The B

PUBLI

(NO.PATNA 804) PA

BIHAR ELEC

MULTI YEAR DI

No. BERC-SMP-21/

section (1) of section 18

of section 181, read with

(36 of 2003) and all other

Regulatory Commission h

1. Short Title, Commen

1.1

These regula

Commission

1.2

These Regul

notification i

1.3

These Regula

2. Scope of Application

2.1

These Regul

the State of B

2.2

These Regula

all cases cov

onwards up

Regulations

REGI

Bihar Gazett

XTRA ORDINARY

SHED BY AUTHORITY

6 BHADRA 1940(S)

ATNA, TUESDAY, 28^TH AUGUST

CTRICITY REGULATORY COMMISSION

ISTRIBUTION TARIFF REGULATIONS, 20

————

NOTIFICATION

The 27^th August 2018

/2018-12––In ex exercise of powers confe

81 and clauses (zd), (ze) and (zf) of sub

sections 61, 62, and 86, of the Electricit

powers enabling it in that behalf, the Biha

ereby makes the following Regulations.

PART-I

PRELIMINARY

cement and Extent

ations shall be called the Bihar Electricity

n (Multi Year Distribution Tariff) Regulat

lations shall come into force from the d

in the Official Gazette.

ations shall extend to the whole of the Stat

ations shall apply to all the Distribution L

Bihar.

ations shall be applicable for determinatio

vered under these Regulations from 1st Apr

to FY 2022 [ i.e., till 31st March 2022]

are amended.

STERED NO. PT.-40

tetetete

2018

018

rred by sub

section (2)

ty Act, 2003

ar Electricity

Regulatory

tions 2018.

date of their

e of Bihar.

Licensees in

n of tariff in

ril 2019 and

or till these

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

2.3

These Regulations shall be applicable where the cost based /

Aggregate Revenue Requirement (ARR) based tariff is determined

by the Commission.

3. Definitions

3.1

In these regulations, unless the context otherwise requires, -

(1) “Act” means the Electricity Act, 2003 (36 of 2003);

(2)

“Aggregate Revenue Requirement” or “ARR” means the

costs pertaining to the licensed business which are permitted,

in accordance with these Regulations, to be recovered from

the tariffs and charges determined by the Commission;

(3)

“Aggregate Technical and Commercial Losses” or “AT&C”

is the difference between energy input units into the system

and the units for which payment is collected;

(4) "Audited Accounts" for the purpose of these regulations

means (Audited) Regulatory Accounts prepared in accordance

with BERC (Power Regulatory Accounting) Regulations, 2018.

(5)

“Base Year” means the financial year immediately preceding

first year of the control period and used for the purposes of

these Regulations;

(6) "Books of Accounts" means Regulatory Books of Accounts

drawn up in accordance with BERC (Power Regulatory

Accounting) Regulations, 2018.

(7) “Commission” means the Bihar Electricity Regulatory

Commission;

(8) “Conduct of Business Regulations” means the Bihar

Electricity Regulatory Commission (Conduct of Business)

Regulations, 2005, and its amendments from time to time.

(9) “Control Period” means a multi-year period normally

comprising of three financial years or as may be determined

by the Commission, for submission of forecast in accordance

with these Regulations;

(10) "Expenditure” means reasonable and prudently required

expenditure incurred on the following:

(a) purchase of energy less rebate availed / to be availed and

excluding late payment surcharge;

(b) salaries and wages of staff, welfare expenses excluding

management remuneration covered below;

remuneration,

fees,

expenses

including

facilities;

(d) salaries and wages of corporate office / registered office;

(e) financing cost excluding penal interest / charges;

(f) interest charges on loan(s) borrowed for capitalized

assets;

(g) interest on temporary accommodation to the extent of

approved unrealized arrears from the consumers

(h) interest on working capital

(i) Return on equity;

(j) financing charges applicable to operational account;

(k) interest on security deposits (in cash) from consumers;

(l) interest on advance received from consumers, if any

against sales;

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

(m) Impact of variation in foreign exchange rate in case of

foreign currency loan taken with due approval and is not

capitalised;

(n) Depreciation

(o) Rents, rates and taxes, other than all taxes relating to

income / profits;

(p) Legal charges;

(q) Auditor’s expenses, Auditor’s fees; auditor’s expenses;

Payment to Auditors in any other capacity or for any

work which is necessary to be got done from them in

connection with audit;

(r) Consultancy charges for work which cannot be done in

house or is uneconomical in doing in-house or is

essential to be done from outside sources;

(s) Bad debts actually written off subject to Commission’s

clearance;

(t) Other expenses necessary which are ancillary or

incidental to the business of electricity except penalty etc

levied under the Act or any other law in force;

(11) “Financial Year” means a period commencing on 1st April of

a calendar year and ending on 31st March of the subsequent

calendar year;

(12)

“Force Majeure Event” for the purpose of these regulations

means the event or circumstance or combination of events or

circumstances including those stated below which partly or

fully prevents the transmission licensee to complete the

project within the time specified in the Capital Investment

Approval, and only if such events or circumstances are not

within the control of the transmission licensee and could not

have been avoided, had the transmission licensee taken

reasonable care or complied with prudent utility practices:

(a) Act of God including lightning, drought, fire and

explosion, earthquake, volcanic eruption, landslide,

flood, cyclone, typhoon, tornado, geological surprises; or

(b) Any act of war, invasion, armed conflict or act of foreign

enemy,

blockade,

embargo,

revolution,

riot,

insurrection, terrorist or military action; or

nationwide impact in India and/or state wide impact in

Bihar;

(13) “Income” shall include all income from any sources but shall

not be limited to the following:

a) sale of energy or gross receipts from sale of energy less

discounts / rebates given based on the orders of the

Commission;

b) Rental of meters, plant, equipment and other apparatus

hired to the consumers;

Income from services to consumers by way of repair or

any sale or other service other than capital receipts;

d) Interest on investments, bank balances including fixed

and call deposits and any other income in the form of

interest;

Profit on sale of assets;

⁴

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Wheeling of energy;

Non tariff income;

h) Income from other business;

Cross subsidy surcharge u/s 42(2) of the Act;

Additional surcharge u/s 42(4) of the Act;

k) Any receipt or refund from other sources against any

expense or likely expense which has been earlier allowed

as expense in the tariff;

All other general receipts arising from and ancillary or

incidental to the business of electricity supply;

m) Other general receipts in terms of Act / Regulations

including use of assets for other business whether

actually recovered or not;

(14) “Licence” means a licence granted under clause (b) of

section 14 of the Act;

(15) “Licensed Business” means the functions and activities,

which the licensee is required to undertake in terms of the

licence granted by the Commission or being a deemed

licensee as referred under sections 14 and 172 of the Act;

(16) “Licensee” means a person who has been granted a licence

and shall include a deemed licensee;

(17) “Non-Tariff Income” means income relating to the licensed

business other than from retail tariff;

(18) “Other Business” means any other business of the

distribution licensee for optimum utilisation of its assets

within the meaning of Section 51 of the Act;

(19) “Retail Supply Business” means the business of sale of

electricity by a distribution licensee to the consumers within

the area of supply in accordance with the terms of the licence

for distribution and retail supply of electricity;

(20) “Wheeling” means the operation whereby the distribution

system and associated facilities of a distribution licensee are

used by another person for the conveyance of electricity on

payment of charges to be determined under section 62 of the

Act;

(21) “Wheeling Business” means the business of operating and

maintaining

distribution

system

for

conveyance

electricity in the area of supply of the distribution licensee.

3.2

The words and expressions used and not defined in these

Regulations, but defined in other Regulations or the Act, shall

have the meanings assigned to them in the other Regulations or

the Act respectively.

3.3

The words “Application” or “Petition” shall be interpreted

synonymously.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

PART-II

GENERAL PRINCIPLES

4. Multi Year Tariff Framework

4.1

The Commission shall determine the tariff for distribution

business under a Multi-Year Tariff framework with effect from

April 1st of each financial year subject to provisions under

regulations 8,12,13 and 14 of these Regulations.

4.2

The Multi-Year Tariff framework shall be based on the

following elements, for calculation of Aggregate Revenue

Requirement and expected revenue from tariff and charges for

Distribution Business:

(a)

Control Period, before commencement of which a forecast of

the Aggregate Revenue Requirement and expected revenue

from existing tariff and charges shall be submitted by the

applicant and approved by the Commission;

(b)

A detailed Business Plan based on the Operational Norms

specified in these regulations and trajectories of performance

parameters, for each year of the Control Period, shall be

submitted by the applicant for the Commission's approval,

subject to provisions under regulations 8,12,13,and 14 of

these Regulations;

petition with the forecast of Aggregate Revenue Requirement

and expected revenue from existing tariff for each year of the

Control Period, and the Commission shall approve the tariff

for each year of the Control Period;

(d) The mechanism for pass-through of approved gains or losses

on account of uncontrollable factors as specified by the

Commission in these Regulations;

(e) The mechanism for sharing of approved gains or losses

arising out of controllable factors as specified by the

Commission in these Regulations;

5. Business Plan

5.1

The Distribution Licensee shall file a Business Plan, for the

Control Period by a Petition in accordance with BERC (Conduct of

Business) Regulations, 2005 and its amendments from time to

time, by 15th September of the year prior to the commencement of

the Control Period and accompanied by such fee payable, as

specified in the BERC (Fees, Fines and Charges) Regulations, 2005

as amended from time to time.

