.2	Domestic Lighting/fan and power on separate delivery points. Meters
	a) Lighting /Fan	2.84	130.01	3692.84
	b) Power	4.13	24.30	1003.08
2.1	Non - Domestic - LT
	a) Singla Phase (<= 5KW)	5.75	57.29	3294.10
	b) Three Phase ( > 5KW)	6.23	173.79	10832.05
2.2	Mixed Load (High Tension) - MLHT Sanctioned Load>100 KW
a)	Supply on 11 KV
	Consolidate rate per KWH	6.97	78.97	5503.52
	In case of Two Part Tariff (P/Kvah)	4.48	270.65	12136.52
b)	I) Supply on LT (400 volts) where supply is given from NDMC Sub-Station.
	Consolidate rate per KWH	8.35	0.51	42.89
	In case of Two Part Tariff (P/Kvah)	5.24	7.29	382.39
	ii) Where the applicant provides built up space for sub-station.
	Consolidate rate per KWH	7.05	33.12	2335.06
	In case of Two Part Tariff (P/Kvah)	4.92	176.61	8694.10
3	Small Industrial Power - SIP	4.72	0.34	16.18
4	Public Lighting	4.13	8.05	332.44
5	Railway Traction
a)	Supply on 11 KV
b)	Supply on LT (400 V)
	Others	4.13	3.95	162.90
Temporary Supply
6.1	For the total Period
a)	less than 16 days
b)	More than or equal to 16 days
6.2	For religious function of traditional and established characters and cultural activities
6.3	For major construction Projects
	Total revenue			50468.05
	Revenue from demand charges  (Rs. Lakhs)			2986.85
	Revenue from minimum charges  (Rs. Lakhs)			615.53
	Total revenue excluding tax (Rs. Lakhs)			54070.43

 

ANNEXURE I

List of Capital Works for FY  2005-2006 and FY 2006-2007

                                                      

All figures in thousands

S. No.	Name of the Work along with Head of Account		Revised Estimate: 2005-06	Budget Estimate: 2006-2007
1.	Establishing switching station at SBI, Sansad Marg.		100	200
2.	-do- at B.D. Marg.		50	200
3	-do- at Sanjay Camp near Nigerian High Commission(behind Singapore Embassy).		200	2000
4	-do- near Veerawali Hospital, Ch.Puri.		200	1000
5	-do- near American School Ch.Puri.		100	1000
6	-do- at C.T.O. complex, Janpath.		100	4500
7	-do- at A.I.R. ESD/NSD complex at Mahadeva Road.		2000	5000
8	-do- Sanskrit School, Ch.Puri.		977	-
9	Providing additional 11KV HT board at s/s Chanakyapuri.		100	-
10		Establishing ESS at DG block, Sarojini Nagar Pump house.	303	400
11		-do- at Bapa Nagar	205	-
12		-do- at 23-Barakhamba Road.	300	100
13		-do- at Cement Godown, Opp: A.I.R..	400	-
14		-do- at I-Hailey Road.	200	-
15		Estab. ESS at Hanuman Mandir, Connaught Place.	100	1000
16		-do- Africa Avenue Cross Road No.2.	100	1000
17		-do- between Ashoka Road and Rajendra Prasad Road.	100	500
18		-do- Navyug School, Peshwa Road (R.K. Ashram Marg.)	100	100
19		-do- Africa Avenue (Opp: Barat Ghar Netaji Nagar)	100	100
20		-do- Africa Avenue Cross Road No.4.	100	100
21		Installation of 1000 KVA unitized s/s at College Lane, Bengali Mkt.		500
22		-do- near Ashoka Road opp. Hotel Indraprastha.		1000
23		-do- near Lok Nayak Bhawan, Khan Mkt.		1000
24		Estab. ESS in Khan Market area.	100	500
25		Aug. of plant & equipment at Tees January Lane.	100	100
26		-do- at ESS No.III.	700	800
27		-do- at Chanderlok Building.	125	700
28		Aug. of transformer capacity at s/s Fire Brgd at Kautilya Marg.	200	100
29		-do- at C-II Moti Bagh.	400	100
30		-do- at R K Puram No.II	100	-
31		Aug. of s/s capacity at Ansari Nagar (E)	200	-
32		Aug. of Tr. Capacity at s/s Mausam Bhawan (Old)	100	100
33		Constn.of s/s buildings & Aug of s/s capacity at Yashwant Place.	100	500
34		Aug.of s/s capacity at D-I Vinay Marg.	50	500
35		Aug. of E.S.S. Aliganj No.2		500
36		Providing duplicate feed to ESS Supreme court.	155	-
37		Aug. of HT feeds from ESS No.3 to ESS Ice Factory and ESS Ice Factory to ESS No.6.	1000	1000
38		Aug. of HT system around Mandi House.	100	1000
39		HT inter connector from 33KV Shahjahn Road to ESS Bharti Nagar.	100	500
40		Providing HT inter connector of 150 sq.mm /3C from 16-Akbar Road to ESS Children Park.	400	-
41		Providing HT inter connector between substation SP Marg to substation Budha Jyanti Park	-	500
42		-do- from substation Chanakya Puri State Guest House to s/s Railway Secretary Board at Moti Bagh.	-	200
43		-do- from s/s Kidwai Nagar (E) – s/s Laxmi Bai Nagar No.II	100	200
44		-do from s/s AIIMS to s/s I Block Sarojini Ngr. Via Safdarjung Staff Qrs.- I	100	200
45		Aug. of LT system in Indian Oil Bhawan.	50	500
46		Strengthening of LT distribution system in Zone-III area from ESS 10-Bhawan Das Road.	300	50
47		-do- In Sarojini Nagar area.	784	100
48		-do- In Palika Niwas, Lodhi Colony.	100	200
49		Strengthening of LT network of Basrurkar mkt, Moti Bagh & Provdg. SCCs to NDMC flats above Basrurkar mkt and Begam Zaidi Market.	500	700
50		-do- at Africa Avenue pump house & Yashwant Place, Ch.Puri.	200	600
51		Provdg. SCCs, pillars & MBs at Laxmibai Ngr and NDMC flats Laxmibai Nagar.	200	600
52		Aug. of LT Dist. System in Ansari Nagar (East) & Ansari Nagar (W)	-	1000
53		Aug. of LT Dist. System in Zone I area.	-	1000
54		Outgoing LT Feeders from E.S.S. DG Block Sarojini Nagar.	-	500
55		Outgoing LT Feeders from temporary E.S.S. High Court	-	500
56		Outgoing LT Feeders from E.S.S. North Avenue	-	500
57		Outgoing LT Feeders from E.S.S. Bapa Nagar	-	500
58		LT Interconnector between E.S.S. Kidwai Nagar East and Kidwai Nagar West	-	500
59		Aug. of LT Dist. System in B.K. Dutt Colony	-	500
60		Aug. of LT Dist. System in Zone I area (from S/s Keventor Dairy Willingdon Crescent, Teen Murti Police staff qrs. S/s Nehru Memorial, Race course Road)	-	100
61		Aug. of LT Dist. System Zone III area around Rajpath for release of temporary load for Republic Day.	-	500
62		Aug. of LT Dist. System from Kerala House.	-	500
63		Aug. of LT Dist. System at E.S.S. No. III and Ice Factory.	-	500
64		Aug. of LT Dist. System in Zone V area feed from s/s A Block, F Block & New Plaza.	-	500
65		Aug. of LT Dist. System of existing E.S.S. Plaza cinema, C.P. New Delhi.	60	-
66		Aug. of LT Dist. System of LT feeds from newly const. BSNL S/s DIZ Area Kali Bari Marg.	-	500
67		Aug. of LT Dist. System for Police staff qrs. Police Station, Parliament Street.	-	200
68		Provdg.  Service connection in NDMC area.	100	200
69		Other miscellaneous/ unforeseen/ completed works.	-	2000
70		Provision for cable trenches and pipes with trench less technology.	50	100
71		Computerization and SCADA system in 11KV and LT distribution network.	50	100
72		Installation of capacitor bank at s/s Hanuman Road, Vidyut Bhawan, Safdarjung Airport, Bapu Dham and Connaught Place.	100	-
73		Providing and installation of microprocessor based electronic meters.	2500	50000
74		Purchase of T&P.	200	2500
		TOTAL	15259	92550

 

ANNEXURE II

Replacement Works

 

                                                                                    Figures in Thousands

Budgetary Estimates FY 2005-06	Revised Estimates FY 2005-06	Budgetary Estimates FY 2006-07
38000	23300	52200

 

 

ANNEXURE III

Cost of Purchased Energy

 

NDMC would like to submit to the Honourable Commission that the bill sent by Delhi Transco Ltd. in August 2005 included arrears of 7131591 units for the months of February 2005, April 2005, May 2005, April 2002, June 2002 and July 2002. Out of this, the arrears for the months of April 2002, June 2002 and July 2002 are of the order of 196285 units. The cost of power purchased @ Rs. 2.57/kVAh corresponding to this works out to Rs. 5,04,452. As a result, the amount of Rs. 5,04,452 has been deducted from the total power purchase cost estimated for FY 2005-06 to arrive at the true power purchase cost for FY 2005-06.

No.D-386/AO(C)                                                                            Dated: 01.09.2006

 

The Secretary,

Delhi Electricity Regulatory Commission,

Viniyamak Bhawan, C-Block,

Malviya Nagar,

New Delhi-110017.

 

         Subject:  Petition for approval of ARR for FY 2006-07 and determination of

                         Retail Tariffs to be charged by New Delhi Municipal Council (NDMC)

                         for the electricity being supplied to its consumers. 

 

Sir,

            This is with reference to your letter no. F.3(120)/Tariff/DERC/2005-06/1000 dated 2nd June, 2006 on the subject cited above, wherein Hon’ble Commission has observed certain deficiencies/ data gaps to paras mentioned in the petition.     The Para-wise reply/information on the queries/issues raised therein, is being furnished here under for kind consideration of the Hon’ble Commission:

 

1.      Capital Expenditure

 

1.1  Capital expenditure during FY 2005-06 and FY 2006-07

The revised estimates of capital expenditure incurred during FY 2005-06 is Rs. 1719.91 Lakh. The estimates of capital expenditure proposed during FY 2006-07 is Rs. 2187.50 Lakh. This does not include replacement works. The same is indicated in Table 1. The details of capital expenditure undertaken during FY 2005-06 and proposed during FY 2006-07 are given in the budget book for FY 2006-07 being submitted by the Petitioner along with this document.

 

Table 1: Capital expenditure during FY 2005-06 and FY 2006-07

                                                                  Rupees in Lakhs

	Revised Estimates FY 2005-06	Budgetary Estimates FY 2006-07
Ongoing works	1337.9	278
New Investment	381.4	1908.0
Total	1719	2186

 

