Can Transmission Corporation of Andhra Pradesh (AP Transco) make a true-up claim of Rs. 650 crore before the regulator for its future requirement? Will it not amount to casting a burden on the power consumers in advance?
These questions are bound to be hotly debated when the Andhra Pradesh Electricity Regulatory Commission (APERC) takes up AP Transco’s filings for the second control period from 2009 to 2014 at the public hearing here on October 9 with consumer groups crying foul over the utility’s claims. True-up claim is the expenditure incurred by the utility over and above the Annual Revenue Requirement (ARR) approved by the APERC.
AP Transco has claimed that it had made a provision for Rs. 650 cr during 2013-14 under terminal benefits for its employees including pension, gratuity and earned leave encashment. The consumer groups argue that the purpose of true –up claim is to seek adjustment of uncontrollable and permissible variations in the expenditure and revenue during the control period or the period gone by. But in this case the utility has included its future requirement, they said and appealed to the APERC to reject the claim as it could be a burden on the consumers in advance.
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Consumer groups also question the utility for true- up claims of taxes to the tune of Rs. 287 cr and wanted the APERC to reject it as it was “inflated and far in excess of the permissible limits”. AP Transco has claimed that the actual taxes paid by it were around Rs. 497 cr which includes deferred tax of Rs. 194 cr and that it was one of the reasons for the revenue deficit. But going by percentage of equity and return on equity, the corporate tax of 35 per cent worked out to Rs. 210 crore, whereas it was claiming Rs. 497 cr or Rs. 287 cr in excess. Though it was not entitled, the utility was also claiming taxes for profits accrued from non-tariff income like undertaking a large number of government lift irrigation schemes.
A P Transco’s arguments are being contested by consumer groups on other counts too. They found fault with the utility for true-up claim of Rs. 285. 58 cr for second control period, as its share from the total revenue deficit of Rs. 619 cr in the undivided State. But the factual position obtained from the tariff order, the groups argue, shows that the utility has “juggled figures” to make these “unsustainable claims”.
Though the national tariff policy of January 2006 had claimed that the implementation of Multi-Year Tariff would minimise risks for utilities and consumers, promote efficiency, reduce losses, attract investments and bring greater predictability to consumer tariffs, experience of AP Transco and Discoms shows otherwise, contends M. Venugopala Rao, representing these groups. AP Transco cannot claim improvement in efficiency in the second control period as it had failed to execute projects and utilise capital expenditure as allowed by the APERC, while operation and maintenance expenditure had gone up.
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