Provided that where no separate fee has been specified for

filling of a business plan, the applicant shall pay fees as may be

determined by the Commission.

5.2

Such Business Plan shall comprise but not limited to detailed

category/sub-category-wise sales and demand projections, power

procurement plan, capital investment plan, financing plan and

physical targets.

Provided that in case the Commission issues guidelines and

formats, from time to time, the same shall be adhered to by the

Distribution Licensee.

5.3

(a)

The Distribution Licensee shall make assessment of

infrastructure requirement and prepare capital investment

plan in accordance with BERC (Procedure for Filing Capital

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Investment and Capitalization Plan) Regulations, 2018 that

will spill into the year(s) under review and new projects that

will commence and may be completed within or beyond the

tariff period.

(b)

The Commission shall approve the capital investment plan

in accordance with BERC (Procedure for Filing Capital

Investment and Capitalization Plan) Regulations, 2018

the actual works compared with the works approved in the

Tariff

Order

while

approving

the

capital

expenditure for the ensuing year.

(d) In case the capital expenditure is required for emergency

work, the Distribution Licensee may take up the work upto

Rs.5 Crore prior to receiving the approval from the

Commission provided the emergent nature of the scheme

has been certified by its Board of Directors.

(e) The Licensee shall submit an application within 15 days of

occurrence of cause for such emergent work, containing all

relevant information along with reasons justifying the

emergent nature of the proposed work, seeking post facto

approval by the Commission.

(f)

Consumer’s contribution towards cost of capital asset shall

be treated as capital receipt and credited in current

liabilities until transferred to a separate account on

Commissioning of the assets.

(g)

An amount equivalent to the depreciation charge on such

assets for the year shall be appropriated from this account

as income to the statement of profit and loss over the useful

life of the asset.

5.4

The Distribution Licensees shall access and project the power

purchase requirement in accordance with Bihar Electricity

Regulatory Commission (Power Purchase and Procurement Process

of Licensee) Regulations, 2018.

6. Forecast

6.1

The applicant, based on the Business Plan, shall submit the

forecast of Aggregate Revenue Requirement and expected revenue

from tariff, for the Control Period by a Petition in accordance with

BERC

(Conduct

Business)

Regulations,

2005

and

its

amendments from time to time, by 15th November of the year

prior

the

commencement

the

Control

Period

and

accompanied by such fee payable, as specified in the BERC (Fees,

Fines and Charges) Regulations, 2005 as amended from time to

time.

6.2

The forecast of Aggregate Revenue Requirement shall be developed

using the assumptions relating to the behaviour of individual

variables that comprise the Aggregate Revenue Requirement

during the Control Period.

6.3

The forecast of expected revenue from tariff and charges shall be

developed based on the following:

(a) Estimates of category/sub-category wise quantum of electricity

to be supplied to consumers and wheeled on behalf of

Distribution System Users for each financial year within the

Control Period; and

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

(b) Prevailing tariff as on the date of making the application.

7. Specific trajectory for certain variables

7.1

The Commission shall stipulate a trajectory while approving the

Business Plan, for certain variables having regard to the

reorganization, restructuring and development of the electricity

industry in the State:

Provided that the variables for which a trajectory may be

stipulated shall include, but are not limited to, Operation &

Maintenance expense norms, supply availability, wires availability,

distribution losses, collection efficiency and AT&C Losses.

7.2

In case the Commission has approved the business plan by 31st

October of current year, the trajectory stipulated by the

Commission in the order approving the Business Plan submitted

by the applicant, shall be incorporated by the applicant, in its

forecast of Aggregate Revenue Requirement and/or expected

revenue from tariff and charges under regulation 6.3 of these

Regulations.

8. Annual Review of Performance and True-up

8.1

Where the Aggregate Revenue Requirement and expected revenue

from tariff and charges of a Distribution Licensee are covered

under a Multi-Year Tariff framework, such Distribution Licensee

shall be subject to an annual review of performance and True-up

during the Control Period in accordance with these Regulations.

9. Controllable and uncontrollable factors

9.1

The “uncontrollable factors” shall comprise but not limited to the

following factors which are beyond the control of, and could not be

mitigated by the applicant:

(a) Force Majeure events, such as acts of God, war, fire and

natural calamities;

(b) Change in law;

(d) Variation in metered sales; if the Distribution Licensee has

adequate power availability;

(f) Variation in the cost of power generation and/or power

purchase due to the circumstances specified in regulations 20

of these Regulations;

(g) Variation in the cost of power purchase due to the

circumstances

specified

regulation

10.1.4

Bihar

Electricity

Regulatory

Commission

(Power

Purchase

Procurement Process of Licensee) Regulations, 2018, provided

procedure for procurement of power in such circumstances

have been complied.

9.2

The “controllable factors” shall comprise but not limited to the

following factors which are within the control of, and are

attributable to the applicant:

(a)

Variations in capital expenditure on account of time and/or

cost overruns/ efficiencies in the implementation of a

capital project not attributable to an approved change in

scope of such project, change in statutory levies or force

majeure events;

(b)

Variations in distribution losses which shall be measured

as the difference between the units input into the

distribution system and the units billed for the same year;

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

(c)

Variations in Return on Equity (RoE), depreciation and

working capital requirements. However, if the Commission

is satisfied that the variation in the working capital

requirement is attributable to any uncontrollable factors,

the same may be considered as uncontrollable factor;

(d)

Failure to meet the standards specified in the Standards of

Performance Regulations, except where exempted;

(e)

Variations in operation & maintenance expenses, except

those attributable to directions of the Commission or to

change in Government policy/law;

(f)

Variation in Wires Availability and Supply Availability,

within the control of Distribution Licensee.

10. Mechanism for pass-through of gains or losses on account of

uncontrollable factors

10.1 The approved aggregate gain or loss to the Distribution Licensee

on account of uncontrollable factors shall be a pass through, as an

adjustment in the tariff of the Distribution Licensee, as specified in

these Regulations and as may be determined in the Order of the

Commission passed under these Regulations.

10.2 The Distribution Licensee shall submit such details of the

variations between actual and the figures approved by the

Commission along with the detailed computations and supporting

documents as may be required by the Commission.

11. Mechanism for sharing of gains or losses on account of controllable

factors

11.1 The approved aggregate gain or loss to the Distribution Licensee

on account of controllable factors shall be dealt with separately for

aggregate gain and aggregate loss in the following manner:

(a)

Aggregate gain:

(i)

Two-third of the amount of such gain shall be a pass

through as an adjustment in the tariff of the

Distribution

Licensee,

specified

these

Regulations and as may be determined in the Order

of the Commission passed under these Regulations;

(ii) The balance one-third of the amount of such gain

shall be on account of Distribution Licensee and

such amount shall be utilized at the discretion of

Distribution Licensee.

(b)

Aggregate Loss:

(i)

One-third of the amount of such loss shall normally

be a pass through as an adjustment in the tariff of

the Distribution Licensee as specified in these

Regulations and as may be determined in the Order

of the Commission passed under these Regulations,

provided the Commission is satisfied that such loss

is not on account of deliberate action of the

Distribution Licensee;

(ii) The balance two-third of the amount of such loss

shall be on account of Distribution Licensee.

Explanation:- If the State Government is providing resource gap

grant, Aggregate Loss shall be reduced by that amount for

the purpose of computation of Aggregate Loss to be qualified

for a pass through.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

11.2 The Distribution Licensee shall submit such details of variation for

sharing of approved aggregate gain or loss on account of

controllable factors along with the detailed computations and

supporting documents as may be required for verification by the

Commission.

PART-III

PROCEDURE

12. Procedures relating to making of an application for determination of

Tariff

12.1 An application (alongwith soft copy) for approval of the Business

Plan shall be made by 15th September of the year prior to the

commencement of the Control Period, in accordance with the

BERC

(Conduct

Business)

Regulations,

2005

and

its

amendments from time to time, and accompanied by such fee

payable, as specified in the BERC (Fees, Fines and Charges)

Regulations, 2005” as amended from time to time.

Provided that where no separate fee has been specified for

filing of a Business Plan, the applicant shall pay fees as may be

determined by the Commission.

