Whereas the Tamil Nadu Electricity Regulatory Commission specified
the TNERC (Terms and Conditions for determination of Tariff) Regulations 2005
(hereafter called Principal Regulations) under section 61 of the Electricity
Act 2003 (Central Act 36 of 2003) read with section 181 thereof and published
in the Tamil Nadu Gazette (Part VI - Section 2 Supplement) dated August 3,
2005; And whereas sub-section (1) of Regulation 14 of the said
Regulations specified that the Commission may implement multi year tariff for
the Transmission and Distribution licensee for a period to be notified by the
Commission; And whereas para 5.3 (h) (1) of the National Tariff Policy
notified by the Government of India on 06.01.2006 stipulated that the Multi
year Tariff framework is to be adopted for any tariff to be determined from
April, 2006 and hence it is considered necessary to make regulations for
adoption of Multi year Tariff framework. Now therefore in exercise of the powers conferred under section 61
of the Electricity Act 2003, (Central Act 36 of2003) read with section 181 of
the said Act, and all other powers enabling it in this behalf, and after
previous publication, the Tamil Nadu Electricity Regulatory Commission, hereby
makes the following Regulations, namely: CHAPTER I General (a) These Regulations may be called TNERC (Terms and Conditions for
Determination of Tariff for Intra state Transmission / Distribution of
Electricity under MYT Framework) Regulations, 2009. (b) These Regulations are applicable to any person engaged in the
business of Intra State Transmission/Distribution of Electricity within the
State of Tamil Nadu. (c) These Regulations shall be read along with the TNERC (Terms and
conditions for determination of tariff) Regulations, 2005. (d) These Regulations shall come into force on the date of their
publication in the Tamil Nadu Government Gazette. (1) In these Regulations unless the context otherwise requires: (a) "Act" means the Electricity Act, 2003 (36 of 2003); (b) "Aggregate Revenue Requirement" (ARR) means the
revenue required to meet the costs pertaining to the licensed business, for a
financial year, which would be permitted by the Commission to be recovered
through tariffs and charges; (c) "Base year" means the financial year immediately
preceding the first year of the Control Period; (d) "CERC" means the Central Electricity Regulatory
Commission established under section 76 of the Act; (e) "Commission" means the Tamil Nadu Electricity
Regulatory Commission; (f) "Conduct of Business Regulations" means the Tamil
Nadu Electricity Regulatory Commission (Conduct of Business) Regulations 2004; (g) "Consumer/User contributions" means any
contributions made by those using or intending to use the Transmission /
Distribution network of a licensee; (h) "Control period" means a multi - year period fixed
by the Commission from time to time under the Multi year Tariff framework; (i) "CTU" means Central Transmission Utility; (j) "Distribution Business" means the business of
operating and maintaining a distribution system for supply of electricity in
the area of supply of the distribution licensee; (k) "Distribution Licensee" means a licensee authorized
to operate and maintain a distribution system for supplying electricity to the
consumers in his area of supply; (l) "ERC" means the Expected Revenue from Charges that
a licensee is permitted to recover pursuant to the terms of his licence; (m) "Financial year" means the period commencing on 1st
April of a calendar year and ending on 31st March of the immediately following
calendar year; (n) "Grid Code" means the Tamil Nadu Electricity Grid
Code; (o) "Licence" means a licence granted under Section 14
of the Act; (p) "Non-Tariff Income" means income other than from: (i) Tariff for Transmission / Distribution and (ii) Income from Other licensed Business; (q) "Open Access Customer" means a consumer permitted
by the Commission to receive supply of electricity from a person other than the
Distribution licensee of his area of supply, and the expression includes a
generating company and licensees, who have availed of or intend to avail of
open access; (r) "Other Business" means any business engaged in by a
Transmission / Distribution licensee under sections 41 and 51 of the Act
respectively for Optimum utilization of the assets of the
transmission/distribution business and shall include any business of the
licensee other than the Transmission/ Distribution business; (s) "State" means the State of Tamil Nadu; (t) "STU" means the State Transmission Utility; (u) "SLDC" or "State Load Despatch
Centre" means the centre established under section 31 of the Act; (v) "Tariff Regulations" means the Tamil Nadu
Electricity Regulatory Commission (Terms and conditions for determination of
Tariff) Regulations, 2005; (w) "Transmission Business" means the business of
transmitting electricity within the state. (2) Words or expressions occurring in these Regulations and not
defined herein but defined in other Regulations published by the Commission or
the Electricity Act 2003 shall bear the same meanings respectively assigned to
them in the Act/Regulations. CHAPTER II [1][(i) Control Period: The
control period under the MYT framework shall be for a duration of 3 years. The
year preceding the first year of the control period shall be the base year.] (ii) Aggregate Revenue Requirement
(ARR): The licensee seeking
tariff for multi year shall furnish ARR for each year of the control period in
the formats specified in the Tariff Regulations along with the tariff petition. (iii) Estimated Revenue from
Charges (ERC) at the existing tariff: The
licensee shall furnish along with tariff petition the estimated revenue at the
existing tariff for each year of the control period in the formats specified in
the Tariff Regulations. [2][(iv) Business Plan: Every
licensee shall submit the business plan and power purchase plan for approval of
the Commission, at least six months prior to submission of the MYT petition.
