BRPL Reply

1
The Matter is listed for hearing on 9th July 2008
BEFORE HON’BLE APPELLATE TRIBUNAL FOR ELECTRICITY
NEW DELHI
APPELLATE JURISDICTION
APPEAL No. OF _36_ 2008
IN THE MATTER OF:
BSES RAJDHANI POWER LIMITED

…APPELLANT
VERSUS
DELHI ELECTRICITY REGULATORY

COMMISSION & ORS
…RESPONDENTS
I N D E X
VOLUME-I
S. No. Particulars
1 Reply on behalf of Respondent No.1 along with supporting
Affidavit
2 ANNEXURE 1: Copy of incomplete supporting affidavits

and verification as originally filed by the appellant along
with the Appeal.
3 ANNEXURE-2: Copy of the presentation on Sales

Projection on January 16, 2008.
4 ANNEXURE 3: Copy of letter dated 1.4.2008 from

Appellant to Respondent No.1 evidencing the sales figures
for Feb 07 to Jan 08.
5 ANNEXURE-4: : Copy of the letter dated August 07, 2007

addressed to the Appellant
6 ANNEXURE-5 Copy of the judgment dated reported as

2007 APTEL 11 34 (ELR) dated 9.11.05 in Appeal No. 114
& 115 of 05.
7 ANNEXURE-6: Copy of “Working Group of Power” of 11th

Plan constituted by the Government of India
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8 ANNEXURE-7: : Copies of the Certificates issued by the

Electrical Inspector
9 ANNEXURE-8: Copy of the Minutes of the Meeting dated

on 02.04.2008.
10 ANNEXURE-9: Copies of the order passed by the Hon’ble

High Court of Delhi in WP (C) 14232/05 and 10105/05.
11 ANNEXURE-10: Copy of the order dated 29th August 2006

of the Hon’ble Appellate Tribunal in Appeal No. 84 of 2006
12 ANNEXURE-11: Copy of the Order dated 4th December,
2007 of the Hon’ble Appellate Tribunal in Appeal No. 100
of 2007
13 ANNEXURE-12: Copy of the letter dated 23.01.06 from the

Appellant to the Respondent No.1 along with the Note of
Respondent No. 1
14 ANNEXURE-13(Colly): Copies of letters dated 30.6.2006

and 14.08.2006 from Respondent No.1 to Appellant along
with evidence regarding excessive profit earned by the
group company REL.
15 ANNEXURE-14: Copy of minutes of the meeting dated

10.3.2006
16 ANNEXURE-15: Copies of documents submitted by the

Appellant for the Capital Expenditure Schemes in the year
2004-05.
17 ANNEXURE-16: Copy of the format of Quality Progress

Report.
18 ANNEXURE-17: Copy of the disclosure made by the

Appellant under the Companies Act.
19 ANNEXURE-18: Copy of the appellant’s letter dated

27.7.2006 addressed to the Secretary Respondent No.1
giving details of transactions with Group Companies.
20 ANNEXURE-19: Copy of the notings on page 27 on the file

of Respondent No.1’s office with reference to letter dated
4.10.04.
21 ANNEXURE-20: Copy of sample of purchase order
22 ANNEXURE-21: Photocopy of the letter dated 30.10.07

from Principal Secretary Power, Govt. of NCT of Delhi to
Chairman, DERC.
23 ANNEXURE-22: Copy of the relevant extract of the MYT

Petition
24 ANNEXURE-23: Copy of the letter dated 15th January,

2008
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25 ANNEXURE-24: A copy of the relevant extract of the Tariff

Order of 2004-05.
26 ANNEXURE-25: Copy of the relevant extract of the Tariff

Order 2006-07.
27 ANNEXURE-26: Copy of the relevant extract of the Tariff

Order 2005-06
28 ANNEXURE-27: Copy of the relevant chart evidencing that

the O & M expenses per unit, i.e. one of the highest.
29 ANNEXURE-28: Copy of the Writ Petition filed by

Appellant
30 ANNEXURE-29: Copy of the letter letter dated 25th April

2006
31 ANNEXURE-30: Copy of the Tariff Order of 2005-06
32 ANNEXURE-31: Copy of the BRPL Tariff Order 2006-07.
33 ANNEXURE-32: Extract of the interest rate on the existing

loans and the proposed loans which have been considered
by the Respondent No.1 in determining the interest rate
under the impugned order.
34 Reply to the Application for Interim Relief.
FILED THROUGH:
Luthra & Luthra

Law Offices
Counsel for Respondent No.1
103, Ashoka Estate,
Barakhamba Road,
New Delhi.-110 001
E-mail: Luthra@luthra.com
Tel: 41215100
New Delhi
Dated:
1
NEW DELHI
APPEAL No. __36__ OF 2008
IN THE MATTER OF:
BSES RAJDHANI POWER LIMITED

……APPELLANT
VERSUS

COMMISSION & ORS
…RESPONDENTS
REPLY ON BEHALF OF RESPONDENT No.1
MOST RESPECTFULLY SHOWETH;
At the outset, the Respondent No. 1 denies each and every averment and/or
submission made in the Appeal which is contrary to and inconsistent with
the averments made and facts stated in the present reply. It is submitted
that nothing stated in the Appeal may be deemed to have been admitted by
the Respondent No. 1 unless and until the same is expressly admitted in the
present reply. It is submitted that the Respondent No.1 (Delhi Electricity
Regulatory Commission/ DERC) is a State Regulatory Commission
constituted by the Government of NCT of Delhi on March 3, 1999 under the
provisions of the Electricity Regulatory Commissions Act, 1998 and Mr.
Amarendra.K. Tewary, Secretary is the duly authorized representative of
Respondent No.1 to, sign, verify, file and defend any case for and on behalf of
Respondent No.1 and as such competent to defend this appeal on behalf of
the Respondent No.1.

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PRELIMINARY SUBMISSIONS
I. It is submitted at the very outset that the present appeal deserves
outright dismissal for the want of proper verification and supporting
affidavits as per the procedure of law. It is submitted that the
affidavits filed by the Appellant herein supporting the instant appeal
are contrary to the requirement of the rules as framed under the
Appellate Tribunal for Electricity (Procedure, Form, Fee and Record of
Proceedings) Rules, 2007. It is pertinent to mention here that the
answering Respondent had pointed out the apparent discrepancy and
brought the same to the notice of the Hon’ble Tribunal. It is submitted
that upon having noticed the same this Hon’ble Tribunal observed that
there has been a blatant and gross disregard of the requirements with
respect to mandatory need for verification of the instant appeal and
execution of the supporting affidavits, which were duly notarized
despite being incomplete in their content. A copy of such incomplete
supporting affidavits and verification as originally filed by the
appellant is annexed hereto as ANNEXURE-1. In view of such
incomplete affidavits having being filed this Hon’ble Tribunal directed
the Appellant to cure the defect appropriately. It is pertinent to
mention here that the appropriate manner to cure the technical defect,
as apparent in the Appeal of the Appellant, was to execute fresh
affidavits and verifications and to get the same duly notarized and file
afresh such affidavits. It is submitted that the appellant herein has, in
contradistinction to such appropriate way, made requisite changes in
the affidavits which had already been notarized and filed the same
after making necessary changes to the same. It is humbly submitted
that such act of the appellant amounts to gross professional
misconduct. The verifications of pleadings and filing of supporting

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affidavits along with the same is not a mere formality. The importance
of the same has been brought to light by the Hon’ble Karnataka High
Court in T.L. Nagendra Babu Vs. Manohar Rao Pawar
ILR2005KAR884. Therefore it is submitted that the instant appeal is a
clear abuse of the process by the Appellant. In view of the act of breach
of professional ethics displayed by the Appellant, it is respectfully
submitted that the instant appeal is not maintainable and accordingly
deserves an outright dismissal.
II. The Appellant has played a fraud in the course of procurement of
capital goods from its related entity, namely, Reliance Energy Limited
(“REL”). This is evident from the documentary evidence on record
before this Hon’ble Tribunal. The Appeal merits dismissal on this
ground alone.
III. It is further submitted, without prejudice to the aforesaid, that a bare
perusal of the instant appeal makes it amply clear that the alleged
grievance of the Appellant is a result of the adherence by Respondent
No. 1 to the Delhi Electricity Regulation Commission (Terms and
Conditions for Determination of Wheeling Tariff and Retail Supply
Tariff) Regulations 2007 (the “MYT Regulations”). It is submitted that
in substance the alleged grievance is not so much towards the
Impugned Order as it is towards the MYT Regulations. These MYT
Regulations cannot be the subject matter of challenge in an appeal the
appropriate course of action for the appellant was to challenge the
MYT Regulations by way of filing writ petition under Article 226/227
of the Constitution.
IV. It is trite law that if there are to views possible, then merely because
an authority has taken one view, would not enable a Tribunal to

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substitute its own view or the other view in the matter. There are no
malafides in passing the Impugned Order. For this reason alone the
Appeal must fail and be dismissed in liminne.
V. It is submitted that the issue of depreciation, being no longer res
integra, as held by this Hon’ble Tribunal cannot now be reopened by
virtue of the instant Appeal.
VI. The Appellant has not maintained accounts in compliance with various
regulations/ regulatory regime. Hence it is not entitled to any
allowances which cannot be verified by Respondent No.1 in absence of
such regulatory accounts.
The appeal is liable to be dismissed on the preliminary objections
mentioned hereinabove. Without prejudice to the foregoing preliminary
objections, parawise reply is as under:
REPLY ON MERITS:
1.1 It is submitted that the contents of para 1.1 are a matter of record and
merit no reply.
1.2 It is submitted that the contents of para 1.2 are a matter of record and
hence merit no reply. It is however, pertinent to mention here that the
Respondent No.1 is a State Regulatory Commission constituted by the
Government of NCT of Delhi on March 3, 1999 and it became of
operational from December 10, 1999. It is pertinent to mention that
the approach of Respondent No.1 towards regulation is driven by the
Electricity Act, 2003 (the Act), the National Electricity Plan, the
National Tariff Policy and the Delhi Electricity Reform Act, 2000 (the
DERA). It is submitted that the Act mandates Respondent No.1 to
take measures conducive to the development and management of the

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electricity industry in an efficient, economic and competitive manner.
It is further submitted that the Respondent No.1 derives its powers
from DERA as well as the Act. The major function assigned to
Respondent No.1 under DERA are as follows:-
(a) to determine the tariff for electricity, wholesale, bulk, grid or

retail and for the use of the transmission facilities.
(b) To regulate power purchase, transmission, distribution, sale and

supply;
(c) To promote competition, efficiency and economy in the activities

of the electricity industry in the National Capital Territory of
Delhi;
(d) To aid and advise the Government on power policy;
(e) To collect and publish data and forecasts;
(f) To regulate the assets, properties and interest in properties

concerned or related to the electricity industry in the National
Capital Territory of Delhi including the conditions governing
entry into, and exit from the electricity industry in such manner
as to safeguard the public interest;
(g) To issue licenses for transmission, bulk supply, distribution or

supply of electricity;
(h) To regulate the working of the licensees; and
(i) To adjudicate upon the disputes and differences between

licensees.
The functions assigned to Respondent No.1 under the Act are as

follows:
“Section 86 (1) The State Commission shall discharge the
following functions, namely:-
(a) determine the tariff for generation, supply, transmission

and wheeling of electricity, wholesale, bulk or retail, as
the case may be, within the State: Provided that where
open access has been permitted to a category of
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consumers under Section 42, the State Commission shall

determine only the wheeling charges and surcharge
thereon, if any, for the said category of consumers;
(b) regulate electricity purchase and procurement process of

distribution licensees including the price at which
electricity shall be procured from the generating
companies or licensees or from other sources through
agreements for purchase of power for distribution and
supply within the State;
(c) facilitate intra-state transmission and wheeling of

electricity;
(d) issue licences to persons seeking to act as transmission

licensees, distribution licensees and electricity traders
with respect to their operations within the State;
(e) promote cogeneration and generation of electricity from

renewable sources of energy by providing suitable
measures for connectivity with the grid and sale of
electricity to any person, and also specify, for purchase of
electricity from such sources, a percentage of the total
consumption of electricity in the area of a distribution
licensee;
(f) adjudicate upon the disputes between the licensees and

generating companies and to refer any dispute for
arbitration;
(g) levy fee for the purpose of this Act;
(h) specify State Grid Code consistent with the Grid Code
specified under Clause (h) of sub-section (1) of Section 79;
(i) specify or enforce standards with respect to quality,

continuity and reliability of service by licensees;
(j) fix the trading margin in the intra-state trading of

electricity, if considered, necessary;
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(k) discharge such other functions as may be assigned to it

under this Act.
(2) The State Commission shall advise the State Government
on all or any of the following matters, namely:-
(i) promotion of competition, efficiency and economy in

activities of the electricity industry;
(ii) promotion of investment in electricity industry;
(iii) reorganization and restructuring of electricity

industry in the State;
(iv) matters concerning generation, transmission,

distribution and trading of electricity or any other
matter referred to the State Commission by that
Government.”
It is submitted that the Respondent No.1 has to work within the frame
work of the above stated powers and in addition thereto be guided by
the National Electricity Policy, National Tariff Policy and the National
Electricity Plan.
1.3 The contents of para 1.3 in so far as they relate to matters of record are
not denied. However, it is pointed out that the contention of the
Appellant that while determining the Annual Revenue Requirement
(the “ARR”), the Respondent No.1 has made various disallowance,
which are unsustainable in law and facts is completely devoid of any
legal force and sanctity. It is submitted that the Impugned Order is a
reasoned one and the allegation that the reasons are not elaborate does
not make the Impugned Order erroneous or unsustainable in law. It is
submitted that the determination of Appellant’s ARR has been a result
of detailed analysis and due consideration of the submissions made by
the Appellant and in accordance with the law and the procedure
established by law. It is submitted that the impugned order is a

8
product of the following procedure followed by the Respondent No.1 in
consonance with the law and the principles of natural justice namely,
• The distribution part of the electricity sector was privatized w.e.f.
July 1, 2002 and the tariffs in Delhi were governed by the Policy
Directions issued by Government of NCT, Delhi vide its notification
dated November 22, 2001 as amended on May 31, 2002.
• The validity of the said notifications ended on March 31, 2007 (i.e
FY 2002 FY 07, the “Policy Period”) and therefore the Respondent
No.1 decided to adopt Multi Year Tariff (MYT) for determination of
tariff in consonance with Section 61 of the Act.
• The Respondent No.1 issued a Consultative paper and draft MYT
Regulation for generation transmission and distribution to all
concerned stakeholders including the Appellant herein. On October
11, 2006 a notice was published in leading Newspapers seeking
comments from public and stakeholders.
• After due deliberation of the comments received from the public and
stakeholders and public hearing with respect to the same, the
Respondent No.1 issued the Delhi Electricity Regulation
Commission (Terms and Conditions for Determination of Wheeling
Tariff and Retail Supply Tariff) Regulations 2007 (the “MYT
Regulations”) vide notification dated May 30, 2007 for the period
FY 08-FY 11 (the “Control Period”).
• In consonance with the provisions of the MYT Regulations, the
Appellant filed its Petition for approval of its ARR under the said
Regulation on October 1, 2007.