12.2 An application (alongwith soft copy) for determination of tariff shall

be made by 15th November every year, for Truing up of expenses

of previous years, for Annual Performance Review (APR) of the

Aggregate Revenue Requirement(ARR) for the current year and

determination of ARR and tariff for retail sale of electricity for the

ensuing years of the control period. The application should contain

the data relating to each item of the ARR supported with the

information/data in the formats 1 to 41 appended to these

Regulations, revenue income on existing tariff, revenue income on

proposed tariff, tariff design, structure and rates for retail sale of

electricity, etc with explanatory notes and accompanied by such

fees as may be specified under the BERC (Fees, Fines and

Charges) Regulations, 2005 as amended from time to time. All the

information as required in the formats appended to these

Regulations along with justification shall be provided in the

main petition.

12.3 The petition for determination of tariff shall be accompanied

by information for the previous year, current year revised estimate

and the ensuing years of the entire control period capturing the

expected revenues from the tariff and charges including

miscellaneous charges at existing rates along with detailed

assumptions, parameters required in annual true-up, Annual

Performance Review exercise, Annual Revenue Requirement etc.

Provided that the application shall be accompanied where

relevant, by a detailed tariff revision proposal showing sub-

category-wise tariff and how such revision would meet the gap, if

any, in Aggregate Revenue Requirement for each year of the

Control Period.

Provided further that the information for the previous year

shall be based on audited accounts and in case audited accounts

for the previous year are not available, audited accounts for the

immediately preceding year should be filed along with provisional

¹⁰

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

books of annual (regulatory) accounts for the previous year duly

approved by the Board of Directors of the licensee company.

12.4 The Distribution Licensee shall along with the aforesaid petition

submit a statement on the status of compliance of directives, if

any, issued by the Commission in its last tariff order.

12.5 The petition for determination of tariff shall include the details of

actual subsidy received from the State Government vis-à-vis

claimed by the Distribution Licensee in the True-up petition for

the previous year.

12.6 The Commission may seek clarification and additional information

on inadequacies if any, in the application within fourteen (14) days

or as may be practicable, of filing of the application for approval of

the Business Plan and application for determination of tariff, as

the case may be.

12.7 The Distribution Licensee shall respond to the Commission within

the next ten (10) days with all clarifications and information as

required.

12.8 The Commission shall admit the application for approval of the

Business Plan and application for determination of tariff, as the

case may be within seven (7) days or as may be required, of

submission of response to the clarifications, if any, by the

Distribution Licensee.

12.9 Upon receipt of a complete application accompanied by all

requisite information, particulars and documents in compliance

with all the requirements specified in these Regulations, the

application for approval of the Business Plan and application for

determination of tariff, as the case may be, shall be deemed to be

received and the Commission or the Secretary or the designated

Officer shall intimate to the applicant with the abridged form of

application for publication of public notice in the daily

newspapers. In case of non-submission or delay in submission of

additional information, the Commission may take suo-motu

decision to formulate this abridged form of application as it deem

appropriate.

Provided that the applicant shall make available a hard

copy of the complete application, to any interested party, at such

locations and at such rates as may be stipulated by the

Commission.

Provided further that the applicant shall also put up on its

internet website, in downloadable spreadsheet format showing

detailed computations, the application made to the Commission

along with all regulatory filings, information, particulars and

documents in the manner so stipulated by the Commission.

Provided further that the web-link to the information

mentioned in the second proviso above shall be easily accessible,

archived for downloading and shall be prominently displayed on

the applicant's internet website.

Provided also that, the applicant may not provide or put up

any such information, particulars or documents, which are

confidential in nature, with the prior approval of the Commission.

Explanation – for the purpose of this Regulation, the term

“downloadable spreadsheet format” shall mean one (or multiple,

linked) spreadsheet software files containing all assumptions,

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

formulae, calculations, software macros and outputs forming the

basis of the application.

12.10 Notwithstanding anything contained in these Regulations, in case

of delay/ non-submission of the application for approval of the

Business Plan and application for determination of tariff, as the

case may be, the Commission may initiate suo-motu proceedings

mandating the filing of the said applications.

Provided that in the event of the licensee not filing the

application despite the aforesaid proceeding, the Commission may

on its own, decide the tariff based on previous year’s tariff details

and after incorporating suitable adjustments. However before

issuing tariff order under such circumstances, comments/

suggestions/ objections from the public and stake holders

including the licensee will be invited and same will be considered

for the tariff order.

Provided further that, the Commission may also pass

directions under Section 129 and/or Section 142 of the Act, if

required.

13. Order approving the Business Plan and Tariff Order

13.1 An Order approving with such modifications or such conditions as

may be specified in that order or rejecting the Business Plan shall,

as far as practicable, be issued before filing of tariff petition

separately or with the tariff order as the Commission may deem fit

and practicable.

13.2 The Commission shall, within one hundred and twenty (120) days

from receipt of a complete application for determination of ARR

and tariff and after considering all suggestions and objections

received from the public and after hearing all stakeholders and

general public:-

(a)

issue a Tariff Order accepting the application with such

modifications or such conditions as may be specified in that

Order;

(b)

reject the application for reasons to be recorded in writing,

if such application is not in accordance with the provisions

of the Act and the Rules and Regulations made thereunder

or the provisions of any other law for the time being in

force:

Provided that, an applicant shall be given a reasonable

opportunity of being heard before rejecting its application.

13.3 The applicant shall publish the tariff approved by the Commission

within seven (7) days of issue of tariff order in at least two (2)

English and two (2) Hindi daily newspapers having wide

circulation in the area of supply of the applicant and shall put up

the approved tariff / tariff schedule on its internet website and

make available for sale, a booklet containing such tariff schedule

to any person upon payment of reasonable reproduction charges.

13.4 The tariff so published shall be in force from the date specified in

the said Order and shall, unless amended or revised, continue to

be in force for such period as may be stipulated therein.

14. True-up and Annual Performance Review

14.1 The Commission shall True-Up expenses of the previous year

either as part of the Tariff order or issue Order/s for True-Up of

expenses preceding the Tariff order of ensuing year:

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

(a)

An order for True-Up of expenses shall be issued on annual

basis.

(b)

An order for True-Up of expenses shall be on the basis of

expense estimates made in the beginning of the year under

consideration, actual expenses booked in the audited books

of accounts of the Distribution Licensee for the year, and

after prudence check of data by the Commission.

(c)

Where audited books of account are not available at the

time of true-up, provisional books of annual (regulatory)

accounts duly approved by the Board of Directors of the

applicant company shall be used for the provisional True-

up process.

(d)

The Commission shall undertake review of estimates of

expenses for the current year as a part of the tariff order on

the basis of the actual expenses incurred during the period

April – September of the current year and corresponding

figures in the order for Annual Revenue Requirement (ARR)

of the current year approved by the Commission.

(e)

Estimates of expenses for the ensuing year shall be on the

basis of corresponding figures in the order for True-up of

expenses of the previous year and Annual Performance

Review or Tariff Order of the current year, as the

Commission may consider reasonable and deem fit.

(f)

Notwithstanding anything contained in regulation 4 of these

Regulations, the Revenue gap/surplus arising out of Truing

shall

considered

the

Commission

while

determining the ARR of ensuing year(s).While approving

adjustments towards revenue/expenses in future years,

arising out of Truing up exercises, the Commission may

allow the carrying costs as determined by the Commission

of such expenses/revenues. However the revised estimated

gap/surplus as a result of APR shall not be passed in the

ARR of ensuing year.

15. Adherence to Tariff Order

15.1 If a Distribution Licensee recovers a price or charge exceeding the

tariff determined under Section 62 of the Act and in accordance

with these Regulations, the excess amount shall be payable to the

person who has paid such price or charge, along with interest

equivalent to the Bank Rate of the Reserve Bank of India without

prejudice to any other liability that may be incurred by such

Distribution Licensee.

15.2 The Distribution Licensee shall submit periodic returns as may be

required by the Commission, containing operational and cost data

to enable the Commission to monitor the implementation of its

Order.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

PART-IV

SALES, POWER PURCHASE QUANTUM AND COST

16. Sales forecast

16.1 Forecasting Methodology

Metered sales shall be treated as an uncontrollable parameter; and

un-metered sales shall be treated as a controllable parameter.

Provided that, open access transactions shall not form part of the

sales.

Provided further that absolute sales forecast of metered category

shall be based on past trends in each of the slabs of consumer categories

Provided also that, in case of un-metered category, sales forecast shall be

based on the norms developed as per Regulation 16.2 of these

regulations.

Provided also that in cases where slab-wise sales to each metered

consumer category are not available in audited books of accounts and

only consolidated sales are available, the Distribution Licensee shall

include the slab-wise sales along with the Business Plan and Tariff

petition.

