1. Analysis of ARR & Tariff Proposal 2011-12 of OHPC World Institute of Sustainable Energy Consumer Counsel

2. Presentation Outline  ARR & Tariff Proposed by OHPC  Comparison of ARR parameter & Tariff with previous year approved ARR (2010-11)  Observations and suggestion on the current ARR & Tariff filings (2011-12)  Conclusion

3. Installed Capacity of OHPC Stations Sl. No. Name of the Power Stations Installed Capacity (2010-11) MW Installed Capacity (2011-12) MW 1Hirakud (HHEP) 275.50 2Chiplima(CHEP ) 72.00 3Balimela (BHEP ) 510.00 4Rengali ( RHEP) 250.00 5Upper Kolab (UKHEP ) 320.00 6Upper Indravati(UIHEP ) 600.00 7Machhkund ( Orissa share) 34.50 Total2062

4. Design Energy of OHPC Stations Sl. No. Name of the Power Stations Design Energy (DE) (in MU) Design Energy for sale (MU) 1HHEP684.00677.16 2CHEP490.00485.10 3BHEP1183.001171.17 4RHEP525.00519.75 5UKHEP832.00823.68 6UIHEP1962.001942.38 Total5676.005619.24

5. Proposed Project Cost in ARR 2011-12 Sl. No Power Station s Historical cost of assets as on 01.04.96 Revalued Cost of assets as on 01.04.96 New additions up to 2010- 11 Project cost for 2010-11 (based on original cost) Project cost for 2010-11 (based on revalued cost) 1HHEP72.75130.16191.74 264.49321.90 2CHEP92.23165.0142.82 135.05207.83 3BHEP115.42334.66209.62 325.04544.28 4RHEP91.09259.013.61 94.70262.62 5UKHEP108.31307.963.82 112.13311.78 Total Old PS 479.801196.80451.61 931.411648.41 6UIHEPApproved project cost1195.42

6. Proposed ARR & Tariff for 2011-12 Components of ARR / TariffRHEPUKHEPBHEPHHEPCHEPUIHEPTotal Salable Design energy (MU) 519.75823.681171.17677.16485.101942.385619.24 Interest on Loan 0.110.138.562.981.4638.2151.45 Depreciation 2.432.8816.176.863.4730.2362.04 Return on equity 0.210.2212.179.282.4957.8282.19 O&M Expenses 38.1028.0746.8040.7816.5561.97232.27 Interest on working capital 2.001.503.172.491.005.8516.02 Total ARR ( Crs) 42.8532.8086.8762.3924.97194.08443.97 Average Tariff (P/U) 82.45139.82474.17892.13451.48099.91979.010

7. Proposed capacity charge and energy charge Sl. No. Name of the Power Stations Capacity charge (Rs crore) Energy Charge (P/U) 1HHEP31.19546.067 2CHEP12.48525.74 3BHEP43.43537.089 4RHEP21.42541.225 5UKHEP16.4019.912 6UIHEP97.0449.958

8. Comparison of ARR parameters and Tariff with Previous year ARR

9. Comparison of components of ARR (Rs in Cr) Component of ARR HHEPCHEPBHEPRHEPUKHEPUIHEP 2010- 11 (A) 2011- 12 (P) 2010- 11 (A) 2011- 12 (P) 2010- 11(A) 2011- 12 (P) 2010- 11 (A) 2011- 12 (P) 2010- 11 (A) 2011- 12 (P) 2010- 11(A) 2011- 12 (P) Return of Equity8.879.281.682.494.1312.170.160.21 0.2255.7857.82 Interest on loan3.642.981.001.461.38.560.210.110.250.13038.21 Depreciatio n7.976.863.33.4716.1216.172.412.432.88 30.23 O&M37.9240.7815.9316.5544.346.831.5638.122.8228.0756.3961.97 Interest on WC2.232.490.8812.553.171.5721.161.54.425.85 Total ARR60.6462.3922.7924.9768.486.8735.9142.8527.3232.8 146.8 2 194.0 8 % Increase 2.88 % 9.56 %27%19%20%32%

10. Percentage increase in Tariff over 2010-11 Sl. No. Name of the Power Stations Average cost in 2009-10 (P/U) (approved) Average cost in 20010-11 (P/U)) (approved) Proposed Average cost (P/U) FY 2011-12 (proposed) (Increase in P/ U) Percentage increase over 2010-11 1 HHEP 64.96 89.5492.134 (2.59) 2.90% 2 CHEP46.9851.48 (4.5) 9.58% 3 BHEP56.6658.4174.178 (15.17) 27% 4 RHEP58.2269.0982.45 (13.36)19.34% 5 UKHEP25.1933.1739.42 (6.25)18.84% 5 UIHEP73.3575.5999.919 (24.32)32.19%