The business plan shall contain projection for all activities including on
going projects, new projects with the specific nature, loss reduction,
effective and tamper-proof metering etc., The licensee shall also furnish the
criteria adopted for such projection. The Commission shall issue the order on
the business plan and the power procurement plan within four months of
submission, so that the licensee is able to submit the MYT petition on the
basis of the approved plan.] (v) Capital Investment
Plan: The licensee shall
get the approval of the Capital Investment Plan for each year of the initial
control period in accordance with the Regulation 17 of TNERC Tariff
Regulations. It may be ensured that the approval of the Commission is obtained
before tariff filing under MYT framework. The capital investment plan shall
have capitalization schedules for each year of the control period. The source
of finance to meet the capital expenditure in each year of the control period
shall also be furnished along with Capital Investment Plan. (vi) Trajectory of specific
variables: Where the
performance of the licensee is sought to be improved through incentives/
disincentives, trajectory for specific variables shall be stipulated by the
Commission. (vii) True up of variations in revenue and cost: The variations on .account of controllable factors like
sales and power purchase shall be reviewed at the end of each year of the
control period based on audited accounts of the licensee and prudence checks by
the Commission. (viii) Mechanism of pass through of approved gains or losses on
account of uncontrollable factors: As
stipulated in Regulation 14 of Tariff Regulations, the following constitute
uncontrollable costs. (a) Cost of fuel; (b) Costs on account of inflation; (c) Taxes and duties and (d) Variation in power purchase unit cost from base line level
including variation on account of hydro-thermal mix in case of force majeure
and adverse natural events like draught. The licensee shall file application
for revision on account of such variation for Commission's consideration and
orders. In respect of variations in power purchase unit cost due to hydro -
thermal mix, the variations will be considered duly taking into account the
Hydro Balancing Fund. [3][(ix) Mechanism for sharing approved gains or losses arising out
of controllable factors: The financial
loss, if any, due to failure to achieve the target for the controllable costs
in any of the years in the control period shall be borne by the licensee and
the efficiency gains, if any, with respect to controllable parameters shall be
shared between the licensee and the consumer in the ratio of 2 :1.] (x) Annual review of
performance: (a) The Commission may undertake annual review of licensee's
performance at the end of each year of the control period. (b) The licensee shall submit information as part of annual review on
actual performance to assess the performance vis-a-vis the targets approved by
the Commission at the beginning of the control period. This shall include
annual statements of its performance and accounts including latest available
audited / actual accounts and the tariff worked out in accordance with these
Regulations. (c) The Commission may, on an application from the licensee, may
consider any modification to the forecast of the ARR for the remainder of the
control period with detailed reasons for the same. (a) The Commission will process the licensee's filings under MYT
framework in accordance with these Regulations read with TNERC conduct of
Business Regulations. (b) Based on the licensee's filing and objections / suggestions from
public and other stakeholders, the Commission may accept the application with
such modifications and / or such conditions as may be deemed just and
appropriate and issue, within 120 days of the receipt of the complete
application, an Order on the tariff applicable for each year of the control
period. The order shall also contain targets for controllable items. (c) The Commission may also approve, the Business plan with
appropriate modifications as may be considered necessary for the control
period. CHAPTER III (1) The State Transmission Utility/Transmission licensee shall make an
application for determination of Transmission tariff for each year of the
control period in accordance with the provisions in Tariff Regulations. (2) The annual Transmission charges for the control period shall be
estimated based on the audited annual accounts of the licensee. (3) The Transmission charges shall be computed as detailed below: (a) The annual transmission charges consist the following: (i) Interest on loan capital, (ii) Depreciation, (iii) Operation and Maintenance expenses, (iv) Interest on working capital, (v) Return on Equity, The above charges shall be computed on the following basis under