Provided also that in case of occurrence of materially significant

findings during audit check as per Regulation 16.3 of these regulations,

prudent adjustment in forecasted sales shall be carried out.

16.2 Methodology for determination of norms of unmetered sales

(a) Till the time 100% metering of electricity consumers is

achieved in the area of operation of Distribution Licensee, an

independent study shall be conducted on yearly basis by the

Distribution Licensee as per Regulation 17 of these

regulations to assess actual consumption of power by

unmetered consumer segment;

(b) The study referred to in clause (a) of this Regulation shall

cover actual consumption in the block (hours of usage,

specifications of motor power etc.) demonstrating seasonal

impact, economic development, demographics, consumption

pattern, etc. This would aid to develop norms pertaining to

electricity consumption in un-metered consumer segments.

consumers in block/district for study which would be, well

distributed representation of the block under purview such

that sampled consumers shall exhibit same demographic

profile, energy consumption pattern, water level etc. of the

block.

Provided that the sample selected shall be from all the

subdivisions in the state.

16.3 Overhaul Exercise

(a) A team shall be formed by Distribution Licensee to validate

the status of meters, load of metered and un-metered

consumers and category classification of consumers in the

area of operations of Distribution Licensee.

(b) The overhaul exercise shall be a year-long assessment study

conducted on monthly basis.

monthly overhaul from the circles served by the Distribution

Licensee.

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Provided that the sample so chosen shall be close

representation

geographic,

demographic,

industrial/

commercial/ residential/ agricultural spread served by the

Distribution Licensee

(d) In the event, inconsistencies are found in the number of

metered consumers, status of the meters, load at consumer

premises or category classification of the consumers, the

forecast arrived at in Regulation 16.1 on the basis of

historical audited sales shall be adjusted accordingly as

specified in Regulation 16.1.

17. Study of un-metered sales

17.1 Study of Agricultural feeders not segregated in significant

numbers

(a)

The sample of consumers selected shall be monitored and

the readings of consumption can be taken from the meters

installed at each DT in the sample area.

(b)

The load of all the consumers connected on the DT in each

of the sample area shall be validated each month to account

for any additional load or replacement of old motor with

new motor by the consumers.

(c)

Based on the result of year long month-wise study, the

consumption pattern for selected subdivisions shall be

established.

(d)

The results of the study shall be extrapolated to adjoining

areas with similar water level and the same cropping

patterns.

(e)

The month-wise analysis of the sample selected for the

establishment of norms shall be submitted to the

Commission at regular intervals so that the directions of the

Commission are incorporated before the completion of

study.

17.2 Study of Agricultural feeders segregated in significant

numbers

(a)

Meters shall be installed at input points of the feeder at the

sub-station and based on the load flow study the technical

loss of the feeder will be evaluated.

(b)

The difference of the feeder meter consumption and

technical losses will be agricultural consumption.

Provided

that

such

computation

agricultural

consumption may include commercial losses the percentage

of which shall be worked out by the Distribution Licensee

during the annual study.

(c)

The study report shall be submitted to the Commission by

31st October so that the Commission have enough time to

conduct validation check and analysis in collaboration with

an independent agency and with due assistance of team

designated by the Distribution Licensee.

(d)

The Distribution Licensee shall be informed as late as

morning of the day scheduled for inspection by the

Commission to have reality check and to ensure that power

supply and the Distribution Licensee’s personnel are

available.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

(e)

Any significant deviation in the parameters reported in

annual study from the baseline study may necessitate

revision of norms by the Commission.

18. Treatment of Aggregate Technical and Commercial Loss

18.1 Aggregate Technical and Commercial Loss shall be considered as a

controllable parameter. The Commission shall approve circle-wise

AT&C Loss targets on the basis of circle-wise approved

distribution loss and collection efficiency targets.

18.2 Distribution Loss

Based on the assessment of metered and un-metered sales as per

Regulations 16 and 17 of these regulations, the Commission shall

update existing baseline of distribution losses.

Provided that circle-wise distribution loss reduction targets shall

be approved by the Commission on the basis of circle-wise

distribution loss, circle-wise differential tariff by way of separate

and distinct distribution loss surcharge may also be considered by

the Commission, if the Commission considers it appropriate and

practicable.

18.3 Collection Efficiency

The Commission shall approve circle-wise collection efficiency

targets on the basis of circle-wise collection efficiency. To reflect

true position of Collection Efficiency, Revenue/Tariff subsidy

actually received (not subsidy booked) shall be considered.

18.4 The AT&C Loss shall be computed in accordance with the formula

and methodology provided in Regulations 18.5 below.

18.5 Formula and methodology for computation of AT&C Loss

The formula and methodology for calculation of Aggregate Technical

and Commercial Loss shall be as under:

AT&C Loss (%) = {Energy Input- Energy Realised)*100/Energy Input

Where;

Energy Realised = Energy Billed*Collection Efficiency

Collection Efficiency (%) = Amount Realised*100/Amount Billed

Methodology for Computation of AT&C Loss

Gross Energy Purchased at State Periphery

(Mus)

Transmission Loss (Mus)

Net Energy at Distribution Periphery (Mus)

A-B

Distribution Loss (Mus)

C-E

Energy Sold (Mus)

Revenue from sale of power without subsidy

(Rs. in Crore)

Tariff Subsidy actually received(Rs. in Crore)

Net Revenue from sale of energy on subsidy

received basis (Rs. in Crore)

F+G

Tariff Subsidy booked(Rs. in Crore)

Revenue from sale of energy on subsidy booked

basis (Rs. in Crore)

F+I

Opening Debtors for Sale of Energy(Rs. in

Crore)

Closing Debtors for Sale of Energy(Rs. in Crore)

Any amount written off during the year directly

from “L” above(Rs. in Crore)

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Adjusted closing Debtors for Sale of Energy (Rs.

in Crore)

L+M

Collection Efficiency (%)

[H+K-N]*100/J

Units Realized (Mus)

E*O/100

Units Un-Realized (Mus)

C-P

AT&C Loss (%)

Q*100/C

** Note:-To be filled up the petitioner based on available records.

Explanation-1:

Opening as well as closing debtors for sale of Energy

shall be without deduction of provisions for doubtful

debtors. Unbilled Revenue shall not be considered as

Debtors.

Explanation-2:

Gross Energy Purchased at State Periphery and

Energy Sold shall not include Energy Traded and

Interstate sales i.e Gross Energy Purchased at State

Periphery = Total Power Purchased including central

transmission losses – Central Transmission Loss-

Energy Traded/ Inter State Sales, Energy Sold=

Energy Sold to all categories of consumers- Energy

Traded/ Inter State Sales.

Explanation-3:

The petitioner shall ensure that Revenue Actually

realized from sale of power as stated in “F” does not

include amount of Tariff Subsidy booked and

Revenue from Energy Traded /Inter-State Sales.

Explanation-4:

The petitioner shall ensure that above figures are in

conformity with the information contained in Audited

Accounts. Moreover Calculation of AT&C losses in

the format given above including Details of subsidy

booked during the year and subsidy received against

current year and against previous years as given

below should form a part of audited accounts as

notes to accounts or annexure.

Details of Subsidy Booked and received

Amount

1. Subsidy Booked during the year

2. Total Subsidy received during the year

i) Against subsidy booked for current year (Rs. Cr.)

ii) Against subsidy booked for previous years (Rs. Cr.)

** Note:-To be filled up the petitioner based on available records.

Illustration:

In case of the licensee have

Total Power Purchase 14,398.16 MUs including 100 Mus Energy

Traded/ Inter State Sales, 266.49 Mus CTU Loss and 419.10 Mus State

Transmission Loss.

Energy Sold to all categories of consumers 10810.08 MUs

including Energy Traded/ Inter State Sales.

Revenue actually realized from sale of power without subsidy

Rs.3810 Crore, Tariff Subsidy actually received Rs.1500 Crore, Tariff

Subsidy booked Rs.1550 Crore, Opening Debtors for Sale of Energy

Rs.3132 Crore, Closing Debtors for Sale of Energy Rs.3742 Crore,

Amount written off during the year directly from debtors Rs.10 Crore.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

Then, calculated figures of AT&C Loss would as stated below:

Total Power Purchase

14,398.16

Energy Traded/ Inter State Sales

100.00

Central Transmission Loss

266.49

Gross Energy Purchased at State Periphery (1-2-3)

14,031.67

Transmission Loss

419.10

Net Energy at Distribution Periphery (A-B)

13,612.57

Distribution Loss(C-E)

2,902.50

Distribution Loss % (D/C)

21.32%

Energy Sold

10,710.08

Revenue from sale of power without subsidy

3,810.00

Tariff Subsidy actually received

1,500.00

Net Revenue from sale of energy on subsidy received basis

(F+G)

5,310.00

Tariff Subsidy booked

1,550.00

Revenue from sale of energy on subsidy booked basis (F+I)

5,360.00

Opening Debtors for Sale of Energy

3,132.00

Closing Debtors for Sale of Energy

3,242.00

Any amount written off during the year directly from “L”

above

10.00

Adjusted closing Debtors for Sale of Energy (L+M)

3,252.00

Collection Efficiency (%)([H+K-N]*100/J)

96.83

Units Realized(E*O/100)

10,370.39

Units Un-Realized(C-P)

3,242.18

AT&C Loss (%)(Q*100/C)

23.82

19. Power Purchase Quantum and Cost

(a)

Based on the demand estimates grossed up with distribution

losses as determined by regulation 18 of these regulations and

transmission losses, the power purchase quantum shall be

calculated in accordance with BERC (Power Purchase &

Procurement Process of Licensee) Regulations, 2018.