PETITION UNDER THE ELECTRICITY ACT 2003   THE PETITIONER RESPECTFULLY SHOWETH:   1.       That the Petitioner (hereinafter referred to as ‘NDMC’ or ‘petitioner’) is a Municipal Council entrusted with the distribution of electricity to the consumers in the New Delhi area under Section 195 to 201 of the New Delhi Municipal Council Act 1994.   2.       That NDMC has the powers and obligations of a Licensee under the Indian Electricity Act 1910 in respect of the New Delhi Area.   3.       That under Section 200 of the New Delhi Municipal Council Act 1994, NDMC has the power to fix charges to be levied for the electricity supplied by it, subject to the provisions of any law for the time being in force.   4.       That NDMC filed its ARR and Tariff Petition for the Financial Year 2005-06 under Section 62 of the Electricity Act 2003 (EA 2003) and in accordance with the Delhi Electricity Regulatory Commission Comprehensive (Conduct of Business) Regulations, 2001 and the Hon’ble Commission passed its Order on the aforesaid ARR & Tariff Petition (Tariff Order) onNovember 2, 2005.   5.       That NDMC is filing this Petition – along with the Retail Tariff Formats, duly filled-in, and supporting documents in validation of the various estimates considered in the filing – under Section 62 of the Electricity Act 2003 (EA 2003) and in accordance with the Delhi Electricity Regulatory Commission Comprehensive (Conduct of Business) Regulations, 2001 for: i.         Truing up its Aggregate Revenue Requirement for FY 2005-06 as approved by the Hon’ble Commission in its Tariff Order ii.       Approval of Aggregate Revenue Requirement for FY 2006-07 iii.      Determination of Bulk Supply Tariff and Retail Supply Tariffs (RST) to be charged by NDMC from the consumers served by it in the New Delhi area for FY 2006-07   6.       That this Petition includes the following documents: i.         Affidavit verifying the Petition and the Power of Attorney for filing the same (attached as (i) in Volume I of this Petition). ii.       Demand Draft No. 940278 dated 28.3.2006 drawn on State Bank of India, New Delhi (Main) for an amount of Rs. 1.00 Lac (Rs. One Lac only) towards filing fee. iii.      Detailed formats along-with explanatory notes (Volume II of this Petition) iv.     Soft Copy of the Petition   7.       That in making the aforesaid submission, NDMC has estimated the annual tariff income from demand estimates, which have been derived from statistical modelling, as applicable to the different categories of consumers.   8.       That NDMC has projected the financial performance in FY 2006-07 by considering the estimated revenue expenditure based on anticipated costs, financial charges, etc., which will be involved in conducting the business activity and meeting the demand for service.   9.       That the double entry accounting system has yet not been implemented in NDMC. For the purpose of the reforms and efficiency in the urban governance, the Government of India (GoI) had taken up the initiative of developing a ‘National Municipal Accounting Manual’ to provide a framework of National Municipal Accounting and a simplified tool kit to the Urban Local Bodies for recording the accounting entries. This initiative was taken up during 2005-06. NDMC has decided to adopt the National Municipal Accounting Manual and NDMC’s Accounts Manual containing the accounting rules, regulations and procedures is being modified by customizing the Municipal Accounting Manual to the requirements of NDMC. Therefore, the schedule for implementation of the double entry accounting system in NDMC has undergone a change. Meanwhile, NDMC continues to follow the cash flow accounting system.   10.   That a number of units/offices handling activities related to the electricity function do not have separate accommodation and are being accommodated in NDMC buildings both at the headquarter office and site offices. It is proposed to charge the rent of these accommodations as expenses of the electricity function. NDMC has adopted the CPWD rates to determine the rent for these units/offices instead of market value, as the market value of such offices would be very high.   11.   That the information pertaining to FY 2004-05 submitted by NDMC during the regulatory process followed up by the Commission for the issue of the Tariff Order for FY 2005-06 was based on estimates of expenses as available at that time. NDMC now has more accurate information available on the expenses incurred during FY 2005-06. The same is being submitted by way of this petition.   12.   That the entity for supply of electricity in NDMC is considered as a department of NDMC like other departments and not as a separate commercial undertaking. Therefore, unlike other electricity utilities, the systems of obtaining actual expenses as and when incurred are not in place in NDMC. Therefore, NDMC is not in a position to provide the details of actual expenses incurred during FY 2005-06 under some expense heads. As a result, the estimates for FY 2005-06 for such expense heads are based on the budget estimates as given in NDMC’s budget for FY 2005-06. The Petitioner will endeavour to provide this information in due course.   13.   That the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the budget estimates for FY 2005-06 may be considered for the purpose of truing up of ARR of FY 2005-06 in case of those expense heads where actual information is not available. With the finalisation of the budget for FY 2006-07 and availability of revised estimates for FY 2005-06, the same will be submitted to the Honourable Commission for the purpose of truing up of expenses for FY 2005-06.   14.   That the Tariff Order for FY 2005-06 was issued by the Honourable Commission on November 2, 2005. The Honourable Commission would appreciate that the time gap between the issuance of this Order and the filing of this Petition is very small. The Petitioner has therefore, not been able to implement complete directives issued by the Honourable Commission in this Tariff Order. The Honourable Commission would also appreciate that since the entity for supply of electricity in NDMC is a department of NDMC like other departments and not a separate commercial undertaking, the requisite systems for maintenance of separate information desired by the Honourable Commission or procedures as directed by the Honourable Commission are not in place. Further, the Honourable Commission would appreciate the regulatory process in the electricity sector is new to NDMC and NDMC lacks the regulatory preparedness to cater to the regulatory information set-up.   On account of the above-mentioned reasons as well as the short time tenure that has elapsed between the issue of the last tariff Order and the filing of this Petition, NDMC has not been able to implement complete directives issued by the Honourable Commission. NDMC is making efforts to institute the procedures and systems required for the implementation of the directives issued by the Honourable Commission. NDMC requests the Honourable Commission to take a lenient view, considering the practical constraints and limited time gap for the compliance of directives issued by the Honourable Commission.       PRAYER   NDMC requests the Honourable Commission:   1.       To examine the petition as deemed appropriate and approve the accompanying Revenue Requirement for FY 2006-07 so that the Petitioner is able to earn a reasonable and justified return after due provision of all legitimate expenses.   2.       To determine the Retail Supply Tariff chargeable to the consumers and the Bulk Supply Tariff that will be payable to the Delhi Transco Limited for purchase of power.   3.       To true up the Aggregate Revenue Requirement for FY 2005-06 and any shortfall in revenue requirement arising out of this truing up exercise be allowed to be adjusted in FY 2006-07.   LIST OF ABBREVIATIONS   ARR Annual Revenue Requirement BST Bulk Supply Tariff DA Dearness Allowance EHT Extra High Tension Existing Tariff Tariff for supply of electricity approved by DERC in Tariff Order dated November 2, 2005. FY Financial Year GFA Gross Fixed Assets GNCTD Govt. of National Capital Territory of Delhi DERC/Commission Delhi Electricity Regulatory Commission NDMC New Delhi Municipal Council HT High Tension kVAh Kilo Volt Ampere hour kW Kilo Watt kWh Kilo Watt Hour or Unit MU Million Units NFA Net Fixed Assets PF Power Factor Rs. Indian Rupees T&D Transmission and Distribution     TABLE OF C O N T E N T S   Sl.No. Description Page No. 1 ANNUAL REVENUE REQUIREMENT 7 1.1 Capital Base 7 1.2 Reasonable Return 9 1.3 Sales Projection 9 1.4 Transmission and Distribution Loss 10 1.5 Power Purchase / Energy Requirements 10 1.6 Employee Cost 11 1.7 Administration and General Expenses 12 1.8 Other Admissible Expenses 13 1.9 Allocation of Expenditure Relating to (A) Administrative Department (B) Civil Engineering Department to Electricity Supply 16 1.10 Repairs and Maintenance Expenses 18 1.11 Depreciation 18 1.12 Interest Charges 19 1.13 Non-Tariff Income 19 1.14 Annual Revenue Requirement 19 2 TARIFF PROPOSAL FOR FY 06-07 21 2.1 Expected Revenue at Existing Tariff in FY 2005-06 21 2.2 Revenue from Sale of Power at Existing Tariff in FY 2006-07 21 2.3 Revenue Deficit at Existing Tariff 21 2.4 Coverage of Revenue Gap 22 2.5 Tariff Revision Proposal For FY 2006-07 22 2.6 Revenue from Sale of Power at Proposed Tariffs 23 2.7 Additional Revenue from Tariff Hike 23   Annexure I-Capital Works Programme 27   Annexure II - Replacement Works 31   Annexure III - Cost of Purchased Energy 32   1.      ANNUAL REVENUE REQUIREMENT   1.1     CAPITAL BASE The Capital Base is the value of original gross fixed assets, works in progress, investment made and working capital reduced by accumulated depreciation, government loans, approved borrowings, security deposits, tariffs and dividend control reserves. The capital base is estimated at Rs. 8974.62 in FY 2005-06 and at Rs. 8920.08 in FY 2006-07 as per the summary in Table 1.1.   Table 1.1: Computation of capital base                                                        Rs. Lakhs     FY 2005-06 FY 2006-07     Revised estimates Projected 1 (a) Original Cost of Fixed asset (excluding consumers contribution) 31155 31934 (b) Cost of intangible assets (including expenses on account of new capital issue)     ( c) The Original cost of works in Progress 274.00 506 (d) The Amount of investment compulsorily made under para-IV of the sixth schedule together with investment made from contributions towards depreciation.     (e) An amount on account of working capital equal to the sum of:                       (e) (I) Average cost of stores (1/ 12th of the sum of the book cost of stores, materials and supplies including fuel in hand at end of each month of the year.) 126 136 (e) (ii) Average cash and bank balance (1/ 12th of the sum of cash and bank balances whether credit or debit and call and short term deposit at end of each month of the year.) 607 667 NA Capitalized loss allowed by the Commission       Sub-Total of Positive elements of Capital base (Sum of above) – A 32162 33243 (Less I) The amounts written off or set aside on account of depreciation of fixed / intangible assets. 21568 22703 ii-a) The amounts of any loans borrowed from organizations or institutions approved by the State Govt. - - ii-b) The amount of any debenture issued by the licensee. - - NA Part of accumulated subventions from State Government used for capital expenditure - - iii) The amounts deposited in cash with the licensee by consumers by way of security 1899 2434 iv) The amounts standing to the credit of Tariff and Dividends Control Reserve at the beginning of the Year - - v) The amounts standing to the credit of the Development Reserve at the close of the Year - - vi) The amount carried forward (at the beginning of the Year of accounting) in the accounts of the Licensee for distribution to the consumers. - -   Sub-Total of negative elements of capital Base (Sum of above) – B 23466.55 25136.97   Net Capital Base (A-B) 9029.08 8435.48   The computation of capital base has been undertaken in accordance with the provisions under the Sixth Schedule and is explained below.   a.       The revised estimates of gross block of fixed assets as at March 31, 2006 is Rs. 31934 Lakh on the basis of the capital expenditure being undertaken in FY 2005-06. The capital expenditure programme during 2005-06 is estimated at Rs. 386 Lakhs including replacement works of Rs. 233 Lakhs. Replacement works are necessary as the distribution network of NDMC with ageing has become weak, and the existing assets need to be replaced to maintain the distribution network to a normal satisfactory level. It is expected that the entire works-in-progress and 50% of the capital expenditure works for FY 2005-06 would be completed and the assets would be put into use during the current year itself. Thus, an amount of Rs. 780 Lakhs gets transferred to the assets that are in use.   b.      The capital expenditure programme during FY 2006-07 is estimated at Rs. 1448 Lakhs including replacement works of Rs. 522 Lakhs. Capital expenditure to the extent of Rs. 1573 Lakhs is estimated to be completed and put into use during FY 2006-07. The Capital Expenditure includes capitalization of Employee cost. The details of capital expenditure programme for FY 2005-06 and FY 2006-07 is provided in Annexure I. The capital expenditure programme during FY 2006-07 includes replacement works planned for FY 2006-07. The revised estimates of replacement works for FY 2005-06 and the proposed replacement works for FY 2006-07 are provided in Annexure II.   c.       Cost of stores under capital base is estimated at average Rs. 126 Lakhs in FY 2005-06 and is projected at average Rs. 136 Lakhs.    The revised estimates for average cash/bank balances is Rs. 607 Lakhs for FY 2005-06. For FY 2006-07, average cash/bank balances are projected at Rs. 667 Lakhs.    d.      The security deposit available as on April 1, 2005 was Rs. 1899 Lakhs. The security deposit as on February 28, 2006 is Rs. 2231 Lakhs and is estimated at Rs. 2434 Lakhs at the end of FY 2005-06.         1.2        REASONABLE RETURN Reasonable return has been computed at 16% of the capital base plus 0.5% on outstanding loans as per provisions of the Sixth Schedule. NDMC requests the honourable Commission to approve the reasonable return as submitted by NDMC.   Table 1.2: Reasonable Return                                              Rs. Lakhs   FY 2005-06 FY 2006-07   Revised estimates Projected Return of 16% on Capital Base 1445 1350 Return of 0.5% on outstanding loans 0 0 Total Reasonable Return 1445 1350   1.3        SALES PROJECTION NDMC has estimated sales of 987.32 MU during FY 2005-06 and projected sales of 1020.31 MU for FY 2006-07. The sales for FY 2005-06 have been estimated on the basis of actual sales for the period April 2005 – October 2005 and the anticipated sales during the period November 2005 – March 2006. For FY 2006-07, NDMC has used the Compounded Annual Growth (CAGR) methodology to arrive at the total sales for the year. The CAGR for the period 2000-01 to 2005-06 i.e. 3.57% has been used for this purpose. The category wise sales are estimated in proportion to the category-wise sales during FY 2004-05.   Table 1.3: Consumer Category wise Energy Sales                                                  (MU) S. No. Category 2002-03 2003-04 2004-05 2005-06 2006-07 1 Domestic (Actual) (Actual) (Actual) (Re. Esti.) (Proj.)        a. Single Delivery Point 46.241 49.491 51.7 54.67 55.43        b. Separate Delivery Point 120.966 117.798 121.25 121.39 130.01        c. domestic Power 26.136 23.657 22.66 21.10 24.30 2 Non domestic                  a. Single Phase 56.172 53.283 53.43 52.11 57.29        b. Three Phase 148.24 150.423 162.08 169.48 173.79 3 Mixed Load                 a. Supply at 11 kV (HT) 283.337 285.294 326.07 349.80 349.62       b. (i) Supply  on LT  where supply is given from NDMC sub-station 6.704 6.842 7.28 7.59 7.81      b. (ii) Supply  on LT  where applicant provides built up space for sub-station 188.006 190.62 195.61 199.53 209.74 4 Small Industrial Power (SIP) 0.302 0.291 0.32 0.33 0.34 5 Public Lighting 7.479 7.492 7.51 7.53 8.05 6 Others 3.43 3.39 3.68 3.81 3.95   Total 887.013 888.581 951.59 987.32 1020.31   1.4        TRANSMISSION AND DISTRIBUTION LOSS The Honourable Commission has approved target Transmission and Distribution (T&D) loss level of 11.60% for FY 2005-06. As against this, the T&D losses for FY 2005-06 are estimated at 11.5%. The Honourable Commission would appreciate that NDMC’s network is of old vintage and little efforts have been made towards strengthening and refurbishment of system in the past.Therefore, there are practical constraints at present beyond the reasonable control of NDMC to further reduce the technical losses in the system.   NDMC would like to highlight that commercial losses by way of theft are negligible in NDMC’s area. While some commercial losses do occur on account of non-performing and under performing meters, the magnitude of these losses is minimal. Further, in view of the already low level of T&D losses, NDMC submits that the T&D losses be maintained at the current level of 11.5% for FY 2006-07.   1.5        POWER PURCHASE / ENERGY REQUIREMENT The Honourable Commission has in its tariff order for NDMC for FY 2005-06 approved the ARR on the basis of energy requirement of 1126.31 MUs i.e. 1251 MkVAh. As against the energy requirement considered by the Honourable Commission, NDMC has consumed 1155.23 MkVAh between April 2005 and February 2006. Further, NDMC has estimated its energy requirement for FY 2005-06 at 1239 MkVAh. For FY 2006-07, NDMC has projected energy requirement of 1281 MkVAh to meet the projected energy sales of 1020.31 MU at 11.5% T&D loss.    Table 1.4: Energy requirement   FY 2005-06 FY 2006-07   Revised estimates Projected Sales projections (MU) 987.32 1020.31 Sales projections (MkVAh) 1097.02 1133.68 T&D losses (%) 11.5 11.5 Energy Required (MkVAh) 1239 1281   The power purchase cost for FY 2005-06 has been estimated at Rs. 31847.85 Lakh as against Rs. 32164 Lakh approved by the Honourable Commission. NDMC would like to submit that the power purchase cost for the energy consumed during the period April 2005 – February 2006 is Rs. 29691 Lakh. The same can be seen in Annexure III. For FY 2006-07, NDMC has projected the power purchase cost at the prevailing BST of Rs.2.57/kVAh.   Here, NDMC would like to submit that NDMC does not own any generating stations and the entire energy requirement is met by purchasing power from Delhi Transco Ltd. at the rates fixed by the Honourable Commission.  NDMC is not contemplating to procure power from any other source during FY 2006-07.   The projected power purchase cost for the FY 2006-07 has been summarized in table 1.5.   Table 1.5: Power Purchase Cost   FY 2005-06 FY 2006-07 Revised estimates Projected Energy Purchased (MkVAh) 1239 1281 BST (Rs/kVAh) 2.57 2.57 Meter Rent (Rs.) 14790 14790 Total variable cost (Rs. Lakhs) 31846 32922 Total fixed cost (Rs.) 177480 177480 Power Purchase Cost (Rs. Lakhs) 31848 32923   1.6        EMPLOYEE COST The expense head of employee cost involves cost of manpower in service and terminal benefits payable to them. Cost of manpower in services includes salary and allowances, bonus, LTC and honorarium. Terminal benefits are payable to retiring employees and includes pension, death cum retirement gratuity as well payments to the family of deceased employee.   As mentioned in the prayer to this Petition, the entity for supply of electricity in NDMC is considered as a department of NDMC like other departments and not as a separate commercial undertaking. Therefore, unlike other electricity utilities, the practice of maintaining separate records of expenses for electricity sector is not presently followed in NDMC. As a result, the estimates of employee cost for FY 2005-06 are based on the budget estimates reasonably and justifiably allocated to the electricity utility, as given in NDMC’s budget for FY 2005-06. The Petitioner requests the Honourable Commission to consider this estimate for the purpose of truing up of ARR of FY 2005-06 as against the approved expenditure of Rs. 6071.28 Lakhs (before capitalisation).   For FY 2006-07, NDMC has adopted the component wise CAGR for FY 2000-01 to FY 2005-06 to project the various components of employee cost for FY 2006-07, except in case of the bonus to be paid to employees. It has been assumed that the payment of bonus will be in the proportion to the salary and allowance during FY 2005-06. Table 1.6 summarises the break-up of employee expenses. This table also indicates the revised estimates of employee costs for FY 2004-05.   Table 1.6: Employee Expenses                                                                     Rs. Lakhs S. No. Particulars FY 2004-05 FY 2005-06 FY 2006-07 CAGR FY 2000-01 to FY 2005-06     Revised estimates Revised estimates Projected   1 Salary and Allowances 3,944.53 5,245.81 5748.21 9.58% 2 Contribution to PF 4.17 4.45 5.14 15.45% 3 Pension and Terminal Benefits 820.39 905.64 1000.62 10.49% 4 Ex-gratia 59.66 70.80 72.26 2.07% 5 Bonus 2.17 2.86 3.13   6 LTC 11.57 16.20 18.82 16.16% 7 Honararium/OTA 8.90 16.00 16.70 4.37% 8 Total 4,851.39 6,261.76 6,864.88     As mentioned in the ARR and Tariff Petition for the Financial Year 2005-06, the practice of capitalisation of employee cost has not been pursued in NDMC. The direct and indirect expenses relating to construction are not being separately maintained in NDMC. However, from FY 2005-06, NDMC has proposed capitalisation of cost of employees involved and associated with capital expenditure in respect of transmission and distribution network. It is proposed that capitalisation of the employee cost be continued at 10% for FY 2006-07.    Table 1.7: Employee expenses after capitalization         Rs. Lakhs   FY 2005-06 FY 2006-07 Revised estimates Projected Gross Employee Cost 6,261.76 6,864.49 Less capitalization 626.18 686.45 Net Employee Cost 5,635.58 6,178.04