MYT framework. Incentive = Equity * (Annual Availability achieved – Target
availability) / 100. CHAPTER IV Determination of Tariff for Distribution of Electricity Under MYT (a) A statement showing current tariff and applicable terms and conditions. (b) A statement showing demand / sales projections for different
categories of consumers including slab wise consumption with a note on the
method adopted to arrive at the projected growth rate. (c) The energy requirement details with Aggregate Technical and
Commercial loss and sources of procurement of power. (d) A statement containing details of expected revenue at the current
tariff for each year of the control period and the revenue gap to be matched
with tariff at each year. (e) A statement showing cost to supply for electricity to different
category of consumers at different voltage level with the allocation of
Transmission and Distribution loss and consumer wise cross subsidy at the
existing tariff. (f) A statement showing the subsidy received/receivable from
Government at the existing tariff. (g) A statement showing the changes in tariff proposed for each
category of consumer and the estimated revenue at the revised tariff. (h) A statement showing cross subsidy at revised tariff and subsidy
committed by the Government, if any. (i) Any other information that the Commission may require. The Distribution licensee may file a petition for fuel surcharge
adjustment (FSA) wherever there is variation in power purchase cost due to
changes in fuel price during the control period. The Commission may issue
orders to allocate per unit increase / decrease in the cost of power purchase
to various categories of consumers appropriately. (i) Estimated value of assets - voltage wise. (ii) Estimated quantum of sale of energy to different categories of consumers
at each voltage. (iii) Estimated break up cost (revenue expenses) for supply at EHT, HT
and LT voltages. (iv) Estimated voltage wise AT & C loss. (v) Estimated cross subsidy levels. (vi) Estimated quantity of demand likely to be stranded. CHAPTER V Miscellaneous [1] Substituted by Notification No. V1(2) 1502/2012, dated
28.11.2012. [2] Substituted by Notification No. TNERC/MYT/18/2, dated
28-2-2011 (wef 23.3.2011) [3] Substituted by Notification No. TNERC/MYT/18 / 2 , dated
28-2-2011 (wef 23.3.2011) '(ix) Mechanism for sharing approved gains or losses
arising out of controllable factors: The financial loss, if any, due to failure
to achieve the target for the controllable costs in any of the years in the
control period shall be borne by the licensees and the gains, if any, shall be
shared with the beneficiaries at 50:50. [4] Inserted by Notification No. TNERC/MYT/18/2 dated 28-2-2011
(wef 23.3.2011). [5] Inserted by Notification No. TNERC/MYT/18 /2 dated 28
-2-2011 (w.e.f. 23.3.20011).Tamil Nadu Electricity Regulatory Commission (Terms and Conditions
for Determination of Tariff for Transmission/Distribution of Electricity Under
MYT Framework) Regulations, 2009
Every licensee shall file an application for approval of ARR & ERC along
with tariff proposal under MYT framework for the control period commencing from
the financial year to be notified by the Commission. The filing shall be in the
tariff filing formats specified in Appendix I to the Tariff Regulation and for
each year of the control period (i.e) for base year, 1st year of control period,
second year of control period etc.,
The Commission has already notified Tariff Regulations on 03.08.2005. The
general principles of computing cost and return and calculation of ARR,
estimation of revenues and formats for tariff filing in the above Tariff Regulations
are to be adopted for the tariff filing under MYT framework also. The detailed
procedure for making application for determination of tariff and decision on
application shall be in accordance with Regulations 6 and 7 of Tariff
Regulations.
The borrowings and repayments for each year of the control period may be
arrived at with reference to the approved capital investment plan and the
estimated internal resources. Interest on loan for each year of the control
period may be calculated in form 13 in Appendix I (Part -III) to the Tariff
Regulations.
Depreciation rates shall be as per the Schedule annexed to the Tariff
Regulations. Addition to the asset base in each year of the control period
shall be as per the approved capitalization schedule.
The Operation and Maintenance expenses include the following: Repairs &
maintenance costs;
Employee-related costs and Administrative & general expenses,
The O&M expenses shall be derived on the basis of actual expenses for the
past five years previous to base year based on the audited Annual Accounts,
after prudence check by the Commission.
The O&M expenses so arrived for the base year may be escalated by four per
cent per annum for every year of the control period.
