- (1.) The Bruhanmumbai Electric Supply and Transport Undertaking (BEST) has filed a Petition on 4 April, 2014 under Regulations 99 and 100 of the MERC (Multi Year Tariff (MYT)) Regulations, 2011 seeking that it be permitted not to refund Fuel Adjustment Charges (FAC) to its consumers during the Second MYT Control Period, i.e. FY 2013 -14 to FY 2015 -16.
(2.) BEST's substantive prayers are as follows: " i. Admit the petition in accordance with the Regulation 99 and 100 MERC (Multi Year Tariff) Regulations, 2011. ii. Allow BEST to adjust amount of Rs 251 Crore, accumulated towards FAC against revenue gap, as on February, 2014. iii. Allow BEST to continue, not to refund FAC (if any) for Second MYT Control Period up to FY 2015 -16, unless the accumulated negative FAC exceeds actual / estimated gap of Rs 1036 Crore, at the end of Second Control Period..."
(3.) In its Petition, BEST has submitted as follows: 3.1. The Commission has approved BEST's MYT Order in Case No. 26 of 2013 on 28 August, 2013. The revised tariff was made effective from 1 September, 2013 as follows: FY FY FY Particulars 2013 -14 2014 -15 2015 -16 5624.75 5719.42 5616.29 Total ARR incl. Regulatory Asset recovery (Rs. crore) Sales (MU) 4758.37 5216.16 5734.66 Revenue at existing tariff (Rs. crore) 4356.53 5247.96 6315.23 Revenue Gap/(Surplus) (Rs. crore) 1268.21 471.46 (698.95) Average Cost of Supply (ACOS) (Rs/kWh) 11.82 10.96 9.79 Average Tariff Increase/(Decrease) (%) 29.11% 8.98% (11.07)% 3.2. The approved revenue for FY 2013 -14 as per the MYT Order is Rs. 5624.75 crore. Realisation of this revenue required sale of 4758.37 MU in FY 2013 -14. Considering the actual sale upto January, 2014, total sales during FY 2013 -14 are expected to be around 4364.74 MU, i.e. less by 393 MU than the approved level. The lower than expected sales are mainly attributable to the slow pace of anticipated infrastructure developments (such as the Wadala Truck Terminal, Dharavi Makeover and Mill area projects); and prolonged monsoon and winter seasons along with closure of commercial establishment because of the LBT agitation during the peak summer season. The development of some of these projects is expected to remain slow in FY 2014 -15 and FY 15 -16 also. 3.3. The revised tariff for FY 2013 -14 was implemented from 1 September, 2013. The delay in implementation of the revised tariff also contributed to the lower revenue of about Rs. 348 crore during FY 2013 -14. Due to reduction in sale of electricity, there will be a cumulative revenue gap of about Rs. 1036 crore at the end of the Second Control Period as against the surplus of Rs. 70.36 crore envisaged by the Commission in its MYT Order. The details are given in the Table below: Approved Revised Estimate (Case No.26 of 2013) Particular Unit FY FY FY FY FY FY 13 -14 14 -15 15 -16 13 -14 14 -15 15 -16 ARR a Rs Cr 5624.75 5719.42 5616.29 5275.58 5492.92 5390.87 Estimated Revenue b Rs Cr 4744.21 5699.82 6847.14 3907.86 5271.04 6377.22 at existing tariff Revenue Gap c= a -b Rs Cr. 880.54 19.6 (1230.85) 1367.71 221.88 (986.34) Equalised Revenue d Rs Cr. 236.91 271.91 531.91 gap for recovery Carrying cost on e=(c -d)* Rs Cr. 150.78 179.95 0.00 deferred recovery 14.62% Revenue Gap for f=d+e Rs Cr. 387.68 451.86 531.91 tariff recovery g MUs 4758.37 5216.16 5734.66 4364.74 4822.53 5341.04 Sales Estimated Revenue h=f+b 4744.21 5699.82 6847.14 3907.86# 5271.04 6377.20 through revised Rs Cr. tariff Revised estimated Revenue gap I=a -h 880.54 19.6 (!230.85) 1367.71 221.88 (986.34) Rs Cr. Cumulative revenue j Rs Cr 880.54 900.14 (201.97) 1367.71 1589.59 803.21 Gap Carrying Cost on k= Cumulative revenue Rs Cr 128.73 131.60 199.96 232.40 j*14.65% gap Expected Gap at the end of control l (70.36) 1036 period (Rs. Crore) #Inclusive of Rs. 251.28 crore to be refunded against FAC 3.4. BEST had levied FAC till August 2013, prior to the MYT Order. It discontinued such levy upon implementation of the Order from 1 September, 2013. 3.5. During FY 2013 -14, the actual variable cost of power purchase in various months has been generally lower than the approved variable cost of Rs 3.62/Unit. This has resulted in negative FAC. At the end of February, 2014, BEST has accumulated Rs 251.30 crore as FAC charges due for refund to the consumers. 3.6. The following difficulties will arise if the outstanding negative FAC is refunded to consumers immediately: a) The revenue gap at the end of the second Control Period may increase to Rs.1360 crore. b) This revenue gap will attract carrying cost which will have to be passed on to consumers. 3.7. BEST's financial situation and cash flow problem will worsen. ;