The B

PUBLI

(NO.PATNA 299) PA

BIHAR ELEC

No. Case No. SMP-32/

Electricity Act, 2003 (36 of 2

previous publication, the Bihar

regulations.

SHORT TITLE, COM

1.1.

These regulations may

of Compliance) Regula

1.2

These regulations shall

1.3

These regulations shall

Gazette of the State of B

DEFINITIONS AND I

2.1

In these regulations, un

(a)

‘Act’ means the

(b)

“Regulated E

transmission lic

2.2

Words and expressions

shall have the meanings

COMPLIANCE AUD

3.1

The Commission may,

compliance with the Ac

by the Commission.

3.2

The Commission may,

manner by inviting bids

in the discharge of these

REGISTERED

Bihar Gazett

XTRA ORDINARY

SHED BY AUTHORITY

13 CHAITRA 1940(S)

ATNA, TUESDAY, 3RD APRIL 20

CTRICITY REGULATORY COMMISSION

————

NOTIFICATION

The 2^nd April 2018

/2017-02–– In exercise of powers conferred by sect

2003), and other provisions enabling it in this beh

r Electricity Regulatory Commission hereby makes

MMENCEMENT AND EXTENT

be called the Bihar Electricity Regulatory Comm

ations, 2018.

extend to the whole of the State of Bihar.

l come into force from the date of their publication

Bihar.

INTERPRETATIONS

less the context otherwise requires:

e Electricity Act, 2003 (36 of 2003);

Entities” mean distribution licensees, generatio

censees, Electricity Traders, and State Load Dispatch

s used and not defined in these regulations but defi

s assigned to them in the Act;

DITS

at any time, conduct audits of regulated entities for

ct, rules, regulations made thereunder, orders and dir

by order, empanel consultants / auditors in fair a

s clearly specifying the term of reference to assist th

e functions on the terms and conditions as deemed fi

NO. PT.-40

tetetete

018

tion 181 of the

half, and after

the following

mission (Audit

in the Official

on companies,

h Centres;

ned in the Act

verifying their

rections issued

and transparent

he Commission

it.

BIHAR GAZETTE (EXTRA) 3RD APRIL 2018

3.3.

The Commission may either appoint consultants/ auditors empanelled with it for an audit

or go through the process of fresh selection, if required for a specific need.

3.4

The Commission may also consider the single source selection of consultants/ auditors

where it is appropriate for reasons to be recorded in writing.

3.5

The Commission before initiating an audit will frame the terms of reference which will

detail out the specific outputs that are to be provided by the Consultant / Auditor in

relation to the task, the timeframe in which the task has to be completed and other terms

relevant to the task.

3.6

The Commission shall assign, through an Order, the specific task of audit to the

consultant / auditor based on the terms of reference framed by it before the audit of the

regulated entity starts.

REQUIREMENTS OF CONSULTANT / AUDITOR.—Consultants / auditors shall

provide professional, objective, and impartial advice and at all times hold the

Commission’s interests paramount, without any consideration for future work, and that in

providing advice they avoid conflicts with other assignments and their own corporate

interests. Consultants / auditors shall not be hired for any assignment that would be in

conflict with their prior or current obligations to other clients, or that may place them in a

position of being unable to carry out the assignment in the best interest of the

Commission. Without limitation on the generality of the foregoing, Consultants / auditors

shall be engaged keeping in view the circumstances set forth below:

(i)

A consultant or an auditor engaged for a particular audit must not hold office or

have a commercial or any other interest in the regulated entity for a period of

three (3) years preceding the engagement by the Commission.

(ii)

While conducting an audit, the consultant or auditor would be expected to do so

honestly, fairly, professionally, independently and objectively and exercise a

standard of skill, care and diligence that would be reasonable to expect of a

person who is skilled, and who has substantial experience, in the provision of

services the same as or similar to those to be provided by the auditor.

(iii)

The selected consultant or auditor would be required to provide a written

declaration to the Commission that he has no conflict of interest while

performing the tasks and functions assigned to him under these regulations nor

by its nature, may be in conflict with another assignment of the consultant or

auditor.

(iv)

Depending upon the requirement of the specific task, the Commission may

specify in the terms of reference, minimum educational qualification and length

of experience in the relevant field of the Consultant / Auditor.

Provided that minimum length of experience in the relative field shall not

be less than 5 (five) years.

(v)

The remuneration / fee payable to the Consultant / Auditor may be specified by

the Commission in the Terms of Reference.

EXPENSES

(i)

All expenses of, and incidental to, any audit made under these regulations, as per

the terms of reference, shall be paid to the auditor/consultant by the Commission,

and such expenses shall be defrayed by the regulated entity in favour of the

Commission within 60 days of the claim made by the Commission. The

Commission may, at its own discretion, decide to claim the said expenses,

partially or fully, before the start or during various stages of the audit exercise. If

the payment in favour of the Commission is not made within the due date, the

regulated entity shall be liable to pay an interest at the rate of one and quarter

percent (1.25%) per month from the date of claim.

(ii)

The regulated entity shall be permitted to claim the said expenses as follows –

(a)

Distribution licensees or transmission licensees may claim the said

expenses as pass through in annual revenue requirement;

BIHAR GAZETTE (EXTRA), 3RD APRIL 2018

(b)

Generation companies may claim the said expenses while filing

application for determination of tariff;

(c)

Electricity Traders may claim the said expenses as increase in trading

margin with the approval of Commission.