1.7        ADMINISTRATION AND GENERAL EXPENSES

Administration and General (A&G) expenses include expenses on computerisation, communication, security and other expenses. A&G expenses for FY 2005-06 have been estimated at Rs. 51.18 Lakh. For FY 2006-07, these expenses are anticipated to increase to Rs. 64.45 Lakh. The estimates for FY 2005-06 have been determined on the basis of actual expenses incurred during part of the year and the projections for the remaining part of the year. The estimates for FY 2006-07 have been determined keeping in mind the various schemes being implemented in NDMC and the expected expenditure as determined during the discussions leading to the finalisation of the budget proposals of NDMC for FY 2006-07, being noted to the Council for approval.

 

In particular, NDMC would like to highlight that the extent of computerization is increasing in all departments of NDMC. The computerisation would require investments for the purchase of hardware and software for the electricity department as well. Further, NDMC is also implementing the ABT regime. The implementation of ABT would lead to an increase in costs of wireless communication.

 

NDMC requests the Honourable Commission to approve the A&G expenses as submitted by NDMC.

 

Table 1.8: A&G Expenses                                                    Rs. Lakhs

S. No.	Particulars	FY 2004-05	FY 2005-06	FY 2006-07
		Revised estimates	Revised estimates	Projected
1	Computerization	0.10	0.30	0.50
2	Purchase of vehicles	11.58	12.00	18.00
3	Wireless communication	0.00	0.10	1.25
4	Telephone	30.69	27.38	34.80
5	Furniture	1.63	7.70	9.30
6	Security & others	5.79	4.00	4.20
7	Total	49.80	51.48	68.05

 

1.8        OTHER ADMISSIBLE EXPENSES

As shown in Table 1.9, other admissible expenses are estimated at Rs. 4092 Lakhs for FY 2005-06 and are expected to increase to Rs. 4175.60 Lakhs during FY 2006-07. The major sub-heads under this expense and the details of the expenses incurred under these sub-heads in the current year and the ensuing year is enumerated below:

 

Rent Rates and Taxes

The Honourable Commission is aware that there are no separate buildings for NDMC’s electricity offices. All electricity offices/sub-stations/service stations are located in NDMC buildings. As a result, the asset value of these buildings is not included in the value of assets relating to electricity supply. However, the rent for such accommodation would have to be included in the expenses of the electricity function of NDMC to determine the true cost of electricity supply to the consumers. NDMC therefore, proposes to charge rent for the electricity offices/sub-stations/service stations of NDMC located in NDMC’s buildings as an expense of the electricity department.

 

NDMC is aware that this rent should be calculated at reasonable and justified rates. Accordingly, the rent charged by NDMC for the buildings owned by NDMC and let out to Ministries and other Government Offices i.e. Rs. 675/= per sq. m. per month has been used to arrive at the figures for rent for FY 2005-06. The rent for FY 2005-06 has been worked out at Rs. 3949.15 Lakhs. For FY 2006-07, NDMC has continued with the rent of Rs. 3949 Lakhs.  

 

NDMC would like to draw the attention of the Honourable Commission to the fact that NDMC has decided to adopt the National Municipal Accounting Manual. NDMC’s Accounts Manual is being modified by customizing the Municipal Accounting Manual to the requirements of NDMC. The modification of NDMC’s Accounting Manual recognises the fact that the activities of the NDMC which are commercial or quasi-commercial in nature are required to be placed on a self-sustaining basis. This includes the activities of a) Estate Department, b) Municipal Housing Department and, c) Municipal Office Buildings being maintained by the Civil Engineering Department, which must pay for their maintenance and renewal through rent, license fee, notional rent (in case of municipal buildings occupied by different departments/functionaries).

 

With the implementation of the new Accounting Manual of NDMC, the electricity department would be required to pay rent for the electricity offices/sub-stations/service stations located in NDMC buildings and the same would be shown as expenses of the electricity department in NDMC’s budget and books of account. In light of this fact, NDMC requests the Honourable Commission to consider the rent for the accommodations of the electricity department as part of the expenses of the electricity function of NDMC and approve the rent claimed by NDMC for the electricity department.

 

Legal charges

Legal charges are budgeted for inter alia meeting costs to be incurred for protecting the Council’s legal rights before the Honourable Civil Courts. At the same time, there is an ongoing litigation with Reliance Energy Ltd. on their application for distribution and retail supply licence in NDMC’s area for supply of electricity. The Honourable Commission is aware of the background of this on-going litigation. NDMC, therefore, has no option but to defend/protect its legal rights against the aforesaid litigation and in the process has incurred and will be incurring such expenses

 

Accordingly, the revised estimates for legal charges for FY 2005-06 are Rs. 30 Lakh. For FY 2006-07, legal charges are budgeted on an estimated basis since NDMC, at this stage, cannot precisely indicate the tenure of the proceedings.

 

Audit fees

The Audit fees for FY 2005-06 is estimated at Rs. 25 lakhs and is conservatively estimated to increase to Rs. 30 lakhs.

 

Processing fee payable to DERC and consultancy fees

The provision for processing fees, payable to DERC on the ARR and Tariff Petition and consultancy charges are estimated at Rs.30 lakhs for FY 2005-06.  For FY 2006-07, these charges are estimated at Rs. 52 lakhs. This is primarily on account of increase in consultancy charges to be paid by NDMC. NDMC proposes to outsource assignments for (a) development of a plan for system improvement, improvement in metering system, load management in short term as well as in the long term in the ABT regime, cost effective load management, etc. and (b) for evaluation of the existing distribution system with the objective of bringing about supply and demand side improvements to improve the system reliability level. NDMC also proposes to outsource the mapping of distribution assets to the pole level. NDMC is in the process of holding discussions with agencies technically equipped for performing these assignments.

 

Consumer Forum

The expenses under this head include expenses incurred towards the Consumers Grievance Redressal Forum as well as the ombudsman’s office. NDMC has estimated Rs. 35 Lakhs under this head for FY 2006-07.

 

Provision for bad and doubtful debts

The arrears outstanding for more than 3 years in respect of electricity supply were about 1054 lakhs in 2004-05. This has been assessed to increase by about Rs. 55 Lakhs during FY 2006-07. NDMC proposes to make a provision for bad and doubtful debts @ 5% for FY 2005-06 as well as for FY 2006-07. NDMC therefore, requests the Honourable Commission to approve the provision for bad and doubtful debts at Rs. 52.70 lakhs for FY 2005-06 and at Rs. 55.5 Lakhs for FY 2006-07.

 

Implementation of software to meet DERC’s requirements for information filing under RIMS

The Honourable Commission would appreciate that the software systems available with NDMC are not of the level required for the purpose of implementation of RIMS, as mandated by the Honourable Commission. Therefore, NDMC has estimated that NDMC would have to incur one-time expenses of Rs. 30 Lakhs to implement the software systems required for the purpose of RIMS.

 

NDMC requests the Honourable Commission to approve the above expenses submitted by NDMC.

Table 1.9: Other Admissible Expenses                                Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1	Rent, Rates and Taxes	3949	3949
2	Legal charges	25	30
3	Audit fees	25	30
4	Fee payable to DERC and consultants	30	46
5	Consumer Forum	10	35
6	Provision for bad and doubtful debts	52.70	55.45
7	Implementation of software to meet DERC’s requirements for information filing under RIMS		30
8	Total	4091.85	4175.60

 

1.9        ALLOCATION OF EXPENDITURE RELATING TO (A) ADMINISTRATIVE DEPARTMENT (B) CIVIL ENGINEERING DEPARTMENT TO ELECTRICITY SUPPLY

The Honourable Commission is aware that NDMC has a separate Administrative Department consisting of NDMC Board, Finance Department, General Administration, Law Department, Public Relations, Staff and Labour welfare, Vigilance Department, Auto workshop, Information and Technology, Engineer in Chief etc. There is a separate Civil Engineering Department and the services of this department are utilised for civil portion of electrical works. Thus, the services of the Administrative Department and Civil Engineering Department are common for all the functions carried out by the NDMC and the expenditure pertaining to these Departments is allocated to all the functions.  So far the function of electricity has not been separated from the NDMC and it was considered as part of NDMC functions. Now that the electricity supply needs to be looked into separately as a distribution licensee and as such the expenditure in respect of Administrative Department and Civil Engineering Department needs to be allocated reasonably and justifiably to the electricity supply.

 

In its ARR and tariff petition for FY 2005-06, NDMC had proposed to allocate 30% of the expenses on these departments to electricity supply.  In the tariff order for FY 2005-06, the Honourable Commission had allocated 19% of expenses of the administrative department to electricity supply. The Honourable Commission also considered an amount of Rs.1000 Lakh towards the allocation of expenses of Civil Department to electricity supply. Further, the Honourable Commission had directed that the cost of works carried out by civil engineering department for electricity department should be separately booked and the complete details of such works and associated costs at the end of the year be provide to the Honourable Commission.