Provided that the power purchase quantum shall be net of

sale of surplus power, if any.

(b)

The Power Purchase cost for the power purchase quantum as

referred in (a) above shall be inclusive of inter-state transmission

and POSOCO charges but excluding revenue from sale of surplus

power, if any.

Provided that the power purchase cost calculated above

shall be net of rebate at such rate as specified in CERC Tariff

Regulations.

Provided further that the power purchase cost referred

above shall be excluding late payment surcharge (LPSC).

(c)

Revenue from sale of surplus power shall be estimated at per unit

weighted average price of bilateral purchases.

¹⁸

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

19.1 Power Purchase Planning

Comprehensive Power Procurement Plan approved in accordance

with the BERC (Power Purchase & Procurement Process of

Licensee) Regulations, 2018 shall be submitted as part of MYT

petition to the Commission.

20. Treatment of Incremental Power procurement cost

20.1 Identification of Incremental cost and process of recovery

(a)

The Distribution Licensee shall recover the incremental cost

incurred due to the following:

(i)

Variation in Generation Cost of its own generation on

account of increase in fuel cost, if the Distribution

Licensee has its own generation.

(ii)

Variation in power purchase cost on account of

increase in fuel cost.

(b)

The incremental cost of own generation and power

purchase shall be computed on the monthly basis on the

basis of actual variation in fuel cost and power purchase

cost vis-a-vis the cost approved in the tariff order in

accordance with the formula provided in regulation 20.2

below.

Explanation:- The incremental cost shall not be computed

on the basis of estimated or expected variation in

fuel/power purchase cost.

(c)

The Distribution Licensee shall submit on monthly basis,

the details of the incremental cost incurred and to be

charged to all consumers for the month, along with the

detailed computations and supporting documents as may

be required for approval and verification by the Commission

within first 15 days of the month end.

(d)

The Commission shall examine the incremental cost

proposed by the Distribution Licensee with supporting

documents submitted by the Licensee and approve the

same with modification, if any within next 7 days.

(e)

The distribution licensee shall charge the incremental cost

approved by the Commission, in proportion to the energy

consumption of the month in which such incremental cost

has been incurred, in the energy bill of subsequent month

in accordance with the terms and conditions for application

of the FPPCA formula provided in regulation 20.2 below.

(f)

The Distribution Licensee shall upgrade the billing and IT

systems to incorporate Incremental Costs (IC) as a

component in tariff design.

20.2 Formula for computation of Incremental cost

The formula and terms and conditions for calculation of the

incremental charge on account of increase in fuel cost and power

purchase cost namely fuel and power purchase cost adjustment

(FPPCA) charges shall be as under:

FPPCA(Paise/kWh)

= ^Qc(Rc^{– Rc}^{) + Qo(Ro}^{– Ro}^{) + Qpp(Rpp}^{– Rpp}^{) + Vz + A}

(Qpg + Qpp + Qpp) x 1 −^L

100^#

x 100

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

Where

Quantity of coal consumed during the adjustment period in

Metric Tons (MT)

(SHR x QPg) (1+TSL)x1000 / GCV, or actual whichever is less

Rc1

Weighted average base rate of coal supplied ex-power station

coal yard as approved by the Commission for the adjustment

period in Rs. / MT

Rc2

Weighted average actual rate of the coal supplied ex-power

station coal yard for the adjustment period in Rs. / MT

Actual Quantity of oil (in KL) consumed during the adjustment

period or normative oil consumption as per Tariff order

whichever is less.

Ro1

Weighted average base rate of oil ex-power station (Rs./KL)

approved by the Commission for the adjustment period.

Ro2

Weighted average actual rate of oil ex-power station supplied

(Rs. / KL) during the adjustment period.

Qpp

Total power purchased from different sources (kWh) =

Qpp2+Qpp3

Qpp1

= ^{Qpp3 %1 −TL}

100^{' in kWh}

Transmission loss (CTU) (in percentage terms).

Qpp2

Power purchase from sources with delivery point within the

state transmission or distribution system (in kWh)

Qpp3

Power purchase from sources on which CTU transmission loss

is applicable (in kWh)

Rpp1

Average rate of power purchase as approved by the Commission

(Rs. / kWh)

Rpp2

Average rate of power purchased during the adjustment period

(Rs. / kWh)

Qpg

Own power generation (kWh)

Qpg1

Own power generation (kWh) at generator terminal – approved

auxiliary consumption

Percentage T&D loss as approved by the Commission or actual,

whichever is lower.

SHR

Station Heat Rate as approved by the Commission (Kcal / kWh)

TSL

Percentage Transit and Stacking Loss as approved by the

Commission.

GCV

Weighted average gross calorific value of coal as fired basis

during the adjustment period (Kcal / Kg).

Amount of variable charges on account of change of cost of

unknown factors like water charges, taxes or any other

unpredictable and unknown factors not envisaged at the time of

tariff fixation subject to prior approval of the Commission (Rs.)

Adjustment, if any, to be made in the current period to account

for any excess/shortfall in recovery of fuel or power purchase

cost in the past adjustment period, subject to the approval of

the Commission (Rs.)

²⁰

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

If there are more than one power stations owned by the Licensee

Qc, Rc1, Rc2, Qo, Ro1, Ro2, Qpg and Qpg1 will be computed separately

for each power station and sum of the increase/decrease of cost of all

power stations shall be taken into consideration.

Terms and conditions for application of the FPPCA formula

The basic nature of FPPCA is ‘adjustment’ i.e. passing on the

increase or decrease in the fuel costs and power purchase costs,

as the case may be, compared to the approved fuel costs and

power purchase costs in the Tariff Order.

The operational parameters / norms fixed by the Commission in

the Tariff Regulations / Tariff Order shall be the basis of

calculating FPPCA charges.

The FPPCA will be recovered every month in the form of an

incremental energy charge (Rs/kwh) in proportion to the energy

consumption of the month in which incremental cost has been

incurred and shall not exceed 10% of the approved avg. cost of

supply in the Tariff order and balance amount, if any, in the

FPPCA over and above this ceiling shall be carried forward to be

billed in subsequent month.

Incremental cost of power purchase due to deviation in respect of

generation mix or power purchase at higher rate shall be allowed

only if it is justified to the satisfaction of the Commission.

Any cost increase by the licensee by way of penalty, interest due to

delayed payments, and due to operational inefficiencies shall not

be allowed.

FPPCA charges shall be levied on all categories of consumers.

Distribution licensee shall file detailed computation of actual fuel

cost in Rs./kWh for each month for each of power stations of the

state generators as well as cost of power purchase (Fixed and

Variable) from each source/station and a separate set of

calculations with reference to permitted level of these costs.

The data in support of the FPPCA claims shall be duly

authenticated by an officer of the licensee, not below the rank of

Chief Engineer on an affidavit supported with the certified copy of

energy bills of power purchase, transmission and RLDC charges,

bill for coal purchase and its transportation cost, oil purchase bill

and the quantity of coal and oil consumed during the month.

Levy of FPPCA charge will be allowed only when it is ten (10) paise

or more per unit. If it is less than 10 (ten) paise/unit, the same

may be carried forward for adjustment in the next month.

10)

The incremental cost per kWh due to the FPPCA arrived for a

month shall be recovered in the energy bill of the month

subsequent to the order of the Commission approving FPPCA with

full details of rate and unit(s) on which FPPCA charges have been

billed. The Generating Company and the Distribution Licensee

shall provide along with the proposal of FPPCA (as applicable to

them) for a month, a compliance report of the previous order of

the commission in respect of FPPCA.

