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OERC okays business plan of four power distribution firms

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The Orissa Electricity Regulatory Commission (OERC) has approved the 5-year Business Plan of four power distribution firms in the state, spanning the period 2008-09 to 2012-13, with a focus on reduction of Aggregate Technical and Commercial (AT&C) loss.

The Commission also directed the distribution companies (distcoms) to invest Rs 2550 crore of the total of Rs 5000 crore estimated to be spent on improvement and upgradation of the power distribution system. The remaining amount may be invested by the state government, it added

While endorsing the business plan of four distribution companies, Cesu, Nesco, and Southco, the Commission observed that the performance efficiency of these companies in the coming years will largely depend on the reduction of AT&C loss.

Overall, the AT&C loss in the power sector in Orissa has come down to 40.5 per cent in 2009-10 from a high of 60 per cent in 1998-99.

However, the Commission pointed out that it is still much higher than the benchmark set by them. Hence, the has directed the distribution firms to take exemplary steps to bring down AT&C loss in a bid to provide quality service to the consumers.

To emphasise the point, it said, 1 per cent reduction in AT&C loss will result in saving of Rs 50 crore.

Setting the AT&C loss reduction targets, the Commission said, the total loss should not exceed 23.77 per cent in 2010-11. Similarly, it has approved AT&C loss of 22.48 per cent for 2011-12 and 21.99 per cent for 2012-13. The loss targets approved for the four distcoms in 1012-13 are as follows: – 23.77 per cent, – 19-17 per cent, Wesco – 20.4 per cent and Southco – 26.25 per cent.

Meanwhile, the OERC has set the electricity tariff for 2010-11 in tune with the AT&C loss targets approved for the year. Similarly, it has in principle decided to fix tariff for 2011-12 and 2012-13 on the same basis.

If the distcoms succeed in lowering AT&C loss below approved figures, it will be an efficiency gain whereas higher AT&C loss would be considered as efficiency loss for the former. Any loss and gain arising out of deviation from the approved benchmark shall be to the account of the licensee and a s such shall not be considered for truing up exercise.

The Commission said, since the state government holds 49 per cent share in the distribution companies with the rest 51 per cent vested with the private partners, there should be joint effort to reduce the AT&C loss and ensure quality power supply to the consumers at an affordable price by suitable capital investment in upgradation, renovation and expansion of the distribution network.

Stressing on the need to check rampant theft of electricity, the OERC advised the state government to expedite establishment and ensure effective functioning of Special Police Stations and Special Courts notified by it.

The OERC also directed both Gridco and distcoms to mutually identify the assets created after 31st March, 2001 for hypothecation against the loan to be availed from the financial institutions such as and PFC.

The assets created during 2008-09 and thereafter can also be hypothecated.

The state government may allow distcoms to pledge the assets created out of World Bank loan to the financial institutions to avail loan for capital works, it suggested.

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