 

The Honourable Commission would appreciate that since the last Tariff Order was issued on November 2, 2005, the time gap between the issuance of this Order and the filing of this Petition is very small. Further, the civil engineering department and electricity department being two separate departments within NDMC, building regulatory preparedness within departments not subject to the regulatory environment of the electricity sector is a time consuming process. In view of these factors, NDMC has not been able to implement the above directive of the Commission at present. NDMC assures the Honourable Commission that NDMC is making efforts to institute the procedures and systems required for the implementation of the directives issued by the Honourable Commission.

 

NDMC would like to highlight that the benefits of Shiv Shankran Scales were extended to the employees specifically working in the electricity department of NDMC and also to common categories of employees working in other departments of NDMC. The employees working in other departments of NDMC are presently being paid salaries as per the provisions of the Fifth Pay Commission. As such, employees working in the electricity department are comparatively better paid employees as compared to their counterparts working in other departments, and also entitled for other better allied benefits/facilities based on higher pay structure, emergency duties performed by them, allotment of municipal accommodations, official working space, official vehicles, telephone/mobile phone facilities, advances paid to employees, medical facilities, etc. Further, the allocation of 30% expenditure of these departments is also justified considering that while allocating the expenses of 30%, the indirect expenses having monetary/commercial value as incurred for the smooth functioning of these departments has not been taken into account.

 

While NDMC feels that 30% of the expenses on the Administrative Department and Civil Engineering departments should be allocated to electricity supply, NDMC is aware that it has not been able to compile the information desired by the Honourable Commission. Therefore, NDMC has considered the amount of Rs. 3922 Lakhs (as approved by the Honourable Commission in the last tariff order) towards the functioning of these departments during FY 2005-06 and FY 2006-07. NDMC submits to the Commission to approve the allocation of these expenses incurred on the Administrative Department and Civil Engineering departments to electricity supply.

 

 

Table 1.10: Allocation of expenses of Administrative and Civil Engineering Departments to Electricity Supply                                                                        Rs. Lakhs

Particulars	FY 2005-06	FY 2006-07
	Revised estimates	Proposed
Allocation of expenses of Administrative and Civil Engineering Departments to Electricity Supply	3922	3922

 

1.10    REPAIRS AND MAINTENANCE EXPENSES

These expenses include expenses on repairs and maintenance of transformers, capacitor banks, lines, switchgears, cable network etc., vehicles, furniture & fixtures, office equipment, etc. R&M expenses in FY 2005-06 have been estimated at Rs. 1,513.15 Lakh on the basis of actual expenses incurred during part of the year and the projections for the remaining year.

 

R&M charges are estimated to increase to Rs. 1607 Lakh in FY 2006-07, representing an increase of 6.25% over the current year. NDMC would like to submit that NDMC has a vintage and weak distribution network, which warrants a higher degree of maintenance to ensure reasonable availability, reliability and quality of supply. Further, the Honourable Commission would appreciate that there has been an inflationary trend in prices of raw materials required for R&M activities. Therefore, NDMC submits to the Commission to approve the R&M charges for FY 2005-06 and FY 2006-07, without any disallowance.

 

Table 1.11: Repairs and Maintenance expenses

Particulars	FY 2004-05	FY 2005-06	FY 2006-07
	Revised estimates	Revised estimates	Projected
R&M expenses	1,313	1,512.85	1607.56

 

1.11    DEPRECIATION

In the last Tariff Order, the Honourable Commission directed to submit the break-up of opening block of assets and assets capitalised during the year as per the classification specified in the Appendix II to Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 while submitting the Petition for FY 2006-07. The Honourable Commission would appreciate that since the last Tariff Order was issued on November 2, 2005, the time gap between the issuance of this Order and the filing of this Petition is very small. Therefore, the Petitioner has not been able to prepare the details of fixed assets asset clarification-wise.

 

Pending preparation of assets- asset classification wise, the average rate of depreciation for distribution assets @ 3.6% has been adopted by NDMC. Further, NDMC has considered the average of opening and closing balance of fixed assets for estimating the depreciation during the year. Accordingly, the amount booked under depreciation is Rs. 1136 Lakhs in FY 2005-06 and Rs. 1178 Lakhs in FY 2006-07. NDMC requests the Honourable Commission to approve the same.

 

1.12    INTEREST CHARGES

No loans are outstanding against power during FY 2005-06. NDMC has made no fresh borrowings during FY 2005-06. Further, NDMC does not propose any borrowings for FY 2006-07. Therefore no interest expenditure is considered for FY 2006-07.

 

1.13    NON-TARIFF INCOME

The revised estimates of non-tariff income for FY 2005-06 and projections for FY 2006-07 are given below. NDMC would like to submit to the Honourable Commission that NDMC has billed Rs. 4 Crores as charges for misuse of electricity to various consumers during FY 2005-06. The same has been duly taken into account in determining non-tariff income.

 

NDMC expects that in FY 2006-07, all components of non-tariff income, except meter rent, will increase by 10% over that in FY 2005-06. NDMC requests the Honourable Commission to approve the same.

 

Table 1.12: Non-Tariff Income                                             Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1.	Meter Rent	157.60	157.60
2.	Service connection fees	14	15.4
3.	Recovery of departmental charges	188.5	207.35
4.	Recovery of storage charges	22	24.2
5.	Other Receipts	78.1	85.91
6.	Surcharge for Late Payment	41.63	45.79
7.	Misuse charges	400.00
	Total	901.82	536.25

 

1.14    ANNUAL REVENUE REQUIREMENT

The Annual Revenue Requirement for the current and ensuing year as estimated by NDMC is provided in the Table below. The Annual Revenue Requirement for FY 06-07 is estimated to be Rs. 50867 Lakhs.

 

Table 1.13: Aggregate Revenue Requirement                    Rs. Lakhs

	FY 2005-06	FY 2006-07
	Revised estimates	Projected
Expenses
Power Purchase	31847.86	32923.42
Employee cost	5635.58	6178.39
A&G expenses	51.48	68.05
R&M	1512.85	1607.56
Depreciation	1135.60	1177.95
Interest and Finance	0	0
Other Admissible Expenses	4091.85	4175.60
Expenses of Administrative & Civil Engineering Department Expenses	3922	3922
Total Expenses	48197.22	50052.96
Add Reasonable Return	1444.65	1350.37
Less  Non Tariff Income	901.82	536.25
Annual Revenue Requirement	48740.05	50867.09

 

NDMC requests the Honourable Commission to true-up the expenses of NDMC for FY 2005-06 on the basis of revised estimates for FY 2005-06. NDMC also requests the Commission to approve the ARR for FY 2006-07 as submitted above.

 

2.      TARIFF PROPOSAL FOR FY 06-07

 

2.1        EXPECTED REVENUE AT EXISTING TARIFF IN FY 2005-06

The revenue from the sale of power at the existing tariff and estimated demand for NDMC for FY 2005-06 is Rs. 45537 Lakhs. The same can be seen in table 2.1. NDMC would like to highlight that the introduction of two-part tariff for consumers with load 10 kW and above has led to a considerable reduction in the revenues realized by NDMC from these categories. The Honourable Commission would appreciate that consumers like hotels and large commercial installations within NDMC’s area of supply are able to manage the power factor to their advantage, with the result that the introduction of two-part tariff has led to a loss of revenue from such consumers.

 

2.2        REVENUE FROM SALE OF POWER AT EXISTING TARIFF IN FY 2006-07

The revenue from the sale of power at the existing tariff and projected demand for the NDMC for FY 2006-07 is projected at Rs. 47299 Lakhs. The details can be seen in table 2.2.

 

2.3        REVENUE DEFICIT AT EXISTING TARIFF

The revenue deficit of NDMC for FY 2005-06 and FY 2006-07 is detailed in table 2.3. The computation of revenue, expenditure and reasonable return has already been detailed in the earlier part of the petition.

.

Table 2.3: Revenue Deficit at Existing Tariff                                  Rs. Lakhs

S. No	Particulars	FY 2005-06	FY 2006-07
		Revised Estimates	Projected
1.	Annual Revenue Requirement	48740.05	50867.09
2.	Revenue from Tariffs	45536.69	47298.82
3.	Revenue Surplus/ ( Deficit ): (1)-(2)	(3203.36)	(3568.26)

 

As shown in the above table, the shortfall in revenue for the ensuing year viz. FY 2006-07 is estimated at Rs 3568.26 Lakhs. Similarly, the current year’s gap in terms of the shortfall in the recovery of expenditure (including reasonable return) for FY 2005-06 has been computed at Rs 3203.36 Lakhs, resulting in the cumulative revenue gap of Rs. 6772 Lakhs.

 

Accordingly, NDMC submits following proposal to cover the shortfall in revenue, for the consideration of the Honourable Commission.

 

 

 

2.4        COVERAGE OF REVENUE GAP

NDMC proposes to cover the cumulative revenue gap of Rs. 6772 Lakhs through additional revenue from proposed tariff revision. ((Revenue at proposed tariff is summarized in Section 2.6 of this petition).

 

2.5        TARIFF REVISION PROPOSAL FOR FY 2006-07

Table 2.4 summarizes the existing and proposed tariff structure for various consumer categories. NDMC has proposed a tariff increase of 15% for all categories of consumers to be able to recover the revenue deficit for FY 2005-06 and FY 2006-07. NDMC requests the Honourable Commission to accept the tariff proposal as suggested by NDMC.

 

Table 2.4: Existing and Proposed Tariff Structure

S.No	Category	Existing Unit Rate (Average) (Rs./Kwh)		Proposed Tariff (Rs./Kwh)	%   Increase
		With Tax	Without Tax	Without Tax
1.1	Domestic Lighting/fan and power	3.37	3.20	3.68	15
1.2	Domestic Lighting/fan and power on separate delivery points. Meters
	a) Lighting /Fan	2.60	2.47	2.84	15
	b) Power	3.78	3.59	4.13	15
2.1	Non - Domestic - LT
	a) Single Phase (<= 5KW)	5.27	5.00	5.75	15
	b) Three Phase ( > 5KW)	5.70	5.42	6.23	15
2.2	Mixed Load (High Tension) - MLHT Sanctioned Load>100 KW
a)	Supply on 11 KV
	Consolidate rate per KWH	6.38	6.06	6.97	15
	In case of Two Part Tariff (P/Kvah)	4.10	3.9	4.48	15
b)	I) Supply on LT (400 volts) where supply is given from NDMC Sub-Station.
	Consolidate rate per KWH	7.64	7.26	8.35	15
	In case of Two Part Tariff (P/Kvah)	4.88	4.56	5.24	15
	ii) Where the applicant provides built up space for sub-station.
	Consolidate rate per KWH	6.45	6.13	7.05	15
	In case of Two Part Tariff (P/Kvah)	4.51	4.28	4.92	15
3	Small Industrial Power - SIP	4.31	4.10	4.72	15
4	Public Lighting	3.78	3.59	4.13	15
5	Railway Traction
a)	Supply on 11 KV
b)	Supply on LT (400 V)
	Others	3.78	3.59	4.13
Temporary Supply
6.1	For the total Period
a)	less than 16 days
b)	More than or equal to 16 days
6.2	For religious function of traditional and established characters and cultural activities
6.3	For major construction Projects

Table 2.5: Expected revenue from proposed tariff – 2006-07

 

S.No	Category	Existing Unit Rate (Average) (Rs./Kwh)	Sales	Revenue from energy charges
		Without Tax	MU	Rs. Lakhs
1.1	Domestic Lighting/fan and power	3.68	55.43	2039.96
1.2	Domestic Lighting/fan and power on separate delivery points. Meters
	a) Lighting /Fan	2.84	130.01	3692.84
	b) Power	4.13	24.30	1003.08
2.1	Non - Domestic - LT
	a) Singla Phase (<= 5KW)	5.75	57.29	3294.10
	b) Three Phase ( > 5KW)	6.23	173.79	10832.05
2.2	Mixed Load (High Tension) - MLHT Sanctioned Load>100 KW
a)	Supply on 11 KV
	Consolidate rate per KWH	6.97	78.97	5503.52
	In case of Two Part Tariff (P/Kvah)	4.48	270.65	12136.52
b)	I) Supply on LT (400 volts) where supply is given from NDMC Sub-Station.
	Consolidate rate per KWH	8.35	0.51	42.89
	In case of Two Part Tariff (P/Kvah)	5.24	7.29	382.39
	ii) Where the applicant provides built up space for sub-station.
	Consolidate rate per KWH	7.05	33.12	2335.06
	In case of Two Part Tariff (P/Kvah)	4.92	176.61	8694.10
3	Small Industrial Power - SIP	4.72	0.34	16.18
4	Public Lighting	4.13	8.05	332.44
5	Railway Traction
a)	Supply on 11 KV
b)	Supply on LT (400 V)
	Others	4.13	3.95	162.90
Temporary Supply
6.1	For the total Period
a)	less than 16 days
b)	More than or equal to 16 days
6.2	For religious function of traditional and established characters and cultural activities
6.3	For major construction Projects
	Total revenue			50468.05
	Revenue from demand charges  (Rs. Lakhs)			2986.85
	Revenue from minimum charges  (Rs. Lakhs)			615.53
	Total revenue excluding tax (Rs. Lakhs)			54070.43

 

 

ANNEXURE I

List of Capital Works for FY  2005-2006 and FY 2006-2007

                                                      

