Section 4 in The Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Wheeling Tariff and Retail Supply Tariff) Regulations, 2011
4. General Approach And Guiding Principles.
(1)The Commission shall adopt Multi Year Tariff framework for approval of ARR and expected revenue from tariffs and charges.(2)The Multi Year Tariff framework shall be based on the following:(a)Business Plan of the Distribution Licensee for the entire Control Period to be submitted to the Commission for approval, prior to the start of the Control Period;(b)Applicant?s forecast of expected Wheeling Tariff and Retail Supply Tariff for each year of the Control Period, based on reasonable assumptions of the underlying financial and operational parameters, as submitted in the Business Plan;(c)Trajectory for specific parameters shall be stipulated by the Commission, where the performance of the applicant is sought to be improved through incentives and disincentives;(d)Annual review of performance shall be conducted based on the actual vis-à-vis the approved forecast and categorization of variations in performance into controllable factors and uncontrollable factors;(e)The Distribution Licensee?s performance vis-à-vis the AT&C loss targets specified by the Commission shall be appropriately incentivise/penalise; and(f)Variation in revenue / cost on account of uncontrollable factors like sales, power purchase and controllable factors - RoCE and Depreciation shall be trued up annually.Segregation of Wheeling and Retail Supply Business(3)The Distribution Licensee shall segregate the accounts of the Licensed business into Wheeling Business and Retail Supply Business.(4)For such period until accounts are segregated, the Licensees shall prepare an Allocation Statement to apportion costs and revenues to respective business. The Allocation Statement along with the methodology which should be consistent over the Control Period, as approved by the Board of Directors of the Licensee, shall be submitted for approval of the Commission.Baseline(5)The baseline values (operating and cost parameters) for the Control Period shall be determined by the Commission and based on the approved values by the Commission in the past, latest audited accounts, estimate of the actuals for the relevant year, prudence check and other factors considered appropriate by the Commission.(6)The Commission shall normally not revisit the performance targets.Targets for Controllable Parameters(7)The Commission shall set targets for each year of the Control Period for the items or parameters that are deemed to be "controllable" and which include:(a)AT&C Loss, which shall be measured as the difference between the net units input into the distribution system for sale to all its consumer and the units realised wherein the units realised shall be equal to the product of units billed and collection efficiency:(b)Provided that units billed shall include the units realised on account of theft measured on actual basis i.e. number of units against which payment of theft billing has been realised;(c)Distribution losses, which shall be measured as the difference between the net units input into the distribution system for sale to all its consumer and sum of the total energy billed in its Licence area in the same year;(d)Collection efficiency, which shall be measured as ratio of total revenue realised to the total revenue billed in the same year:(e)Provided that revenue realisation from electricity duty and late payment surcharge shall not be included for computation of collection efficiency;(d)Operation and Maintenance Expenditure which includes employee expenses, repairs and maintenance expenses, administration and general expenses and other miscellaneous expenses viz. audit fees, rents, legal fees etc;(e)Return on Capital Employed;(f)Depreciation; and(g)Quality of Supply.(8)The target AT&C loss levels to be achieved by each Distribution Licensee during each year of the Control Period shall be determined by the Commission based upon benchmarking, past trends, business plan submitted by the Distribution Licensee and any other factor considered relevant by the Commission.(i)The Distribution Licensee will be eligible for incentive by the way of higher rate of Return on Equity (to be considered while calculating RoCE) as shown below for achieving lower AT&C loss level than specified in the loss reduction trajectory:(ii)Additional Return on Equity (%) = (Xi-Yi)/(Xi-1-Xi)(iii)Where,(iv)Xi = Target AT&C loss level for ith year,(v)Xi-1= Target AT&C loss level for (i-1)thyear,(vii)Yi = Actual AT&C Loss level for ith year:(vii)Provided that any financial loss on account of under performance with respect to AT&C loss targets shall be to the Licensee?s account.Sales Forecast(9)The Licensee shall forecast sales for each customer category and sub-categories for each year of the Control Period in their filings, for the Commission?s review and approval.(10)The Commission shall examine the forecasts for their reasonableness and consistency based on growth in the number of consumers, pattern of consumption, losses and demand of electricity in previous years and anticipated growth in the next year and any other factor, which the Commission may consider relevant and approve the sales forecast with such modifications as deemed fit for each year of the Control Period.(11)Sales shall be treated as uncontrollable.(12)Sale of electricity, if any, to electricity traders or other distribution Licensee(s) shall be separately indicated;(13)The distribution Licensee(s) shall also indicate category-wise open access customers and sales. The demand and energy wheeled for them shall be shown separately for:(a)Supply within its area of supply; and(b)Supply outside its area of supply.Capital Investment(14)The Commission shall approve capital investment plan of the Licensees for the Control Period commensurate with load growth, distribution loss reduction and quality improvement proposed in the Business Plan.(15)Capital investment plan submitted by the Licensee shall also provide details of ongoing projects that will spill into the Control Period and new projects that will commence during the Control Period but may extend beyond the Control Period.(16)The investment plan shall be zone wise /scheme-wise and with respect to each zone/scheme, shall include:(a)Purpose of investment (i.e. replacement of existing assets, meeting load growth, technical loss reduction, non-technical loss reduction, meeting reactive energy requirements, customer service improvement, improvement in quality and reliability of supply, etc) ;(b)Capital Structure;(c)Capitalization Schedule;(d)Financing Plan;(e)Cost-benefit analysis;(f)Performance improvement envisaged in the Control Period.(17)The Commission shall review actual capital expenditure incurred and capitalisation at the end of each year of the Control Period vis-à-vis the approved capital expenditure and capitalisation schedule. Based on trued up capital expenditure and capitalisation, the Commission shall true up Return on Capital Employed (RoCE) and depreciation while truing up for any year of the Control Period. The Commission may also revise the capital expenditure and capitalisation for remaining years of the Control Period based on trued up capital expenditure and capitalisation for any year.(18)Capital expenditure shall normally be incurred by the Licensee after the approval of the Commission.(19)The Licensee shall quarterly submit the details of the scheme-wise asset capitalisation along with receipt of the Electrical Inspector certificate (wherever applicable) and other documents as may be prescribed by the Commission from time to time for allowing Return on Capital Employed and Depreciation.Quality of Supply and Customer Service(20)The quality of supply and the customer service parameters shall be monitored as per the norms to be prescribed by the Commission separately from time to time. For certain parameters listed in clause 6.2, the Commission shall monitor Licensee?s performance with respect to the targets specified.True Up(21)The true up across various controllable and uncontrollable parameters shall be conducted as per principle stated below:(a)Variation in revenue / expenditure on account of uncontrollable sales / power purchase respectively shall be trued up every year;(b)For controllable parameters,(i)Any surplus or deficit on account of Operation and Maintenance (O&M) expenses shall be to the account of the Licensee and shall not be trued up in ARR; and(ii)Depreciation and Return on Capital Employed shall be trued up every year based on the actual capital expenditure and actual capitalisation vis-à-vis capital investment plan (capital expenditure and capitalisation) approved by the Commission.