9
• Thereafter Respondent No.1 conducted preliminary analysis of the
Petition submitted and observed certain discrepancies which are
reproduced hereunder for the sake of ready reference:-
“(a) Calculations regarding AT&C losses, O&M Expenses,

RoCE, etc., are not in accordance with the provisions
made in the MYT Regulations, 2007.
(b) The accumulated depreciation and the Capital Work in

Progress (CWIP) have not been excluded while calculating
Regulated Rate Base (RRB) as provided in the MYT
Regulations, 2007.
(c) Allocation statement to apportion costs and revenues to

respective businesses of wheeling and retail supply has
not been duly approved by the Board of Directors as
required under Clause 4.4 of MYT Regulations, 2007.
(d) The allocation statement specifying the cost of power

purchase that is attributable to trading activity of the
BRPL has not been made as per Clause 5.30 of the MYT
Regulations, 2007.
(e) Power purchase cost has been fixed without taking into
consideration the estimated revenues through bilateral
exchanges and UI.
(f) The baselines and performance trajectory for all quality

parameters has not been proposed as specified in the
Delhi Electricity Supply Code and Performance Standards
Regulations, 2007 and as per sub-clause (d) and (h) of
Clause 8.3 of the MYT Regulations, 2007.
(g) The tariff proposed for each consumer category, slab wise
and voltage wise is not duly supported by a cost of service
model, allocating the cost of business to each category of
the consumer based on voltage wise cost and losses.
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(h) The business plan filing in general and the capital

investment plan thereof in particular are not as per
Clause 8.3 of the MYT Regulations, 2007.”
• Thereafter Respondent No.1 conducted a hearing on October 22,
2007 for admission of the Petition and discussing the discrepancies
observed. The Respondent No.1 after hearing the arguments
issued an order dated October 26, 2007 along with the directions
which are reproduced hereunder for the sake of easy reference :
“(a) All the calculations regarding AT & C loss level, O&M

expenses, RoCE, etc. shall be worked out in accordance
with the provisions given in the MYT Regulations, 2007.
(b) The calculations for Regulated Rate Base (RRB) shall be

arrived at using provisions given in the MYT Regulations,
2007 after excluding accumulated depreciation and the
CWIP.
(c) An allocation statement to apportion cost and revenue of

respective businesses shall be duly approved by the Board
of Directors of the Licensee as per Clause 4.4 of the MYT
Regulations, 2007.
(d) The power purchase cost shall take into account apart
from other parameters, the estimate of revenues received
through bilateral exchanges and UI.
(e) To submit for each consumer category, slab wise and

voltage wise tariff in accordance with Clause 8.7 of the
MYT Regulations, 2007, duly supported by cost of service
model, allocating the cost of business to each category of
consumer as well as subsidy, if any, being granted by
GoNCTD.
(f) The Petitioner/Licensee shall propose the baseline

performance trajectory for all quality parameters as
specified by Delhi Electricity Supply Code Performance
11
Standard Regulations, 2007 and as per Clause 7.2 of MYT

Regulations, 2007.
(g) The Petitioner/Licensee is directed to take up the issue of

past period true-up expenses with the GoNCTD. The
Petitioner/Licensee is further directed to propose tariff
structure for recovery of aforesaid expenses in case
GoNCTD is not agreeable to provide these expenses in the
form of government support and same needs to be
recovered through tariff.
(h) The Commission has observed that prayer Clause of the

Petitioner/Licensee is vague. The Commission directed
the Petitioner to have specific reference to the prayer and
also the Orders of Appellate Tribunal, High Court and
Supreme Court etc on which the Licensee intends to rely
upon. The Licensee is further directed to file a copy of
such Orders on which they have placed reliance.
(i) The Commission also directed that as the issue of

consumer security deposit is not related to the Multi Year
Tariff Determination and has already been disposed off by
the Commission by way of a speaking Order, this issue
should not be made a part of this petition. The
representative of the Petitioner present during the
hearing, agreed to withdraw this issue and take it up
separately before an appropriate forum.”
• In view of the above stated discrepancies, vide the said order, the
Respondent No.1 directed the Appellant herein to submit requisite
information with respect to the issues raised within seven days of
the said order.
• Though, on November 5, 2007, the Appellant herein made a
response to the said order dated October 26, 2007 by way of filing
re-submissions, however, Respondent No.1 observed that the
Appellant had not complied with any of the directions stated supra.
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• The Respondent No.1 in order to determine the ARR of the
Appellant interacted regularly with the Appellant to seek
clarifications and justifications on various issues analysis of the
Petition.
• In addition thereto, the Appellant and the Respondent No.1,
respectively, published Public Notices highlighting the salient
features of the Petition inviting comments from the stakeholders on
the Petition filed by the Appellant. Vide the said public notices
stakeholders were asked to file their objections and suggestions on
the Petition by December 10, 2007 which date was later revised to
December 31, 2007.
• In response to the said public notices that Respondent
No.1/Appellant received objections from 276 respondents thereto.
The date of public hearing was informed to all the parties who had
submitted their objections/suggestions and the said public hearing
was held in eight sessions to discuss the issues related to the
Petition filed by the Appellant for determination of ARR.
• It is only after careful examination of the various concerns and
issues voiced by the stakeholders and the Appellant herein and in
accordance with the provisions of the MYT Regulations that the
Respondent No.1 finalized the impugned order.
1.4 The contents of para 1.4 are wrong and hence denied. It is denied that
the impugned order has severely impacted the Appellant as a
consequence of the various disallowances. It is pointed out that there is
nothing in law or fact to support the correctness of the impact of
disallowances as suggested by the Appellant. In any event and as

13
would be evident from the succeeding paragraphs, the disallowances
by the Respondent No.1 are based on law and reason.
1.5 The contents of para 1.5 are misleading and hence denied. It is
submitted that the contention of the Appellant that the illegal
disallowances made by Respondent No.1 has gravely prejudiced the
operations of the Appellant is solely based on its own projections of the
figures vis-à-vis the Control Period which is nothing but a result of its
own whims and fancies. The contention raised by the Appellant is in
contradiction to the provisions of the MYT Regulations as explained
infra.
REPLY TO THE SUMMARY OF THE GROUNDS OF CHALLENGE
It is submitted that the contentions raised by the appellant as
“Summary of grounds of challenge” in the present appeal are dealt
with in detail in the reply of paragraph no. 8 and are not repeated
herein for the sake of brevity.
2-4. The contents of paras 2 to 4 are matters of record and hence, merit no
reply.
5. That the contents of paragraph No. 5 are denied for want of
knowledge.
6. REPLY TO THE FACTS OF THE CASE:
6.1 The contents of para 6.1 are matters of record and hence no reply.
6.2 The contents of para 6.2 are in so far as the same relate to matters of
record merit no reply.

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6.3-6.5 The contents of para 6.3 to 6.5 are matters of record and hence
merit no reply.
6.6 The contents of para 6.6 are in so far as the same relate to matters of
record merit no reply. However, it is pertinent to mention that the
Hon’ble Supreme Court stated that the judgment is confined to the
facts of the case alone and the reasoning given therein is in the context
of the Policy Period, period of 5 years. The Respondent No.1 has duly
applied the judgment for the Policy Period. The judgment should not
be construed to apply for all times To come, especially when
subsequently the MYT Regulations have come into effect. The
Respondent No. 1 also craves leave to distinguish the judgment of the
Hon’ble Supreme Court from the facts and submissions in the instant
appeal.
6.7. The contents of para 6.7 are misleading and hence denied. It is
pertinent to mention herein that the Appellant is trying to portray that
the Respondent No. 1, pursuant to the passing of the order dated
15.02.07 by the Hon’ble Supreme Court in the matter of DERC Vs
BSES Yamuna Power Ltd & Ors. reported as (2007) 3 SCC 33, has not
followed the direction laid down by the Hon’ble Supreme Court while
passing order dated 22.09.06. It is respectfully submitted that
admittedly the Respondent No. 1 passed the order dated 22.09.06 prior
to the directions passed by the Hon’ble Supreme Court vide order
dated 15.02.07 with respect to depreciation.
6.8 The contents of para 6.8 are in so far as the same relate to the matter
of record merit no reply. However, it is pertinent to mention that the
Hon’ble Supreme Court stated that the judgment is confined to the

15
facts of the case alone and the reasoning given therein is in the context
of the Policy Period, period of 5 years. The judgment should not be
construed to apply for all times to come, especially since, subsequently
the MYT Regulations have been passed.
6.9. It is submitted that the contents of para 6.9 are a matter of record and
merit no reply.
6.10 It is submitted that the contents of para 6.10 are wrong and hence
denied.
6.11-6.12 It is submitted that the contents of paras 6.11 to 6.12 are a
matter of record and merit no reply.
6.13 It is submitted that the contents of para 6.13 are wrong and hence
denied. It is submitted that the minutes of the meeting on 27.7.2007
do not mention about any relaxation in the MYT Regulations 2007.
The detail comments with respect to the same have been offered in the
reply to para 8.4.1 infra, and the same are not being repeated here for
the sake of brevity.
6.14 The contents of para under reply in so far as the same relate to the
filing of ARR for wheeling business and ARR for retail supply business
for each year of the Control Period in accordance with MYT
Regulations 2007 on or around 1.10.2007 are a matter of record and
merit no reply. However, the contention of the Appellant that the
aforesaid filings were made by the Appellant on the understanding
that the Respondent No.1 would abide by its representation
considering the contentions and assumptions of the Appellant while it
would determine the tariff, including relaxation of the MYT

16
Regulations, where required is denied to the extent where the
Appellant is assuming that MYT Regulations would be relaxed as per
the Appellant’s requirement.
6.15 It is submitted that the contents of paras 6.15 absolutely wrong and
hence denied. It is submitted that the Respondent No.1 has acted in
strict adherence of the directions issued vide order of Hon’ble Supreme
Court dated 15.2.2007 and the order of the Hon’ble Tribunal dated
22.5.2007.
6.16-6.17 It is submitted that the contents of paras 6.16 to 6.17 are a
matter of record and merit no reply.
6.18 It is submitted that the contents of para 6.18 are denied. It is denied
that there are any reasonable grounds for relaxation of the provisions
of the MYT Regulations. Further it is denied that the Appellant by
filling the ARR Petition has not waived its right to challenge the MYT
Regulations.
6.19 It is submitted that the contents of para 6.19 in so far as the same
relate to the matter of record need no reply. However, it is submitted
that the contention of the Appellant that vide the impugned order, the
Respondent No.1 denied the Appellant its legal entitlement and/or
failed to provide the Appellant amount due and payable to it in law
and in facts is not correct and without any merit and hence denied.
7. The contents of para 7 are wrong and hence denied. It is denied that
there are any questions of law as raised by the Appellant which
deserve any adjudication by this Hon’ble Tribunal.
8. REPLY TO GROUNDS OF RELIEF WITH LEGAL PROVISIONS:

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8.1 Sales Estimate
8.1.1 The contents of para 8.1.1 are false, misleading and hence denied. It is
submitted that the contention of the Appellant that the Respondent
No.1 has arbitrarily reduced sales estimates for the FY 2007-2008 and
FY 2008-2009 is contrary to abundantly clear facts and devoid of any
legal force.
8.1.2 The contents of para 8.1.2 are misleading and hence denied. It is
submitted that the contention of the Appellant that the sales
projections of Respondent No.1 deserves outright rejection as the
Respondent No.1 has without assigning any reasons reduced the year
on year growth to 7.3% for FY 2007-08 and 8.22% for FY 2008-09 is
contrary to the facts of the matter. A bare perusal of the order makes it
amply clear that the Respondent No.1 has considered the submissions
of the Appellant and came to its finding based on past trends and
projections made by the Appellant. It is submitted that not only has
the Respondent No.1 recorded the reasons of its coming to its finding
but also explained the methodology with respect to the same as
reproduced hereunder for the sake of ready reference:
“4.12 The Commission has analysed the sales projected by all

the distribution licensees for the Control Period. The
Commission has observed that the energy sale in the
previous years of all the licensees does not show a uniform
trend. Therefore, the Commission has considered the
consolidated sales of a specific category (i.e. Domestic,
Industrial, Commercial etc) of all the three DISCOMs
namely, BRPL, BYPL and NDPL and has forecasted the
same for the Control Period by considering an appropriate
growth rate based on the past trends. The Commission
has, thereby, calculated the weighted average share of
sales of each distribution company in FY 06 and FY 07 in
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a particular category and has allocated the consolidated

sales forecasted for that category to the respective
distribution company in the proportion of its weighted
average share.”
“4.13. For deciding the appropriate growth rate for forecasting

the energy sales for a particular category, the Commission
has analysed the year-on-year variations in sales as well
as the short term and long term trends in sales. The
Commission has computed the CAGR for 2 years to 12
years duration. The Commission has, thereafter,
considered the appropriate CAGR depending upon the
consumer categories, consumption trend in recent period,
excluding the abnormal variations.”
8.1.3 That the contents of para 8.1.3 are wrong and hence denied. It is
submitted that as per the Appellant’s own projections though the year
to year growth is 11.68% for the FY 2008 but the same is only 9.81%
for FY 2009. It is submitted that the Respondent No.1 had directed
the Appellant to make a presentation regarding the methodology
adopted by the Appellant for the sales forecast. It is submitted that
the Appellant made the said presentation on sales projection on
January 16, 2008. A copy of the said presentation is attached herewith
as ANNEXURE-2 It is submitted that on a perusal of the said
presentation, the Respondent No.1 observed certain discrepancies in
the sales figure submitted by the Appellant for the domestic sub-
categories and directed the Appellant to resubmit the correct estimates
and also to submit the assumption it has made with respect to increase
in energy consumption for various categories with respect to upcoming
commonwealth games. The Appellant admitted the inadvertent
mistake in its sales forecast and later submitted revised sales forecasts
vide letter no RCM-06-07/1030 dated 25 January 2008. However, it is

19
submitted that the Appellant failed to provide details of assumption
and reasoning which the Appellant has adopted for projection of sales
forecast with respect to upcoming commonwealth games for projecting
sales of various consumer categories. It is submitted that The
Respondent No.1 observed that the sales forecast of the Petitioner was
not appropriate. Some of the Respondent No.1’s observations were;
(a) Sudden increase in the specific consumption of the domestic
consumer, especially JJ Cluster and domestic consumer in 0 -
200 slab.
(b) The Appellant has projected increase in domestic sales @ 11%,
12%, 11% and 10% for FY08, FY09, FY10 and FY11, although
the year-wise increase in domestic sales in past three year were
13%,-8.23%, 6%.
(c) Sales projection for DMRC not in-line with the projection made
by DMRC as given below:
Category FY08 FY09 FY 10 FY 11
Comm Commis Commis Appell Commis

Appella ant
ission/ Appellant sion/ Appellant sion/ sion/
nt
DMRC DMRC DMRC DMRC
DMRC 72 92 86 110 112 142 146 142
In fact, inspite of the lower projections by the Appellant for DMRC
sales, the Respondent No.1 has taken the sales projections for DMRC
based on DMRC’s estimates. Which shows that the Respondent No.1
has been transparent and fair in its projections for the sales. This also
shows that Appellant has not applied its mind while projecting sales
for various consumer categories.
(d) Increase in sales for Public Lighting lower than past years
20
The Appellant had no answer to the Respondent No.1’s queries and
was not able to explain the reasons. Therefore it is submitted that the
reduction in the sales estimates by Respondent No. 1 is not without
reason and on the contrary is in accordance with the justifications as
explained supra
Without prejudice to the aforesaid, it is submitted that the contention
of the Appellant is not only contrary to the abundantly clear facts but
also devoid of any legal sanctity. It is submitted that the Respondent
No.1 is a State Regulatory Commission performing quasi judicial
functions. It is a well established principle of law that a detailed order
is the requirement to be met by the decision of Court of law in order so
that the same is in consonance with the principles of natural justice.
However, as has been observed by the Hon’ble Supreme Court in the
matter titled S.N. Mukherjee vs. Union of India AIR 1990 SC 1984 the
same is not a requirement vis-à-vis the decision of a quasi judicial
authority. The Supreme Court while deliberating on the issue in the
matter stated supra observed as under:
“It may, however, be added that it is not required that the

reasons should be as elaborate as in the decision of a Court of
law. The extent and nature of the reasons would depend on
particular facts and circumstances. What is necessary is that
the reasons are clear and explicit so as to indicate that the
authority has given due consideration to the points in
controversy.”
In light of the above, it is submitted that the Respondent No.1 being in
the nature of a quasi judicial authority is not required to deliver a
detailed order. It would meet the ends of justice if the same is
supported by reasons though not explained in a detailed manner.