All figures in thousands

S. No.	Name of the Work along with Head of Account		Revised Estimate: 2005-06	Budget Estimate: 2006-2007
1.	Establishing switching station at SBI, Sansad Marg.		100	200
2.	-do- at B.D. Marg.		50	200
3	-do- at Sanjay Camp near Nigerian High Commission(behind Singapore Embassy).		200	2000
4	-do- near Veerawali Hospital, Ch.Puri.		200	1000
5	-do- near American School Ch.Puri.		100	1000
6	-do- at C.T.O. complex, Janpath.		100	4500
7	-do- at A.I.R. ESD/NSD complex at Mahadeva Road.		2000	5000
8	-do- Sanskrit School, Ch.Puri.		977	-
9	Providing additional 11KV HT board at s/s Chanakyapuri.		100	-
10		Establishing ESS at DG block, Sarojini Nagar Pump house.	303	400
11		-do- at Bapa Nagar	205	-
12		-do- at 23-Barakhamba Road.	300	100
13		-do- at Cement Godown, Opp: A.I.R..	400	-
14		-do- at I-Hailey Road.	200	-
15		Estab. ESS at Hanuman Mandir, Connaught Place.	100	1000
16		-do- Africa Avenue Cross Road No.2.	100	1000
17		-do- between Ashoka Road and Rajendra Prasad Road.	100	500
18		-do- Navyug School, Peshwa Road (R.K. Ashram Marg.)	100	100
19		-do- Africa Avenue (Opp: Barat Ghar Netaji Nagar)	100	100
20		-do- Africa Avenue Cross Road No.4.	100	100
21		Installation of 1000 KVA unitized s/s at College Lane, Bengali Mkt.		500
22		-do- near Ashoka Road opp. Hotel Indraprastha.		1000
23		-do- near Lok Nayak Bhawan, Khan Mkt.		1000
24		Estab. ESS in Khan Market area.	100	500
25		Aug. of plant & equipment at Tees January Lane.	100	100
26		-do- at ESS No.III.	700	800
27		-do- at Chanderlok Building.	125	700
28		Aug. of transformer capacity at s/s Fire Brgd at Kautilya Marg.	200	100
29		-do- at C-II Moti Bagh.	400	100
30		-do- at R K Puram No.II	100	-
31		Aug. of s/s capacity at Ansari Nagar (E)	200	-
32		Aug. of Tr. Capacity at s/s Mausam Bhawan (Old)	100	100
33		Constn.of s/s buildings & Aug of s/s capacity at Yashwant Place.	100	500
34		Aug.of s/s capacity at D-I Vinay Marg.	50	500
35		Aug. of E.S.S. Aliganj No.2		500
36		Providing duplicate feed to ESS Supreme court.	155	-
37		Aug. of HT feeds from ESS No.3 to ESS Ice Factory and ESS Ice Factory to ESS No.6.	1000	1000
38		Aug. of HT system around Mandi House.	100	1000
39		HT inter connector from 33KV Shahjahn Road to ESS Bharti Nagar.	100	500
40		Providing HT inter connector of 150 sq.mm /3C from 16-Akbar Road to ESS Children Park.	400	-
41		Providing HT inter connector between substation SP Marg to substation Budha Jyanti Park	-	500
42		-do- from substation Chanakya Puri State Guest House to s/s Railway Secretary Board at Moti Bagh.	-	200
43		-do- from s/s Kidwai Nagar (E) – s/s Laxmi Bai Nagar No.II	100	200
44		-do from s/s AIIMS to s/s I Block Sarojini Ngr. Via Safdarjung Staff Qrs.- I	100	200
45		Aug. of LT system in Indian Oil Bhawan.	50	500
46		Strengthening of LT distribution system in Zone-III area from ESS 10-Bhawan Das Road.	300	50
47		-do- In Sarojini Nagar area.	784	100
48		-do- In Palika Niwas, Lodhi Colony.	100	200
49		Strengthening of LT network of Basrurkar mkt, Moti Bagh & Provdg. SCCs to NDMC flats above Basrurkar mkt and Begam Zaidi Market.	500	700
50		-do- at Africa Avenue pump house & Yashwant Place, Ch.Puri.	200	600
51		Provdg. SCCs, pillars & MBs at Laxmibai Ngr and NDMC flats Laxmibai Nagar.	200	600
52		Aug. of LT Dist. System in Ansari Nagar (East) & Ansari Nagar (W)	-	1000
53		Aug. of LT Dist. System in Zone I area.	-	1000
54		Outgoing LT Feeders from E.S.S. DG Block Sarojini Nagar.	-	500
55		Outgoing LT Feeders from temporary E.S.S. High Court	-	500
56		Outgoing LT Feeders from E.S.S. North Avenue	-	500
57		Outgoing LT Feeders from E.S.S. Bapa Nagar	-	500
58		LT Interconnector between E.S.S. Kidwai Nagar East and Kidwai Nagar West	-	500
59		Aug. of LT Dist. System in B.K. Dutt Colony	-	500
60		Aug. of LT Dist. System in Zone I area (from S/s Keventor Dairy Willingdon Crescent, Teen Murti Police staff qrs. S/s Nehru Memorial, Race course Road)	-	100
61		Aug. of LT Dist. System Zone III area around Rajpath for release of temporary load for Republic Day.	-	500
62		Aug. of LT Dist. System from Kerala House.	-	500
63		Aug. of LT Dist. System at E.S.S. No. III and Ice Factory.	-	500
64		Aug. of LT Dist. System in Zone V area feed from s/s A Block, F Block & New Plaza.	-	500
65		Aug. of LT Dist. System of existing E.S.S. Plaza cinema, C.P. New Delhi.	60	-
66		Aug. of LT Dist. System of LT feeds from newly const. BSNL S/s DIZ Area Kali Bari Marg.	-	500
67		Aug. of LT Dist. System for Police staff qrs. Police Station, Parliament Street.	-	200
68		Provdg.  Service connection in NDMC area.	100	200
69		Other miscellaneous/ unforeseen/ completed works.	-	2000
70		Provision for cable trenches and pipes with trench less technology.	50	100
71		Computerization and SCADA system in 11KV and LT distribution network.	50	100
72		Installation of capacitor bank at s/s Hanuman Road, Vidyut Bhawan, Safdarjung Airport, Bapu Dham and Connaught Place.	100	-
73		Providing and installation of microprocessor based electronic meters.	2500	50000
74		Purchase of T&P.	200	2500
		TOTAL	15259	92550

 

 

 

 

ANNEXURE II

Replacement Works

 

                                                                                    Figures in Thousands

Budgetary Estimates FY 2005-06	Revised Estimates FY 2005-06	Budgetary Estimates FY 2006-07
38000	23300	52200

 

 

ANNEXURE III

Cost of Purchased Energy

 

NDMC would like to submit to the Honourable Commission that the bill sent by Delhi Transco Ltd. in August 2005 included arrears of 7131591 units for the months of February 2005, April 2005, May 2005, April 2002, June 2002 and July 2002. Out of this, the arrears for the months of April 2002, June 2002 and July 2002 are of the order of 196285 units. The cost of power purchased @ Rs. 2.57/kVAh corresponding to this works out to Rs. 5,04,452. As a result, the amount of Rs. 5,04,452 has been deducted from the total power purchase cost estimated for FY 2005-06 to arrive at the true power purchase cost for FY 2005-06.

No.D-386/AO(C)                                                                            Dated: 01.09.2006

 

The Secretary,

Delhi Electricity Regulatory Commission,

Viniyamak Bhawan, C-Block,

Malviya Nagar,

New Delhi-110017.

 

         Subject:  Petition for approval of ARR for FY 2006-07 and determination of

                         Retail Tariffs to be charged by New Delhi Municipal Council (NDMC)

                         for the electricity being supplied to its consumers. 

 

Sir,

            This is with reference to your letter no. F.3(120)/Tariff/DERC/2005-06/1000 dated 2nd June, 2006 on the subject cited above, wherein Hon’ble Commission has observed certain deficiencies/ data gaps to paras mentioned in the petition.     The Para-wise reply/information on the queries/issues raised therein, is being furnished here under for kind consideration of the Hon’ble Commission:

 

1.      Capital Expenditure

 

1.1  Capital expenditure during FY 2005-06 and FY 2006-07

The revised estimates of capital expenditure incurred during FY 2005-06 is Rs. 1719.91 Lakh. The estimates of capital expenditure proposed during FY 2006-07 is Rs. 2187.50 Lakh. This does not include replacement works. The same is indicated in Table 1. The details of capital expenditure undertaken during FY 2005-06 and proposed during FY 2006-07 are given in the budget book for FY 2006-07 being submitted by the Petitioner along with this document.

 

Table 1: Capital expenditure during FY 2005-06 and FY 2006-07

                                                                  Rupees in Lakhs

	Revised Estimates FY 2005-06	Budgetary Estimates FY 2006-07
Ongoing works	1337.9	278
New Investment	381.4	1908.0
Total	1719	2186

 

 

1.2  Assets capitalized

The Petitioner submits that investments of Rs. 2033 Lakhs have been capitalized during FY 2005-06. The revised projections for FY 2006-07 is Rs. 2233.6 lakhs. However, the Petitioner is unable to provide the information for all the capitalized assets. The Petitioner submits that the entire ongoing works of the petitioner at the beginning of FY 2005-06 have been capitalized during FY 2005-06. Similarly, the replacement works undertaken by the Petitioner during FY 2005-06 have been capitalized. In respect of the new investments undertaken during FY 2005-06, investments of Rs. 323.67 Lakhs have been capitalized. The same is given in Table 2. The details of assets capitalized during FY 2004-05 is also given in Table 2. The detailed break up of these assets in given in Annexure I.

 

Table 2: Assets capitalized during FY 2004-05 and FY 2005-06

Rs. Lakhs

S. No.	Division concerned	Assets capitalized during FY 2004-05	New Investment capitalized during FY 2005-06
1	Distribution South Division	139	77
2	Protection Division	-	-
3	Maintenance South Division	-	-
4	Maintenance South Division	-	-
5	Maintenance of Feeder	313	100
6	Maintenance 33 kV	-	-
7	Distribution North Division	79.06	133.46
8	Store  - I (11 kV)	-	1.21
9	Cost of meter board single phase, three phase and CT operated	10.20	12
10	Total	541.26	323.67

 

 

1.3  Replacement Works

The revised estimates of replacement works undertaken during FY 2005-06 as given in the budget book for FY 2006-07 are given in Table 3. Further, the revised estimates for the replacement works proposed to be undertaken for FY 2006-07, as given in the budget book for FY 2006-07, are also given in Table 3. The Petitioner submits that the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the Petitioner requests the Hon’ble Commission to consider the estimates for FY 2005-06 and FY 2006-07 as given in the budget book for FY 2006-07 in the context of replacement works undertaken by the Petitioner.

 

Table 3: Replacement works           

                                                      Rupees in Thousands

Revised Estimates FY 2005-06	Budgetary Estimates FY 2006-07
15100	66400

 

The details of replacement works as indicated above are available on page 102 in the Budget Book for FY 2006-07 being submitted by the Petitioner along with this document.

 

1.4  220 KV GIS sub-station at AIIMS/Trauma centre and Electric Lane

The Petitioner submits that a meeting was convened by Secretary, Ministry of Power on the request of NDMC, GNCTD, DTL, MHA and CEA to resolve the said issue. During this meeting, it was decided that these two sub-stations would be implemented by DTL at its own cost. A copy of the Reso. of the Council will be submitted to the Hon’ble Commission as soon as the same is approved by the Council.

 

 

1.5  Capital Base

The provisional estimates for capital base for FY 2005-06 and the revised estimates for FY 2006-07 are indicated in table 4.

 

 

 

Table 4: Capital base                                                        Rs. Lakhs

		FY 2005-06	FY 2006-07
		Revised estimates	Projected
1 (a)	Original Cost of Fixed asset (excluding consumers contribution)	31422	33304
(b)	Cost of intangible assets (including expenses on account of new capital issue)
( c)	The Original cost of works in Progress	1337.91	278
(d)	The Amount of investment compulsorily made under para-IV of the sixth schedule together with investment made from contributions towards depreciation.
(e)	An amount on account of working capital equal to the sum of :
(e) (I)	Average cost of stores (1/ 12th of the sum of the book cost of stores, materials and supplies including fuel in hand at end of each month of the year.)	330	330
(e) (ii)	Average cash and bank balance (1/ 12th of the sum of cash and bank balances whether credit or debit and call and short term deposit at end of each month of the year.)	802	989
NA	Capitalized loss allowed by the Commission
	Sub-Total of Positive elements of Capital base (Sum of above) – A	33892	34901
(Less I)	The amounts written off or set aside on account of depreciation of fixed / intangible assets.	23104	24270
ii-a)	The amounts of any loans borrowed from organizations or institutions approved by the State Govt.	-	-
ii-b)	The amount of any debenture issued by the licensee.	-	-
NA	Part of accumulated subventions from State Government used for capital expenditure	-	-
iii)	The amounts deposited in cash with the licensee by consumers by way of security	1899	2434
iv)	The amounts standing to the credit of Tariff and Dividends Control Reserve at the beginning of the Year	-	-
v)	The amounts standing to the credit of the Development Reserve at the close of the Year	-	-
vi)	The amount carried forward (at the beginning of the Year of accounting) in the accounts of the Licensee for distribution to the consumers.	-	-
	Sub-Total of negative elements of capital Base (Sum of above) – B	25003.46	26703.34
	Net Capital Base (A-B)	8888.06	8197.62

 

Note:

 

e.      The stock valuation of material in store for FY 2005-06 is Rs. 3957.79 Lakh. Therefore, the cost of stores is estimated at average Rs. 330 Lakhs in FY 2005-06 and is projected at the same level for FY 2006-07. The revised estimates for average cash/bank balances is Rs. 802 Lakhs for FY 2005-06. For FY 2006-07, average cash/bank balances are projected at Rs. 989 Lakhs. 

