2.1 In the last tariff order the Commission had, while assessing the performance of the Board, had set certain targets relating to various operational aspects of the Board. The Commission has taken stock of the performance of the Board in general and with respect to the targets set in the earlier tariff order, in particular. Observations of the Commission in this regard are discussed in the following paragraphs.
 

Category-wise Consumption

The comparison of actual category-wise consumption with ARR filing projections and Commission�s approval has been summarized below:           

        An analysis of the above table indicates that the consumption by HT categories is increasing at a lower rate as compared to consumption by LT categories.

2.3 Category-wise Consumers

    The comparison of number of consumers during last 3 years is given below:

       It is observed that overall increase in the number of consumers in Board�s network has been around 3.15%. While the increase in LT category has been around 3.15%, increase in HT has been around 4.57%.

2.4 T&D losses

       The reduction of T&D losses is a major concern as approximately 50% of the energy is lost in transit. This may either be pilferage and theft or on account of technical losses.  Reduction of losses to reasonable level not only results into saving of valuable and costly resources of the MPSEB but also ensures additional availability of power for consumers. T&D losses during the past two years as assessed by MPERC in the last tariff order and actual are given in the following table:

       The Board had mentioned that it would be able to bring down the loss level to 42.88% during 2001-02, which was accepted by the Commission. This meant reduction of 8.12 percentage points. However the actual reduction has been only 2.23 percentage points.

       The Board has explained that in order to have proper assessment of energy consumed by the agricultural consumers, an exercise/sample survey covering 1278 agricultural consumers situated at different geographically locations of Madhya Pradesh has been conducted. The survey covered different crops cultivated, in various divisions, circles, region, having proper representation of all areas, all type of crops and all type of sources of watering.  Region-wise average consumption per HP/month is as under:

       The average consumption per HP/month including all types of water sources, all type of crops and all regions works out to 98 units. The aforesaid study covers a period of about 4-5 months of the Rabi Season. Hence, the consumption for five months of the Rabi Season may be considered as 98 units per HP/month. Besides the Rabi Season, the consumption in other seasons of the year is about 36% to 40% of the total consumption during the year.  Accordingly, for remaining seven months of the year, the average consumption would be about 42 to 43 units per HP/month.  This will give average agricultural consumption of 65 to 66 units per HP/month during the year 2001-02 which is equivalent to a load factor of 12% as against 15% allowed by the Commission for the year 2001-02.  With this load factor and the consumption of 20 units per month per connection for SC/ST Single Light Point Connections for 2001-2002 and for other SLP connections at 20 units per month per connection for the period April 2001 to September, 2001, and 60 units per month per connection for the period October 2001 to March 2002, The T&D losses for the year 2001-02 works out to 48.77% which is nearly 49%. This tallies with the findings of losses of 49% in the State based on the actual readings of the meters installed at various sub-stations and feeders in various Divisions, Circles and Regions for energy auditing work.

       The figures of 12% load factor for agricultural consumers and T&D losses of 49% are based on the actual study conducted by installing meters at the premises of about 1278 consumers and the readings from meters at various sub-stations and feeders.  Once 100% metering is achieved, accurate agricultural consumption or SLP consumption and accurate loss figures will be computed.  At present, aforesaid figures are purely based on the limited study and these are subject to change.  The load factor of agricultural consumers or the T&D loss may be somewhat different in future when full details would be available.  

        While passing the tariff order for the year 2001-02, the Commission had directed that the T&D losses as prevailing at the end of 2000-01, which was determined at 51%, shall be reduced to 42.88% by 2001-02. Further, the Commission had prescribed the following programme for reduction of T&D losses over next five years: 

         The Board has explained that during the year 2001-02, technical losses could not be reduced as it requires huge investment for renovation of HT/LT transmission and distribution system. Even if sufficient investments are tied-up, it would take considerable time to reduce such losses.  Under reforms and restructuring process, the Asian Development Bank is providing funding for renovation of the transmission and distribution system in a phased manner for which action has been initiated.
 

         Actual T&D losses for the year 2000-01 have been 50.97% as against 51% determined by the Commission.  For the year 2001-02, the estimated losses are 47.29% i.e. a reduction of 3.7 percentage points.  However, 10 nos. RE Societies have recently been merged with the Board in the month of March, 2002 and the losses being comparatively on higher side in REC Societies, the T&D losses at the end of the year 2001-02 are estimated at 48.77%.