11. Percentage increase in Tariff over 2010-11 During FY 2011-12, OHPC propose to supply an estimated energy of 5619.24 MU at an average rate of 79.01 P/kWh During FY 2010-11, same unit supply was approved by Commission at an average rate of 64.40 P/kWh Over all Hike of 22.68% in OHPC tariff

12. Comparison of two-part tariff Sl. No Name of the Power Stations Approved tariff 2010-11 Proposed tariff 2011-12 Capacity charge (Rs crore) Energy Charge (P/U) Capacity charge (Rs crore) Energy Charge (P/U) 1HHEP30.32040.77531.19546.067 2CHEP11.39523.49012.48525.74 3BHEP34.2029.20143.43537.089 4RHEP17.95534.54521.42541.225 5UKHEP13.66016.58416.4019.912 6UIHEP73.41037.79397.0449.958

13. Observations and suggestion on the ARR & Tariff parameters (2011-12)

14. Two Part Tariff – CERC Regulation 09  Annual Fixed cost for Hydro station is to be recover through Capacity Charge (50%) Energy Charge (50%)  Annual Fixed Cost consist of Return of Equity Interest on loan capital Depreciation O&M Interest on working capital

15. Capitalization of asset during 2010-11 Sl. No. Name of the Power Stations Historical cost of Asset as on 01.04.96 ( Cr) New additions up to 2009-10 ( Cr) (approved) Proposed new additions up to 2010-11 Additional Capitalization during 2010- 11 (Cr) 1 HHEP72.75190.09191.941.85 2 CHEP92.2336.0242.826.8 3 BHEP115.42208.74209.620.88 4 RHEP91.092.833.610.78 5 UKHEP108.313.813.820.01 6 UIHEPApproved Project cost – 1195.4210.32

16. Capitalization of asset during 2010-11 Observations & submission  The expenditure of 10.32 Cr on account of capitalization of assets during 2010-11 is not approved by the Commission in 2010-11 ARR  The expenditure details and the status of the work for the proposed asset capitalization is missing in the ARR.  Expenditure details of TRCM installation at Chiplima HEP (6.80 Cr against order value of 6.06 Cr) may required to be furnished  Hon. Commission may consider the expenses on account of capitalization of asset to pass through in the ARR after verifying the cost and necessity of the work

17. Interest on Loan Observation & Suggestion  The loan liability of OHPC consist of state Govt loan and PFC loan  OERC has advised the Govt that the effects of up-valuation of assets and moratorium on debt services of state Govt loan shall be kept in abeyance till end 2012-13  Interest of Rs 38.21 Cr on State Government investment /loan (545.86 cr) in UIHEP may be kept in abeyance till end of the control period Or OERC may recommend Govt to make it interest fee loan  This will substantially reduce UIHEP tariff as well as the average cost of supply of OHPC stations (6.8 P/U); since UIHEP contribute app 35% share of design energy of OHPC stations

18. O& M expenses Observation  OHPC has claimed O& M expenses as per CERC 2009 regulation (5.72 % escalation on previous yr O&M) and thereafter added various Arrear salary and terminal liabilities Submission  Arrear salary and terminal liabilities of Corporate Office claimed in the ARR 2011-12 ( 6.95 Cr) – It is not clear whether it is paid in 2010-11 or proposed to be paid in 2011-12. If not paid in 2010-11 same shall not be considered in ARR 2011-12.  Differential Pension liability (21.28 Cr) should be met through Terminal (Pension) liabilities fund (140.95 Cr) earmarked for the purpose by OHPC & shall not allow to pass through in the ARR – Reply to the query raised by Director Tariff in OHPC ARR order of 2010-11

19. Interest on Working capital Submission  CERC Tariff Regulation 2009 specifies the interest of W.C as SPLR of SBI as on 01.04.09 or 1 st April of the year in which the generating station is declared under commercial operation, which ever is later.  As all 6 HEP of OHPC has put on commercial operation prior to 01.04.2009 the SBI SPLR prevailing as on 01.04.2009 may be consider for calculating interest on working capital.  Since there is provision of Rs 14 Cr for Rolling Working Capital earmarked by OHPC during 2009-10, total working capital requirement for FY 2011-12 (128.19 Cr ) may be reduced by appropriate amount.

20. In Conclusion  Hon Commission may consider the suggestions of consumer counsel with regard to interest on loan (particularly of UIHEP), O&M, interest on working capital and curtail the ARR accordingly in the interest of consumers.  As per Govt notification OHPC is claiming license fee for water used for generation of electricity from all HEP (5.67 Cr). Since it is non- consumptive use of water and OHPC is Govt Corporation OERC may advice Govt to waive the license fees

21. Thank You