 

f.        The security deposit available as on April 1, 2005 was Rs. 1899 Lakhs. The security deposit as on February 28, 2006 is Rs. 2231 Lakhs and is estimated at Rs. 2434 Lakhs at the end of FY 2005-06.  The figures for FY 2005-06 will be submitted to the Commission as soon as the same are available.

 

2.      Sales Projections

The Hon’ble Commission has advised that sales projections for FY 2006-07, which has been worked out based on CAGR for the period 2000-01 to 2005-06, the CAGR needs to be revised taking into account the actual sales of 2005-06 and accordingly, the sales projections for FY 2006-07 needs to be worked out.   In this regard it is submitted to the Hon’ble Commission that Petitioner has compiled the sales data upto Feb., 2006 and the sales data for the month of March, 2006 are yet to be compiled.  The figures already compiled are being reconciled.   As such actual sales data for the FY 2005-06 are not ready by now.    Petitioner wants to submit that actual sales data for the FY 2005-06 are being compiled and will be submitted shortly. 

 

3.      Power Purchase Costs

The actual power purchase costs for FY 2005-06 can be seen in Annexure IV to this document. The Petitioner submits that the Petitioner is not receiving any rebate for early payments.  To receive the rebate for early payment. from Delhi Transco Limited it is pre-condition that the Petitioner shall procure at its own cost and expenses from a Nationalised/Scheduled Bank acceptable to Transco and maintain an unconditional and irrevocable letter of credit. The matter is under consideration by the Council. A copy of the letter from Delhi Transco Ltd. on this issue is enclosed as Annexure V to this document. Further copies of the month-wise power purchase bills for FY 2005-06 are enclosed as Annexure VI to this document.

 

4.      Employee Costs

The category wise no. of employees working as per the budget book for FY 2005-06 is indicated in table 5.

 

Table 5: Category wise no. of employees for FY 2005-06

Grade	No. of Employees in Electricity supply	No. of Employees in Electrical Engineering	Total
A	98	13	111
B	581	54	635
C	1925	512	2437
D	18		18
Total	2622	579	3201

 

The actual figures for different components of employee cost viz. salary and allowances, contribution to PF, pension and terminal benefits, ex-gratia, bonus and overtime/LTC etc. from FY 2000-01 to 2005-06 are given in Table 6. The figure for FY 2005-06 are revised estimates as per the budget book for FY 2006-07. In the petition submitted by the Petitioner, the Petitioner had mentioned that with the finalisation of the budget for FY 2006-07 and availability of revised estimates for FY 2005-06, the same would be submitted to the Honourable Commission for the purpose of truing up of expenses for FY 2005-06. The Petitioner requests the Commission to consider the revised figures for FY 2005-06 as given in Table 6.  

 

Table 6: Employee Expenses                                                                 Rs. Lakhs

S. No.	Particulars	FY 2000-01	FY 2001-02	FY 2002-03	FY 2003-04	FY 2004-05	FY 2005-06
		Actual	Actual	Actual	Actual	Actual	Revised estimates
1	Salary and Allowances	3,320.57	3,280.32	3,465.78	4,230.27	3,993.83	3,420.43
2	Contribution to PF	2.17	1.81	2.41	4.40	0.02	0.00
3	Pension and Terminal Benefits	550.03	598.19	441.80	822.00	820.39	905.64
4	Ex-gratia	63.91	63.26	61.54	67.06	59.10	44.46
5	Bonus	3.51	3.44	3.23	3.82	2.12	2.02
6	LTC	7.66	1.18	0.05	9.88	11.55	25.50
7	Honararium/OTA	12.92	8.67	3.39	3.40	8.80	10.00
8	Total	3,960.77	3,956.87	3,978.20	5,140.83	4,895.81	4,408.05

 

The revised projections for employee costs for FY 2006-07, as given in the budget book for FY 2006-07, are given in Table 7. However, for pension and terminal benefits, the CAGR for FY 2000-01 to FY 2005-06 has been adopted to project the pension and terminal benefits payable in FY 2006-07.

 

Table 6: Revised projections for employee expenses for FY 2006-07    

Rs. Lakhs

S. No.	Particulars	FY 2006-07
		Revised projections
1	Salary and Allowances	5635.15
2	Contribution to PF	0.00
3	Pension and Terminal Benefits	1000.62
4	Ex-gratia	70.62
5	Bonus	0.05
6	LTC	28.20
7	Honararium/OTA	15.00
8	Total	6,749.64

 

The Petitioner submits that the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the Petitioner requests the Hon’ble Commission to consider the budget estimates for FY 2006-07 as given in the budget book for FY 2006-07 for projecting the employee expenses during FY 2006-07.

 

5.      Administration and General Expenses

The revised estimates of A&G expenses for FY 2005-06 as given in the budget book for FY 2006-07 are given in Table 8. Further, the revised projections for A&G expenses for FY 2006-07, as given in the budget book for FY 2006-07, are also given in Table 8. The Petitioner submits that the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the Petitioner requests the Hon’ble Commission to consider the budget estimates for FY 2006-07 as given in the budget book for FY 2006-07 for projecting the A&G expenses during FY 2006-07.

 

Table 8: A&G Expenses                                       Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Revised projections
1	Computerization	10.00	10.00
2	Purchase of vehicles	12.00	24.00
3	Wireless communication	0.10	0.10
4	Telephone	35.76	42.10
5	Furniture	8.80	10.40
6	Security & others	6.45	9.60
7	Total	73.11	96.20

 

 

 

 

6.      Other Admissible Expenses

The revised estimates of other admissible expenses for FY 2005-06 and the revised projections for the same for FY 2006-07 as given in the budget book for FY 2006-07 are given in Table 9. The Petitioner requests the Hon’ble Commission to consider these estimates for the purpose of the Petitioner’s ARR.

 

The Petitioner also submits that the revised estimates or actual figures and projections for the rent to be paid by the electricity department for the electricity offices/sub-stations/service stations located in NDMC buildings is not available at the moment. The Petitioner would once again like to draw the attention of the Hon’ble Commission to the fact that NDMC has decided to adopt the National Municipal Accounting Manual. NDMC’s Accounts Manual is being modified by customising the Municipal Accounting Manual to the requirements of NDMC.

 

With the implementation of this new Accounting Manual, the rent paid by the electricity department of NDMC for the electricity offices/sub-stations/service stations located in NDMC buildings would be shown as expenses of the electricity department in NDMC’s budget and books of account. In light of this fact, NDMC requests the Honourable Commission to consider the rent as claimed by NDMC for the electricity department. The computation of this rent has already been submitted by the Petitioner in its ‘Petition for Approval of Annual Revenue Requirement for the year 2006-07 and Proposal for Revised Tariff”.

 

In respect of outstanding arrears, the Petitioner submits that the level of outstanding arrears as on November 2005 is Rs. 103.47 crore. The Petitioner also submits that the Petitioner is making efforts for the collection of arrears. The action plan for liquidation of past arrears is enclosed as Annexure II. The actual year-wise outstanding arrears at the end of the year from 31.03.2003, doubtful debts provided against these outstanding arrears and collections made against these doubtful debts may also be provided.

 

Table 9: Other Admissible Expenses                           Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1	Rent Rates and Taxes	3949	3949
2	Payment for consultancy fee/legal charges/professional charges	5	16
3	Expenditure for electric consumer grievances redressal forum	20	20
4	Share cost for running of ombudsman office	0	3
5	Provision for bad and doubtful debts	52.70	55.45
6	Implementation of software to meet DERC’s requirements for information filing under RIMS		30
7	Total	4026.85	4073.60

Implementation of the National Municipal Accounting Manual

The Petitioner submits that the National Municipal Accounting Manual is in the process of being implemented within NDMC. A note on the current status of implementation is enclosed as Annexure III to this document. The Petitioner will submit a copy of the new Accounting Manual of NDMC to the Hon’ble Commission as soon as the same is implemented.

 

The Petitioner also submits that the information desired by the Commission with respect to the Electricity Department and Land, and the treatment of rent by Electricity Department in NDMC’s books of account will be available with the implementation of the new Accounting Manual.

 

7.      Allocation of expenditure relating to administrative and civil engineering departments to electricity supply

As mentioned above, the National Municipal Accounting Manual is in the process of being implemented within NDMC. The implementation of this Accounting Manual will involve the implementation of the double entry accounting system and hence, separate booking of the cost of works carried out by Civil engineering department for Electricity Department. The Petitioner submits that complete details of expenditure relating to administrative and civil engineering departments to electricity supply would be provided to the Hon’ble Commission once the National Municipal Accounting Manual and double entry accounting system is implemented within NDMC.

 

8.      Repairs and Maintenance Charges

The revised estimates of R&M expenses for FY 2005-06 are given in table 10. Further, the revised projections for R&M expenses for FY 2006-07, as given in the budget book for FY 2006-07, are also given in Table 10. The details of R&M expenses undertaken during the period April 2005 to March 2006 can be seen in the budget book in sections E (E.4.2, E.5), G2 (G.2.4, G.2.5) and H2 (H.2.4 to H.2.7). The Petitioner submits that the budget of the Council for an ensuing financial year is prepared after many deliberations and detailed scrutiny within the Council on the proposals submitted by the various departments of NDMC after considering various factors and the ground realities. Therefore, the Petitioner requests the Hon’ble Commission to consider the budget estimates for FY 2006-07 as given in the budget book for FY 2006-07 for projecting the R&M expenses during FY 2006-07.

 

Table 10: Repairs and Maintenance expenses         

                                                            Rs. Lakhs

Particulars	FY 2005-06	FY 2006-07
	Revised estimates	Revised projections
R&M expenses	1,556.25	1625.90

 

 

Transformer failure rate

The transformer failure rate for FY 2005-06 is indicated in table 11.

 

Table 11: Transformer failure rate

Transformer rating	Total number of units	Failed during the year	%
66/33 kV	4	0	0
66/11 kV	4	0	0
33/11 kV	31	0	0
11/0.440 kV	688	15	2.18%

 

 

9.      Depreciation

The Hon’ble Commission has desired the break- up of opening block of assets and assets capitalized during the year as per the classifications specified in CERC’s Terms and Conditions of tariff Regulations, 2004. The Petitioner submits that while the details of assets and assets capitalized are available with the Petitioner, the same is not available as per the classifications specified in CERC’s Terms and Conditions of Tariff Regulations, 2004.

 

10.  Non – Tariff Income

The revised estimates of non-tariff income for FY 2005-06 are given in Table 12. Further, the revised projections for non-tariff income for FY 2006-07, as given in the budget book for FY 2006-07 are also given in Table 11. The Petitioner submits that the surcharge for late payment has been estimated by the Petitioner. The Petitioner will submit the actual figure for FY 2005-06 when the same is finalized.

 

Table 12: Non-Tariff Income                                                        Rs. Lakhs

S. No.	Particulars	FY 2005-06	FY 2006-07
		Revised estimates	Projected
1.	Meter Rent	120	120
2.	Service connection fees	28	28
3.	Recovery of departmental charges	72.76	118.5
4.	Recovery of storage charges	9	10
5.	Other Receipts	39.4	33.2
6.	Surcharge for Late Payment	41.63	45.79
7.	Misuse charges	400
	Total	710.79	355.49

 

 

11.  Audited Accounts for FY 2004-05 & FY 2005-06

The Audited Accounts for the FY 2004-05 are enclosed with this document. For FY 2005-06, while the audit of accounts is complete, the same is to be laid before the Council for its approval. The Petitioner will submit a copy of the same to the Hon’ble Commission once the same is approved by the Council.

 

Yours sincerely,

 

                                                                                                                 Sd/-

(Keshav Chandra)                                                                         

                                                                                                                 Secretary

 

Encls:

 

1.   Annexure I: Detailed break up of assets capitalized during FY 2004-05 and FY

      2005-06

2.   Annexure II: Action plan for recovery of past arrears

3.   Annexure III: Current status of implementation of National Municipal

      Accounting Manual

4.   Annexure IV: Actual power purchase costs for FY 2005-06

5.   Annexure V: Letter from Delhi Transco Ltd.

6.   Annexure VI: Copies of the month-wise power purchase bills for FY 2005-06

 

NEW DELHI MUNICIPAL COUNCIL

ELECTRICITY DEPARTMENT -II

 

Subject: Information regarding ARR Division wise abstract of cost of Capitalized Assets

15.                                                                                                                                                                               All figures in Lacs

 

S.No.	Division	Amount upto 2004  (In Lacs)	Assets capitalized during 2004-05	Assets capitalized during 2005-06	Total Assets upto 31.03.06
	Distribution South Division	2371/-	139/-	77/-	2587/-
	Protection Division	224/-	--	--	224/-
	Maintenance South Division	6688/-	--	--	6688/-
	Maintenance North Division	4763/-	--	--	4763/-
	Maintenance of  Feeder	3624/-	313/-	100/-	4037/-
	Maintenance 33 KV	9607/-	--	--	9607/-
	Distribution North Division	1619/-	79.06	133.46	1832/-
	Store – I (11 KV)	12/-	--	1.21	13/-
	Cost of Meter Board single Phase, Three Phase & CT Operated	1972/-	10.20	12	1994/-
GRAND TOTAL		Rs.  = 30880 Lacs	541.26	323.67	31745/-

 

Note : The cost does not include depreciation   

 

Sd/-

E.E. (D/S)

DETAILS OF ASSETS OF D/S ELECTRIC DIVISION 2004-05

 

 

Sl. No.	Description	Qty.	Rate	Amount	Instal./laying charges	Total
1.	Pillars	Big-1600 Med-100 Mini-39	19,000/- 16,000/- 11,000/-	3,24,29,000/-	1,62,14,500/-	4,86,43,500/-
2.	L.T.Cables	1791 KM		8.8 cr.	100% 8.8 Cr.	17,60,00,000/-
3.	E.4.2.	31.3.2004 74.47 lac	31.3.2005 42.48 lac			1,16,95,000/-
4.	Desposit work	31.3.2004 103.67 lac	31.3.2005 36.54 lac			1,40,21,000/-
5.	Gypsy	1		1.5 lac (appr.)		1,50,000/-
6.	Eicher canter			50,000/-		50,000/-
7.	Jeep M&M			1,25,000/-		1,25,000/-
8.	Fault Locating M/c			3,29,728/-		3,29,728/-

 

 

Grand total = Rs. 25,10,14,228.00

 

 

Capitalized Assets upto 31.3.2005            -          2510 lacs.

