Commission Order on Demand Side Management, 2016

                                   JOINT ELECTRICITY REGULATORY COMMISSION

                                                  FOR MANIPUR AND MIZORAM

                                                   AIZAWL : MIZORAM

TBL Bhawan, 2^nd –5^th Floor, E-18, Peter Street, Khatla, Aizawl, Mizoram - 796001

Fax: 0389-2301299/2300240, Tel. No. : 0389-2310623/2320555

Website: www.jerc.mizoram.gov.in, Email: jerc.mm@gmail.com

Petition No 1 of 2016

In the matter of

Petition for approval of the Joint Electricity Regulatory Commission for Manipur and Mizoram(herein after referred to as “JERC(M&M)”) for implementation of Domestic Efficient Lighting Programme(DELP) for LED Bulbs in its circle of operations in Mizoram

AND

Power & Electricity Department, ………………………………….Petitioner

Government of Mizoram

(herein after referred to as “PED”)

Present:

Mr. R.K. Kishore Singh  -Chairperson

O R D E R

          The petitioner PED has filed the present petition for approval of the JERC(M&M) for implementation of Domestic Efficient Lighting Programme (DELP) for LED Bulbs in its circle of operation in Mizoram as part of Demand Side Management(DSM) measure with the technical and financial support of M/s. Energy Efficiency Service Limited, New Delhi and for consequential recovery of the investment through the Aggregate Revenue Requirement(ARR) approved by the Commission.

2.         The petitioner stated that M/s. Energy Efficiency Services Limited, New Delhi submitted Standard offer Programme(SOP) for implementation of DSM based DELP in household sector in the state of Mizoram promising to make the capital investment required, recovering the cost from the PED quarterly based on the accrued energy resource benefits and guaranting the performance of the project period of three years. BIS rated 3(three) nos of LED bulbs will be offered in exchange of working IncandescentLamps(ICL) for each LED at subsidized prize of Rs.10/- per LED bulb to 1,00,000 nos of domestic consumers and collected ICLs will be destroyed to preclude their use forever. As part of this programme, the sample testing procedure may also be carried out in any laboratory accredited by NABL jointly by M/s. Energy Efficiency Services Limited and PED in order to ensure safety compliance. Third party agencies such as BEE or any other third party services shall be engaged for physical verification by randomly selecting the sample of households annually and certifying the working conditions of the LED bulbs in the system. M/s Energy Efficiency Service Limited further agrees to replace the faulty LED bulbs for any technical defects(and not for broken lamps) at free of cost throughout the project period of three years irrespective of the type of fault.The power saving per bulb on replacing average wattage 29.3W of conventional lights (i.e average of 1 no. 60W ICL and 2 nos 14W CFL) by LED bulb of 7W is 22.30W. The energy saved per bulb per year assuming daily usage of 3:50 hours for 300 days is 23.45kWh. The annual energy saved by using 300000 LED bulbs is 7.035 MkWh. The equivalent saving during 3 years is worked out at Rs. 8.72 crores. While M/s. Energy Efficiency Services Limited invests Rs.3.30 crores, the total payout to it will be Rs.4.55 crores including O & M charges, presently applicable income tax @ Rs. 33.99% of return on equity and service tax @ 14.00%. New tax, if any, will be passed on to PED. Thus, the net saving to PED owing to implementation of the scheme iscalculated at Rs. 4.17 crores. The project benefits the society through energy security, savings and environment protection, while

