- (1.) The Tata Power Co. Ltd. (TPC) (Distribution Business) has filed a Petition on 25 August, 2014 for review of the Multi Year Tariff (MYT) Order dated 28 June, 2013 in Case No. 179 of 2011 with regard to disallowance of capitalization. This Petition is related to the Order dated 6 June, 2014 on an earlier Review Petition (Case No. 99 of 2013) which also involved this issue.
(2.) TPC's prayers are as follows: a) Condone the delay of about 400 days and admit the review petition in accordance with Regulation 85(a) MERC (conduct of business) Regulations, 2004; b) To consider the revised capitalization of Rs. 187.93. Crores for FY 2011 -12 instead of Rs.183.33 Crores as considered for the ROE and interest computation. "
(3.) The Petition states as follows: 3.1. In its MYT Tariff Order in respect of TPC's Distribution Business in Case No. 179 of 2013, the Commission approved capitalization of Rs. 187.93 crore after True -up. However, the capitalization amount considered for computation of Return on Equity (RoE) and Interest was Rs. 183.33 crore, i.e. it was less by Rs. 4.60 crore. 3.2. Hence, TPC filed a review Petition (Case No. 99 of 2013) to rectify the error. In its Order dated 16 June, 2013, the Commission stated that the deduction of Rs. 4.62 crore from the approved capitalization amount for FY 2011 -12 was towards the consumer contribution and not a computational error. 3.3. However, in the principal Case No. 179 of 2013 (original MYT proceedings), TPC had clarified that the capitalization submitted was excluding the consumer contribution. Its letter dated 10 January, 2013 is quoted below: "We wish to submit that the capitalization as considered for FY 2011 -12 does not include assets that have created through the Consumer Contribution." 3.4. In Case No. 99 of 2013 for review of the MYT Order, TPC had explained the treatment of depreciation of assets created towards consumer contribution as follows: "As regards, the consumer contribution we wish to submit the following: Tata Power -D while submitting the GFA is deducting the consumer contribution from the capitalization. Hence the ROE, Loan and Depreciation computed for the LA business is without taking any consumer contribution. However though we deduct the consumer contribution from the GFA in the ARR computation, the asset remains with Tata Power -D in its books and hence corresponding liability to this extent of consumer contribution is created in the books of Tata Power. However, since such liability is not refundable to the consumer, the liability needs to be written back. Tata Power had adopted the methodology of writing back this liability at a rate of depreciation." 3.5. However, the Commission in its Order dated 16 June, 2014, ruled that: "22. As regards the deduction of Consumer Contribution, it is clarified that the Consumer Contribution amount deducted by the Commission is Rs. 4.62 Crore and not Rs. 4.96 Crore, which is the amount for which reconciliation has been submitted by TPC in reply to the Commission's queries. 23. Further, the amount of Consumer Contribution of Rs. 4.62 crore deducted by the Commission from the capitalized amount, was based on TPC's submission in its reply dated 10 January, 2013 as a separate Annexure wherein, in the reply to Query No. 7, TPC had submitted that the total amount transferred to Capital Contribution during FY 2011 -12 is Rs. 4.62 Crore. 24. Further, the Commission has always been following the same approach of deducting the Consumer Contribution from approved capitalization for the purpose of computation of RoE, Interest on Loan and Depreciation in all its previous Orders. 25. Accordingly, the Commission is of the view that there is no error apparent in the amount of capitalization considered for computation of RoE and interest expenses, and therefore, the Commission disallows TPC's prayer to consider additional capitalization of Rs. 4.62 Crore for the computation of RoE and Interest on Loan." 3.6. TPC got clarity from that Order that the disallowance of the capitalization amount was on account of consumer contribution of Rs. 4.62 crore and not for the depreciation amount. This was not clear to TPC before that time, or else it would not have raised the issue for review in the manner that it did. 3.7. Since the review matter raised in this Petition is arising out of Case No. 179 of 2011, there is a considerable delay in filing the Petition. However, this is due to the incorrect understanding by TPC, clarified in the Commission's recent Order of 16 June, 2014. Hence, TPC seeks that the Commission consider the consumer contribution of Rs. 4.62 crore. 3.8. In its Order dated 16 June, 2014 on TPC's Review Petition in Case 99 of 2013, the Commission has stated that that the capitalization amount deducted was based on TPC's response dated 10 January, 2013. In that letter, TPC had provided the list and value of assets created out of consumer contributions. These assets are different from those submitted in Form 5.4D of the MYT Petition in Case 179 of 2011. 3.9. The capitalization amount of Rs. 188.08 crore was submitted in Form 5.4D, out of which the Commission approved Rs. 187.93 crore. This does not include the consumer contribution. However for the purpose of working out the Debt and Equity, the Commission had considered an amount of Rs 183.33 crore after deducting consumer contribution of Rs 4.62 crore. 3.10. Since the capitalization of Rs 188.08 crore presented by TPC in its MYT Petition was arrived at after deduction of the consumer contribution of Rs 4.62 crore, a further deduction of that amount is not justified. Hence, capitalization of Rs. 187.93 crore may be considered for computation of RoE and Interest for FY 2011 -12, instead of Rs. 183.33 crore considered in the MYT Order. ;