Capitalized Assts upto 31.3.2004              -          2371 lac.

                                                                          (-)

                                                                         ______________

        Capitalized Assets during 2004-05                139 lacs.

                                                                         ______________

 

                                                                                                                       

 

                                                                                                                            Sd/-

                                                                                                                        E.E.(D/S)

DETAILS OF ASSETS OF D/S ELECTRIC DIVISION 2005-06

 

S.No.	Description	Qty.	Rate	Amount	Instal./Laying Charges	Total
	Pillars	Big – 1600 Med –100 Mini-39	19,000/- 16000/- 11,000/-	3,24,29000/-	1,62,14,500/-	4,86,43,500/-
	L.T. Cables	1791 Km		8.8 Crore	100% 8.8 Cr.	17,60,00,000/-
	E.4.2	(31.3.2004) 74.47 Lac	(31.3.2005) 42.48 Lac	31.3.2006 48.00 lac		1,64,95,000/-
4.	Deposit work	31.3.2004 103.67 lac	31.3.2005 36.54 lac	31.3.2006 29.00 lac		1,69,21,000/-
5.	Gypsy	1		1.5 Lac. (Appr.)		1,50,000/-
6.	Eicher center			50,000/-		50,000/-
7.	Jeep  M& M			1,25,000/-		1,25,000/-
8.	Fault Locating M/c			3,29,728/-		3,29,728/-

 

 

            Grand Total=   Rs. 25,87,14,228.00

 

Capitalized Assets upto 31.3.2006 ----- 2587 Lacs.

Capitalized Assets upto 31.3.2005-----  2510 Lacs.

                                                           (-)

                                                          ______________

Capitalized Assets during 2005-06            77 Lacs.

                                                          ______________

 

                                                                                  Sd/-

                                                                                                            E.E. (D/S)
NEW DELHI MUNICIPAL COUNCIL

ELECT.DEPARTMENT-II

MAINTENANCE OF FEEDER(M/F) DIVISION

 

Capitalized Assets upto March 2004 -              Rs.3624 lacs.

 

 

  DETAILS OF ASSETS ADDED DURING THE YEAR 2004-05

 

 

Sl.No.	Items	Amount
1.	Underground cables & devices	301.7 lacs
2.	Vehicles	10.5 lacs
3.	Furniture & fixture	0.8 lacs.
	Total	313.00 lacs.

 

 

 

Capitalized Assets upto March 2005 -          Rs. 3937 lacs.

 

 

DETAIL OF ASSETS ADDED DURING THE YEAR 2005-06.

 

S.No.	Item	Amount
1.	Underground cables & devices	100 lacs.

 

 

Total capitalized Assets upto March 2006-          Rs. 4037 lacs

 

 

 

 

 

                                                                                                         Sd/-

                                                                                 E.E(M/F)

ELECTRIC DISTRIBUTION NORTH DIVISION

 

Details of Assets added during the year 2004-05

 

 

S.No.	Items	Qty.	Amount
	L.T. Cable (Off Size)	20.981 Km	Rs. 766443
	G.S. Pillar (Off Size)	10 Nos.	Rs.  240000
TOTAL			Rs. 7906443/-

 

 

Meter Board + Meter (Single Phase – three phase + CT operated+ Earthing etc.)

Rs.  10.2 Lacs

 

 

Details of Assets added during the year 2005-06

 

S.No.	Items	Qty.	Amount
	L.T. Cable (Off Size)	18.448 Km	Rs.  12938914
	G.S. Pillar (Off Size)	16 Nos.	Rs.  408000
TOTAL			Rs. 13346914/-

 

 

Meter Board + Meter (Single Phase – three phase + CT operated+ Earthing etc.)

Rs.  11.98 Lacs

 

 

Sd/-

EE (D/N)

List of assets purchased during 2005-06 in Electric Store-I

 

1.    Sr. Executive table with 3 drawer box.                                           4 Nos.

       One cup board front panel size 1675 x 865x762mm

       S/T/104

 

2.     Asstt. Executive table with 3 drawer boxes                            7 Nos.

       one cup board of size 1370x680x762mmS/T/106

 

3.     Office chairs of size                                                           40 Nos.

        900x535x560mmS/c/1016

 

4.    Filing cabinet with steel handle, side, back                             5 Nos.

      Top & bottom 0.8mm, lock mechanism shell be

      1.6 mm of size 1380x430x700mm(4 drawers) S/SF/04

 

5.    Super Book case of 1635x840x305 mm side, back                 01 Nos.

       bottom & shelves 1 mm thick lock, 6 lever with

       duplicate keys & 4 Transparent glass doors

 

      S/4B/BC/01       

 

                                                                                       1,20,729.00

Say Rs.1.21 lacs.

 

 

Sd/-

E.E.Store-I (11KV)

Action plan for liquidation of past arrears as on March, 2004 in respect of Private Category and HTP Category

 

            The arrears of 99.6 Crores were pointed out in respect of various category and Annexed at Flag ‘X’. In this report it has been mentioned that a sum of Rs.30.49 crore is outstanding against private Category and 7.17 crore is outstanding from HTP category as on March, 2004. It is to point out here that the recovery action for arrear is already being taken by the section by issue of 15 days notice and subsequent disconnection. It has been observed that in number of cases the recovery is affected after issue of disconnection order. But the Department cannot taken any action in cases for recovery of arrear which has been stayed by the order of various Courts viz. lower Court, High Court and Other Consumer Court. The arrear stayed by the Court arrear is detailed as under:

 

1. Stay as per order High Court                            :           17.96 Crores
2. Stay as per order Lower Court             :           14.75 Crores
3. Stay as per order by Other Court                      :           02.25 Crores

                                                                                            ============

                                                                        Total                34.96.Crores

                                                                                            ============

                        (The  list of cases is enclosed)

 

 The pending letigative cases can only be settled through mutual settlement. In this connection a arrears list exceeded 1 lac has already been provided to Director (Recovery) and the cases could not be settled out due to direction from the Chairperson, NDMC for framing a policy for settlement which is under process of finalization.

 

            The Recovery of the arrears stayed by the Court can be liquidated if the cases pending in the Court are vigorously followed by the section and contested by legal section.

 

            However from the figure of the collection of demand of Rates Branch it is on record that the demand raised by the Department are recoverable almost in full. Further arrear are not allowed to be accumulated because of stern action by the Section. However the following action plans are suggested:

 

1. The Court Cases are to be reviewed with the Municipal Council’s for the vacation of the stay.
2. The cases can be discussed wherein the settlement can be done.
3. The Policy of the waiver of surcharge can be framed for recovery of arrear.

 

            Submitted for information of Director (Commercial).

 

Sd/-

(G.K. Chopra)

A.O.(Billing-II)

Accounts Department

Accrual Based Account Section

Palika Kendra, New Delhi

 

 

Sub:     Status of work relating to Double Entry System on Accrual basis.

 

            The work of compiling of accounts on accrual basis is start from 2004-05. The work of compiling of accounts for this year is in advance stages and it is expected that balance sheet for the year 2004-05 would be prepared within 3 months. Thereafter the balance sheet for the year 2005-06 is expected to be prepared within one month from the date of completion of balance sheet for the year 2004-05. It is also to be mentioned that these balance sheet will clearly depict the complete accounts in respect of electricity supply in NDMC area including the depreciation funds etc.

 

 

Sd/-

(S.K. Choudhry)

A.O.(ABAS)

A NOTE ON MACRO ACCOUNTING STRUCTURE FOR NDMC

            The Council vide resolution passed its meeting No. 5/2005-06 held on 26.08.2005 has approved, in terms of Section 58 of NDMC Act, 1994, the adoption of National Municipal Accounting Manual, launched jointly by Government of India, Ministry of Urban Development and the Office of C & AG in February this year, subject to such modifications which Chairperson may deem necessary in consultation with Financial Advisor.

In pursuance of above decision of the Council the Consultants in close corporation with the Accounts Department is customizing the National Municipal Accounting Manual to the requirements of NDMC. In this context, an important question that has arisen relates to determination of the overall form and structure of the Council’s Accounts. In this context it may also be mentioned that the ‘Form of Accounts’ not only lays down the detailed, the intermediate and the major heads under which Revenue and Expenditure transactions can be compiled, but also the manner in which these will be consolidated and abstracted. In other words setting the Form of Accounts will also involve determining the manner in which the Council, the Auditors, the Citizens, and other stake holders would like to see the ‘financial picture’ of the Council. Needless to say the picture should be such that all concerned are able to form a clear opinion as to the manner in which the Council mops up the revenues and the manner in which it expends the same. Also, it should be clear from the accounts as to whether different functions of the Council are being run on a self-sustaining basis and if some of the activities subsidized/funded by in some from other activities the extent to which such subsidization is taking place. This alone would lent the desired transparency to the compilation of accounts as well as application of resources. In other words the form of accounts should clearly establish as to which activities are the ‘profit centers’ and to which are ‘cost centers’ and what is the revenue and expenditure equation under various activities. Such depiction of financial data has a very vital bearing on the management of finances of the Council as well as on the overall control that can be exercised over the administration of Council’s activities.

In the backdrop of the above explained rationale underlying decisions relative to broad framework of accounts, the National Municipal Accounting Manual gives municipalities an option to have either a ‘Single Fund’ accounts where transactions under all functional heads merge into one Municipal Fund (something we are following at present) or to have a Fund based accounting framework where financial transactions are recorded, compiled and consolidated not only according to function to which these may relate but also according to the distinct source of funding or stream of revenue that is applied in carrying out specific functions/activities notwithstanding the fact that a particular kind of activity ma be carried out with reference to various functions backed by varying sources of funding. Such Fund based accounting is typically resorted to in situations where either Funds have been borrowed from the market or received for a specific purpose from a Funding agency like State/Central Government or a multilateral agency like World Bank.

In the case of NDMC, however, the situation is slightly different. The Council generates all its resources internally, except a small contribution from the Government of NCTD it received no external funding and all its capital expenditure is met from its own funds. Therefore, Fund Accounting, in the classical sense, is not appropriate for NDMC. However, there is a very discernable need to have an accounting structure that establishes a clear nexus between revenue and expenditure under various functions. Though in classical Fund based accounting each fund is constituted on a stand alone basis and all funds are independent of each other, in the case of NDMC we will have to make a departure considering the requirement of NDMC Act, 1994 which under Section 44 stipulates that there shall be one Municipal Fund into which will flow all revenues and out of which all expenditure will be incurred. To meet the requirements of this law it is proposed that the balances of each Fund other than General Municipal Fund may be transferred to the later and deficits if any, in a particular Fund may be met out of the General Municipal Fund. In this manner, in my opinion, the Funds other that the General Municipal Fund will legally be the Funds of the General Municipal Fund in keeping with Section 44 of NDMC Act, 1994. The question as to whether these will simultaneously constitute to be as ‘Special Fund’ in terms of Section 54 of NDMC Act, 1994, however, remains to be resolved. In case provisions of Section 54 are attracted separate regulations will have to be framed for each Fund. The Financial Statements i.e. the balance sheet, the income expenditure account and the receipt and payment for a cash flow statement, will, however, have to be prepared for each Fund and then consolidated on a line by line basis, as is done by major business organizations that are carrying out business under various distinct segments. In this manner, stakeholder is able to gauge the Financial Health of each segment of business carried out by an entity while, at the same time getting a financial overview of the entity as a whole.

 

In this context I would like to reproduce here below the relevant extracts from the following:

a)            Generally Accepted Accounting Principles (GAAP) for Governments 2005 by Warren Ruppel. (IFO of New York City Council)

b)            The recommendations of Standing Committee on Ministry of Urban Development

c)            The Modern Municipal Law Development by Ministry of Urban Development.

                     From the extracts of the above source documents as have been reproduced at Appendix, it is evident that the macro picture of the NDMC Accounts and its structure as explained above is well within the realm of concepts enunciated in the highest echelons of the Government of India as well as the practices and experience prevailing globally.

 

            If the above stated formulation meets the approval of the Chairperson who has been authorized by Council to deliberate and decide on these matters, the Consultants who are engaged in converting NDMC Accounts from Single Entry to Double Entry and also customizing the Accounting Manual as well as Chart of Accounts may be asked to work on these lines and make suitable changes in the draft documents. Discussions will also have to held with the agency which is writing and operationalising the software that will backup Accrual Based Accounts System for the Council.

 

Also NDMC is perhaps, the only Municipality in the Country which is engaged in the business of buying and distributing electricity without having a separate entity with a distinct account to manage such business. In that respect purchase and distribution of electricity by Mumbai and Kolkata Municipalities is on a different footing. However, in the case of NDMC also it has now become imperative to create a separate Electricity Fund considering the requirement of new Electricity Act and the regulatory framework that it has brought into existence. All incomes arising from distribution and all expenses on purchase of power and its distribution will be looked to this Fund.