21
8.1.4 &8.1.5 The contents of paras 8.1.4 & 8.1.5 are misleading and hence
denied. The contention of the Appellant that the rejection by
Respondent No.1 of the Appellant’s projections are unreasoned and
therefore in blatant disregard of this Hon’ble Tribunal directions in
Appeal No.266/2006 is devoid of factual accuracy. It is submitted that
as has been stated supra, the rejection of Appellant’s projections by the
Respondent No.1 are not without reason. On the contrary, it is
submitted that the Respondent No.1 has stated in the impugned order
the complete methodology adopted by it to derive the sales figures. It
is further submitted that a bare perusal of the impugned order makes
it amply clear that the Respondent No.1 has analyzed the sales
projected by all the distribution licensees for the Control Period. The
Respondent No.1 has observed that the energy sale in the previous
years of all the licensees does not show a uniform trend. The trend of
sales of Appellant as per their submission in MYT petition is given
below:
Year 2002-03 * 2003-04 * 2004-05 2005-06 2006-07 2007-08

9 mts ) projected by
the petitioner
Sales in MUs 3328.41 4538.78 5364.52 5309.52 5872.14 6557.00
YOY growth ( % ) 18% -1% 11% 12%
It is submitted that a bare perusal of the above table makes it clear
that the increase in sales on year on year basis for FY 06-07 is 11%, for
FY 05-06 is -1% and FY 04-05 is 18%. Hence there is no definite
pattern of sales in the area of BRPL in the previous years.
Therefore, it is submitted that the Respondent No.1 has considered the
consolidated sales of a specific category (i.e. Domestic, Industrial,
Commercial etc) of all the three DISCOMs namely, BRPL, BYPL and
22
NDPL and has forecasted the same for the Control Period by
considering an appropriate growth rate based on the past trends. The
Respondent No.1 has, thereby, calculated the weighted average share
of sales of each distribution company in FY06 and FY07 in a particular
category and has allocated the consolidated sales forecasted for that
category to the respective distribution company in the proportion of its
weighted average share.
It is submitted that for deciding the appropriate growth rate for
forecasting the energy sales for a particular category, the Respondent
No.1 has analysed the year-on-year variations in sales as well as the
short term and long term trends in sales. The Respondent No.1 has
computed the CAGR for 2 years to 12 years duration. The Respondent
No.1 has, thereafter, considered the appropriate CAGR depending
upon the consumer categories, consumption trend in recent period,
excluding the abnormal variations.
It is submitted that the findings of the Respondent No.1 as reflected in
the impugned order is a result of a detailed reasoning. In order to
negate the contention of the appellant to the contrary it is submitted
that the Respondent No.1 believed that due to the commonwealth
games, the energy consumption would increase but this increase would
be mainly in Non-Domestic (Commercial) and Public lighting
categories. From a bare perusal of the impugned order it is amply clear
that that the answering Respondent has projected higher consumption
for these categories vis-à-vis projection of the Appellant. Accordingly
the answering Respondent has projected lower consumption vis-à-vis
Appellant’s projection for Domestic, Industrial and DMRC. Respondent
No.1 has factored in the Hon’ble Supreme Court’s order of relocation of

23
industries from the Appellant’s area to NDPL area for forecasting
industrial sales.
It is further submitted that for forecasting sales of bulk consumers like
DMRC and Railway, Respondent No.1 had relied on the interaction
with the consumer and projection made by them. Respondent No.1 has
used the same methodology as used by it in the previous tariff orders.
It is submitted that Respondent No.1 has calculated the weighted
averaged share of sales of Appellant in FY 2005-06 and FY 2006-07 in
a particular category and allocated the consolidated sales forecast for
that category in the proportion of its weighted average share. The
Respondent No.1 had considered the CAGR for domestic as 5.54%,for
non-domestic as 13.56%, for industrial as 1.03%,for public lighting as
12.19%, for agriculture & mushroom cultivation as (-)14.84% ,for
DMRC actual as submitted by DMRC and for others as 0.87%. The
CAGR for the last 7 years taken by the Respondent No.1 for
considering sales projection in MYT period has been tabulated below:
Year 7 yr 6 yr 5 yr 4 yr 3yr 2yr Approved
Domestic 5.54% 6.71% 4.21% 2.15% 0.86% 2.80% 5.54%
Non-Domestic 14.48% 15.55% 14.93% 13.56% 6.46% 7.92% 13.56%
Industrial 0.68% 0.84% 1.03% 10.00% 4.43% 1.64% 1.03%
Public Lighting 10.48% 12.19% 17.19% 18.11% 8.20% 7.59% 12.19%
Irrigation &
Agriculture -14.82% -16.64% -14.84% -19.75% -21.87% -13.91% -14.84%
As projected
by Railway
Railway Traction -5.32% -11.16% 3.10% -2.06% -7.43% -11.54%
as projected
DMRC 90.73% 67.95% 31.80% by DMRC
Others 0.87% 46.72% -4.39% 0.87%
TOTAL 6.70% 7.64% 6.83% 6.79% 3.85% 4.05%
It is submitted that in line with the above methodology, the
commission has approved energy billed in FY 2007-08 as 6305 MUs

24
against the actual of 5872 MUs for FY 2006-07, an increase of 433
MUs i.e. 7.37 % over the previous year.
It is further submitted that Respondent No.1 has also provided a
growth of 8.23% in sales for FY 2008-09 over FY 2007-08, 9% increase
for FY 2009-10 over FY 2008-09 and 8.29% for FY 2010-11 over FY
2009-10 which would take care of the growth of sales including that on
account of Commonwealth Game which are going to impact primarily
during FY 10-11.
It is submitted that the table below compares the sales forecast of the
Petitioner as per letter no RCM-06-07/1030 dated 25 January 2008 and
the Commission approved value.
S. Category
FY08 FY08 FY09 FY09 FY11 FY11
No FY10 FY 10
Appella Appella Appella
DERC Appellant DERC DERC DERC
nt nt nt
1
Domestic 3190 3033.25 3553 3201.21 3935 3378.47 4325 3565.55
2 Non-
2270 2239.48 2537 2543.13 2829 2887.96 3100 3279.54
domestic
3
Industrial 624 627.44 636 641.83 649 656.25 661 670.70
4 Public
148 152.8 160 171.42 173 192.31 187 215.75
Lighting
5 Irrigation &
32 24.8 32.03 21.12 32.03 17.98 3203 15.31
Agriculture
6
Railway 25 24.75 24 23.51 24 23.51 24 23.51
7
DMRC 72 92 86 110.00 112 142 146 142.0
8.
Others 197 110.71 173 111.67 156 112.65 143 113.63
Total 6557 6305.22 7201 6823.89 7909 7411.14 8618 8025.99
It is clear from the above that the commission has considered increased
sales w.r.t. the projection of petitioner in case of Non domestic and
public lighting categories which will be the most impacted categories
on account of common wealth games.
At the cost of repetition it is submitted that as per the MYT
Regulations clause 4.10 to 4.12, Sales is an uncontrollable item and
would be trued up in subsequent years based on the actual sales.

25
8.2. Re: Distribution Loss Targets
8.2.1 The contents of para 8.2.1 are a matter of record and hence merit no
reply.
submitted that the contention of the Appellant that determination of
Respondent No.1 seeking reduction of distribution losses without
specifying any reason to justify such a high reduction, is devoid of any
legal force and lacks factual accuracy. Contrary to the contention of the
Appellant that Respondent No.1’s reduction of the distribution losses is
in blatant disregard of the past trend, it is submitted that the
Respondent No.1 has followed the Aggregate Technical and
Commercial (AT&C) loss reduction trajectory as per regulations. For
the sake of clarification it is most respectfully submitted that
Respondent No.1 has assumed collection efficiency of 99.00%, 99.25%,
99.50% and 99.50% for FY08, FY09, FY10 and FY11 respectively as
followed by in its earlier Tariff Order. It is further submitted that
Respondent No.1 has derived Distribution losses for each year of the
Control Period for the Appellant from AT&C loss target after assuming
reasonable Collection Efficiency as explained hereunder:
Distribution Losses = 1 – (Energy Billed in MUs / Energy
Purchase in MUs)
Collection Efficiency = Revenue Collected (Rs Cr) / Revenue
Billed (Rs Cr)
= (Sales Realized in MUs * Average Billing Rate)/ (Energy Billed
in MUs * Average Billing Rate)
= (Sales Realized in MUs)/ (Energy Billed in MUs)
Distribution Losses = 1- ((1- AT&C Losses)/ Collection
Efficiency)
26
= 1 – (Sales Realized in MUs / Energy Purchase in MUs)/ (Sales
Realized in MUs)/ (Energy Billed in MUs)
= 1 – Energy Billed in MUs/ Energy Purchase in MUs
further submitted that the contention of the Appellant with respect to
fixing higher target of distribution loss for the FY 07-08 is completely
misplaced and the argument that the loss reduction of 9.68%. in one
year is difficult to achieve more so when the Tariff Order itself has
been notified just one month before the end of FY2007-08 is not in
consonance with the sectoral practice. It is submitted that the
Appellant is well aware of the practice that distribution loss is
consequent of AT&C loss target. Despite the high distribution loss in
FY 2006-07, the Appellant was able to achieve AT&C targets because
of high collection efficiency of 108.8% thereby resulting in more
revenue. It is submitted that this incremental revenue and increased
collection efficiency offsets the incremental cost of power purchase on
account of higher distribution losses.
8.2.4 - 8.2.7 The contents of paras 8.2.4 to 8.2.7 are misleading hence denied.
It is submitted that Distribution targets are a consequent of AT&C
losses target arrived at after taking into account the collection
efficiency which has been considered as per the following table:
YEAR BRPL SUBMISSION COMM APPROVED
FY 08 104.66% 99.00%
FY 09 100.28% 99.25%
FY 10 99.62% 99.50%
FY 11 99.63% 99.50%
27
Accordingly, the Respondent No.1 has set the following Distribution
loss targets trajectory for BRPL for the control period:
YEAR 2007-08 2008-09 2009-10 2010-11

Distribution 25.96 22.88 19.83 16.58
Losses (%)
In light of the aforesaid, with respect to the contention of the Appellant
that the distribution loss targets as fixed by the appellant are
unachievable in view of the fact that the Impugned Order was notified
only one month prior to the closing of the financial year, it is submitted
that the Appellant knew the required achievement levels of AT&C
losses and thereby distribution losses well in advance as these were set
in accordance with the MYT Regulations which were issued in May
2007. Accordingly the contention of the appellant is completely
misplaced.
submitted that the contention of the Appellant in the para under reply
is completely misplaced. The Respondent herein most respectfully
submits that the AT&C loss targets are binding on the Appellant while
distribution loss levels are not, though power purchase depends upon
distribution loss levels. It is submitted that in case the Appellant is
able to achieve higher collection efficiency than assumed by
Respondent No.1 for reaching the target AT&C loss level, it’s
distribution losses would be higher than the approved distribution
losses, which would result in higher power purchase quantum and cost.
At the same time, as the collection efficiency is higher, it would also
recover additional revenue than the answering Respondent’s projection
which would be balanced out with higher power purchase cost.

28
8.3 Re: Power Purchase
8.3.1 The contents of para 8.3.1 are wrong and hence denied. It is most
respectfully submitted by the Respondent No.1 that Power purchase
expense being the single largest component in the ARR of Distribution
Companies, has been analyzed with utmost care and diligence by the
Respondent No.1 with prudent checks. It is further submitted that the
contention of the Appellant that the Respondent No.1 has approved
power purchase of 8515 MUs in FY 2007-08 and 8849 MUs in FY 2008-
09 which is lower than 9122MU as approved by the Respondent No. 1
for FY 2006-07, is without any merit. It is submitted that the
Appellant is well versed with the fact that power purchase cannot be
analyzed in isolation and has to be considered along with the sales
approved, sales realized and AT&C losses.
8.3.2 The contents of para 8.3.2 are wrong and hence denied. It is submitted
that the Respondent No.1 has projected the Power Purchase
Requirement of the Appellant based on the sales approved and
distribution losses for each year of the Control Period i.e.
Power Purchase Requirement in MU = Sales Projection Approved by
the Respondent No.1/ (1- Distribution Loss Level Approved by the
Respondent No.1)
It is submitted that the Answering Respondent has explained the
methodology of sales forecast in paragraph 8.1.5 above, the contents
whereof are not repeated here for the sake of brevity. In addition, it is
submitted that the Respondent No.1 has arrived at the distribution
losses from AT&C losses and collection efficiency. It is submitted that
the Respondent No. 1 has approved 8515 MUs for FY 2007-08 by
taking into account the AT & C losses specified in the Regulations

29
issued by the Respondent No. 1. As per the Regulations, the
Respondent No. 1 has approved the AT & C loss target of 17% at the
end of control period with minimum annual reduction of 20% of the
approved AT & C loss. The approved trajectory of AT & C losses,
distribution losses and collection efficiency by the Respondent No.1 for
control period is as follows:
YEAR 2006-07 2007-08 2008-09 2009-10 2010-11
AT & C Losses 29.92 26.69 23.46 20.23 17.00

(%)
Collection 108.87 99.00 99.25 99.5 99.5

Efficiency(%)
Distribution 35.63 25.95 22.88 19.83 16.58

Losses (%)
The AT & C and Distribution losses in FY 2006-07 were 29.92% and
35.63% respectively. There is a decrease of 9.68% in the Distribution
losses and 3.23% in AT & C Losses of FY 2007-08 in comparison to FY
2006-07. The Respondent No.1 has approved energy billed in FY 2007-
08 as 6305 MUs against the actual of 5872 MUs for FY 2006-07, an
increase of 433 MUs i.e. 7.37 % over the previous year. The
Respondent No.1 has also provided a growth of 9% in sales for FY 09-
10 over FY 08-09 and 8.2% in FY 2010-11 over FY 2009-10, which
would take care the growth of sales including that on account of
Commonwealth Game which are going to impact primarily during FY
2010-11. Energy input of 8515 MUs has been arrived at by applying
Distribution losses of 25.95% on the figures of energy billed of 6305
MUs for FY 2007-08. In the light of the aforesaid, it is submitted that
the methodology explained supra for arriving at the Power Purchase
Estimates are a result of detailed reasoning and completely in
consonance with the ground realities.