20.3 Incremental

cost

realisation

per

unit

electricity

consumption

The Commission may approve recovery of incremental cost on

account of fuel and power purchase cost from the consumers in

one or more monthly installment.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

PART-V

FINANCIAL PRINCIPLES

21. Component of ARR

The Aggregate Revenue Requirement (ARR) for the Distribution Business

of the Distribution Licensee for each year of the Control Period, shall

inter-alia contain but not limited to the following financial parameters:

A. Quantum and Cost of power procurement from various sources

B. Transmission and load dispatch charges

C. Operation and Maintenance expenses

D. Depreciation

E. Contingency Reserves

F. Interest on loan and other finance charges

G. Interest on Working Capital

H. Return on Equity

Bad debts, if any

J. Non-Tariff Income; and

K. Income from Other Business

L. Interest on security deposit.

22. Operation & Maintenance Expenses

(a)

The Commission shall stipulate a separate trajectory of norms for

each of the components of O&M expenses viz., Employee cost,

Repair and Maintenance (R&M) expense and Administrative and

General (A&G) expense.

Provided that such norms may be specified for a specific

Distribution Licensee or a class of Distribution Licensees.

(b)

Norms shall be defined in terms of combination of number of

personnel per 1000 consumers and number of personnel per

substation along with annual expenses per personnel for

Employee expenses; combination of A&G expense per personnel

and A&G expense per 1000 consumers for A&G expenses and

R&M expense as percentage of gross fixed assets for estimation of

R&M expenses.

(c)

One-time expenses such as expense due to change in accounting

policy and arrears paid due to pay commission recommendation

shall be excluded from the norms in the trajectory.

(d)

The unforeseen expenses beyond the control of the Distribution

Licensee such as pay revision, shall be excluded from the norms

in the trajectory.

(e)

The One-time expenses and the expenses beyond the control of

the Distribution Licensee shall be allowed by the Commission over

and above normative Operation & Maintenance Expenses after

prudence check.

(f)

The norms in the trajectory shall be specified over the control

period with due consideration to productivity improvements.

(g)

The norms shall be determined at constant prices of base year and

escalation on account of inflation shall be over and above the

baseline.

(h)

The Distribution Licensee specific trajectory of norms shall be

identified by the Commission on the basis of absolute and relative

analysis.

(i)

In absolute analysis, Distribution Licensee’s audited accounts of

operations for last three years, expenses claimed for control

²²

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

period, historically approved cost, and prudence check shall be

used by the Commission to estimate values of norms.

(j)

In relative analysis, performance parameters of other Distribution

Licensees within the same state or in other states, shall be

considered by the Commission to estimate norms.

Provided that other Distribution Licensees so chosen shall have

similar profile as that of the Distribution Licensee under

consideration in terms of consumer mix, type of license area (city,

state, etc.) type of distribution networks, viz., underground/

overhead, High Tension (HT) consumer, Low Tension (LT)

consumer ratio, etc.

(k)

Suitable average of outcomes of absolute and relative analysis

shall be taken by the Commission to fix the norms over the control

period for the Distribution Licensee.

22.1 Employee Cost

Employee cost shall be computed as per the approved norm

escalated by consumer price index (CPI), adjusted by provisions

for expenses beyond the control of the Distribution Licensee and

one time expected expenses, such as recovery/adjustment of

terminal benefits, implications of pay commission, arrears and

Interim Relief, governed by the following formula:

EMPn = (EMPb * CPI inflation) + Provision

Where:

EMPn : Employee expense for the year n

EMPb : Employee expense as per the norm

CPI inflation : is the average increase in the Consumer

Price Index (CPI) for immediately preceding three years

Provision: Provision for expenses beyond control of the

Distribution Licensee and expected one-time expenses as specified

above.

Till the norms are specified by the Commission the

employee cost shall be determined on the basis of actual historical

cost.

22.2 Repairs and Maintenance (R&M) Expense

Repairs and Maintenance expense shall be calculated as

percentage (as per the norm determined) of Opening Gross Fixed

Assets excluding land cost for the year governed by following

formula:

R&Mn = Kb * GFAn

Where:

R&Mn : Repairs & Maintenance expense for nth year

GFAn : Opening Gross Fixed Assets for nth year

Kb : Percentage point as per the norm

22.3 Administrative and General (A&G) Expense

A&G expense shall be computed as per the norm escalated

by wholesale price index (WPI) and adjusted by provisions for

confirmed initiatives (IT etc. initiatives as proposed by the

Distribution Licensee and validated by the Commission) or other

expected one-time expenses, and shall be governed by following

formula:

A&Gn = (A&Gb * WPI inflation) + Provision

Where:

A&Gn: A&G expense for the year n

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

A&Gb: A&G expense as per the norm

WPI inflation: is the average increase in the Wholesale Price

Index (WPI) for immediately preceding three years

Provision: Cost for initiatives or other one-time expenses as

proposed by the Distribution Licensee and validated by the

Commission.

Till the norms of A&G expenses is specified by the

Commission, the actual historical cost will be considered for

determination of A&G expenses.

23. Treatment of Depreciation

Depreciation shall be calculated for each year of the control period

on the original cost of the fixed assets of the corresponding year.

b) Depreciation shall not be allowed on assets funded by capital

subsidies, consumer contributions or grants.

Depreciation shall be calculated annually on the basis of assets

capitalised and put to use based on the straight line method over

the useful life of the asset at rate not exceeding the rate specified

the

Central

Electricity

Regulatory

Commission

for

Transmission utility.

d) The residual value of assets shall be considered as 10% and

depreciation shall be allowed to a maximum of 90% of the original

cost of the asset.

The Distribution Licensee shall submit separate detail of fully

depreciated asset along with year of commissioning and year of

attaining ninety percent depreciation with the tariff petition.

Provided that freehold land shall not be treated as a depreciable

asset and its cost shall be excluded while computing 90% of the

original cost of the asset.

Provided further that cost of leasehold land shall be amortized

evenly within the leased period.

Depreciation shall be charged from the first year of commercial

operation of the asset. Provided that in case the operation of the

asset is for a part of the year, depreciation shall be charged on

proportionate basis.

A provision of replacement of assets shall be made in the capital

investment plan.

24. Contribution to Contingency Reserve

24.1 If the Distribution Licensee has made an appropriation to the

Contingency Reserve, a sum not less than 0.25 percent and not

more than 0.5 percent of the original cost of fixed assets shall be

allowed annually towards such appropriation in the calculation of

ARR.

Provided that where the amount of such Contingency Reserves

exceeds five (5) percent of the original cost of fixed assets, no

further contribution shall be allowed.

Provided further that such contribution shall be invested in

securities authorised under the Indian Trusts Act, 1882 within a

period of six months of the close of the Year.

24.2 The Contingency Reserve shall not be drawn upon during the term

of the license except to meet such charges as may be approved by

the Commission, such as following:

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

(a) Expenses or loss of profits arising out of accidents, strikes or

circumstances which the management could not have

prevented;

(b) Expenses on replacement or removal of plant or works other

than expenses required for normal maintenance or renewal;

force and for which no other provision is made:

Provided that such drawal from contingency reserve shall

be computed after making due adjustment for any other

compensation that may have been received by the Licensee as part

of an insurance cover.

24.3 No diminution in the value of contingency reserve as mentioned

above shall be allowed to be adjusted as a part of tariff.

25. Treatment of loan and other finance charges

(a)

The Distribution Licensee shall provide detailed loan-wise, project-

wise and utilization-wise details of all the loans.

(b)

If the equity actually deployed is more than 30 % of the capital

cost, equity in excess of 30 % shall be treated as normative loan.

Provided that where equity actually deployed is less than 30% of

the capital cost, the actual loan shall be considered for

determination of interest on loan.

(c)

Actual loan or normative loan, if any, shall be referred as gross

normative loan in this Regulation.

(d)

The normative loan outstanding as of 1st April of control period

shall be computed by deducting the cumulative repayment as

approved by the Commission (basis as mentioned below) up to

31st March of current period (a year before control period) from

the gross normative loan.

(e)

The repayment for the control period shall be deemed to be equal

to the depreciation allowed for the year.

(f)

Notwithstanding

any

moratorium

period

availed

the

Distribution Licensee, the repayment of the loan shall be

considered from the first year of the control period as per annual

depreciation allowed.

(g)

The rate of interest shall be the weighted average rate of interest

calculated on the basis of actual loan portfolio at the beginning of

each year of the control period, in accordance with terms and

conditions of relevant loan agreements, or bonds or non-

convertible debentures.

Provided that if no actual loan is outstanding but normative loan

is still outstanding, the last available weighted average rate of

interest shall be applicable;

Provided further that if no actual loan is outstanding but

normative loan is still outstanding and the last available weighted

average rate of interest is also not available, rate of interest equal

to the State Bank one-year Marginal Cost of Funds-based Lending

Rate (‘MCLR’) shall be applicable;

Provided further that the interest on loan shall be calculated on

the normative weighted average loan of the year by applying the

weighted average rate of interest;

Provided also that exception shall be made for the existing loans

which may have different terms as per the agreements already

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

executed if the Commission is satisfied that the loan has been

contracted for and applied to identifiable and approved projects;

(h)

The Distribution Licensee shall make every effort to refinance the

loan as long as it results in net benefit to the consumers.

