RAKESH NATH, J. - (1.) THIS Appeal has been filed by Orissa Power Transmission Corporation Limited against the order dated 20.03.2009 passed by Orissa Electricity Regulatory Commission ("State Commission") in case No.63 of 2008 determining Annual Revenue Requirement (ARR) and Transmission Tariff of the Appellant for the FY 2009 -10.
(2.) THE Appellant is a transmission licensee and also carrying out the functions of State Transmission Utility in the State of Orissa. The State Commission is the 1st Respondent. Respondent No.2 to 5 are the distribution licensees.
(3.) IN the present Appeal, the Appellant has challenged the disallowances under the following heads: i) Employees Cost; ii) Terminal Benefits; iii) Repair and Maintenance (R&M) Expenses; iv) Administration and General (A&G) Expenses; v) Interest on Loan; vi) Return on Equity (RoE); vii) Interest on Working Capital; viii) Pass through Expenses; and ix) Contingency Reserves. The Appellant has also challenged the deduction of a sum of Rs.30.50 crores from the ARR on account of miscellaneous receipts. Ld. Counsel for the Appellant has made the following submissions on the above issues: 4.1 Employees Cost: In the ARR petition, the Appellant had claimed a sum of Rs.155.22 crores towards employees cost against which by the impugned order the State Commission had allowed a sum of Rs.102.47 Page crores. Subsequent to the filing of the Appeal, the State Commission has trued up the employees cost based on the audited report allowing a sum of Rs.119.76 crores. Thus the present claim subsequent to the true up by the State Commission is confined to the carrying cost in respect of the differential sum of Rs.17.29 crores (Rs.119.76 - Rs.102.47 crores) 4.2 Terminal Benefits: The Appellant had claimed the terminal benefits of Rs.228.81 crores for the FY 2008 -09 on the basis of the Actuary Report of M/s. Bhudev Chatterjee dated 30.09.2008. However, the State Commission had allowed a sum of Rs.76.94 crores towards terminal benefits on actual payment basis for earlier year in the Tariff Order. Subsequently, the State Commission appointed M/s Darashaw and Company and their report dated 16.12.2010 was considered by the State Commission in the Tariff Order for the FY 2011 -12, in which the truing up has been carried out. According to the Appellant, the report of the Actuary appointed by the Appellant should have been accepted by the State Commission as it was based upon up -to -date database and the State Commission in the Tariff Order for the FY 2008 -09 had also accepted the Actuary Report of the same company, viz., M/s. Bhudev Chatterjee. Further, interest rate (discounting rate) of 7.5% Page 4 of 19 and Attrition rate/withdrawal rate considered by the Actuary appointed by the Appellant appear to be more realistic. However, in the alternative, he submitted that since the Report of M/s Darashaw and Company has been accepted by the State Commission in the Tariff Order for the FY 2011 -12, this issue may be left open to be considered in Appeal No./DFR No.1995 of 2008 arising out of the Tariff Order for the FY 2011 -12 after copies of Reports of both the Actuaries are placed on record. 4.3 Repair and Maintenance (R&M) Expenses: The Appellant had claimed a sum of Rs.123.74 crores towards R&M expenses against which the State Commission had allowed Rs.47 crores. As per the accounts audited by the CAG the actual R&M expenses are Rs.26.14 crores which has since been trued up by the State Commission. Thus the claim of the Appellant under this head does not survive. 4.4 Administration and General (A&G) Expenses: The Appellant had claimed a sum of Rs.39.85 crores towards A&G expenses against which the State Commission had allowed Rs.17.50 crores. Subsequently as per CAG Audit, actual A&G expenses are Rs.26.68 crores. However, in the truing up order the State Commission has confirmed allowances of Rs.17.50 crores as Page 5 of 19 per the impugned order. The State Commission should have allowed the actual expenses as per the audited accounts. 4.5 Interest on Loan: The Appellant had claimed a sum of Rs.189.51 crores towards interest on loan against which the State Commission had allowed Rs.70.53 crores. As per the CAG audit, actual amount comes to Rs.54.16 crores which has been trued up subsequently by the State Commission in the truing up order. Thus the claim of the Appellant under this head does not survive. 4.6 Return on Equity (RoE): The Appellant had claimed RoE amounting to Rs.13.30 crores, @ 14% on the equity of Rs.95.07 crores. However, the State Commission did not allow the claim for RoE on the basis of letter dated 17.02.2009 of the Government of Orissa. The letter from the Government of Orissa only referred to freezing of RoE to GRIDCO and OHPC and not the Appellant. The State Commission should have allowed RoE according to the Central Commission's Tariff Regulations. 4.7 Interest on Working Capital: The Appellant had claimed a sum of Rs.26.39 crores towards the interest on working capital on the basis of the Central Commission Tariff Regulations, 2004. However, the State Commission did not allow any amount towards interest on working capital. 4.8 Pass through Expenses: The Appellant had claimed a sum of Rs.51.41 crores towards pass through expenses on account of pass through interest liability (Rs.42.35 crores) and past losses up to the FY 2006 -07 (Rs.9.06 crores). However, the State Commission disallowed the claim of the Appellant. However, in the Tariff Order for the FY 2011 -12 a sum of Rs.18.98 crores has been allowed by the State Commission leaving a balance of Rs.23.37 crores. Since the expenditure of Rs.23.37 crores had actually been incurred towards interest on term loan as per the accounts audited by CAG, the same ought to have been allowed. Regarding loss appropriation, the balance loss upto the FY 2006 -07 as per the audited accounts amounts to Rs.9.06 crores. The claim of Rs.9.06 crores should not have been disallowed on the basis of cash flow statement since the same does not reflect the correct financial position which has been provided by the audited figures. 4.9 Contingency Reserve: The Appellant had claimed a sum of Rs.15.01 crores towards Contingency Reserve against which the State Commission had allowed a sum of Rs.9.08 crores. As per the CAG audit, the actual figure comes to Rs.10.94 crores. However, in the truing up in the Tariff Order for 2011 -12, the State Commission has confirmed the allowance of Rs.9.08 crores. The balance amount of Rs.1.86 crores ought to have been allowed. 4.10 Miscellaneous Receipts: In the impugned order the State Commission had taken a sum of RS.30.50 crores on account of miscellaneous receipts of the Appellant. As per the CAG audit, the actual figure comes to Rs.32.61 crores which has been trued up in the Tariff Order for the FY 2011 -12. This issue, therefore, does not survive. ;