30
8.3.3-8.3.5 The contents of paras 8.3.3 to 8.3.5 are misleading and hence
denied. It is submitted that the contention of the Appellant that
Respondent No.1 has disregarded material facts while making its
determination with respect to the proposed power purchase is based on
misplaced and inaccurate facts. It is submitted that the reduction as
reflected by the Respondent No.1 in the impugned order is in
consonance with the reasoning as stated supra and the same may be
read with respect to the contents of the para under reply. For the sake
of clarification it is submitted that the Respondent No.1 has reduced
the power purchase for FY 2007-08 from 9122 MUs in (2006-07) to
8515MUs which is 607 MUs i.e. 6.65% less than the power purchased
in FY 2006-07. It is submitted that the higher quantum of the power
purchase in FY 2006-07 was required because of high Distribution
losses of 35.63% in comparison to 25.95% in FY 2007-08, a difference of
9.68%. It is further submitted that the Appellant has stated that the
actual power purchase of 7342MU upto December 2007 has been
submitted to the Respondent No.1 and the total power purchase
approved for FY 2007-08 is 8515MU i.e. only 1173MU is available for
three months which the Respondent No.1 is alleged to have arrived
that without taking into consideration the fact that the actual drawl
for the corresponding period of the previous year was 1920MU. As per
the Appellant if power purchase for January to March of FY 06-07 i.e.
1920 MUs are considered for the corresponding period of FY 07-08, the
total power purchase for FY 07-08 comes to 9262 MUS i.e. 747 MU
more than approved by the Respondent No.1. Further, the Appellant
had submitted the AT&C losses till Nov-07 as 34.24% which was
higher than the year target of 26.69% resulting in higher power

31
purchase of about 554 MUs. It is however submitted that even
considering the total power purchase of 9262 MUs as indicated by
Appellant, it would result in sales realization of 6790 MUs by taking
into consideration 26.69 % AT&C losses for FY 2007-08 against the
6242 MUs as approved by the Commission. Hence BRPL will realise
548 MUs more than approved by the Respondent No.1. The average
billing rate approved for Appellant for FY 07-08 is 481.35 Ps/kWh and
it results in 264 crore rupees more revenue from increased realized
units as illustrated below:
S.No As per As per Actual

Appellant MYT Upto Jan
order 08 as
submitted
by BRPL
1 Units Input upto Dec 07 7342.00
2 From Jan-Mar08 1920.00
3 Total Input 9262.00 8515.00 8021.6
4 Extra input as per 747.00
Appellant (A3-B3)
5 Avg. power purchase cost 257.13
(Ps/Kwh)
6 Extra cost in 192.08
Crore(4*5/1000)
7 Approved AT & C losses 26.69 26.69 31.72
8 Units realised as per 6789.97 6242.35 5477.15*
above AT &C (MU)
9 Extra units 547.63
realised(MU)(A12-B12)
10 Avg.billing rate (Ps/Kwh) 481.35
11 Extra revenue realised in 263.60
Crore(C9*C10/1000)
In addition to the aforesaid it is submitted that as January to March is
a comfortable period, the Appellant is likely to realise gross sales
around 6924 MUs for the year 2007-08, which should result in
increased revenue of Rs. 328 crores over the sale figure of the order.
This is evident from the rolling sales figure for Feb. 2007 to Jan. 2008
as submitted by the Appellant vide its letter dated 1.4.2008. A copy of
the said letter is annexed hereto as ANNEXURE-3.

32
8.3.6-8.3.9. The contents of paras 8.3.6 to 8.3.9 are misleading and hence
denied. It is submitted that the impact, as worked out by the
Appellant, of the power purchase quantum laid down by the
Respondent No.1 in the impugned order is based on inaccurate
calculations. It is submitted that while projecting power purchase
quantum and cost for FY 2007-08, the Respondent No.1 has included
actual power purchase from bilateral and short term arrangements
upto December, 2007. For January 2008 to March 2008 an additional
100 MUs from bilateral purchase through intra state sources has been
estimated by the Respondent No.1 while approving the power purchase
cost for FY 2007-08. The actual purchase through bilateral/intra state
& UI as per the SLDC for January-March, 2008 has been produced
below :
(in MUs)
Bilateral purchase 7.62

Intra state purchase 154.94
Net UI purchase 65.35
Total purchase including UI 227.91
Bilateral sale 253.41
Intra state sale 14.5
Total sale 267.91
Net sale 40.00
It is submitted that from the above table it is very much clear that
despite purchasing peak power as envisaged, the Appellant has a net
sale of 40 MUs which has resulted into a Net Revenue of Rs. 69 crores
for Appellant during the period January-March, 2008. The power
purchase cost for FY 2007-08 comes to Rs. 256.40 Ps./Kwh as per
SLDC submission in line with approved power purchase cost of Rs.

33
252.43. It is submitted that for the remaining control period, the
Respondent No.1 has assumed that 5% of net annual power
requirement shall be required to be sourced through bilateral
purchases and short term arrangements with trading companies for
meeting seasonal peak demands in summer and winter months.
Further, the Respondent No.1 has considered that 25% of such short
term peak power shall be available from intra state sources and 75%
through inter state sources. Further, the Respondent No.1 has
assumed that 20% of deficit power procured from inter-state sources
will be coming through banking arrangement and balance is bilateral
purchase through short term arrangements/trading companies. In
addition the Respondent No.1 has taken 100 MUs as additional power
purchase through intra state sources for meeting peak demand during
January, 2008 to March, 2008. It is also submitted that, as has been
explained supra, the Power purchase cost is an uncontrollable
parameter and would be trued up at the end of each financial year.
It is further submitted that the Appellant has submitted a gap of Rs
245 crore against power purchase without giving any calculation for
FY 2008-09, whereas Respondent No.1 has considered the above
methodology and regulated losses for deriving the figures for FY 2008-
09. The approved sales of Appellant for FY 2008-09 is 6824 MUs
against the fig. of 6305 MUs in FY 2007-08 ,an increase of 8.23%.
Further the power purchase cost will reduce in FY 2008-09 because
additional allocation of 80 MW by Delhi Government from unallocated
quota which was made effective after issue of impugned orders. This,
at PLF of 80% would result into an availability of 64 MW which, if
available round the clock, would result into an additional energy of 560
34
MUs which would be available at the regulated price. Thus, it would
further bring down the Appellant’s power purchase cost for FY 2009.
Re: Non inclusion of Reactive Energy Charges and Rebate arising out of
timely payments made by the Appellant to Delhi Transco Ltd
(DLT/Transmission Company) towards the power purchase costs.
8.3.10-8.3.18 The contents of paras 8.3.10-8.3.18 are wrong and hence denied.
It is submitted that the Respondent No.1 has allowed the reactive
energy charges of Rs.0.85 crores for the Appellant for FY 06 as directed
by the Hon’ble Tribunal vide its order dated May 23, 2007. It is
submitted that the reactive energy charges as approved by the
Respondent No.1 in the impugned order are strictly in consonance with
the directions of this Hon’ble Tribunal and as claimed by the Appellant
in the MYT Petition. It is submitted that since the Respondent No.1
did not allow the reactive energy charges under power purchase to the
Appellant in FY 06, the Hon’ble Tribunal had vide its order dated May
23, 2007 directed the Respondent No.1 to allow the same. Therefore, it
is submitted that in consonance with the direction of the Hon’ble
Tribunal the Respondent No.1 has allowed the reactive energy charges
in the impugned order to the extent of Rs.0.85 crores for the FY 06 as
claimed by the Appellant in the MYT Petition. It is submitted that the
Respondent No.1 has not followed any different methodology for the
FY 2007.
In the light of the aforestated facts, it is vehemently denied that the
Respondent had disallowed reactive energy charges as claimed by the
Appellant in the instant Appeal. It is submitted that the said issue of

35
disallowance of reactive energy charges to the extent of Rs.0.66 crores
has been raised for the first time. It is submitted that the discrepancy
was observed by the Respondent when it pointed out that in the MYT
Petition the Appellant had claimed power purchase expenses for FY 07
as Rs 2102.96 Crores. However, it was brought to the knowledge of the
Appellant that as per the Delhi Transco Limited’s (DTL) account, the
revenue on account of power purchase from Appellant was Rs 2095.91
Crores. The Appellant in reply to the aforesaid submitted that the
difference of 7.05 crores (between the power purchase cost submitted
by the Appellant and that submitted by the Delhi Transco Limited) is
on account of dispute on rebate calculation methodology adopted by
DTL with respect to which the Appellant had already filed a Petition
before the Hon’ble Respondent No.1. It is however pertinent to
mention here that the Respondent No.1 was never informed by the
Appellant that this difference is also due to reactive energy charges. It
is submitted that the whole issue of disallowance of reactive energy
charges to the extent of Rs.0.66 crores has been brought to the
knowledge of Respondent for the first time by way of the instant
Appeal. In support thereof it is pertinent to mention that neither Table
64 on Page 129 of the MYT Petition nor Form A1 as referred on page
211 in the MYT petition indicate the reactive energy charges. In view
of the aforesaid, it is submitted that the whole issue of alleged
disallowance of reactive energy charges to the extent of Rs.0.66 crores
is a mere afterthought and not supported by any facts.
8.3.19-8.3.26 The contents of paras 8.3.19-3.8.26 are misleading and
hence denied. It is submitted that the Appellant has with respect to
the rebate payment to DTL observed in paragraph 3.145 of the
impugned order that “dispute on rebate calculation methodology

36
adopted by DTL against which the Petitioner has already submitted
petition to the Commission. As the adjudication on the matter is
awaited from the Commission, the Commission approves power
purchase cost for FY07 at Rs 2095.91 Cr, provisionally. The
Commission will allow additional power purchase cost to the Petitioner
depending upon the outcome of the case”. It is submitted that a bare
perusal of the aforesaid observation makes it clear that the
Respondent No.1 has not denied expenses on this account to the
Appellant. It has only been determined by the Respondent No.1 that
in the circumstance of the dispute relating to rebate calculation
pending adjudication before the Respondent No.1, it is prudent for the
Respondent No.1 to provisionally allow the power purchase cost as per
DTL submission subject to the condition that the Respondent No.1
would allow Additional Power Purchase cost to the Appellant
depending upon the outcome of the pending litigation. It is submitted
that the approach adopted by the Respondent No.1 to allow
provisionally the power purchase cost as per DLT submission is in no
manner arbitrary.
8.4 Re:Aggregate Technical & Commercial Losses (AT&C) Levels:
that the contention of the Appellant that the AT&C loss levels set up
in the MYT Regulations and the Respondent’s approach in fixing the
targets are contrary to the regulatory practice and the sectoral
realities in India is completely misplaced. It is submitted that the
AT&C loss reduction targets for the Appellant as specified in the MYT
Regulations 2007 have been fixed considering the past achievements
on loss reduction, capital expenditure programmes, consumer mix of

37
Delhi, metering status etc. It is further submitted that the meeting on
July 27, 2007 referred to by the Appellant did not imply any relaxation
in the regulation of the Respondent No.1 as is evident from the
minutes of the meeting and a copy of the letter dated August 07, 2007
addressed to the Appellant which is annexed herewith as
ANNEXURE-4.
No.1 ought to relax the AT&C levels fixed under MYT Regulation is
without any legal force or sanctity. It is submitted that the
Respondent No.1 derives its powers from the provisions of DERA and
the Electricity Act. As per the provisions of the aforementioned
statutes the Respondent No.1 has to work within the framework of the
MYT Regulations and it cannot to go beyond the same.
8.4.2 & 8.4.3 The contents of paras 8.4.2 & 8.4.3 are misleading and hence
denied. It is submitted that the argument of the Appellant that the
refusal by the Respondent No.1 has gravely prejudiced the Appellant,
who now has a potential burden of Rs.57 crores (approx. in FY 08) and
Rs.111 crores (approx. in FY 09) is completely misplaced. The
Respondent No.1 most respectfully submits that in case, the Appellant
is able to achieve higher collection efficiency than assumed by the
Respondent No.1 for reaching the target AT&C loss level, it’s
distribution losses would be higher than the approved distribution
losses, which would result in higher power purchase quantum and cost.
At the same time, as the collection efficiency is higher, it would also
recover additional revenue than the Respondent No.1’s projection
which would be balanced out with higher power purchase cost.

38
Accordingly, the Respondent No.1 has set the following AT&C and
distribution targets trajectory for Appellant for the control period:
YEAR 2007-08 2008-09 2009-10 2010-11
AT & C 26.69 23.46 20.23 17.00

Losses (%)
Distribution 25.96 22.88 19.83 16.58

Losses (%)
8.4.4 & 8.4.5 The contents of paras 8.4.4 & 8.4.5 are wrong and hence
denied. It is submitted that the contention of the Appellant that the
Respondent had failed to exercise its discretionary powers to relax the
provisions of the MYT Regulation despite there being strong and
compelling grounds for the exercise of the said power is devoid of any
legal force. It is submitted that the powers to relax the MYT
Regulations on fixation of AT&C levels is discretionary power and the
discretion to use the same lies with the Respondent No.1. The
Respondent No.1 has not acted arbitrarily and has exercised
reasonable skill and care while passing the Impugned Order.It is
submitted that the Appellant cannot mandate the Respondent No.1 to
use its discretionary powers in a particular manner in the absence of
malafides.
It is further submitted that the contention of the Appellant that the
AT&C losses submitted by the Appellant were not accepted by the
Respondent No.1 despite good and cogent reasoning before the
Respondent No.1 is based on inaccurate facts and hence denied. In any
event, without prejudice to the other submissions of the Respondent
No. 1, it is submitted that the Appellant did not make any specific
prayer in their prayer clause of the MYT/ARR petition for considering

39
relaxation in the regulation in respect of loss target specified by the
Respondent No.1.
The Respondent No.1 had issued and notified MYT Regulations on
30th May, 2007 specifying the AT & C losses level to be achieved by
distribution companies at the end of control period. It had fixed AT &
C loss level of 17% for Appellant. These regulations were framed under
a valid process of law taking into consideration the views of various
stakeholders involved. While admitting the petition of Appellant, the
Respondent No.1 had issued an admission order no. 51/2007 dated
26.10.2007, wherein the Appellant submission of loss level targets was
not accepted by the Respondent No.1 and they were directed to follow
the targets given in the regulations. The relevant extracts of the said
Order is reproduced below :
a) “ All the calculations regarding AT&C loss level, O&M

expenses, RoCE, etc. shall be worked out in accordance with the
provisions given in the MYT Regulations, 2007.
It is further submitted that even as per the submission made by
Appellant vide their letter dated 1.04.2008, the rolling figures for loss
level from the period February 2007 to January 2008 stand at 25.04%
which are well within the target for 07-08.
Without prejudice to the aforesaid it is submitted that the issues
regarding the Hon’ble Tribunal’s jurisdiction to review the regulations
framed by the Respondent No.1 has been dealt at length in the matter
of Neyveli Lignite Corporation Ltd. Vs Tamil Nadu Electricity Board
and Others 2007 APTEL 1134(ELR), wherein the special bench
comprising of Hon’ble Justice Anil Dev Singh, Chairperson, Hon’ble
Justice E. Padmanabhan (Member Judicial) and Hon’ble Justice H. L.