Provided that the cost associated with such refinancing shall be

eligible to be pass through in tariffs and the benefit on account of

refinancing of loan and interest on loan shall be shared in the

ratio of 50:50 between the Distribution Licensee and the

consumers. Provided further that the Distribution Licensee shall

submit the calculation of such benefit to the Commission for its

approval.

(i)

The Distribution Licensee shall enable tracking of the loans

converted into grants under schemes like APDRP, R-APDRP,

RGGVY,DDUGJY, RSVP, etc or any other loan from the Central or

State Government by providing information and data regularly to

the Commission, for enabling the Commission to recover from

Distribution Licensee the amount of interest on loans which have

been passed on to the consumers in the earlier years and have

been converted into grant subsequently so that the recovered

amount is passed on to the consumers.

(j)

Addition to loan during the year for Interest purpose will be

restricted to the quantum of assets capitalized and put to use out

of actual or normative loan.

(k)

Details of expenses on account of rebates for prompt payment,

Power factor rebate for maintaining power factor above 0.90 and

cost of raising finance such as Bank Commission etc. shall also be

separately filed by the licensee with the ARR under the head

“Interest on loan and other finance charges.

25.1 Interest during Construction (IDC)

(a)

Interest

during

construction

shall

computed

corresponding to the loan from the date of infusion of debt

fund, and after taking into account the prudent phasing of

funds upto Scheduled Date of Commercial operation

(SCOD).

(b)

In case of additional costs on account of IDC due to delay in

achieving the SCOD, the Licensee shall be required to

furnish detailed justifications with supporting documents

for such delay including prudent phasing of funds.

Provided that if the delay is not attributable to the

Licensee and is due to uncontrollable factors as specified in

these regulations, IDC may be allowed after due prudence

check.

Provided further that only IDC on actual loan may be

allowed beyond the SCOD to the extent, the delay is found

beyond the control of licensee after due prudence and

taking into account prudent phasing of funds.

25.2 Incidental Expenditure during Construction (IEDC)

(a) Incidental

expenditure

during

construction

shall

computed from the zero date and after taking into account

pre-operative expenses up to Scheduled Date of Commercial

operation (SCOD).

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Provided

that

any

revenue

earned

during

construction period up to SCOD on account of interest on

deposits or advances, or any other receipts may be taken

into account for reduction in incidental expenditure during

construction.

(b) In case of additional costs on account of IEDC due to delay

in achieving the SCOD, the licensee shall be required to

furnish detailed justification with supporting documents for

such delay including the details of incidental expenditure

during the period of delay and liquidated damages

recovered or recoverable corresponding to the delay.

Provided that if the delay is not attributable to the

licensee and is due to uncontrollable factors as specified in

these regulations, IEDC may be allowed after due prudence

check.

Provided further that where the delay is attributable

to an agency or contactor or supplier engaged by the

licensee, the liquidated damages recovered from such

agency or contractor supplier shall be taken into account

for computation of capital cost.

after due prudence, the increase of capital cost on account

of cost variation corresponding to the period of time over

run may be excluded from capitalization irrespective of

price variation provisions in the contracts with supplier or

contractor of the licensee.

26. Interest on Working Capital

The Distribution Licensee shall be allowed interest on estimated level of

working capital for the financial year, computed as follows:

Two months equivalent of expected revenue.

Maintenance spares@40% of R&M expenses for one month:

Less:

(i)

Power purchase cost, transmission charges and load dispatch

charges for one month.

(ii)

Depreciation, return on equity and contribution to contingency

reserves equivalent to two months.

(iii) Amount of security deposits from consumers, if any, held

during the year.

Provided that the interest on working capital shall be on normative

basis and rate of interest shall be equal to the State Bank one-year

Marginal Cost of Funds-based Lending Rate (‘MCLR’) as of the date on

which petition for determination of tariff is filed plus 150 basis points.

The rate of interest for the purpose of Truing-up shall be the weighted

average MCLR of the concern Financial Year plus 150 basis points.

Provided further that interest shall be allowed on consumer

security deposits and security deposits from Distribution System users

held during the year at the Bank Rate as of the date on which petition for

determination is filed. The interest allowed shall be subject to true up at

weighted average Bank Rate of the concern Financial Year.

Provided also that if the State Government is providing resource

gap grant and/or direct subsidy to consumers, the working capital shall

be reduced by two months equivalent of that amount.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

27. Treatment of Return on equity

(a) Return on equity shall be computed on 30% of the capital base or

actual equity, whichever is lower.

Provided that assets funded by consumer contribution,

capital subsidies/ grants and corresponding depreciation shall not

form part of the capital base. Actual equity invested in the

Distribution Licensee as per book value shall be considered as

perpetual and shall be used for computation in this Regulation.

Provided further that the premium if any raised by the

Licensee while issuing share capital and investment of internal

resources created out of its free reserves, for the funding of the

Scheme, shall be reckoned as paid up capital for the purpose of

computing return on equity, provided such premium amount and

internal resources are actually utilized for meeting the capital

expenditure of the distribution system, and are within the ceiling

of 30% of capital cost approved by the Commission.

(b) The return on the equity invested shall be allowed from the date of

start of commercial operation after put to use.

project which is commissioned w.e.f. 01.04.2016 and further

incentive equivalent to 0.5% will be allowed in the form of RoE, if

the project is completed within original schedule period. However,

Return on Equity for the project commissioned prior to

01.04.2016 shall be allowed at the rate of 14%.

28. Bad and Doubtful Debts

Bad and Doubtful Debts shall be allowed as a legitimate business

expense provided the distribution licensee actually identifies and writes

off bad debts as per the transparent policy approved by the Commission.

In case there is any recovery of bad debts already written off, the

recovered bad debt will be treated as other income.

29. Tax on Return on Equity

29.1 The base rate of return on equity as allowed by the Commission

under Regulation 27 shall be grossed up with the effective tax rate

of the respective financial year. For this purpose, the effective tax

rate shall be considered on the basis of actual tax paid in the

respect of the financial year in line with the provisions of the

relevant Finance Acts by the concerned the Distribution Licensee,

as the case may be. The actual tax on income from other business

including deferred tax liability (i.e. income on business other than

business of distribution, as the case may be) shall not be

considered for the calculation of effective tax rate.

29.2 Rate of return on equity shall be rounded off to two decimal places

and shall be computed as per the formula given below:

Rate of pre-tax return on equity = Base rate / (1-t)

Where “t” is the effective tax rate in accordance with Clause (1) of

this regulation and shall be calculated at the beginning of every

financial year based on the estimated profit and tax to be paid

estimated in line with the provisions of the relevant Finance Act

applicable for that financial year to the company on pro-rata basis

by excluding the income of non-generation or non-transmission

business, as the case may be, and the corresponding tax thereon.

In case of licensee paying Minimum Alternate Tax (MAT), “t” shall

be considered as MAT rate including surcharge and cess.

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BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Illustration:-

(i)

In case of the licensee paying Minimum Alternate Tax (MAT) @

20.96% including surcharge and cess:

Rate of return on equity = 15.50/(1-0.2096) = 19.61%

(ii)

In case of licensee paying normal corporate tax including

surcharge and cess:

(a)

Estimated Gross Income from the licensee business for FY

2017-18 is Rs 1000 crore.

(b)

Estimated Advance Tax for the year on above is Rs 240

crore.

(c)

Effective Tax Rate for the year 2017-18 = Rs 240 Crore/Rs

1000 Crore = 24%

(d)

Rate of return on equity = 15.50/ (1-0.24) = 20.39%

29.3 The Licensee shall true up the grossed up rate of return on equity

at the end of every financial year based on actual tax paid together

with any additional tax demand including interest thereon, duly

adjusted for any refund of tax including interest received from the

income tax authorities pertaining to the tariff period 2019-20 to

2021-22 on actual gross income of any financial year. However,

penalty, if any, arising on account of delay in deposit or short

deposit of tax amount shall not be claimed by the Licensee. Any

under-recovery or over-recovery of grossed up rate on return on

equity after truing up, shall be recovered or refunded to

beneficiaries on year to year basis.

30. Non-Tariff Income

(a) All incomes being incidental to electricity business and derived by

the Licensee from sources, including but not limited to theft of

energy, delayed payment surcharge, meter rent, profit derived

from disposal of assets, rents, income from investments other

than contingency reserves, miscellaneous receipts from the

consumers, other miscellaneous receipts, income to Licensed

business from the Other Business of the Distribution Licensee and

any other income mentioned in Schedule-5 of The Electricity

(Supply)Annual Accounts Rule 1985 shall constitute Non-Tariff

Income of the Licensee.