 

On similar lines of separate Fund needs to be established to bring transactions relative to purchase and distribution of water, operation and maintenance delivery system under this may be called Water Fund. Capital and maintenance expenditure on sewerage and drainage works may, however, be placed under the General Municipal Fund as these are obligatory functions for which no direct user charges are re coverage.

 

Similarly, we are the only municipality which is in a position to provide and fund the Pension liability. We are already in the process of selecting an Actuary who will determine the total magnitude of our liability and compare the same, at its present value with the success that have been set apart so far for the purpose on an ad-hoc basis. This will provide us an idea as to how much gap there exists between what has already been provided in the accounts and invested towards the Pension liability and the present value of the total magnitude of this liability. It is prudent to manage this liability by setting up an independent Fund which will receive, every year, a certain contribution from a General Municipal Fund of NDMC based on Actuarial calculation and out of which all the Pension liability will be met. Also, the interest earned on the balances of the Fund invested will be credited to it from time to time.

 

The fourth area which requires to be placed on a self-sustaining basis are those activities of the council which are commercial or quasi-commercial in nature. This includes the activities of a) Estate Department, b) Municipal Housing Department and, c) Municipal Office Buildings being maintained by Civil Engineering Department; which must all pay for their maintenance and renewal through rent, license fee, notional rent (in the case of Municipal buildings occupied by different departments/functionaries).

 

Similarly, all types welfare activities of the Council will be reflected through a distinct Welfare Fund which may receive contribution from the employee and as well as the council and would finance the welfare activity including grants paid to Samaj Kalyan Samiti. This would help us determine the total welfare cost per employee and his/her own contribution thereto.

 

Apart from the above the funds received from Government of Delhi as Grant-in-Aid have also to be accounted for a distinct fund.

 

In view of the picture that has been drawn above the council will have the following funds:

a)      General Municipal Fund

b)      Electricity Fund

c)      Water Fund

d)      Estate Development and Maintenance Fund

e)      Pension Fund

f)        Welfare Fund

g)      External Assistance Fund

 

Delhi Transco Limited

Office of General Manager (Comml.), Commercial Department

33 KV Grid S/Stn. I.P. Estate, New Delhi 110002

 

No. E.DTL/203/F-14/2005/Opr/Comml/GM(Comml)/363       23rd November, 2005

 

The Secretary,

New Delhi Municipal Council

Palika Kendra, Sansad Marg

New Delhi-110001

 

Subject :             Availing admissible rebate of 2% per month on timely payment of electricity bills

Sir

 

This has reference to you letter no. D-1054/AO(C) dated 2nd November, 2005 soughting clarification for availing admissible rebate of 2% per month on timely payment of electricity bills.

 

In this context, it is submitted that NDMC can avail admissible rebate of 2% per month on early payment of electricity bills after fulfillment of the following conditions :

 

(i)                 Bulk Supply Agreement is executed between NDMC & DTL.

 

(ii)               NDMC opens and maintains an unconditional, irrevocable and non-transferable letter of credit (LC) in favour of Delhi Transco Limited at their own cost and expenses from a Nationalized / Scheduled Bank for at least 140% (or any other amount as may be otherwise be agreed to by DTL) of the monthly simple average of the most recent power purchase cost for the past three months (for the power to be purchased by the NDMC from DTL);

 

(iii)             Except during a period when NDMC is in payment default or material default of any of its other obligations of the Bulk Supply Agreement, if NDMC makes payment of amounts due to DTL before the due date (s) of payment, then for the period the payment is made prior to the due date, NDMC shall be eligible for a rebate at the rate of 2% per month, on the amount paid in advance / before due date of payment, calculated on prorates basis, provided final settlement of monthly invoice is done on or before last working day (due date of payment) of the month;

 

(iv)              The rebate shall accrue from the date of advance payment corresponding to the amount paid and shall be adjusted in the final payment against monthly invoice.

Yours Sincerely,

Sd/-

(M.P. Aggarwal)

General Manager (Commercial)

Encl: As above

Copy to:

1. Chairperson, NDMC for favour of kind information.
2. Director (Operations) for favour of kind information.
3. Director (Finance) for favour of kind information.

OFFICE COPY

Sd/-

General Manager (Commercial)

Delhi Transco Limited

Office of General Manager (Comml.), Commercial Department

33 KV Grid S/Stn. I.P. Estate, New Delhi 110002

 

No. E.DTL/203/05-06 Oprs/Comml/F-I/M(LB)/38                              30th May, 2006

 

Director (Commercial)

New Delhi Municipal Council

Palika Kendra, Sansad Marg

New Delhi-110001

 

Subject :             Availing admissible rebate of 2% per month on timely payment of electricity bills

 

Sir

This is in reference to your letter No. D-1287/AO(C) dated 10.03.06, addressed to our General Manager (Commercial) on the subject.

 

            The position has already been clarified in our letter No. F.DTL/203/F-14/2005-Opr(Comml.)/GM(Comml.)/363 dated 23.11.05 (copy enclosed for ready reference.

 

            It is once again reiterated that 2% rebate is available only if payments are made against LC i.e. only when adequate LC has been opened and maintained by the purchaser for availing the rebate. Thus, at present NDMC is not entitled to any rebate, till such time they enter into Bulk Supply Agreement with DTL and open LC of the adequate amount as mentioned in the draft BSA already sent please.

 

 

Yours faithfully,

 

 

Sd/-

(Er. A.C. Agrawal)

Manager (LB) Commercial

 

Encl.: As above

NEW DELHI MUNICIPAL COUNCIL

PALIKA KENDRA, SANSAD MARG, NEW DELHI – 110 001

Website : [http://www.ndmc.gov.in/home.htm]

 

 

PUBLIC NOTICE

REQUEST FOR PUBLIC RESPONSE

Petition for approval of Aggregate Revenue Requirement (ARR) for FY 2006-07 and Determination of  Tariff

 

 

1. New Delhi Municipal Council had filed the Petition on 3.04.2006 for Aggregate Revenue Requirement (ARR) for FY 2006-07 before the Commission for deliberation and Orders under the provisions of the Electricity Act, 2003. The Commission, after having sought further information through technical sessions/correspondence, has admitted the Petition on 9.10.2006.

 

2. The tariff determination for bulk supply and retail supply would be the prerogative of the Commission, after considering the submissions made by all the Petitioners in their respective filings and accordingly, no tariff proposal has been submitted.

 

 

3. The salient features of the NDMC are provided below :

Summary of ARR and Revenues for [Petitioner] at existing BST and RST

Particulars	Unit	2006-07
A. Energy Input	MkVAh	1281
B. AT & C Loss at the end of the year	%	11.5
C. Expenditure other than Power Purchase Cost	Rs Lakhs	17129.54
D. Existing Bulk Supply Tariff	(Rs /KVAh)	2.57
E. Power Purchase Cost at existing BST	Rs Lakhs	32923.42
F. Total Expenditure (C+E)	Rs Lakhs	50052.96
G. Past Arrears payable	Rs Lakhs	-
H. Allowable Return	Rs Lakhs	1350.37
I. Non Tariff Income	Rs Lakhs	536.25
J. Aggregate Revenue Requirement (F+G+H-I)	Rs Lakhs	50867.09
K. Estimated Revenue Realisation based on existing Retail Supply Tariff	Rs Lakhs	47298.82
L. Revenue Gap at Existing Tariffs (J-K)	Rs Lakhs	3568.26

 

 

Performance of New Delhi Municipal Council (NDMC) during FY 2005-06

 

NDMC incurred capital expenditure of Rs 3.86 Crores (provisionally) including replacement works of Rs. 2.33 Crores.

 

The standard of electricity supply in NDMC area during 2005-06 was maintained.  To meet the rising demand of electricity, the works at the substations 66 KV at Dr. B.D. Marg and State Guest House, 33 KV at Shah Jahan Road & Mandi House, augmentation of capacity at S/S Nirman Bhawan, S/S Nehru Park, establishing 33 KV S/S Trauma Centre including 33 KV Feeders and laying of new 2 Nos. 66 KV Feeders from S/S Park Street to S/S School Lane and S/S Vidyut Bhawan, have either been completed or are near completion. 

 

Establishing 11 KV Substations at 23-Barakhamba Road was undertaken.  Augmentation of plants and equipments was carried out at Chanderlok Building, Fire Brigade at Kautilya Marg, Moti Bagh, Mausam Bhawan (Old) ESS No. III.    11 KV Inter-connector were laid at the various Electric Substations to ensure the reliability and continuity of electricity supply in NDMC area.

 

 

NDMC was constrained to carry out load shedding of 0.55 MU due to constraints in their own system and 0.6 MU due to grid constraints including breakdowns in Delhi Transco during the period from April 2005 to March 2006 as compared to that of 1.1 MU during the similar period in the previous year.

 

      NDMC has maintained Reliability Index to 99.2% during the period from April 2005 to March 2006.

 

      Reliability index represents as

 

(total number of HT Feeders X 720 –(Total number of Feeders

became defective in a month X defective period)                          X 100

   Total number of HT Feeders X 720

 

 

Proposals by NDMC for FY 2006-07

 

1.   The NDMC is proposing a capital expenditure of Rs 45 Crores for system improvement including change of old meters by new meters.

 

 

2.   Efficiency improvement

 

NDMC is expecting reduction in T&D Losses with the proposed provision of meters and augmenting the existing distribution system with the proposed capital expenditure of Rs 45 Crores. Improvement works like additional sub-stations, augmentation of power transformer capacities, replacement of worn out equipment, old cables, pillar boxes are planned. SCADA System is proposed to be installed in all the 66 KV, 33 KV Sub-stations for further improvement in the system.  These works will help to reduce AT&C Losses, improve reliability Index from the present level.

 

NDMC proposes to establish 11 KV Electric Sub-Stations at 23-Barakhamba Toad, Hanuman Mandir (Connaught Place), Africa Avenue Cross Road, between Ashoka Road and Rajendra Prasad Road, Navyug School, R.K. Asharma Marg, Khan Market, CPWD Cement Godown,  Netaji Nagar, Africa Avenue Cross Road No. 4,  at College Lane (Bengali Mkt.), near Ashoka Road opp. Hotel Indraprastha, near Lok Nayak Bhawan Khan Market, Palika Parking and installation of 990 KVA unitizes S/S in the campus of Lady Irwin College (Sikandra Road).  Further for augmentation of L.T. Distribution System to cope with the increase in demand of electricity, would be carried out in the areas of Chanderlok Building; ESS No. III, Yashwant Place; Aliganj, Golf Link, Palika Niwas, Lodhi Colony, Ansari Nagar (E&W), DG Block Sarojini Nagar, Delhi High Court, B.K. Dutt Colony, area around Rajpath, Hailey Road, Lady Irwin College, Shivaji Stadium, Moti Bagh etc.  and H.T. Feed from ESS TV Centre to ESS Sapru House and adjoining area and to aug. of tr. Capacity by installing an addl. 1000 KVA Transformer at S/S Golf Link-II etc.  Inter connector are proposed to be provided around Mandi House, between substations S.P. Marg -Budha Jyanti Park, Chankaya Puri State Guest House-Railway Secretary Board at Moti Bagh, Kidwai Nagar-Laxmi Bai Nagar No. II, AIIMS to Sarojini Nagar, I Block, Shahajahan Road to ESS Aurbindo Marg besides this augmentation of HT system will be carried out around Mandi House and alternative feed will be provided to Mohan Singh Place from Hanuman Rd. extending upto Regal.   

 

Tariff rationalization Suggestions by NDMC for FY 2006-07.

 

NDMC proposes to continue the present Consumer categories and the slabs without any change for the FY 2006-07. 

 

4.   In accordance with the provisions of the Delhi Electricity Regulatory Commission Comprehensive (Conduct of Business) Regulations, 2001 notified by the Commission, the consumers and stakeholders are requested to submit the response on the above Petitions. Responses on affidavit, in triplicate, may be sent to the Secretary of the Commission at the following address by 10.11.06.     The responses may be submitted personally or by post to the Commission.

 

DELHI ELECTRICITY REGULATORY COMMISSION

Vinayamak Bhawan,

C-Block, Shivalik,

Malviya Nagar, New Delhi – 110017

 

5. The Commission would hold public hearings with the responding stakeholders subsequently. The date of the public hearings shall be notified separately by the Commission.

 

 

6. A copy of the Petition could be purchased from the office of Accounts Officer (Commercial), Room No. 1905, Palika Kendra, Sansad Marg, New Delhi-110001 on any working day from 27.10.06 to  10.11.06 between 11 a.m. and 2 p.m. on payment of Rs 25/-, either by cash or by Demand Draft/Pay Order in favour of NDMC payable at New Delhi.

 

 

Address of the Head Office of the Petitioner:

 

NEW DELHI MUNICIPAL COUNCIL

PALIKA KENDRA, SAMSAD MARG, NEW DELHI – 110 001

Website: [http://www.ndmc.gov.in/home.htm]

 

 

7. The complete Petition is available at our website as well as the web-site of the Commission [http://www.dercind.org]. Copy of the Petition is available for inspection at our Head Office as well as the Commission’s office at the addresses provided herewith, on any working day between 11 a.m. to 4 p.m.

 

SECRETARY

NEW DELHI MUNICIPAL COUNCIL

PALIKA KENDRA, SANSAD MARG, NEW DELHI – 110 001