PETITION - tantransco

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21. Debt-Equity Ratio For the purpose of determination of tariff, debt-equity ratio as on the date of commercial operation of Generating Station and transmission projects, sub-station, distribution lines or capacity expanded after the notification of these Regulations shall be 70:30. Where equity employed is more than 30% the amount of equity shall be limited to 30% and the balance amount shall be considered as loans, advanced at the weighted average rate of interest and for weighted average tenor of the long term debt component of the investment” “Provided that in case of a Generating Company or other licensees, where actual equity employed is less than 30%, the actual debt and equity shall be considered for determination of return on equity in tariff computation.” (Emphasis Added) 4.6.3 TANTRANSCO would like to submit that Return on Equity is a surplus generated which entitles a utility to safeguard itself against any uneven contingencies or a force majeure event in future. Also, clause 5.3(a) of the National Tariff Policy states that: “Balance needs to be maintained between the interests of consumers and the need for investments while laying down rate of return. Return should attract investments at par with, if not in preference to, other sectors so that the electricity sector is able to create adequate capacity. The rate of return should be such that it allows generation of reasonable surplus for growth of the sector. (Emphasis Added)” 4.6.4 Also, APTEL order in the case for KPTCL v/s. KERC, states as follows: The Appellate Tribunal observed that merely because there is no notification or allocation indicating the capital or investment or such other sum cannot be reason enough to deny return of equity. 4.6.5 TANTRANSCO would like to submit that Return on Equity is a surplus generated which entitles a utility to safeguard itself against any uneven contingencies or a force majeure event in future. Also, the National Tariff Policy 4.6.6 The Reasonable Rate of Return of TANTRANSCO for the year FY 2011-12 is shown in the table below: Table 19: RoE for FY 2011-12 Rs. Crs Particulars Approved by Commission FY 2011-12 Year (Actuals) Opening Equity - 1,928 Additions during the year - 406 Closing Equity - 2,334 Average Equity - 2,131 Return on Equity (%) - 14% Total - 298 4.6.7 Based on the foregoing paragraphs, TANTRANSCO requests the Hon’ble Commission to approve the Reasonable Rate of Equity for FY 2011-12 at Rs. 298 Crores. Page 19
4.7 Other Income 4.7.1 Other Income includes interest on staff loans, income from investment, income from trading, interest from banks, income from short term open access, etc. The amount of Other Income as per provisional accounts for FY 2011-12 is Rs. 35.16 Crores and the Hon’ble Commission is requested to approve the same. 4.8 Other Debits & Prior Period Expenses 4.8.1 Other Debits incurred by TANTRANSCO for the year FY 2011-12 is Rs. 2.08 Crs as against Rs. 0.84 Crs approved by the Hon’ble Commission. 4.8.2 The Hon’ble Commission has not considered Prior Period Income for FY 2011-12. However, as per the provisional account for the year FY 2011-12, the Prior Period Income for TANTRANSCO is Rs. 1.56 Crs. Table 20: Other Debits & Prior Period Expenses for FY 2011-12 Rs. Crs Particulars Approved by Commission FY 2011-12 Difference Year (Actuals) Other Debits 0.84 2.08 1.24 Prior Period Income - 1.56 Total 0.84 3.64 2.80 4.8.3 TANTRANSCO would like to submit that that the disclosure of prior period items is in line with Accounting Standard (AS)-5 on Prior Period and Extraordinary Items, which emphasizes that Prior period items should be separately disclosed in the current statement of profit and loss together with their nature and amount; and in a manner that their impact on current profit or loss can be perceived. 4.8.4 The term ‘prior period items’, refers only to income or expenses which arise in the current period as a result of errors or omissions in the preparation of the financial statements of one or more prior periods. The items covered under the Prior Period Charges in the present petition had been missed out in the previous audited accounts and hence is not claimed earlier. Therefore, prior period items are the expenses which are legitimate in nature and have not been claimed in the previous year accounts or ARR, due to “Error of omission” or “Error of Commission” and same has been identified in FY 2011-12 and has been accounted in that year. These are the daily routine expenses which includes interest, any excess provision related to income or expenses and employee cost which are necessary for smooth functioning of the company and are pertaining to the previous financial year but recognized during current year. 4.8.5 Based on the above submission, TANTRANSCO request the Hon’ble Commission to allow the prior period expenditure and other debits as showcased in the above table for the year FY 2011-12. Page 20
Page 1 and 2: TAMIL NADU TRANSMISSION CORPORATION
Page 3 and 4: 6.9 OTHER DEBITS AND PRIOR PERIOD I
Page 5 and 6: Table 53: Incentive for FY 2013-14
Page 7 and 8: Sr. No Abbreviations Descriptions 3
Page 9 and 10: asis and assigned to the services o
Page 11 and 12: 2. OVERALL APPROACH FOR PRESENT FIL
Page 13 and 14: 3. FINAL TRUE UP FOR FY 2010-11 3.1
Page 15 and 16: Table 3: R&M Expense for FY 2010-11
Page 17 and 18: 3.5.2 TANTRANSCO would like to subm
Page 19 and 20: 3.6.7 Based on the foregoing paragr
Page 21 and 22: 4. PROVISIONAL TRUE UP FOR FY 2011-
Page 23 and 24: Table 15: O&M Expenditure for FY 20
Page 25: 4.5.3 TANTRANSCO would like to subm
Page 29 and 30: 5. CAPITAL EXPENDITURE FOR FY 2010-
Page 31 and 32: 6. ANNUAL PERFORMANCE REVIEW - FY 2
Page 33 and 34: 6.3.4 Thus, the Employee Expense of
Page 35 and 36: 6.4 GFA and Depreciation 6.4.1 The
Page 37 and 38: 6.7.2 The Hon’ble Commission in i
Page 39 and 40: Table 40: Annual Transmission Charg
Page 41 and 42: 7.2.2 The Employee Expense of TANTR
Page 43 and 44: 7.3.4 The depreciation charge propo
Page 45 and 46: 7.6.2 Further, the Tariff Regulatio
Page 47 and 48: 7.11.2 The petition is filed under
Page 49 and 50: 9. TRANSMISSION CHARGES FOR CONTROL
Page 51 and 52: Table 56: Transmission loading for
Page 53 and 54: • To maintain % voltage regulatio
Page 55 and 56: 9.2.5 Operation and Maintenance exp
Page 57 and 58: B. Administration & General Expense
Page 59 and 60: 9.2.7.5 The funding for new capital
Page 61 and 62: 9.2.11.3 The Hon’ble Commission i
Page 63 and 64: 10. METHODOLOGY FOR RECOVERY OF NET
Page 65 and 66: 10.4 Loading of the Transmission Sy
Page 67 and 68: 10.5.7 As per Comprehensive Tariff
Page 69 and 70: 11. DIRECTIVES OF THE HON’BLE COM
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PETITION - tantransco

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