40
Bajaj (Member Technical) held that the Hon’ble Tribunal has no
jurisdiction to examine the validity of the regulations in exercise of its
appellate jurisdiction under Section 111 of the Electricity Act, 2003. It
was further held that even, under Section 121 of the Electricity Act,
which confers on the Hon’ble Tribunal the supervisory jurisdiction on
the Respondent No.1, the Hon’ble Tribunal cannot examine the
validity of regulations framed by the Respondent No.1 as the Hon’ble
Tribunal can only issue orders, instructions or directions to the
Respondent No.1 for the performance of its statutory functions under
the Act. A copy of the said judgment is annexed hereto as
ANNEXURE-5.
8.4.7-8.4.9 The contents of paras 8.4.7-8.4.9 are misleading and hence
Respondent No.1 failed to consider the observations of the Task Force
on Distribution Loss Reduction (Abraham Committee) is completely
devoid of any force. It is submitted that the recommendations of the
Abraham Committee Task Force on reduction of AT & C losses level as
indicated by Appellant, have neither been accepted by the Government
till date nor any policy on AT&C losses has been made by Government
of India as per Section 3 of Electricity Act. Hence, these
recommendations are not binding on the Regulatory Commissions and
therefore the contention of the Appellant is without any substance. It
is however pertinent to mention that the AT&C loss reduction targets
for the Appellant as specified in the MYT Regulation, 2007 have been
fixed considering the past achievements on loss reduction, capital
expenditure programs, consumer mix of Delhi, metering status, etc. It
is submitted that 212 towns in the country have brought down the
41
AT&C losses below 20 percent which also consist of 169 such towns
that have brought down the AT&C losses below 15 percent.
In addition to the aforesaid, the Respondent No.1 has also considered
the loss levels in similar private urban distribution licensees, such as
Ahmedabad Electricity Company, BEST and BSES, Mumbai, where
AT&C losses were in the range of 10 percent to 14 percent in FY05. It
is further submitted that referring to the recommendation of “Working
Group of Power” of 11th Plan constituted by the Government of India,
the relevant extracts of which are annexed hereto as ANNEXURE-6,
the urban areas of the country were expected to reduce their losses to
15% by the end of 11th Plan i.e. at the end of FY 2012. The Respondent
No.1 states that Delhi being an urban area with very small number of
agricultural consumers and almost 100 percent retail consumer
metering, loss reduction can be achieved at much faster rate.
8.4.10- 8.4.12 It is submitted that the contents of paras 8.4.10- 8.4.12 are
wrong and hence denied. It is submitted that the contention of the
Appellant that despite their being a difference in the base year AT&C
loss for NDPL and the Appellant, the two DISCOMS have been given
the same target of 17% at the end of the Control Period is
unsustainable in law and in fact. It is submitted that the said
contention of the Appellant instead of supporting the Appellant’s case
brings to the fore the Appellant’s own shortcoming. It is submitted
that Appellant’s claim of comparison of Appellant’s loss level targets
with that of NDPL does not sound reasonable as the opening level of
losses of both, NDPL and the Appellant were fixed at the same level of
48.1% at the beginning of the Policy Period and both were required to
reduce the losses by 17% at the end of the Policy Direction Period. It is
42
submitted that in the light of the aforesaid the claim of the Appellant
of discriminatory treatment is completely observed and deserves to be
outrightly rejected.
8.4.13-8.15 It is submitted that the contents of paras 8.4.13 to 8.4.15 are
misleading and hence denied. It is submitted that the contention of
the Appellant that the comparison of the Appellant with entities like
BEST, AEC, SEC and CESE is a comparison of unequals and therefore
unsustainable in fact is devoid of any force. It is submitted that all
these are distribution companies in urban areas with very small
number of agricultural consumers and almost 100 percent retail
consumer metering where loss reduction can be achieved at a much
faster rate. Also, substantial capital investments were made by the
Appellant in Delhi for improving the distribution network and
reducing technical and commercial losses. Government support in the
form of special courts for power theft related cases, recent amendment
in the Electricity Act wherein theft of electricity has been classified as
cognizable & non-bailable offence, police support during theft control
drives, deployment of CISF, etc are also being provided to the
Petitioner. This will help the DISCOMs in Delhi in reducing losses at
much faster rate.
8.4.16-8.4.19 It is submitted that the contents of paras 8.4.16-8.4.19 are
misleading and hence denied. It is submitted that the argument of the
Appellant is misfounded and based on its own assumptions. It is
submitted that the AT&C loss levels as determined by the Respondent
No.1 in the impugned order is a product of a detailed reasoning. The
Respondent No.1 while determining the AT&C loss reduction targets

43
for the Appellant as specified in the MYT Regulation 2007 took into
account, inter alia, the following:
• The past achievements on loss reduction, capital expenditure
programs, consumer mix of Delhi, metering status, etc.
• 212 towns in the country have brought down the AT&C losses
below 20 percent which also consist 169 such towns that have
brought down the AT&C losses below 15 percent”
• The Respondent No.1 has also considered the loss levels in
similar private urban distribution licensees, such as Ahmedabad
Electricity Company, BEST and BSES, Mumbai, where AT&C
losses were in the range of 10 percent to 14 percent in FY05.
• The Respondent No.1 also believes that Delhi being an urban
area with very small number of agricultural consumers and
almost 100 percent retail consumer metering, loss reduction can
be achieved at much faster rate.
It is submitted that in view of the above mentioned points the
Respondent No.1 considered AT&C loss reduction targets as per the
provisions of the MYT Regulation 2007. The Respondent No.1 has
considered a reduction of 12.92% reduction in AT&C losses (29.92% in
FY07 to 17.00% in FY11) for the Control Period. The Respondent No.1
has considered reduction of 25% of the total AT&C loss reduction
target in each year of the Control Period. It is submitted that the
Respondent No.1 has specified the AT&C loss reduction target for the
Appellant in accordance with the MYT Regulations. The AT&C loss
levels have been worked out on the basis of the following formula as
specified in Clause 4.7(a) of the MYT Regulations:

44
AT&C Losses = 1- (Sales Realized in MUs / Energy Purchase in

MUs)
Where,
Sales realized in MUs = Revenue Collected in Rs Cr *10 /
Average Billing Rate,
Average Billing Rate = Revenue Billed in Rs Cr *10 / Energy
Billed in MUs
It is submitted that the Respondent No.1 had issued and notified MYT
Regulations on 30th May, 2007 specifying the AT & C losses level to be
achieved by distribution companies at the end of control period. It had
fixed AT & C loss level of 17% for Appellant. These regulations were
framed under a valid process of law taking into consideration the views
of various stakeholders involved. While admitting the petition of
Appellant, the Respondent No.1 had issued an admission order no.
51/2007 dated 26.10.2007, wherein the Appellant submission of loss
level targets was not accepted by the Respondent No.1 and they were
directed to follow the targets given in the MYT Regulations. The
relevant extract of the said Admission Order is reproduced below:
“All the calculations regarding AT&C loss level, O&M expenses,

RoCE, etc. shall be worked out in accordance with the provisions
given in the MYT Regulations, 2007.
The calculations for Regulated Rate Base (RRB) shall be arrived

at using provisions given in the MYT Regulations, 2007 after
excluding accumulated depreciation and the CWIP.
An allocation statement to apportion cost and revenue of

respective businesses shall be duly approved by the Board of
Directors of the Licensee as per Clause 4.4 of the MYT
Regulations, 2007.
45
The power purchase cost shall take into account apart from
other parameters, the estimate of revenues received through
bilateral exchanges and UI.
To submit for each consumer category, slab wise and voltage

wise tariff in accordance with Clause 8.7 of the MYT
Regulations, 2007, duly supported by cost of service model,
allocating the cost of business to each category of consumer as
well as subsidy, if any, being granted by GoNCTD.
The Petitioner/Licensee shall propose the baseline performance

trajectory for all quality parameters as specified by Delhi
Electricity Supply Code Performance Standard Regulations,
2007 and as per Clause 7.2 of MYT Regulations, 2007.
The Petitioner/Licensee is directed to take up the issue of past

period true-up expenses with the GoNCTD. The
Petitioner/Licensee is further directed to propose tariff structure
for recovery of aforesaid expenses in case GoNCTD is not
agreeable to provide these expenses in the form of government
support and same needs to be recovered through tariff.
The Commission has observed that prayer Clause of the

Petitioner/Licensee is vague. The Commission directed the
Petitioner to have specific reference to the prayer and also the
Orders of Appellate Tribunal, High Court and Supreme Court
etc on which the Licensee intends to rely upon. The Licensee is
further directed to file a copy of such Orders on which they have
placed reliance.”
The Appellant however did not take action on the directions given by
the Respondent No.1 in the Admission Order and did not modify their
submissions on AT & C for complying with the regulations. The
Appellant in the corresponding paragraphs is seeking relaxation of the
provisions of the MYT Regulations from this Hon’ble Tribunal. It is
most respectfully submitted that the Appellant by the way of present

46
relief is trying to seek review of the regulations framed by the
Respondent No.1. It is further submitted that this Hon’ble Tribunal in
view of the law laid down in the matter of Neyveli Lignite Corporation
Ltd. Vs Tamil Nadu Electricity Board and Others 2007 APTEL 1134
(ELR) has held that the Tribunal has no jurisdiction to examine the
validity of the regulations in exercise of its appellate jurisdiction under
Section 111 of the Electricity Act, 2003. It was further held that even,
under Section 121 of the Electricity Act, which confers on the Hon’ble
Tribunal the supervisory jurisdiction on the Respondent No.1, the
Hon’ble Tribunal cannot examine the validity of regulations framed by
the Respondent No.1 as the Hon’ble Tribunal can only issue orders,
instructions or directions to the Respondent No.1 for the performance
of its statutory functions under the Act. The Hon’ble Tribunal in the
case of NTPC Ltd Vs Transmission Corporation of A.P. & Ors in
Appeal No. 51-53 of 2006 has again confirmed that “this Tribunal
cannot go into the validity of the Regulations in exercise of its
appellate power”.
8.4.20. The contents of the para 8.4.20 are misleading and hence
denied. It is submitted that as has been stated supra the
Appellant’s was directed vide the Admission Order to modify its
submission vis-à-vis AT&C loss targets. However, the same
direction was not complied with. The Respondent No.1 has fixed
loss trajectory keeping in view the minimum of 20% loss
reduction required during each year of the control period as per
MYT regulation. As per this, BRPL has to reduce minimum of
(20% of 12.03) 2.4% AT&C losses during every year of the
control period subject to the condition of achieving overall target
of AT & C loss reduction by the end of control period.

47
8.4.21 The contents of the para 8.4.21 are misleading and hence
denied. It is submitted that, as has been stated supra there was
no specific prayer in the prayer clause for relaxation of the MYT
Regulations in the MYT Petition filed by the Appellant and the
same has arisen for the first time before this Hon’ble Tribunal.
In the light of the aforesaid it is stated that the contention of the
Appellant is a mere afterthought.
8.5 Re: Capital Expenditure and Capitalization
8.5.1 That the contents of para 8.5.1 are mere statement of fact and hence
merit no reply. However, with respect to the submission of the
Appellant vis-a-vis a disallowance of 47 crores of capital expenditure
by the Respondent No.1 without assigning any reasons in the
Impugned Order it is submitted that the basis for the stated figure of
Rs. 47 Crores is not clear.
However, it is submitted that, with regard to the aspect of
disallowance of Capital Expenditure for reasons other than
delay in certification by Electrical Inspector and transactions
with sister concern, reference is drawn to Para 3.40 of the
Impugned Order wherein this aspect has been elaborately
discussed. It is submitted that the Impugned Order explicitly
states that in addition to the costly purchases affected from
REL, the Respondent No.1, based on the documents/supportings
furnished by the Appellant, had observed that:
a. The Labour, Civil & other charges (erection,
commissioning etc.) are found to be on a significantly
higher side in proportion to the material cost. Further

48
these charges are varying widely even in case of execution
of similar schemes involving similar kind of work.
b. In case of schemes involving underground cables, the cost
of cable laying and road restoration charges, in totality,
are on a higher side. Further in all EHV works, a
component of miscellaneous charges has been added to
the scheme cost even after accounting for all the cost
components.
c. For HVDS schemes variations have been noted in case of
the equipment/material details given in the relevant
formats vis-à-vis the details in Electrical Inspector’s
Certificates. Such variations have been noticed for
schemes being considered for capitalization in FY07
onwards.
In view of the above, it is submitted that, the Respondent No.1
has considered appropriate disallowance on the admissible cost
of the scheme to arrive at the prudent Capital Expenditure for
the schemes under reference in the respective years. Therefore
the statement of the Appellant is misleading and at variance
with the actual facts cited above.
8.5.2-8.5.7 That the contents of paras 8.5.2 to 8.5.7 are wrong and hence
denied. It is submitted that the Appellant has stated in the para
under reply that the Impugned Order is at variance with the
practice of the Respondent No.1 for the past years, whereby
provisional approval was accorded on such capital expenditure
and capitalization subject to submission of the requisite

49
clearances. Reference has been made to the Commission’s Tariff
Orders dated 07.07.2005 and 22.09.2006.
It is submitted at the very outset, the submission made by the
Appellant is far from the actual facts. A perusal of Para 3.36 to
Para 3.43 of the Respondent No.1’s impugned Order, explicitly
brings out that the Respondent No.1 has firmed-up the
capitalization of the assets upto FY 2005-06 only and the same
has been approved on a provisional basis for FY 2006-07 (Para
3.41 specifically). It has been further stated in the impugned
order that while firming up the capitalization for FY2006-07, the
impact of variations in equipment/ material details given in
relevant formats submitted by the Appellant vis-à-vis the details
in Electrical Inspector’s Certificate will also be considered. The
Respondent No.1 shall consider capitalization of such schemes
currently pending for capitalization upto 31 March, 2007 (i.e.,
before commencement of the Control Period) in the coming year
by which time the relevant Electrical Inspector’s Certificate is
likely to be issued. The schemes proposed by the Appellant for
capitalization during the Control Period as per the Business
Plan, shall be trued up at the end of the Control Period as per
the MYT Regulations, 2007. Therefore, it is submitted that there
has been no variance with the practice followed by the
Respondent No.1 for the past years in considering capitalization
of assets on provisional basis for FY 2006-07 in the Tariff Order
thereby giving another opportunity to the Appellant to
substantiate their claim with appropriate details/Certificates for
consideration of the Respondent No.1.