2.4.2    Steps for reducing high Commercial Loss

For reducing high commercial loss, which is of the order of 27%, the following steps need to be initiated.

(i)       Intensive checking of Jhuggi Jhopadi clusters, agriculture sector and unauthorized colony.

(ii)      Meter must necessarily be installed at existing unmetered SLP and agriculture  connections within the given time frame of 3 years.

(iii)      Close monitoring of HT/LT industry to curb pilferage and misuse and     that recorded consumption is commensurate with actual use.

(iv)     Precision Electronic Meters be ensured on all HT consumers� premises and LT industries so that theft of energy can be readily checked.  No HT connection should remain defective for a duration exceeding 7 days and similar action for LT industries.

(v)      Defective meters should be replaced by making monthly programme and should be ensured that the defective meters remain within the level of 2.5% i.e. 3% in the rural areas and 1.5% within the township and urban area.

(vi)     100% meter reading of LT consumers should be ensured.  Supervisory officers (JE/AE) must be given programme to exercise checks of 5% and 10% to ensure correct recording to ensure correctness of meter reading. 

2.4.3            Revised Schedule For Reduction Of T&D Losses

        In the tariff order for the year 2001-02 approved by the Commission certain level of improvement in T&D losses was approved against which the MPSEB came out with a different programme. The MPSEB has worked out and projected monthwise circle wise programme for reduction of losses from July, 2002 to November, 2003.  13 circles out of 35 circles of the MPSEB has recorded very high level of T&D losses.

       From the data presented by the MPSEB, the Tikamgarh Circle has recorded as high as 63.93 % T&D losses followed by 62.49 % in respect of Gwalior City Circle, 61.5% in respect of Rajgarh Circle and 60.36% in respect of Shivpur Circle.   The analysis further indicates that only around 36% to 39% of the power injected in to the system is available for sale.

        The MPSEB has been continuously arguing that high technical losses are because the required level of investment is not possible.  The figures projected by the Board do not support the statement of the MPSEB for city circles controlling corporation areas, such as Gwalior (CC), Bhopal (CC) and Indore (CC) where infrastructure is relatively very good and has recorded more or less the same level of losses.

       Reduction of losses as suggested in the programme of the Utility must be ensured.  Accountability for failure to achieve the set targets should be fixed and stringent action should be initiated against employees concerned.

2.5  Energy Generation

2.5.1    Power Station- wise installed capacity as on February 2002 is as follows:

      In the inter-state project viz. Satpura Thermal Power Station No.  1 at Sarni, MPSEB has a share of 60%, while Rajasthan owns the balance.  In respect of Hydel Station viz. Gandhi Sagar (Located in Madhya Pradesh having a capacity of 115 MW), Rana Pratap Sagar  (located in Rajasthan having a capacity of 172 MW) and Jawahar Sagar (located in Rajasthan having a capacity of 99 MW), both the states own 50% share each.  Also the MPSEB and the MSEB (of Maharastra) have an inter state Hydel Power station namely Pench Totladoh with a capacity of 160 MW wherein the MPSEB owns a share of 66.67 % i..e 107, MW and 33.33% (53 MW) is owned by MSEB.

      Apart from inter state power stations with the states of Rajasthan and Maharastra, Madhya Pradesh also has inter state projects with U.P. In Rajghat which has a capacity of 45 MW, both the state of Madhya Pradesh and UP share 50% each of the power generated from this power station.  Further, in Matatila hydel station, which has a capacity of 30 MW, Madhya Pradesh has a share of 33% (10 MW).

       In addition to above, the MPSEB has a share of 37.5 MW from Rihand (UP) and 5 MW from Hirakud (Orissa). This has not been accounted for because this power is not being physically transferred and the matter is under dispute with respective State Govts. 

       Overall performance of the thermal power stations owned by the Board for the years 1999-2000, 2000-2001 and 2001-2002 have been indicated below alongwith the performance parameters fixed by the Commission for the year 2001-2002, for the purpose of evaluation:

2.5.2        Plant Load Factor

2.5.3            Auxiliary Power Consumption

2.5.4            Specific Oil Consumption (ml/KWhr)

2.5.5    Station Heat Rate (kCal/ kWhr)

        It is evident from the above data that the performance of the above thermal power stations has deteriorated during the past three years and the PUF during the year 2001-02 declined to 62.9% against the target of 71.1% fixed by the Commission. Similarly, the parameters for auxiliary power consumption, fuel oil consumption and station heat rate achieved, have not been comparable.