The licensee may also propose indexation for estimating the O&M expenses.
O&M expense is a controllable cost and the licensee cannot recover the cost
in excess of norms. The licensee shall share the gains on account of savings
with the beneficiaries as provided in regulation 3(ix).
Norms for working capital shall be as per regulation 26 of Tariff Regulations.
The quantum of working capital for each year of the control period may be
computed with reference to the value of different components applicable for the
respective years. The rate of interest on working capital shall be equivalent
to short term primary lending rate of State Bank of India as on 1st April of
the initial year of the control period. The variation in the rates in the
subsequent years in the control period will be considered in the True up.
Return on Equity shall be 14% per annum post tax for each year of the control
period and computed in accordance with regulation 22 of Tariff Regulations.
[4][The
Distribution licensee shall achieve various indices related To supply
availability as given by the Commission from time to time. For every under
achievement of 1% in composite availability for urban and rural areas, ROE
shall be reduced by 0.1%.]
The STU / Transmission licensee shall furnish, along with tariff application,
the capacity allotted to all long term customers on the base year and estimates
for the allotted capacity for each year of the control period. The
STU/Transmission licensee shall also furnish the estimates for the available
capacity for each year of the control period with reference to planned
generation capacity additions.
The STU/ Transmission licensee may segregate and furnish the value of SLDC
assets for the purpose of determining SLDC charges.
Wherever the licensee is functioning as an integrated utility, the transmission
cost is to be segregated and projected appropriately for each year of the
control period.
The tax on income of the Transmission licensee shall be computed as expenses
and allowed as pass through. The licensee shall estimate the income tax for
each year of the control period. The difference, if any, will be adjusted based
on the actual tax assessed.
The Transmission Licensee shall be entitled to incentive @ 1% of equity for
each percentage point of increase in annual availability beyond the target
availability prescribed under regulation 58(b) (i.e) 98% in accordance with the
following formula
A portion (as decided by the Commission) of the incentive shall be shared with
the long term OA customers in the ratio of their average allotted capacity.
The STU/ Transmission licensee shall furnish the expected revenue at the
existing tariff for each year of the control period in the format prescribed in
the Tariff Regulations along with tariff petition under MYT framework.
The STU/Transmission licensee shall furnish the details of estimated other
income for each year of the control period in the format specified in the
Tariff Regulations.
The STU / Transmission licensee shall propose tariff for each year of the
control period based on the estimated annual transmission charges and estimated
allotted capacity as provided in Regulation 12 for the same for each year of
the control period.
The transmission charges payable by the long term intra state open access
customers like the distribution licensees and other beneficiaries, for each
year shall be arrived at as per Regulation 59 of the Tariff Regulations. The
charges for usage of transmission facilities by long term beneficiaries shall
be based on the capacity allotted and on MW / Day basis.
Till such time the cost of SLDC is segregated, the charges for SLDC for each
year of the control period shall be determined by the Commission on a lump sum
basis.
The Reactive power charges for each year of the control period shall be
regulated as per the Tariff Regulations. The rate will be notified by the
Commission in the MYT Tariff order.
The Distribution licensee shall file application for determination of tariff
under MYT framework for each year of the control period for retail supply of
electricity along with ARR in accordance with the procedure notified in the
Tariff Regulations.
The application shall also be accompanied with the following statements for
each year covered in the control period in the formats specified in the Tariff
Regulations.
The Distribution licensee shall forecast the demand and sale of electricity for
different categories of consumers (including slab wise consumption ) for each
year of the control period.
The licensee may adopt a suitable methodology like CAGR to arrive at the
category wise sales for the base year.
The licensee shall also furnish the category wise existing open access
customers with the demand and the estimated number of consumers who may opt for
open access and the estimated energy to be wheeled in each year of the control
period. The details may be furnished separately for the supply within the area
of the Distribution licensee and to the supply outside the Distribution
licensee.
The Commission shall fix benchmarks for reduction of losses and the licensee
shall achieve the target fixed for each year of the control period.
The AT & C loss is a controllable item and the financial loss, if any, on
account of failure to achieve the target shall be borne by the Distribution
licensee. The gains, if any, on account of achieving the loss below the
targeted level shall be shared with the consumers.
The Distribution licensee may arrange for third party verification of energy
audit results for different areas / localities. They may propose to impose area
/ locality specific surcharge for greater AT & C loss levels which could
generate local consensus for effective action for better governance.