50
It is further submitted that a reference has been made by the
Appellant to the Respondent No.1’s Tariff Order dated
22.09.2006 for FY 2006-07 pertinent to capitalization of Assets
for FY 2005-06 and FY 2006-07. It is submitted that the said
reference is completely misconceived.It was clarified by the
Respondent No.1 in the Tariff Order dated 22 September, 2006
that the consideration of Asset Capitalization to the extent of Rs
408.95 Cr and Rs 400.00 Cr during FY 2005-06 and FY 2006-07
respectively, was for the purpose of determining the ARR and
did not imply the Respondent No.1’s approval for assets
capitalized during the year. The Respondent No.1 had explicitly
expressed that the details of actual assets capitalized for final
adjustments would be separately examined at the time of truing
up.
It is submitted that the Respondent No.1 had analyzed in detail
the schemes completed during the respective years. In its Tariff
Order dated 22 September, 2006, the Respondent No.1 had
expressed the view that the EHV & HV schemes on completion
should be considered for capitalization only on its commercial
operation/charging to rated voltage after obtaining all necessary
statutory clearances and compliance with the prevalent safety
standards. The Respondent No.1 had in April and May, 2005
prescribed certain formats for information with regard to
capitalization of assets which inter-alia covered the execution of
respective work as per the prevalent safety rules and laws of
land. The Respondent No.1, in the said Tariff Order, had
directed that from FY 2005-06 onwards the relevant information
shall be furnished by the Appellant in the formats so prescribed

51
by the Respondent No.1 for capitalization of assets. The said
formats were to be submitted along with the necessary statutory
clearances and certificates within one month from the date of
issue of the said Order. The capital expenditure incurred for
residual works within the original scope of scheme, was to be
admitted on merits.
However, it is submitted that the Appellant had submitted the
formats for capitalization of assets pertaining to FY 2005-06 and
FY 2006-07 on 9 August, 2007 and 31 December, 2007
respectively. The relevant Electrical Inspector’s Certificate/
Clearance for the capitalization of EHV and HV schemes were
submitted subsequently.
The case of capitalization of assets for FY 2005-06 and FY 2006-
07 has been considered by the Respondent No.1 in light of the
directives contained in Tariff Order of FY 2006-07. The
capitalization of EHV and HV schemes has been considered on
the availability of the relevant Electrical Inspector’s
Certificate/Clearance for the respective financial year. The carry
forward of the balance capitalization of assets from FY 2004-05
onwards has been appropriately factored in the subsequent
years.
In addition to the costly purchases effected from M/s Reliance
Energy Limited (REL), the Respondent No.1, based on the
documents/supportings furnished by the Appellant, had
observed considerable variation (on higher side) with regard to
various cost components of the scheme as analysed from the

52
formats for capitalization of assets submitted by the Appellant.
The Respondent No.1 had analysed the information submitted
by the Appellant and approved Asset Capitalization of Rs 131.54
Cr in FY 2005-06 and Rs 147.21 Cr in FY 2006-07, based on the
methodology elaborated above.
The above aspects have been duly outlined at para 3.36 to 3.43
of the Impugned Order.
The Appellant has relied on the following observations made by
the Hon’ble Tribunal in Appeal No. 266/2006 :
“…it was revealed that the proposal for Capital

Expenditure were being delayed for want of personnel in
the Commission who are required to visit the sites and
examine the feasibility and safety aspects of such capital
schemes. We feel that this difficulty can be overcome, if the
Commission provisionally approves the capital schemes
based on certification by qualified engineers on the roll of
the DISCOMs so that the Appellant can go ahead with the
capital schemes to augment infrastructure for electricity
distribution of Delhi, which is a crying need. The
Commission may also consider accepting certification of
engineers of one DISCOM in respect of the Capital
Expenditure of another DISCOM in order to ensure
impartially and fairness in such certification”.
In light of the above, the Appellant has prayed to the Hon’ble
Tribunal to direct the Respondent No.1 to provisionally allow
the Capitalization disallowed in the Impugned Order. It has
been stated that the office of the Electrical Inspector is severely
short staffed and therefore, the DERC be directed to allow for
self-certification of capital schemes as has been observed by this

53
Hon’ble Tribunal in its Judgement in Appeal No. 266/2006 cited
above.
The Appellant has deliberately made an attempt to mislead the
Hon’ble Tribunal by mixing up the issues of approval for Capital
Investment/Expenditure schemes and Capitalization of Assets.
The difference between the two is clearly explained hereunder:
¾ Approval of Capital Investment/Expenditure – Initial
approval of the Respondent No.1, before implementation of
capital works schemes, which the Appellant is talking of, is
an ‘in principle’ approval mainly keeping in view the
following :
(a) necessity
(b) overall suitability
(c) pay back period
(d) whether the scheme fits into Central Electricity
Authority’s (CEA’s) overall system planning study for
Delhi
(e) whether in-feed to the new sub station proposed will be
available from the system of Delhi Transco Ltd. (DTL)
(f) whether it meets at least the near future demand growth
projections
In this approval, the cost declared by the utility on estimate
basis is considered and is approved on estimate after a broad
examination with corrections for obvious mistakes etc. In any
case, initial approval is only an estimate of the utility as also of
the Respondent No.1. The said initial approval is subject to

54
prudence check of the actual expenditure on completion of the
scheme at the time of capitalization of assets.
The Respondent No.1 had in its various Tariff Orders directed
the Appellant/DISCOMs to submit the complete Detailed project
Reports (DPRs) along with the cost-benefit analysis for the
proposed schemes of value more than Rs. 2 Crore for obtaining
investment approval from the Respondent No.1. The
Appellant/DISCOMs were also directed to obtain the approval
from the Respondent No.1 for individual schemes less than Rs. 2
Crore but aggregating to Rs. 20 Crore.
The said approval of the Respondent No.1 prior to inception of
the schemes is with the prime objective of allowing prudent
investment in an efficient and economical manner and to ensure
a coordinated approach between the schemes executed by the
Transmission Utility and the Distribution Companies for a
pragmatic capital expenditure plan to ensure that the benefits of
system improvement are available to the end consumers. The
Capital Investment schemes are approved by the Respondent
No.1 at an Estimated Cost and the actual cost on completion of
the scheme is subjected to prudence check at the time of
capitalization of the respective assets. With the initial approval
of the Respondent No.1 for execution of capital schemes, the
utilities are to proceed for procurement of capital
equipments/items and services of labour/contractor, etc. in a
competitive manner and the actual scheme cost is then
discovered which is subject to prudence check by the Respondent
No.1 while determining the amount for Asset Capitalization.

55
¾ Approval of Asset Capitalization - The Capitalization of
Assets pertains to approval of the final cost of schemes which
have been actually implemented/completed during the
respective Financial Year by the Utility. While considering
the capitalization of assets, the Respondent No.1 is duty
bound to analyse the utility of the scheme so far as the end
consumers are concerned and to ensure that the execution of
the respective works have been taken up as per the prevalent
safety rules and laws of land.
Rule 63 of the Indian Electricity Rules 1956, presently in
vogue states as under:
Electric Supply Lines, Systems and Apparatus for High and
Extra-High Voltages
Section 63 of the Electricity Act, 2003 :Approval by Inspector
(1) Before making an application to the Inspector for
permission to commence or recommence supply after
an installation has been disconnected for one year or
above at high or extra-high voltage to any person, the
supplier shall ensure that the high or extra-high
voltage electric supply lines or apparatus belonging to
him are placed in position, properly joined and duly
completed and examined. The supply of energy shall
not be commenced by the supplier unless and until the
Inspector is satisfied that the provisions of Rules 65 to
69 (both inclusive) have been compiled with and the
approval in writing of the Inspector has been obtained
by him:
56
PROVIDED that the supplier may energise the
aforesaid electric supply lines or apparatus for the
purpose of tests specified in Rule 65.
(2) The owner of any high or extra-high voltage

installation shall, before making application to
the Inspector for approval of his installation or
additions thereto, test every high or extra-high
voltage circuit or additions thereto, other than an
overhead line, and satisfy himself that they
withstand the application of the testing voltage
set out in sub-rule (1) of Rule 65 and shall duly
record the results of such tests and forward them
to the Inspector:
PROVIDED that an Inspector may direct such

owner to carry out such tests as he deems
necessary or, if he thinks fit, accept the
manufacturer’s certified tests in respect of any
particular apparatus in place of the test required
by this sub-rule.
(3) The owner of any high or extra-high voltage

installation who makes any additions or alterations
to his installation shall not connect to the supply
his apparatus or electric supply line, comprising
the said alterations or additions unless and until
such alterations or additions have been approved in
writing by the Inspector.
Copies of some of the Certificates issued by the Electrical
Inspector in this regard are annexed hereto as ANNEXURE 7.
The enclosed Certificates do clearly mention that – “ ……the
said installation has been found in order as per the Indian
Electricity Rules, 1956. There is no objection, so far as this office
is concerned, if the said installation is brought into use.”

57
Accordingly, a harmonious reading of the Indian Electricity
Rules 1956 presently in vogue and the certificate issued by the
Electrical Inspector, clearly indicates that any high voltage
installation (higher than 650 V) can be charged/brought into use
only after the inspection and certification by the Electrical
Inspector. The Respondent No.1 as a statutory body, is duty
bound to advise the utilities to abide by the relevant laws of land
and with this background the Respondent No.1 has considered
the capitalization of assets as has been duly reflected in the
Impugned Order.
From the above, it can be observed that approval of the Capital
Expenditure schemes and approval to Capitalization of Assets
are two different processes and the statutory requirement of
certification by Electrical Inspector for any high voltage
installation to be charged/brought into use cannot be substituted
by self-certification or certification by engineers of one DISCOM
in respect of schemes of another DISCOM so far as the
compliance with the safety rules is concerned. The Appellant is
deliberately attempting to inter-mingle the two processes to
mislead the Hon’ble Tribunal by interpreting that the
observations made by the Hon’ble Tribunal in Appeal No.
266/2006 in respect of the approval of Capital Expenditure
schemes can well be extended for Capitalization of Assets. The
said conclusion as stated by the Appellant is illegal and ill-
founded for reasons cited above.

58
The provisions of the Electricity Act, 2003 with regard to the
Appointment of Chief Electrical Inspector and Electrical
Inspector states as under:
“162 . Appointment of Chief Electrical Inspector and Electrical

Inspector
(1) The Appropriate Government may, by notification,

appoint duly qualified persons to be Chief Electrical
Inspector or Electrical Inspectors and every such
Inspector so appointed shall exercise the powers and
perform the functions of a Chief Electrical Inspector or an
Electrical Inspector under this Act exercise such other
powers and perform such other functions as may be
prescribed within such areas or in respect of such class of
works and electric installations and subject to such
restrictions as the Appropriate Government may direct.
(2) In the absence of express provision to the contrary in this

Act, or any rule made thereunder, an appeal shall lie from
the decision of a Chief Electrical Inspector or an Electrical
Inspector to the Appropriate Government or if the
Appropriate Government, by general or special order so
directs, to an Appropriate Commission.”
Certainly the Statutory functions of the Electrical Inspector
cannot be delegated as per the Electricity Act, 2003.
The Appellant has now stated in the Appeal that there is
shortage of staff at the office of Electrical Inspector and the
Appellant has also written to the Govt. of NCT of Delhi for
augmenting the office of the Electrical Inspector. According to
the Appellant, they have been penalised for no fault of their
own. At the outset, it needs to be mentioned that the Appellant
had never stated this aspect of the problems regarding Electrical
Inspector Certificate even in their MYT Petition and the issue is

59
now being deliberated only after issuance of the Impugned MYT
Order. It may be mentioned that the Appellant utility has been
in the distribution business for the past so many years and the
prudent utility practice calls for compliance with the laws of
land which includes the safety rules and the mandated
Electrical Inspector Certificate for commissioning/charging of
the high voltage installation. While the Appellant has not placed
any documents on record to suggest the manner and occasion on
which the matter was taken up by them with the Govt. of NCT
of Delhi for augmenting the office of the Electrical Inspector, it
is a known fact that the Govt. of NCT of Delhi is a 49% stake-
holder in the Appellant Company and the matter could well
have been discussed in the Board. The shortage of staff in the
office of Electrical Inspector, cannot be construed by the
Appellant as a plea for charging/putting into use the high
voltage installation without prior certificate of the Electrical
Inspector in defiance to the statutory provisions. In fact, the
issue of Electrical Inspector Certificate had become active only
after the issuance of Impugned Order and a meeting in this
regard was taken by Secretary(Power), Govt. of NCT of Delhi, on
02.04.2008. Copy of the Minutes of the Meeting is annexed
hereto as ANNEXURE 8.
The aspect of mandatory requirement of Electrical Inspector
Certificate for capitalization of High Voltage installation/Assets
has been dealt in the Impugned MYT Order. Reference is drawn
to various Orders issued by the Hon’ble High Court of Delhi,
wherein the issues were taken up by some Resident’s Welfare
Association such as Samaj Sudhar Samiti of Mandoli, Sangam

60
Vihar Samiti etc. (WP ( C ) 14232/ 05 and10105/ 2005 )
regarding the capital investment for the High Voltage
Distribution Scheme(HVDS) undertaken by the Distribution
Companies and they had requested the Hon’ble Court to
interfere in those cases where the electrification was not in
conformity with the Indian Electricity Rules, 1956. The Hon’ble
High Court in its Orders in such cases have held that the
Electrical Inspector have been vested with suitable powers to
deal with the issues relating to violation of Indian Electricity
Rules, 1956 and it has to ensure that all provisions of Rule 77,
79 and 80 are complied with and an appropriate certificate is to
be given... In view of the statutory provisions and the directions
of the Hon’ble High Court, the Respondent No.1 is judiciously
allowing the capitalisation of assets only after certification by
the Electrical Inspector for compliance of the installation with
the safety rules in vogue. Copies of the orders passed by the
Hon’ble High Court of Delhi are annexed hereto as
ANNEXURE-9.
It has been further stated in the Impugned MYT Order that
both M/s BRPL and BYPL had furnished the Completion
certificates over a period of 6 to 8 months during FY 2007-08 for
the Schemes which they propose to capitalise for the years FY
2005-06 and FY 2006-07, in accordance with the directions
contained in the DERC’s Tariff Order for the FY 2006-07 (para
3.5.2 of Order on ARR and Tariff Petition of BRPL for FY 2006-
07). The Electrical Inspector’s Certificates were also received for
some of the schemes. Comparison of the available Electrical
Inspector Certificates in a few schemes indicated that there was

61
a quantity deviation in respect of number of PCC poles,
Transformers and conductor which will have some price
implication to the tune of 20% in these schemes. The total
Capital Cost of a Scheme is sum total of various quantities
multiplied by their respective unit rates along with some
overheads as applicable. This is a normal practice for cost
estimation in this sector. Further, the unit rates indicated are
also subject to prudence check and ultimately lead to
finalisation of cost of the Scheme to be considered for
capitalization.
The details of Capital Expenditure and Asset Capitalization as
claimed by the Appellant for the period FY 2002-03 to 2006-07
and as allowed by the Respondent No.1 in the respective Tariff
Orders including the Impugned Order, are given as under:
(All figures are in Rs. Crore)

S. No. FINANCIAL YEAR TOTAL
2002-03 2003-04 2004-05 2005-06 2006-07

(from
01.07.20
02)
1. Capital
Investment
i. As claimed 71.54 114.57 538.49 711.16 398.88 1834.64

(Table 6 of by the
the Appellant
Impugned
Order)
ii. As 76.38 114.56 538.75 618.54 306.21 1654.44
(Table 7of considered
the by the
Impugned Commission
Order)
2. Asset
Capitalizati
on
i. As claimed 44.51 106.28 265.25 765.85 311.99 1493.88
(Table 9 of by the
the Appellant
Impugned
Order)
ii. As 18.72 106.29 93.38$ 131.54 147.21* 497.14
(Table 10 of considered
the by the
Impugned Commission
Order)
$ includes capitalization of Rs. 15.10 Crore on account of additional capitalization
due to revaluation of stores.
* Provisionally approved.
62
As stated earlier, the Capital Investment schemes are approved by the
Respondent No.1 at an Estimated Cost and the actual cost on
completion of the scheme is subjected to prudence check at the time of
capitalization of the respective assets. It is submitted that the aspect of
prudence check by the Respondent No.1 at the time of capitalization of
assets was deliberated by this Hon’ble Tribunal in Appeal No. 84 of
2006 (KPTCL Vs KERC) and as per the Order dated 29th August 2006,
it was stated that the consumers’ interest do not arise at the stage of
proposal or plan or investment by utility as the liability of the
consumers, if any, arise or there could be a passing by way of return on
equity or interest, etc. as such contingency arises only when the
Regulatory Commission subject to its prudent check allows such
expenditure while fixing the Annual Revenue Requirement and
determining the tariff. Till then, the consumers have no say and there
could be no objection from their side. It was mentioned that when the
consumers complain poor service or failure to maintain supply, to face
such a situation the utility as to plan in advance, invest in advance,
execute the project or scheme for better performance. It was explicitly
stated in the said Order of the Hon’ble Tribunal that the Commission
shall undertake a prudent check at the stage when utility claims for
return on such investment, interest on capital expenditure and
depreciation (i.e. at the time of capitalization of assets) and if deemed
fit the claim be allowed. This Hon’ble Tribunal had further stated that
in appropriate cases the Commission may disallow such claims of
utility and it is for the utility to bear the brunt of such investment and
it cannot pass it on to consumers. Copy of the relevant order dated 29th

