SPDCL lost Rs. 5,820 Cr to buy power at higher rates: CAG

Hyderabad : The Comptroller and Auditor General of India (CAG), in its report for the year ended March 2017 which was placed before the Telangana Legislative Assembly on Thursday, revealed that the Southern Power Distribution Company of Telangana (SPDCL) purchased short term power in excess of State Electricity Regulatory Commission limits and at rates higher than the maximum ceiling limits set by SERC. This resulted in an extra cost of 5,820.90 crore during 2012-17.

The CAG report said that the State Electricity Regulatory Commission stated (March 2015) that during the truing-up of the power purchase cost, agricultural sale quantum would be limited to actual consumption or the Tariff Order quantity, whichever is less. This was to avoid passing of excess power purchase costs due to increased agricultural sales to other consumers. However, the power supply to agriculture exceeded the approved limits during 2012-17. This resulted in additional burden of Rs. 1744.56 crore on the Company. "The Company reported continuous reduction in energy losses during the period 2012-17. However, the losses were higher than the norm fixed by the SRC in all the years. AS a result, the company was burdened with additional loss of Rs. 1306.76 crore during the period 2012-17," the report said.

The Company had spent Rs. 6632.62 crore during 2012-17 on creation and strengthening of infrastructure as against the SERC approval of Rs. 5843.43 crore. As SERC does not allow recovery of expenditure in excess of the approved amounts through tariff, the Company was burdened with excess expenditure of Rs. 789.19 crore. The Company should develop a system to adhere to SERC approved norms and file timely truing-up to absorb excess investment, the CAG advised.

The Aggregate Revenue Requirement for a year was required to be filed by the Company with State Electricity Regulatory Commission is 120 days before commencement of the respective financial year. However, due to delay in submission of Aggregate Revenue Requirement by the Company, application of earlier tariff order resulted in loss of revenue of Rs. 323.89 crore. The CAG advised that the control should be put in place to ensure that ARIL is filed in a timely manner.

By implementing the directions of the State Government to ensure supply for nine hours to agriculture, without ensuring the funding in advance, the Company was forced to meet expenditure of Rs. 585.91 crore from its own funds.

National Electricity Fund (Interest Subsidy) Scheme provided for interest subsidy ranging from three to five per cent on the interest paid on loans taken for execution of various capital works taken up during 2012-14. The Company, however, claimed (up to March 2017) scheme benefits on only Rs. 4.01 crore of interest paid during the year 2013-14 instead of Rs. 216.91 crore paid during 2013-17.

The Government of India formulated (October 2012) the Financial Restructuring Plan to turn-around loss making State owned DISCOMs. As the Company did not approach the SERC for approval of Financial Restructuring Plan, State Electricity Regulatory Commission did not allow the Company to recover interest of Rs. 140.74 crore on rescheduled loans for 2015-16 through tariff.

The Central Electricity Authority issued specifications on energy efficient outdoor type three phase and single phase distribution transformers in August 2008. As per these specifications, the quantum or energy conserved would increase with higher star rating. The Company, however, continued to buy three star distribution transformers in its jurisdiction. Audit analysis showed that the Company could have saved 701 to 20586 units per distribution transformer on various capacities of 5 star 3-phase distribution transformers instead of 3 star distribution transformers. This would have enabled the Company to conserve energy of Rs. 2,220.49 crore over the 25 years lifetime of 5 star distribution transformers, revealed the CAG report.