HPERC finalizes its APPC for FY14

Himachal Pradesh State Electricity Commission has approved the average pooled purchase cost (APPC) for FY 2013-14 toRs 2.17 per unit. HPSEBL proposed to reduce the price from 2.20 per unit to 1.98 per unit for the FY 2013-14 (for relevant blogpost on HPSEBL’s proposition, Click Here), while demanding the new methodology and requested that forward/contra banking to be included as purchase of power.

As per our analysis the premise of calculation used by HPSEBL is logically inconsistent. Banking of power with other Discom’s for use later on is not equivalent to purchase and sale, it is equivalent to loan given to other Discom and taken back later. Thus including this power as “purchased” is incorrect.

HPERC in previous APPC order had considered only the forward banking purchase and had not considered contra-banking. According to HPSEBL, banking purchase by means of any kind of banking is definitely is a source of power which evidently must be considered for calculation of APPC.

HPERC states that outward banking (banking sale) is from out of power purchased from energy suppliers (long term and short term) during the year and its cost is already paid.  Therefore, if the same quantum is received as inward banking (contra banking purchase), such quantum and price should not be included over and above the quantum or price already taken into account, out of which such power has been banked. Since there is no criterion for determination of rate and as a prudent practice the Commission had taken such banking sale and purchase at zero cost, this quantum of energy shall be treated as additional purchase at zero cost. The Commission, therefore, decided not to accept the new methodology proposed by the HPSEB Limited, to consider the contra-banking quantum at zero cost during the year for determination of the APPC rates.

GoHP rate of free & equity power are kept different and are not included in the computation of APPC. GoHP Free & Equity Power rate is Rs.2.90 per unit.

HPERC has excluded the UI and transmission charges to calculate APPC as these are the integral part of its purchase cost.

Contributed by – Chetan Singh Adhikari

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