Provided that Delayed Payment Surcharge to the extent of

financing cost on the principal amount corresponding to the

Delayed Payment Surcharge shall not be treated as non- tariff

income.

The

financing

Cost

the

principal

amount

corresponding to the Delayed Payment Surcharge shall be allowed

at weighted average MCLR of the concern Financial Year plus 150

basis points.

Provided further that the interest earned from investments

made out of Return on Equity corresponding to the regulated

Business of the Distribution Licensee shall not be included in

Non-Tariff Income

(b) The amount received by the Licensee on account of Non-Tariff

Income

shall

deducted

from

the

Aggregate

Revenue

Requirement in calculating the net revenue requirement of

Distribution Licensee.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

31. Income from Other Business

Where the Distribution Licensee is engaged in any other business,

the income from such business will be deducted from the Aggregate

Revenue Requirement in calculating the revenue requirement of the

Licensee in the manner and in proportion as may be specified by the

Commission in BERC (Treatment of Income of Other Businesses of

Transmission Licensees and Distribution Licensees) Regulations, 2013

and its amendments from time to time.

Provided that the Licensee shall follow a reasonable basis for

allocation of all joint and common costs between the Distribution

Business and the Other Business and shall submit the Allocation

Statement as approved by the Board of Directors to the Commission

along with the application for determination of tariff;

Provided further that where the sum total of the direct and

indirect costs of such Other Business exceed the revenues from such

Other Business or for any other reason, no amount shall be allowed to be

added to the Aggregate Revenue Requirement of the Distribution Licensee

on account of such Other Business.

32. Treatment of Regulatory Assets

(a) Regulatory assets shall not be created against cost/loss incurred

in normal course of business except in case of natural calamity or

forced majeure conditions and extraordinary situations as the

Commission deems fit and proper.

(b) The amortization schedule corresponding to the regulatory asset

shall be approved by the Commission and put in effect along with

creation of the regulatory asset. The amortization schedule shall

normally provide for recovery of the regulatory asset within a

period not exceeding seven years.

State Bank one-year Marginal Cost of Funds-based Lending Rate

(‘MCLR’) for the tenure for which regulatory asset has been created

plus 150 basis points.

PART-VI

WHEELING AND RETAIL SUPPLY BUSINESS

33. Segregation of Wheeling Business and Retail Supply Business

Every Distribution Licensee shall maintain separate accounting

records for the Wheeling Business and Retail Supply Business and shall

prepare an Allocation Statement to enable the Commission to determine the

Tariff separately for :—

(a) Wheeling Business ;

(b) Retail Supply of electricity:

Provided that in case complete accounting segregation has not

been done between the Wheeling Business and Retail Supply Business of

the Distribution Licensee, the Commission shall stipulate the ratio of

allocation of the Aggregate Revenue Requirement of the Distribution

Licensee based on data obtained from the Distribution Licensees. The

following broad principles shall be followed for allocation of costs towards

wheeling business and supply business, out of the total annual

Aggregate Revenue Requirements determined:

Power purchase cost shall be allocated to the Retail Supply business.

³⁰

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Operation and Maintenance expenses shall be segregated between

wheeling and retail supply businesses in such manner as may be

determined by the Commission;

Majority of the capital expenditure related expenses, viz.,

depreciation, interest and return on equity, shall be included under the

wheeling business;

Explanation – The Retail Supply Business would require only a

small component of the capital expenditure towards billing and collection

activity.

34. Target Availability and Recovery of ARR

(a)

Recovery

the

annual

Aggregate

Revenue

Requirement

determined as per the norms under these regulations shall be

based on achievement of the target availability index as under:

The Availability index shall be computed for both Wheeling

Business and Retail Supply Business of the Distribution Licensee

on yearly basis as per following:

For Wheeling Business:

Wheeling Network Availability Index (%) = (1-(SAIDI/8760)) X 100

Where,

SAIDI = Sum of all customer interruption durations/Total number of

consumers served

For Retail Supply Business:

The Supply Availability shall be measured on the basis of power

contracted by the Distribution Licensee on a long-term basis as

per the power procurement plan under following heads:

Base Load Supply Availability = ((Actual Contracted Base Load

Supply (MW)) X (Number of Off-Peak hours)) / ((Base Load in MW)

X (Number of Off-Peak hours)) Peak Load Supply Availability =

((Actual Contracted Peak Load Supply (MW)) X (Number of Peak

hours)) / ((Peak Load in MW) X (Number of Peak hours)) Supply

Availability Index = 75% of Base Load Supply Availability + 25% of

Peak Load Supply Availability

(b)

The Distribution Licensee shall maintain data on planned

maintenance outages, load shedding, force majeure outages and

trippings.

(c)

The incentive/disincentive shall exclude the circumstances when

the actual supply differs from the contracted supply due to force

majeure situations, weather conditions, extreme monsoon failure,

station outages, etc. which are beyond the control of the

Distribution Licensee.

(d)

The Commission shall specify progressively increasing normative

levels of Availability for Wheeling and Supply Business of the

Distribution Licensee on the basis of past performance over the

control period.

Provided that the Availability of Retail Supply Business shall not

be lower than 90% and shall gradually increase to 95% or 98% in

no less than three years

(e)

The incentive/disincentive shall be considered as +/- 0.2% of ARR

for every percentage point increase/decrease in Availability vis-à-

vis the normative levels of availability.

Provided that, the maximum incentive/disincentive shall

be limited to +/- 2% of ARR.

BIHAR GAZETTE (EXTRA), 28TH AUGUST 2018

35.

Subsidy

(a)

The Commission shall determine the ARR and Tariff without

considering subsidy.

Provided that if the State Government declares subsidy for

the categories of consumers after notification of Tariff Order, the

licensee shall incorporate the same in the tariff and intimate the

Commission with the revised Tariff Schedule that shall be charged

if the subsidy is received in advance.

Provided further that in case the State Government declares

subsidy in advance or during tariff filing proceedings and the

licensee incorporates the subsidy in the petition, the Commission

shall notify two tariff schedules, one with subsidy and the other

without subsidy.

Provided also that the Government’s subsidy provided for or

declared shall be supported by documentary evidence of time

schedule of payment, mode of the payment of the subsidy and

categorization of the subsidy amount into subsidized consumer

categories.

(b)

The Commission may clarify in the tariff order, post the

declaration from the Government, the quantum of Government’s

subsidy as applicable to the fuel cost adjustment along with the

range (%) of variable cost upto which the fuel adjustment cost

shall not be passed to the consumers, category wise classification,

mode of payment and schedule of payment etc.

(c)

In case of no disbursement or delayed disbursement of subsidy by

the Government, the licensee shall charge consumers as per the

tariff schedule which is approved by the Commission without

consideration of subsidy.

(d)

In case the amount of subsidy by the Government is not utilized in

full, the balance amount of subsidy amount shall be used for

adjusting in ARR of the ensuing year(s).

Provided that in case the Government directs to utilize such

un-utilized balance of subsidy in some other manner, the same

shall not be used for adjusting in the ARR of the relevant year(s).

36.

Cross Subsidy, Allocation of Cost to Serve and Tariff Design

(a)

The Commission shall notify a roadmap for reduction of cross

subsidies within control period. The road map shall also have

intermediate milestones, based on the approach of a gradual

reduction in cross subsidy.

(b)

The Distribution Licensee shall compute the consumer category-

wise cost of supply as per the methodology elaborated below.

(c)

Allocation of Cost: The Cost to serve shall be allocated to the

consumer categories in the following manner:

Step 1: Functionalization of Cost - Total cost shall be divided

on the basis of functions performed such as power purchase,

transmission, distribution etc.

Step 2: Classification of Cost –Each of the functionalized costs

shall be further classified, based on its intrinsic nature into Demand

related cost, Energy related cost and Customer related cost. Demand

related costs shall generally be of fixed nature, related to capacity

creation and shall include interest on capital borrowing, depreciation

etc. Energy cost shall be related to quantum of electricity consumption

of consumer, such as fuel cost, interest on working capital, etc.

³²

BIHAR GAZETTE (EXTRA) 28TH AUGUST 2018

Consumer related cost shall include operating expenses associated with

meter reading, billing and accounting.

Step 3: Allocation of Cost

(i)

Allocation of Demand Costs: Demand costs of all three

functions shall be allocated among consumer categories on

the basis of average coincident peak demand of the tariff

categories (average of past 12 months). To facilitate

determination of average coincident peak demand for the

various tariff categories, load research shall be made an

integral part of the operations of the DISCOMs and

systematic load research exercises shall be initiated.

(ii)

Allocation of Energy Costs: Energy related costs of

Distribution functions shall be allocated to consumer

categories on the basis of ratio of electricity consumption of

each

consumer