Section 22 in Bihar Electricity Regulatory Commission (Multi Year Distribution Tariff) Regulations, 2015
22. Operation & Maintenance Expenses.
(a)The Commission shall stipulate a separate trajectory of norms for each of the components of O&M expenses viz., Employee cost, Repair and Maintenance (R&M) expense and Administrative and General (A&G) expense.Provided that such norms may be specified for a specific Distribution Licensee or a class of Distribution Licensees.(b)Norms shall be defined in terms of combination of number of personnel per 1000 consumers and number of personnel per substation along with annual expenses per personnel for Employee expenses; combination of A&G expense per personnel and A&G expense per 1000 consumers for A&G expenses and R&M expense as percentage of gross fixed assets for estimation of R&M expenses:(c)One-time expenses such as expense due to change in accounting policy and arrears paid due to pay commission recommendation shall be excluded from the norms in the trajectory.(d)The unforeseen expenses beyond the control of the Distribution Licensee such as pay revision, shall be excluded from the norms in the trajectory.(e)The One-time expenses and the expenses beyond the control of the Distribution Licensee shall be allowed by the Commission over and above normative Operation & Maintenance Expenses after prudence check.(f)The norms in the trajectory shall be specified over the control period with due consideration to productivity improvements.(g)The norms shall be determined at constant prices of base year and escalation on account of inflation shall be over and above the baseline.(h)The Distribution Licensee specific trajectory of norms shall be identified by the Commission on the basis of absolute and relative analysis.(i)In absolute analysis, Distribution Licensee's audited accounts of operations for last three years, expenses claimed for control period, historically approved cost, and prudence check shall be used by the Commission to estimate values of norms.(j)In relative analysis, performance parameters of other Distribution Licensees within the same state or in other states, shall be considered by the Commission to estimate norms.Provided that other Distribution Licensees so chosen shall have similar profile as that of the Distribution Licensee under consideration in terms of consumer mix, type of license area (city, state, etc.) type of distribution networks, viz., underground/overhead, High Tension (HT) consumer, Low Tension (LT) consumer ratio, etc.(i)Suitable average of outcomes of absolute and relative analysis shall be taken by the Commission to fix the norms over the control period for the Distribution Licensee.22.1Employee Cost. - Employee cost shall be computed as per the approved norm escalated by consumer price index (CPI), adjusted by provisions for expenses beyond the control of the Distribution Licensee and one time expected expenses, such as recovery/adjustment of terminal benefits, implications of pay commission, arrears and Interim Relief, governed by the following formula:EMPn = (EMPb * CPI inflation) + ProvisionWhere:EMPn : Employee expense for the year nEMPb : Employee expense as per the normCPI inflation : is the average increase in the Consumer Price Index (CPI) for immediately preceding three yearsProvision : Provision for expenses beyond control of the Distribution Licensee and expected one-time expenses as specified above.Till the norms is specified by the Commission the employee cost shall be determined on the basis of actual historical cost.22.2Repairs and Maintenance (R&M) Expense. - Repairs and Maintenance expense shall be calculated as percentage (as per the norm determined) of Opening Gross Fixed Assets for the year governed by following formula:R&Mn = Kb * GFAnWhere:R&Mn : Repairs & Maintenance expense for nth yearGFAn : Opening Gross Fixed Assets for nth yearKb : Percentage point as per the norm22.3Administrative and General (A&G) Expense. - A&G expense shall be computed as per the norm escalated by wholesale price index (WPI) and adjusted by provisions for confirmed initiatives (IT etc. initiatives as proposed by the Distribution Licensee and validated by the Commission) or other expected one-time expenses, and shall be governed by following formula:A&Gn = (A&Gb * WPI inflation) + Provision Where:A&Gn: A&G expense for the year nA&Gb: A&G expense as per the normWPI inflation: is the average increase in the Wholesale Price Index (WPI) for immediately preceding three yearsProvision: Cost for initiatives or other one-time expenses as proposed by the Distribution Licensee and validated by the Commission.Till the norms of A&G expenses is specified by the Commission, the actual historical cost will be considered for determination of A&G expenses.