63
August 2006 of this Hon’ble Tribunal in Appeal No. 84 of 2006 is
annexed herewith and marked as ANNEXURE-10. .
It is further submitted that in a subsequent Appeal No. 100 of
2007(KPTCL Vs KERC), this Hon’ble Tribunal while clarifying its
judgement in Appeal No. 84 of 2006, stated that the payments of
interest and finance charges, pending final approval of the
Commission, are merely provisional payments and, therefore, the
Commission need not discontinue its decades old practice of allowing
the interest and finance charges to the Licensee till capitalization of
assets. It was mentioned that if there is any variation in the
expenditure made by the Appellant and the approval accorded by the
Commission, adjustment can always be made. According to Hon’ble
Tribunal, it would therefore, be just, fair and equitable to continue to
allow interest and finance charges to the Appellant as per
Commission’s well-established practice and make required
adjustments at the time of capitalization of assets as approved by the
Commission. Copy of the relevant Order dated 4th December, 2007 of
this Hon’ble Tribunal in Appeal No. 100 of 2007 is annexed hereto as
ANNEXURE-11.
The Respondent No.1 had analysed the submission with regard to the
HVDS schemes which were considered for capitalization in FY 2006-07
onwards based on the certificates of the Electrical Inspector. It was
further noted that the Electrical Inspector certificate submitted by the
Appellant were issued in FY 2006-07 and FY 2007-08 for the schemes
which were proposed for capitalization in FY 2005-06 and FY 2006-07.
Accordingly, for reasons cited above, the Respondent No.1 was bound
64
to consider the capitalization of various schemes as per the year in
which the relevant Electrical Inspector Certificate were issued.
It is submitted that the issue of Capitalization of Assets has been
considered by the Respondent No.1 in the same manner for all the
utilities i.e. Transmission Licensee (DTL) and the Distribution
Companies namely; BRPL, BYPL & NDPL, whereby the Capitalization
has been considered only on production of the relevant Electrical
Inspector Certificate. Therefore, there is no biased treatment as is
being alleged by the Appellant.
8.5.8 That the contents of para 8.5.8 are wrong, misleading and contrary to
facts and hence denied. The Respondent No.1 vehemently denies the
contention of the Appellant that it had followed the procedures
prescribed for undertaking the capital expenditure, and thereby also
followed the prescribed procedure for undertaking the expenditure in
question and that the Respondent No.1 had agreed and accepted the
incurrence of the same. It is submitted that the Appellant is trying to
mislead the Hon’ble Tribunal by way of such frivolous submissions.
It is submitted that the approval of capital expenditure schemes
by the Respondent No.1 is a two stage process. There is an
initial approval and a final approval. The initial approval of the
Respondent No.1, before implementation of capital works
schemes, with respect to which the Appellant has made its
submission, is an ‘in principle’ approval mainly keeping in view
the following:
a) necessity
b) overall suitability
65
c) pay back period
d) whether the scheme fits into Central Electricity Authority’s
(CEA’s) overall system planning study for Delhi
e) whether in-feed to the new sub station proposed will be
available from the system of Delhi Transco Ltd.(DTL).
f) Whether it meets at least the near future demand growth
projections.
It is submitted that at this stage of ‘initial approval’ approval,
the cost proposed by the utility is on estimate basis and the cost
is approved by the Respondent No.1 after a broad examination
of the estimate with corrections for prima-facie errors etc. It is
submitted that the ‘initial approval’ is thus only an estimate of
the Utility as also of the Respondent No.1.
It is submitted that the final approval of capital outlay
consequent to implementation of a scheme, is granted at the
time of tariff fixation, after a diligent and proper prudence check
and verification of the actual cost, actual quantity of material
used, proper implementation of the scheme and after verifying
that all legal clearances like Electrical Inspector’s permission
etc. have been obtained. It is submitted that at the time of final
approval, if the actual expenditure is found to be inflated,
whether by inflating the cost by making purchases from Group
Companies at high rates or otherwise, then the same is
corrected.
It is submitted that the aforementioned procedure for approving
the capital works schemes is explained in paras 6,7 & 8 of
Annexure V, of the impugned order. The Respondent No.1

66
respectfully submits that the aforesaid procedure has been
followed by the Respondent No.1 since its inception.
It is submitted that in the instant case, the adjustment of
capital expenditure/capitalization has been made on account of
costly purchases made by the Appellant, which prima-facie do
not appear to be at arm’s length, and are made from an
associate enterprise, a group company, namely M/s Reliance
Energy Limited (“REL’). The detailed reasons whereof have
been elaborately explained in Annexure-V to the impugned
order, and the same is the result of prudence check made at the
time of allowing capital expenditure/ capitalization for purposes
of tariff fixation, as specifically stated in para-33 of Annexure-V
to the impugned order.
It is submitted that some of the schemes for which these
purchases were made had the initial ‘in principle’ approval of
the Respondent No.1 and some did not have such approval as
would be clear from a perusal of the document annexed hereto
as ANNEXURE-12. The exact details and bifurcation in this
regard can only be furnished by the Appellant. However, for
final approval/capitalization, all schemes implemented by the
appellant, are considered. It is submitted that the approach
adopted by the Respondent No.1 is in consonance with the
principles of natural justice and has been upheld by the Hon’ble
Tribunal in the matter titled Karnataka Power Transmission
LTD. Vs. KERC Bangalore & others, Appeal No.84 of 2006
decided on 29.08.2006 wherein this Hon’ble Tribunal observed
that “the regulator is not going to approve the expenditure or

67
approve the financial changes just for asking and the regulator
has to satisfy itself by a prudent check with respect to capital
investment….”. It is submitted that similar view has been
taken by this Hon’ble Tribunal in a number of other cases such
as:
• Karnataka Power Transmission Corporation Ltd. Vs.
Karnataka Electricity Regulatory Commission and Ors.
being Appeal No. 100 of 2007 decided on 4.12.2007
• Himachal Pradesh State Electricity Board Vs. Himachal
Pradesh Electricity Regulatory Commission being Appeal
No. 113 of 2005decided on 06.07.2006
• Power Grid Corporation of India Ltd. Vs. Central
Electricity Regulatory Commission being Appeal No. 119
of 2005 decided on 09.12.2005
It is submitted that, as claimed by the Appellant in the instant
appeal, the Appellant had also stated before the Respondent
No.1, in tariff proceedings, that the goods in question were
purchased from REL at rates approved by the Respondent No.1.
However, it is pertinent to mention that no evidence whatsoever
has ever been filed showing that the goods were in fact so
purchased. It is submitted that the approval that the Appellant
is talking of, appears to be the initial ‘in principle’ approval
before implementation of the schemes. After implementation,
the entire expenditure is subjected to a prudence check as
explained supra. The instant disallowance of capitalization was
made by way of a prudence check of the purchases made by the

68
Appellant from Group Company REL, at the time of final
approval of capital expenditure/ capitalization during tariff
fixation proceedings. It is submitted that the Appellant’s plea
that the purchases in question from group company REL were
made at the Respondent’s approved rates, and therefore, could
be not subjected to a prudence check, is thus wholly misleading
and deserves to be rejected.
It is further submitted that the submission of the Appellant in
the para under reply, that the Respondent No.1 had not before
30.6.2006 (correct date being 2.6.2006), prescribed any
procedure for approval of related party transactions and
accordingly the Respondent No.1 is not justified in applying the
procedure laid down in its direction dated 30.6.2006,
retrospectively is completely unsustainable in facts and in law
and is an attempt by the Appellant to mislead this Hon’ble
Tribunal.
It is submitted that the instant case is not one of applying the
directions contained in the letter dated 30.6.2006 (which in fact
is dated 2.6.2006), retrospectively but of cross verifying the
position in accordance with the regularly and consistently
applied procedures set out above. It is a case of prudence check
of capital expenditure/capitalization claimed, as clearly
mentioned in para 33 of Annexure-V to the impugned order. It
is submitted that it has been observed in the para 33 of
Annexure-V to the impugned order that “It is made clear that
this disallowance has been made on an analysis and prudence

69
check of capital expenditure/capitalisation claimed by the
petitioner which form part of the ARR of the petitioner”.
From the above, it would be evident that the Appellant is only
trying to mislead the Hon’ble Tribunal by putting forth the
argument regarding the prospective effect of the letter dated
2.6.2006. For the sake of clarification, it is submitted that as
has been explained in Annexure-V to the impugned Order, the
Respondent No.1 vide letter dated 30.6.06 directed the
Appellant to furnish, year-wise, amount of related party
transactions w.e.f. 1.7.02 including the profit margin of the
related parties in these transactions. To this letter, a reply
dated 27.7.06 was filed giving the year-wise details of the
related party transactions but the profit margin of the related
parties was not given and it was only stated that the Appellant
was not in a position to furnish the profitability of the related
parties but that the related parties earned only “a small
reasonable margin like any other vendor”. It is submitted that
the Respondent No.1 did not consider the aforementioned reply
as satisfactory and served a letter on the Appellant dated
14.8.06 expressing dis-satisfaction at the Appellant’s stance that
it is not able to furnish the profit margin of the related parties in
respect of their transactions with the Appellant and the letter
further stated as under:-
“3 .Insofar as the profit margin of Reliance Energy Ltd. in

respect of supply of capital goods to you is concerned, the
Commission has come across evidence to indicate that the goods
were sold to you at a price more than 60% higher than their
purchase price, which in the opinion of the Commission is
excessive. A copy of the documents available with the
70
Commission in this regard, is enclosed. It is not clear as to

whether Reliance Energy Ltd. had also purchased some of these
goods from/through a group company/sister concern.
4. BSES Rajdhani Power Ltd. may please give their

feedback in the matter within 10 days of receipt of this letter.”
Along with this letter, a copy of the evidence available with the
Respondent No.1 (13 pages) regarding the excessive profit
earned by the group company REL, in its transactions with the
Appellant, was also enclosed. Copies of the letter dated 30.06.06
and letter dated 14.08.06 along with its annexure is annexed
hereto as ANNEXURE-13(colly).
However, the Appellant never explained the procedures followed
by them for undertaking the purchases nor gave any details
thereof. Therefore, it is entirely incorrect to say that the
Respondent No.1 agreed and accepted the incurrence of the
expenditure in the manner in which the Appellant has done.
The Appellant is trying to confuse the initial ‘in principle’
approval on ‘estimate basis’ with the acceptance of the purchase
procedure. It is submitted that the same is not at all true.
It is pertinent to mention here that the Appellant has never
questioned the veracity and authenticity of the documentation
forwarded by Respondent No.1 to the Appellant through the
letter mentioned supra. In the light of the aforesaid, it is
submitted that the arguments now being advanced by the
Appellant with respect to the transactions with group company
REL, are a mere after-thought and un-substantiated in facts
and in law.
71
8.5.9 The contents of para 8.5.9 are misleading and hence denied. It
is submitted that the Appellant is trying to mislead this Hon’ble
Tribunal by putting forth such extraneous and irrelevant pleas.
It is submitted that in the paragraph under reply, the Appellant
has relied on paras 13, 19 & 20 of the dissent note of the
Member of Respondent No.1 (the “Member”) as detailed in
Annexure VI to the impugned order. It is submitted that in
para-13 and para-20 of his dissent note, the Member has
mentioned the procedure for approval of capital expenditure
schemes, which according to him has not been followed. It is
further submitted that in Para-19 of the dissent note, he has
only mentioned that in his view the procedure mentioned by him
in Para-13 should have been followed. In para-13 of his dissent
note, the Member has mentioned that the Respondent No. 1
must acquire the expertise for checking completed schemes
including the price thereof. In Para-20, he has mentioned that
jurisdiction has not been properly established by the Respondent
No. 1 for making the disallowance in question and that the
matter has to be examined by a forum which has appropriate
jurisdiction in such matters. It is submitted that based on the
aforesaid observations of the Member, the Appellant has stated
that the majority view does not follow the legal process as
explained by the Member and is therefore liable to be set aside.
It is submitted that the aforementioned contention of the
Appellant is unsustainable and only an effort to mislead this
Hon’ble Tribunal, as has been explained infra.

72
As has been explained supra, the Respondent No.1 regularly
follows the procedure for granting approval for capital
expenditure schemes in two parts i.e. (i) initial approval (ii) final
approval. The initial approval is ‘in principal’ kind of approval
keeping in view mainly the following:-
a) necessity
c) pay back period
projections.
It is submitted that at this stage of initial approval, the cost
declared by the utility on estimate basis is considered and is
approved on estimate after a broad examination, with
corrections for obvious mistakes. The initial approval is thus
only an estimate of the utility as also of the Respondent No. 1.
However, the final approval of capital expenditure/
capitalisation given after implementation of a scheme, is after a
proper and diligent examination. This involves a proper
prudence check for verification of actual cost, actual quantity of
material used, proper implementation of the scheme, and after
verifying whether all legal clearances like Electrical Inspector’s
permission etc. have been obtained. It is submitted that if the
actual expenditure is found to be inflated, whether by inflating

73
the cost by making purchases from Group Companies at high
rates or otherwise, then the same is corrected. As has been
stated supra, this is the procedure followed by the Respondent
No. 1 since its inception and has been judicially endorsed and
upheld by the Hon’ble Tribunal in the case of Karnataka Power
Transmission Ltd. Vs KERC Bangalore being Appeal No. 84 of
2006.
It is submitted that the Member, in para-13 of his dissent note,
has commented only on the final approval after implementation
of the schemes whereas the Appellant, in order to misguide this
Hon’ble Tribunal, is employing these arguments to the initial
‘in principle’ approval before implementation of the schemes. It
is submitted that the reliance of the Appellant on para 13 of the
Member’s dissent note is completely misplaced because the
dissenting Member made the comments in the context of
granting approval of completed schemes whereas the Appellant,
is employing these arguments to the initial ‘in principle’
approval.
It is further submitted that the Member has mentioned in para-
13 that the Respondent No. 1 must acquire the expertise to
examine and approve the completed schemes. It is most
respectfully submitted that there can be no two opinions about
the same. However, it is submitted that what the Member
implied by the same was that for making the disallowance of the
capital expenditure in question, the Respondent No. 1 should
not have relied upon evidence like the purchase rates of REL but
should have made the disallowance by its own inherent

74
expertise in checking the schemes. It is submitted that the
Member in his dissent note has not clarified as to how the
evidence relied upon by the Respondent No. 1 is not correct.
It is submitted that the Respondent No.1 has relied on the
purchase rates of REL because, as has been mentioned in para-8
of Annexure-V to the Impugned Order, it is well known that the
rates quoted by manufacturers for bagging large orders of the
kind under consideration, are always appreciably less than
market prices. Therefore, it is observed in the Impugned Order
that it would be almost impossible for anyone to independently
verify the rates of such large purchases without floating a
similarly large tender for similar goods at about the same time
which apparently cannot be done.
It is further observed in the Impugned Order that good evidence
is available in the form of the purchase of the goods in question
by REL from a number of independent, third party vendors
which shows the market rates of these goods at the relevant
time which are significantly lower. Therefore, there can be no
better proof of the market rates of these goods prevalent at the
relevant time. In the light of the aforesaid, it is submitted that
the basis adopted by the Respondent No. 1 for holding that that
the goods in question were purchased by the Appellant from
REL at prices much higher than the market rates, is the only
practicable & feasible method of checking the then prevalent
market rates of these goods.
It is further submitted that in any case, the onus for proving the
reasonableness of the expenses claimed in its ARR which forms

