The Western Electricity Supply Company of Orissa Ltd. (WESCO) is carrying out the business of distribution and retail supply of electricity in nine districts of State of Orissa namely Sambalpur, Sundargarh, Bolangir, Bargarh, Deogarh, Nuapara, Kalahandi, Sonepur and Jharsuguda. The company receives bulk supply from GRIDCO at several interconnected points at HT and EHT.

The profile of the company as on 31st March 2001 gives a pen picture about its current activities.

Total consumer        -     343952 (Source : Status of metering)
Total input in MU        -    2867.768
Total billing in MU    -    1628.892
Total billing in rupees lakhs-    46384.82 (Source:Audited accounts of WESCO)
33 KV lines (in Kms.)    -    2420
11KV lines (in Kms.)    -    15112             Source:
LT lines (in Kms.)        -    13003             WESCO
33/11KV sub-stations    -    188 nos., 524 MVA General data
11/0.4 KV sub-stations    -    9590 nos., 601 MVA dt.28.8.01

The comparative figure of consumption at different voltage levels as well as energy purchase in MU from the FY 1998-99 onwards with a projection for the future periods is taken from various filings with the Commission and tabulated to serve as an indicator about pattern of consumption in the area of licensee.

The voltage wise sale mix of consumers is given in the table to indicate that the consumption is getting skewed in favour of LT which has been taken from table-II of the RST application of 2000-01 for the FYs 1998-99 and 1999-00 and the same data in respect of FY 2001. 2002 and 2003 has been taken from technical format T-1 of RR application 2002-03.

Table-2 Sale mix variation

WESCO in its RST application of FY 01-02 has stated that there exists a very high degree of non-technical loss in its LT distribution system. It expects a growth rate of 22.18% in the domestic category for the year 2001-02 based on the estimated increase in number of consumers.

WESCO estimate a growth of 23.89% in respect of commercial consumption and 23.89% in respect of irrigation consumer based on expected growth in the number of consumer.and due to aggressive metering programme.

In respect of HT consumers it estimates a growth rate of 3.37% based on the consumption trend and increase in number of industries at the end of the first quarter of the ensuing year.

In respect of EHT consumers WESCO estimates a growth rate of 4.86% based on the consumption trend of the first quarter of the ensuing year.

FY 2002-03

For the FY 2002-03, WESCO estimates a growth rate of 9.25% in domestic category, 11.43% for commercial category and 18.18% for irrigation category over the estimated figure of 2001-02. This estimation of growth rate is based on the trend of consumption for the year 2001-02.

It expects a growth rate of 3.64% in HT category and 20.57% in EHT category based on the consumption of the FY 2001-02 and the expected load growth due to special agreement with INDAL at EHT.

The licensee is required to meet the cost of power purchase from GRIDCO, the cost of distribution covering expenses on account of employees, administration and general expenses, repair and maintenance expenses, depreciation, interest on loan, appropriation to contingency reserve and provision for bad and doubtful debts. In addition to this, the licensee is expected to earn a reasonable return on its capital base based on the methodology prescribed in the Sixth Schedule to the Supply Act, 1948. The cost of power purchase covers not only the cost of power required to meet the need of the end users but also it covers the cost of energy lost on account of technical and commercial losses of the distribution system. The licensee is also required to meet the cost of capital of new investments needed to improve system reliability and quality of power supply.

The licensee earns its only source of revenue through retail supply tariff from the consumers of electricity within its area of license. A summary of proposals of its revenue requirement and the expected revenue at the present tariff for the year 2001-02 as taken from the filings before the Commission is given in the table below.

Table : 3

(Rs. in Crore)

WESCO in its application of 2001-02 has stated that during their operation for the last two and half years the tariff award made by OERC on 30th December 1999 and 19th January 2001 were found to be notional. Similarly the increase granted in the RST order of 19.01.2001 was found to be inadequate to meet the actual and anticipated expenses and the Commission disallowed certain legitimate and reasonable expenses and under-estimated the power purchase expenses. On account of these circumstances WESCO continued to incur losses from 1st April 1999 and the trend continues for the year 2000-01 and 2001-02.

WESCO in its application has stated that in the last two tariff orders the Commission has adopted a method of rationalization of tariff for creating a consumer friendly environment allowing concessions which had serious financial implications e.g. the effect of tariff revision was totally nullified.

WESCO has stated that in spite of RST increase announced by OERC, the margin available to WESCO even with 100% collection efficiency is grossly inadequate to meet the operational expenses, the employees cost and repair and maintenance expenses. As a result of this, there is substantial increase in financial losses suffered by the WESCO.

WESCO in its application have stated that they have targeted to reduce losses in the LT sector to the extent of 38% (estimated) in the FY 2001-02. The pilot study as directed by the Commission has been taken up. The interim results of pilot study indicate that overall distribution loss in WESCO is likely to be in the order of 41%. In the ARR 2002-03 filing ,WESCO has stated that,actual loss for 2001-02 is 45% but for the purpose of tariff determination WESCO has requested OERC to accept distribution loss at 38%.For the FY 2002-03 they proposed a target of reduction of 4% to achieve a distribution system loss of 41% during the year. Accordingly the request is to accept the distribution loss of 41% for computing their revenue requirement for the year 2002-03.

Tariff Revision Proposal (Tariff schedule as per existing and proposed - Annex-D1 and Annex-D2)

WESCO has proposed an overall tariff rise of 20% to compensate for the shortfall in revenue requirement for the year 2001-02. They have also requested to carry forward a substantial portion of losses incurred by them for recovery in future tariff.

WESCO proposes to move towards a cost based tariff structure for which a minimum increase of 30 paise per unit has been suggested in EHT/HT category and a rise of 50-80 paise per unit has been proposed for different consumers in LT category. No change has been proposed in tariff for Kutir Jyoti consumers. WESCO also proposes modification to the monthly minimum fixed charges for LT categories of consumers.

WESCO submits that if the Commission feels it necessary for phasing out of cross-subsidy at a faster pace the Commission can consider the proposal for State Government subsidy to compensate the utility for the financial implications of the proposed measure. The State Government has a significant role to play in balancing the varying interest of different classes of consumer. They have requested OERC to come out with appropriate direction in this regard.

They have proposed no change in the special tariff for consumers with load of 100 MVA and above and a guaranteed monthly load factor of 80% i.e. Rs.2.00 per Kwh based on existing EHT. At the same time WESCO has requested that the special tariff be made applicable to consumers with a load of 50 MW and above

They have proposed special tariff of Rs.1.82/kwh for consumers with load factor of 50 MW and above and guaranteed load factor of 90%,based on existing BST.

• Approval of the proposed retail tariff and charges
• Confirmation of the revenue requirement
• Confirmation of expected revenue from proposed tariff for WESCO

The revenue requirement and the expected revenue for the year 2002-03 as projected by WESCO is given in the table.

Table : 4

(Rs. in Crore)

WESCO has requested for confirmation of revenue requirement for FY 2002-03.