The Distribution licensee may introduce local area based incentive and
disincentive schemes to it's staff, linked to reduction in losses.
The energy input requirement shall be computed on the basis of estimated demand
and AT & C loss for each year of the control period.
The Distribution licensee shall furnish the sources and quantum of energy to be
procured for each year of the control period duly taking into account the Merit
Order Dispatch principles and the estimated increase in available capacity.
Wherever the Distribution licensees have their own generating stations, the
availability from generation shall be computed with reference to the normative
plant load factor and auxiliary consumption.
The availability from own Hydro stations shall be computed based on 25% plant
load factor as specified in the Tariff Regulations.
[5][Supply
availability should be measured on the basis of power contracted by the
distribution licensee on a long-term basis for the power procurement plan
submitted by the utility.]
The Distribution licensee shall forecast power purchase cost for each year of
the control period strictly based on merit order dispatch.
The increase in power purchase cost due to increase in quantum of purchase
consequent to failure of monsoon shall be adjusted against the Hydro Balancing
Fund.
The Operation and Maintenance expenses include the following: Repairs &
maintenance costs;
Employee-related costs and
Administrative & general expenses,
The O&M expenses shall be derived on the basis of actual expenses for the
past five years previous to base year based on the audited Annual Accounts,
after prudence check by the Commission.
The O&M expenses so arrived for the base year may be escalated by four per
cent per annum for every year of the control period.
The licensee may also propose indexation for estimating the O&M expenses.
O&M expense is a controllable cost and the licensee cannot recover the
excess cost in excess of norms. The licensee shall share the gains on account
of savings with the beneficiaries as provided in Regulation 3(ix).
Depreciation rates shall be as per the Schedule annexed to the Tariff
Regulation.
Addition to the asset base in each year of the control period shall be as per
the approved capitalization schedule.
The borrowings and repayments for each year of the control period may be
arrived at with reference to the approved capital investment plan and the
estimated internal resources.
Interest on loan for each year of the control period may be calculated and
furnished in form 13 in Appendix I (Part -III) to the Tariff Regulations.
The tax on income of the Distribution licensee shall be computed as expenses
and allowed as pass through. The licensee shall estimate the income tax for the
each year of the control period. The difference, if any, will be adjusted based
on the actual tax assessed.
The Distribution Licensee shall make a provision of 0.25 % on outstanding
debtors for each year of the control period towards Bad and doubtful Debts in
accordance with the Regulation 29 of TNERC Tariff Regulations.
The Distribution Licensee may adopt the practice of Self Insurance and a
provision upto 0.5 % of the Capital Cost shall be allowed by the Commission in
their Revenue Requirement for each year of the control period.
To meet out any contingent liability or unforeseen revenue losses, the
Distribution licensees shall maintain a contingency reserve. The Distribution
Licensees shall estimate the contingency reserve on the value of Assets for
each year of the control period.
Return on Equity shall be 14% per annum post tax for each year of the control
period and computed in accordance with regulation 22 of Tariff Regulations.
The Distribution licensee shall furnish the expected revenue at the existing
tariff for each year of the control period in the format prescribed in the
Tariff Regulations along with tariff petition under MYT framework.
The Distribution licensee shall furnish the details of estimated non tariff
income for each year of the control period in the format specified in the
Tariff Regulations.
The Distribution licensee shall furnish the details of estimated other income
for each year of the control period in the format specified in the Tariff
Regulations.
Under the MYT proposals, the Distribution licensee shall indicate tariff rates
for each year of the control period to various categories of consumers taking
into account the ARR, Non tariff income and other income.
The Distribution licensee shall submit along with MYT tariff filing, proposal
for determination of Wheeling charge, Surcharge and additional surcharge for
each year of the control period. The proposal shall contain the following
details for each year of the control period.
The Commission for reasons to be recorded in writing, may, at any time, add,
vary, alter, modify, delete or amend any provisions of these Regulations, on
it's own motion or on an application made before it.
If any difficulty arises in giving effect to any provisions of these
Regulations, the Commission may, on it's own or otherwise, by general or
specific order, make such provisions not inconsistent with the provisions of the
Act, as may appear to be necessary for removing the difficulty.
Nothing in these Regulations shall bar the Commission from adopting in
conformity with the provisions of the Act, a procedure, at variance with any of
the provisions of these Regulations, if the Commission, in view of the special
circumstances of a matter or class of matters and for the reasons to be
recorded in writing, deems it necessary or expedient for dealing with such a
matter or class of matters.