(d)

State Load Despatch Centre may claim the said expenses as pass through

in its annual budget approval.

METHODOLOGY

6.1

The consultant / auditor may, at any time, and shall, on being directed to do so by the

Commission, cause an inspection to be made, by one or more of his officers, of any

regulated entity and his books of account, registers and other documents in its custody,

and to investigate into the affairs of the regulated entity in a manner as deemed fit by the

Commission.

Provided that the regulated entity shall be given a reasonable advance notice not less than

15 days in writing of such inspection and / or investigation.

6.2

It shall be the duty of every regulated entity, to produce before the consultant / auditor, all

such books of account, registers and other documents and to furnish him with any

statement and information relating to the affairs of the regulated entity, as the said

consultant / auditor may require of him within such time as the said consultant / auditor

may intimate in writing in this behalf.

6.3

The consultant / auditor shall collect sufficient amount of evidence to document the work

performed and to serve as the basis for the conclusions reached during the course of the

audit. The information gathered will be generally through:

Data Requests - The primary method of obtaining data shall be through data

requests to the concerned regulated entity. The data obtained through data

requests could include financial and operational information, procedures

manuals, organization charts, reports, email and voice mail records, and studies.

The data may be obtained either electronically or as paper documents (depending

upon the requirement).

Site Visits – The consultant / auditor shall conduct Site visits to ensure accurate

interpretation of the information provided by the concerned regulated entity. The

consultant / auditor shall inter alia collect materials on-site, observe processes,

and offer an opportunity to conduct face-to-face interviews, as relevant to the

audit.

Interviews – The consultant / auditor may conduct interviews in person and over

the phone.

As the data are collected from the regulated entity under audit, the consultant /

auditor shall compile and analyze the data. The consultant / auditor shall analyze

information gathered from multiple sources, including filings made before the

Commission by such regulated entity, as well as from public records. Advanced

analysis may require the creation of complex spreadsheets and databases, and the

use of sampling to test for potential non-compliance of the Act, rules, regulations

made thereunder, orders and directions issued by the Commission.

Third party complaints - Areas of non-compliance may also be identified through

third party complaints, for example, customer complaints.

6.4

The consultant / auditor will be required to provide full reports to the Commission, which

shall contain, as a minimum:

a description of the reporting scope and methodology, which should include all

matters specified in the terms of reference;

a description of the systems and procedures that have been established to comply

with

regulatory

obligations,

including

the

identification

relevant

documentation and responsible positions;

a discussion of how compliance is managed, addressing generic compliance

issues and any specific issues identified for that report;

⁴

BIHAR GAZETTE (EXTRA) 3RD APRIL 2018

details of any non-compliance identified and the actions being undertaken by the

regulated entity to rectify them, and an assessment of the adequacy of the actions.

6.5(a) The Commission may share the preliminary report with the regulated entity for their

comments. The Regulated entity shall submit their comments, if any within 15 days. On

receipt of such comments, if any, the Consultant/ Auditor, after due discussion and

consultation with the Commission on the comments of the regulated entity shall finalize

and submit the report to the Commission.

(b) The report shall include a statement, signed by the auditor, which states that:

i) the terms of reference have been complied with by the consultant / auditor in making

findings and in preparing the report; and

ii) the report reflects the professional opinion of the auditor.

6.6

The consultant / auditor shall also supply to the regulated entity a copy of his report as

referred above.

COMPLIANCE OF AUDIT REPORT

i) The Commission, on the basis of report under these regulations, if satisfied that the

regulated entity has made false information, of not complied or contravened any of

the orders or provisions of the Act or regulations made under the Act, shall by an

order in writing give such directions as may be necessary for the purpose of securing

compliance of such defects.

ii) The Commission, before issuing any direction under (i) above, shall:-

a) Serve a notice in the manner as may be specified to the concern regulated entity;

b) Publish the notice in the manner as may be specified for the purpose of bringing

the matters to the attention of persons affected or likely to be affected.

c) Consider suggestions and objections from the concerned regulated entity and the

persons affected or likely to be affected.

ORDERS AND PRACTICE DIRECTIONS

Subject to the provisions of the Act, the Commission may from time to time issue

orders, and practice directions in regard to the implementation of these

Regulations.

ii)

Notwithstanding anything contained in these Regulations, the Commission may

also initiate proceedings u/s 142 of the Act for non compliance of any or all

provisions of these Regulations.

POWER TO REMOVE DIFFICULTIES.—If any difficulty arises in giving effect to

any of the provisions of these regulations, the Commission may, by general or special

order, take suitable action, not being inconsistent with the Act, which appears to the

Commission to be necessary or expedient for the purpose of removing the difficulties.

10.

POWER TO AMEND.—The Commission may at any time, amend any provisions of

these regulations.

By the order of the Commission,

PARMANAND SINGH,

Secretary.

————

PUBLISHED AND PRINTED BY THE SUPERINTENDENT,

BIHAR SECRETARIAT PRESS, PATNA.

Bihar Gazette (Extra) 299—571+400—Egazette

Website: http://egazette.bih.nic.in