2.5.6            Reasons for the lower performance are attributed mainly to the following:

i.        Lack of timely maintenance of the units owing to pressing demand for the power in the state.
ii.       Unforeseen outages resulting from ageing.
iii.       Non-availability of spares in adequate quantity.
iv.       Lack of funds resulting in the deferment of refurbishment/renovation/modernization activities of the units. 
v.       Non�supply of adequate quantity and quality of coal as per the linkage decided by the Standing Linkage Committee.

Reasons for poor performance of each station are discussed in following paragraphs.

AMARKANTAK THERMAL POWER STATION

(Capacity: 1x30+1x20+2x120= 290 MW)

i)         The 2x30 MW units of this power station (out of which one has already been derated to 20 MW capacity) were commissioned during 1965 and are as old as 36 years. Though the Board is striving to take up the refurbishment works, they are yet to be awarded. Further, there has been a problem of non-availability of coal mills spares resulting in the operation of only one unit at a time. 

ii)       The 2x120 MW units were commissioned during 1977-78. The units are not working satisfactorily in as much as they do not generate beyond 90 MW capacity each. Their R & M works have got held up owing to the backing out of M/s Ensaldo Energia of Italy who were awarded this work. Therefore, the performance of these units could not be achieved to the desired level during the year 2001-02 as was envisaged.

         In view of the above, the performance of Amarkantak TPS has been continuously poor. Against the target of 45.5% for Amarkantak complex as a whole, fixed by the Commission for the year 2001-2002 it achieved only 39%.

iii)      Specific oil consumption for smaller units nos. 1 and 2 has been 14.067 ml/unit, which is abnormally high. The Board is directed to investigate into the causes of this high level of consumption for the year 2001-02 and take remedial steps.

SATPURA THERMAL POWER STATION:

(Capacity:5x62.5+1x200+1x210+2x210=1142.5 MW)

i)                    Units of PH- I (5x62.5 MW) are as old as 32 to 35 years. During the year, units no.  3 and 4 had to undergo major repairs of their turbine blades and rotors. This repair took 77 days for each of the units.

ii)                   Due to scanty rainfall during the year 2000, the Satpura lake did not contain sufficient water and as a consequence there was a sharp decline in the water level from April 2001 to June 2001. Generation, therefore, had to be restricted resulting into a lower PUF.

iii)                 There was unforeseen failure of LP turbine blades of 210 MW of unit no. 9 in the month of February 2001. LP turbine rotor was dismantled and sent to the BHEL Bhopal works for repair. Thereafter cracks were also found in IP turbine rotor. After repair the rotors were received and commissioned during July 2001. This resulted in lower PUF.

iv)                 Coal received for PH- II and PH- III has comparatively lower CV than the designed ones. Also coal received has an ash content of 40% or more against the designed value of 28%.

        In view of the above, the Board could not achieve PUF target determined by the Commission for 2001-02.

SANJAY GANDHI THERMAL POWER STATION BRISINGHPUR

(Capacity:2x210+2x210=840 MW)

       The poor performance is due to condenser tube problems associated with unit nos. 1 and 2 (2x210 MW), which were commissioned during the year 1993/1994, i.e. only 8/9 years ago, they are not functioning as desired. During the year 2001-2002, aluminum - brass tubes in their condensers, which had prematurely failed, were completely replaced with the new copper- nickel condenser tubes.  Further coal shortage at the power station also results in the generation loss.

        In view of the above the SGTPS could not achieve the PUF as determined by the Commission for 2001-02.

2.6   State Government Subsidy

       During the meeting, the Commission had with the State Govt. on this issue last year, the State Government had informed that for the year 2001-02, budget provision of Rs.315.27 crore towards payment of subsidy to the Board has been made. This includes payment of free supply to eligible agriculture / SLP connections and tariff subsidy to agriculture consumers. The Commission had sought a meeting with the State Government on 3.8.2001 on the quantum of Government subsidy required. The State Government further informed that apart from the above budgeted subsidy of Rs.315.27 crore, the Board can retain the electricity duty collected (estimated at Rs.245 crore), which shall be treated as additional subsidy for the year 2001-02. The Board received an actual subsidy of Rs. 132 crore, which was Rs. 428 crore less than agreed sum. This clearly affects the financial position of the Board in a negative manner and ultimately in a lower quality of supply and service to the consumer.