reducing the cost and the energy consumptions to the consumers. The cross- subsidize category and the PED will also be benefited in reducing the demand and supply gap and minimizing load shedding. The estimation of the tentative project cost is Rs.3.30 croresbased on the assumed cost of LED bulb at Rs. 100/- per bulbs, distribution, storage, transportation, insurance and awareness at Rs. 20/- per bulb less consumer contributions of subsidized price at Rs. 10/- per bulb. The assumed price Rs. 100/- per bulb will be revised based on the price discovered through competitive bidding. The benefit of any reduction in the price will be passed on to the PED. Interest for Debt Servicing is at 12.50% p.a on the debt portion of 80% of the project cost, Return on equity is calculated at 15.50% p.a on 20% of the project cost and Annual Maintenance charges are calculated at 2% p.a of the total LED Cost. The petitioner requested that draft Energy Saving Agreement submitted along with this petition may be approved for implementation of this DELP scheme. The petitioner prayed that the programme be allowed, the capital investment be approval, DELP-SOP prices per unit of energy saved be approved, quarterly payout to M/S Energy Efficiency Services Limited for recovery of the investment made by it be allowed, the normative parameters be approved and the annual payout be recovered through the ARR for the respective year.

3.         The Petition was received in the Commission on 13.10.2015 with petition fee of Rs.10,000/- only. Whereas, according to Schedule of Fee attached to the Joint Electricity Regulatory Commission for Manipur and Mizoram(Conduct of Business) Regulations, 2010, the petitioner was required to pay Petition fee of Rs. 21,000/- . Therefore, the Commission requested the Petitioner to pay the remaining fee of Rs. 11, 000/-. The petitioner paid the remaining fee of Rs. 11, 000/- on 27.01.2016.

4.         The Commission examined the Petition and found the same generally in line with the Electricity Act 2003 and JERC (M& M) Regulations on Demand Side Management and Conduct of Business. The Commission has admitted the petition on 8.2.2016 and numbered it as Petition No. 1 of 2016. The Commission Scheduled hearing of the Petition on 12.02.2016 at 1:00pm in the Commission’s Conference Hall. The Commission sent admission of the petition with hearing notice to the petitioner for the date fixed. The Commission heard the representative for the petitioner at length and has gone through the petition with accompanying documents carefully and thoroughly. It is observed from the petition of ARR for the FY 2016-17 that this DSM programme is approved by the State Government as the petition of ARR was filed with the Commission under the approval of the State Government.

5.         Therefore, the petitioner is permitted to implement the DELP with the financial support of M/s. Energy Efficiency Services Limited, New Delhi with capital investment up to the maximum of Rs. 3.30 crores at present. The Commission approves the DELP-SOP price per unit for the first FY, second FY and 3^rd FY at Rs. 2.1873, Rs. 2.1584 and Rs. 2.1245respectively. The petitioner is allowed to make quarterly payout to M/s. Energy Efficiency Services Limited in accordance with the approved DELP-SOP price through the ARR for the respective year. The payout shall be made during the control period i.e a period of 3 years starting from the date when distribution of LEDs is completed. The draft Energy Saving Agreement attached along with the petition is approved subject to making correction for the address of the PED at clause 4(e) with the present address and the change of stipulations as mentioned in the following clauses instead of the existing entry:

Clause 1(h)      : As it is recommended by the DISCOM, it is to be ensured by EESL that, during distributions of LED bulb, the consumers shall bring a copy of their

latest electricity bill paid and ICLs in order to be eligible to get LED bulb. Receipt and Register shall be maintained for the distributed LED bulbs in exchange of ICLs.

Clause 1(n) : Distribution of LED bulbs will be in a phased manner covering specific area in each phase. For this purpose, distribution of a maximum of 3,00,000 LED bulbs will be deemed as completion of distribution of LED bulbs.

Clause 1(p) : EESL will undertake the annual monitoring of Energy Saving for selected sample of households through and organization registered/recognized by Government of India. Based on the proportion of LED bulbs not working, the payment to EESL will be reduced.

Clause 1(w) : As agreed between EESL and P&ED, Annual Maintenance charges is kept@ Rs. 2% per annum of the total project cost(LED Cost). In case, EESL incurs additional costs, the same will be borne by EESL from its own resources.

Clause 4((a) :Governing Law and Jurisdiction

This Agreement shall be continued and interpreted in accordance with and governed by the laws of India, and the Courts of Gauhati shall have jurisdiction over all matters arising out of or relating to this Agreement.

The Energy Saving Agreement after duly making changes as above shall be signed after incorporating all the necessary correctionsand duly signed copy of it shall be submitted to the Commission.