2.7   Revenue Requirement

        MPSEB has submitted the details of the actual expenditure incurred in FY02, under each head of expenditure as given below:

FY02 ARR  (in Rs. Crores)

Differences in various heads are discussed in the following paragraphs.

2.8     Power Purchase

         The Board had envisaged purchase of 13181.42 million units at a cost of Rs. 2513.64 crore at an average cost of 190.70 paise per unit.  The Commission had accepted this projection. The actual purchase was 13746.61 million units at an average rate of 186.07 paise per unit. There has been additional purchase to the extent of 565.19 million units. This resulted into an increase of Rs 57.82 crore as compared to the approved expenditure.

2.9      Employees Cost

          Actual expenditure has been lower by Rs. 106 crore primarily due to freezing of DA rates by the State Government. Major heads of deviation are given below:

2.10     Interest and Finance Charges

The Board had proposed for expenditure of Rs. 686.90 crore which was revised to 585.05 crore by the Commission. However, the actual liability of the Board in this regard was Rs. 1089.08 crore. This resulted into an increase of Rs. 504.02 crore over the amount approved by the Commission. Some of the important differences are summarized below:

 Rs. In crore

        The above table indicates that the result of the revenue mobilization programme of the Board was significantly lower than estimated, resulting in defaults in obligations. This in turn attracted penal charges from lenders/suppliers. Such shortfall would restrict the capability of the Board to invest in new schemes and also maintenance of the existing facilities. This is a matter of serious concern.

2.11     Depreciation

        The Board had proposed depreciation of Rs. 595.96 crore, which the Commission had restricted to Rs. 440.79 crore. The Board has submitted a revised estimate of Rs. 497.65 crore. In the absence of availability of reliable of records it is difficult to pinpoint the reasons for such deviation.

2.12      Collection Efficiency

        The Commission had directed the Board to increase its collection efficiency to 96% during 2001-02. The Board submitted that the same was improved to 92%. However, the collection efficiency needs to be evaluated keeping in view the total outstanding amount i.e. including previous years� arrears also. The same is summarized as under:

        One of the major factors contributing towards higher collections level was the payment of Rs. 200 crore of dues by the Indore Municipal Corporation.

        The Commission is of the opinion that there is substantial scope for improving the collection efficiency. Outstanding position as on 31.3.2002 represents 154 days� sales equivalent. The Board should make concerted efforts to bring it down to not more than 75 days� level. Needless to say, better collection efficiency would enable the Board to borrow less and at better terms.

2.13        Metering

        The financial health of any utility is critically dependent on an accurate assessment of revenue due and its subsequent realization. MPSEB is not in the position to recover the cost of supply through existing tariff. Thus, every additional unit sold by MPSEB to the subsidized set of consumers adds to its losses. In such a scenario, proper metering and energy audit are important steps towards narrowing the gap. The Commission once again stresses the need for 100% of metering at an early date.

        In Madhya Pradesh there are 1639 HT consumers. For all these HT consumers metering was completed by the Board on 31/12/2001. The progress of installation and replacement of stopped/defective meter on the LT side is, however, poor in some areas. The current level of metering of LT consumers is indicated below.

          It is observed that in some circles such as Chhindwara, Sidhi, Khargone and Jhabua the level of metering is below 50%. The progress towards replacement of stopped/defective meters, particularly for LT consumers in some of the regions, is also unsatisfactory. Against a total of 42,50,139 installed LT meters, the percentage of stopped/defective meters as on 31.03.2002 was 8.81%. The maximum percentage of stopped/defective meters is 12.89% in Gwalior region.  The region-wise percentage of stopped/defective meters and progress of replacement is indicated below. 

2.14    Audit Report (Commercial) for the year ending 31st March, 2002

       Audit of MPSEB was conducted from December, 2000 to June, 2001 covering records of Chief Engineer (Generation) & Chief Engineer (T&D) at Head Office and 9 Areas and 10 Generation Stores for the last 5 years for the year ending March, 2002.  The main findings of the audit report on the test check of the records indicate that the Board had not laid down effective inventories, control measures by stipulating the minimum, maximum, reordering and critical level of stores.  There was no system to (a) properly assess requirement before purchase; (b) for replacing the defective materials; (c) periodical identified surplus materials and dispose them expeditiously. 

  The Board should immediately introduce system to accurately assess system before making purchase and also identify surplus material and dispose them of expeditiously.