75
part of its tariff petition was upon the Appellant particularly
when the rates at which it had purchased the capital goods in
question from its Group Company, M/s REL, were found to be
exorbitant i.e. 68% higher than the cost of REL and the
Appellant was duly required to show cause about it. It is
submitted that the Appellant failed to discharge this onus as to
why it agreed to allow such a high mark-up on the re-sale of the
capital goods purchased by REL.
It is further submitted that the Member in the para-13 of his
dissent note has referred to the alleged observation of the
Chairman that approving capital expenditure schemes is an
“onerous task”. It is submitted that there is no such
observation in Annexure-V of the Impugned Order. In para 19
of his dissent note, the Member has only mentioned that the
procedure mentioned by him in para-13 and 20 of his note
should have been followed. As explained above, the procedure
described by him in para-13 of his dissent note is ambiguous,
vague and inoperable / unimplementable.
In para-20 of his dissent note, the Member has stated that the
jurisdiction should have been established before making the
disallowance of capital expenditure/ capitalisation in annexure-
V of the Impugned Order. It is submitted that the disallowance
has been made by way of well accepted due diligence and
prudence check of the capital expenditure/capitalization claimed
by the appellant in its Annual Revenue Requirement (ARR)
petition. It is submitted that the same has been stated in para-
33 of Annexure V of the Impugned Order wherein it is observed

76
that “It is made clear that this disallowance has been made on
an analysis and prudence check of capital expenditure/
capitalization claimed by the petitioner which form part of the
ARR of the petitioner”. It is very basic to the working of an
Electricity Regulatory Commission that all expenditure claimed
is subjected to prudence check before fixation of tariff. The
issue is no longer res integra and has been dealt with by this
Hon’ble Tribunal in a plethora of cases as under:
• Himachal Pradesh State Electricity Board Vs. Himachal
Pradesh Electricity Regulatory Commission being Appeal
No. 113 of 2005decided on 06.07.2006
• Power Grid Corporation of India Ltd. Vs. Central
Electricity Regulatory Commission being Appeal No. 119
of 2005 decided on 09.12.2005
It is further submitted that it is not clear, what other
jurisdiction, the Member had in mind. Regarding the Member’s
observations that “the matter has to be examined by the forum
which has appropriate jurisdiction in such matters”, it is
submitted that it is difficult to offer any comments as no such
forum has been specifically indicated. The Appellant’s claim

77
that the disallowance be set aside as the procedure mentioned
by the Member in para-13 had not been followed and jurisdiction
for making the disallowance had not been established, is thus
clearly without basis.
8.5.10. The contents of para 8.5.10 are wrong and hence denied. It is
submitted that the contention of the Appellant based on the
comments of the Member in his dissent view that the
Respondent NO.1 has failed to function within the parameters of
law is unsustainable and devoid of any legal force. It is
submitted that the Member has mentioned in his dissent view
that Respondent No.1 has to discharge its statutory functions
within the parameters of law. It is submitted that there is no
doubt that the Respondent No.1 has to function within the
parameters of law. However, it is submitted that the argument
is completely misplaced because, as has been explained supra,
the Respondent No.1 has acted within the parameters of law
after taking into account relevant evidence and in consonance
with the principles of natural justice.
vehemently denied that the Respondent No.1 has not acted
within the scope of its powers. It is submitted that the
Member’s dissent note does not in any way show that the
Respondent No.1 has exceeded its powers or jurisdiction. It is
submitted that the Appellant has been repeatedly stating that
the capital goods in question were purchased on competitive
market rates. It is submitted that competitive market rates
would essentially mean price discovered through transparent

78
competitive bidding. However, it is submitted that the
Appellant filed no evidence whatever to that effect in spite of
repeated opportunities provided to the Appellant vide letters
dated 30.6.2006 and 14.08.2006. During the course of public
hearings conducted by the Respondent No.1 on the Appellant’s
MYT petition when, as mentioned in Annexure-V of the
impugned order, as many as 117 consumer groups, NGO’s,
individual consumers etc. objected in writing and orally to the
high cost purchases made by the Appellant from REL and the
Appellant replied to these in writing as well as orally during
public hearings conducted by the Respondent No.1 in respect of
the appellant’s tariff petition, but only by making bald
statements unsupported by any evidence.
It is submitted that the Appellant’s contention that the
transaction is at arm’s length basis has not been supported by
any credible evidence but is a mere unsubstantiated averment.
It is submitted that simply stating that a transaction is at arm’s
length is not enough. It has to be proved with credible
evidence, but no evidence in support of this claim has ever been
filed.
On capitalization of assets for FY 2004-05 in the Appellant’s
case, a meeting was held in the Commission on 10.3.2006. A
copy of minutes of the meeting is annexed hereto as
ANNEXURE-14. During the meeting, the Appellant was asked
to clarify whether the material procured for capital expenditure
schemes was done by inviting open tender through competitive
bidding. However, even then no details at all in respect of

79
competitive bidding, if any, were furnished. It is submitted that
no details were even given in respect of the procurement
procedures adopted by them.
It is further submitted that the claim of the Appellant that the
goods were purchased at the Respondent No.1’s approved rates,
is not sustainable in view of the submissions of the Respondent
No.1 in para 8.5.8 above.
The documents submitted by the Appellant itself also establish
that there is a large variation in the rates of capital goods
projected in the Detailed Project Report (DPR) submitted by
BRPL and BYPL for the Capital Expenditure Schemes in the
year 2004-05 for seeking initial approval, vis-à-vis the purchase
order placed by them later. Copies of some of the sample
documents as per narration given below are annexed hereto as
ANNEXURE-15.
i) In HVDS scheme of BRPL the price of the poles had been
estimated at an approximate value of Rs.3508/-by the
Respondent whereas the purchase orders furnished by the
appellant reflect that some of the poles were purchased at
more than Rs.6000/- and some poles at about Rs.4500/-. [71%
higher]
ii) In the same scheme, 25kVA transformer has been estimated
at Rs.30,000/- (approx.) by the Commission whereas the
purchase Order No. D-01/23/006215 gives the price of
Rs.42496 + taxes i.e. totaling Rs.51658/-. [72%higher]

80
iii) In Ganga Vihar HVDS Scheme (HVDS R2G026) of BRPL
number of dwelling units energized are 55 and the purchase
order gives a total cost of Rs.10.78 lakh whereas
capitalization format gives the figure of Rs.23.30 lakh. This
difference of Rs.12.52 lakhs is inexplicable and is 116%
higher than purchase orders submitted with the DERC,
iv) Whereas the DPR had the estimates in the form of the
quantity of the material and the respective rates totaling to
the total cost of the scheme; the purchase orders have been
placed on per Dwelling Unit (DU) basis.
v) In the capitalization formats submitted by BRPL, the break
up of the material (quantity wise and rate wise) has not been
furnished and, instead, total cost of the Scheme has been
given. At some of the places quantity of the material given
has been also found to be at variance with the quantity
estimated by the Respondent No. 1 in its initial approval
conveyed to the appellant.
vi) Under all the group of schemes approved by the DERC,
deviations have been observed in the actual execution. Some
of the Schemes have been left out and large number of
additional scheme have also been taken up and executed by
the appellant. For instance in BRPL and BYPL around 40
HVDS schemes each were approved by the Commission
whereas the actual execution done by two companies are for
about 208 schemes in BRPL and similar higher No. in BYPL.
Thus, it can be seen that there is no finality to the initial
approval given by the Commission. This is the reason that

81
the final approval is conveyed only at the time of
capitalization of the assets at the end of financial year after
implementation of the schemes. Even the schemes in
respect of which initial approval is not there, are considered
for capitalization at the time of according final approval for
tariff fixation.
It is submitted that these instances are only illustrative and not
exhaustive and have been noticed from the Appellant’s own
filings before the Respondent No.1.
The Appellant has also stated that it had kept the Respondent
No. 1 notified about the purchases and cost of equipments by
way of DPR and Quarterly Progress Report (QPR). It has been
mentioned earlier that in the DPR only estimates were given.
In the QPR format prescribed by the Respondent No. 1, there is
no column for purchases and price as it is only in respect of
quantity and execution status. A copy of the format of this QPR
is annexed hereto as ANNEXURE-16. However, during 2004-05,
the appellant was not furnishing information even in the
prescribed format for QPR despite reminders. Contrary to the
factual position, the appellant is mentioning QPR submission to
support its stand that it was furnishing item wise purchase
rates etc. to the Respondent No. 1.
It is further submitted that the claim of the Appellant that all
these transactions are duly enclosed in the Annual Reports of
the Company under related party transactions in accordance
with the provisions of the Companies Act is again made with an
attempt to mislead. All that has been disclosed is an aggregate

82
of all such transactions in a year under 3 heads i.e. on capital
account, on revenue account and for services received. It is
submitted that there is no party-wise or transaction-wise detail
provided vide such disclosure. A copy of the disclosure made
under the Companies Act is annexed hereto as ANNEXURE-17.
It is further submitted that the Appellant has mentioned in the
para under reply that these related party transactions were
advised to the Respondent No.1 from time to time without
mentioning how, when and where. The claim of the Appellant
is vague and cannot be verified. The Appellant has further
submitted that the Respondent No.1 had failed to verify the
market prices of items mentioned in the Trading Account of REL
from any other source or third party quotes. It is submitted
that, as explained supra and as mentioned in para-8 of
Annexure-V of the impugned order, the same was neither
necessary nor feasible. It is well known that the rates quoted
by manufacturers for bagging such large orders are always
appreciably less than market rates. The only way of
independently verifying the market rates of such large
purchases is by floating a similarly large tender at about the
same time, which clearly is not possible.
It is submitted that the best indication of market price at the
relevant time is to examine and consider the rates at which REL
purchased similar goods in the open market. It is submitted
that the goods were purchased by REL from a number of
unrelated third party vendors and were purchased only for

83
supplying these to the BSES DISCOMS at Delhi. This is as
good an indication of market rates of the time as any.
Without prejudice to the above, it is submitted that the onus for
proving the reasonableness of the expenses claimed in its ARR
which forms part of its tariff petition was upon the appellant
particularly when the rates at which it had purchased the
capital goods in question from its group company REL, were
found to be exorbitant i.e.68% higher than the cost of REL. The
appellant had been required to show cause about the same and
has failed to do so. In the light of the aforementioned
circumstances the argument of the Appellant cannot be
sustained and deserves to be dismissed.
8.5.12. That the contents of para 8.5.12 are wrong and hence denied. It
is vehemently denied that the disallowance has been made
solely on the ground that the transactions are with related
party, REL. It is submitted that the disallowance has been
made for the reason that the goods were purchased from a
related party at a price much higher than the market price
thereby allowing REL (a sister concern) to make unreasonably
excessive profit and transferring the cost thereof to the
appellant and consequently the electricity consumers of Delhi.
Therefore, it is submitted that the expenditure incurred by the
Appellant can not be termed as “prudent expenditure”, when the
same is incurred by allowing a profit margin of 68% above the
market price to a group company.
8.5.13. That the contents of para 8.5.13 are wrong and vehemently
denied. It is submitted that the Appellant is trying to make out

84
an entirely new case before this Hon’ble Tribunal which was
never pleaded before the Respondent No.1 during proceedings in
connection with the tariff petition filed by the appellant. It is
submitted that the claim of the Appellant that the contracts in
question with REL for purchase of the goods were EPC contracts
(turn key contracts for procurement, engineering, installation,
erection, commissioning etc) and not merely for the purchase of
the equipments, is a brand new argument being adopted by the
Appellant at this appellate stage for the first time. It is
submitted that the Appellant cannot raise this new issue at the
appellate stage.
Without prejudice to the aforesaid, it is submitted that the
claim of the Appellant is unsustainable as the same is contrary
to the clear implication as derived from the following documents,
copy whereof is annexed hereto as ANNEXURE-18.
1) Copy of the appellant’s letter dated 27.7.2006 addressed to the
Secretary Respondent No.1 giving details of transactions with
Group Companies. The relevant extract of this letter is
reproduced hereunder:
Year Company Amount Nature of Transaction

(Rs.in Crs)
2002-03 BSES Ltd. 0.10 Purchase of cables
2003-04 Reliance Energy Limited (formerly

known as BSES Ltd.) 4.09 Purchase of Materials etc.
2004-05 Reliance Energy Limited (formerly

known as BSES Ltd) 861.00 Purchase of Materials etc.
2004-05 RELIANCE SALGAONKAR POWER 0.20 Purchase of cable fault

CO.LTD. locator
2005- Reliance Energy Limited 103.13 Purchase of Materials

etc.
2005- Utility Energytech Engineers 3.42 Purchase of Meter

(P) Ltd. Accessories
85
2005- Reliance Communication 0.02 Purchase of

Infrastructure Ltd. Mobile/FWP phones.
2005- Reliance Energy Limited 178.70 Contractual payments

for
schemes/HVDS/Grid
sub station etc.
2005- Utility Energytech Engineers 6.59 Contractual payment

(P) Ltd. for mass meter
replacement
2005- Reliance Energy Limited (1.38) Income from Sale of

Material
TOTAL 1,155.87
It is submitted that it is clearly mentioned in the above table
that the payments of Rs.861 crore in 2004-05 and Rs.103.13
crore in 2005-06 made by the appellant to REL were for
“Purchase of materials etc.” Payments made to REL for
‘services’ is shown separately in the same table at Rs.178.70
crore in 2005-06 and is stated to be for “contractual payments
for schemes/HVDS/Grid sub-station etc.”
2) Copy of the related party disclosures made by the appellant in its
Annual Accounts under the Companies Act. It separately shows
payments to REL for purchases on capital account and payments
for receiving services as under:
BRPL 2004-05 2005-06
i) “Purchase of other items on

capital account” 861.20 106.57
ii) For receiving services - 194.91
(Rupees in Crores)
3) Copy of the exemption certificate issued by the appellant for
enabling REL to claim exemption from Sales Tax for 2004-05
and Annexure -1 thereto. It is submitted that a bare perusal of

86
the aforesaid makes it amply clear that payment of Rs.868.69
crore is stated to have been made to REL in 2004-05 for “supply
of material/electrical equipment”. It is specifically mentioned in
this certificate that the same is for goods purchased for a
consideration of Rs.868.69 crores. In addition thereto,
description of the goods purchased is also given. A plain reading
of the description of the goods purchased i.e. ‘Material/electrical
equipment’ would show that there is no EPC element in the
purchase.
4) Copy of the Trading Account for the year 2004-05 of REL, which
shows that the vendor i.e. REL treated it as a pure trading
transaction.
5) Purchase register summary of the goods purchased by REL,
reflected in the above Trading Account. It gives the vendor-wise
details of the purchases made by REL.
6) Copy of the assessment order in the case of M/s. Reliance Energy
Ltd. for Sales Tax for the year 2004-05. It has been stated in
this order that the total sales of Rs.1233.56 crores shown in the
Trading Account were made to BRPL and BYPL. (Rs.868.69
crore to BRPL and Rs.365 crore to BYPL). It has been
mentioned in this order that “The dealer (REL) engaged in the
trading of cable, transformer & electrical goods, which have been
purchased against the statutory forms SI-35 and C forms and all
the sales have been effected to M/S BSES Yamuna Power
Limited & M/S BSES Rajdhani Power Limited, as exempted
sales.” The sales tax returns filed by REL under the Delhi
87
Sales Tax Act, 1975 also make it very clear that REL had made
pure sale transactions, independent of any EPC contract.
7) A sample copy of the purchase orders given by the appellant to
REL for purchase of the goods. It shows that the order was only
for purchase of capital goods and did not have any element of
EPC type services in it.
A bare perusal of the aforementioned documents makes it amply
clear that the claim of the Appellant that the contracts in
question with REL were EPC Contracts and not merely
Purchase Contracts, is a mere afterthought and an effort to
deviate the focus of this Hon’ble Tribunal from the fraud played
by the Appellant along with its group company, on the
consumers so as to enrich the group with unearned profits.
It is further submitted that the stand of the Respondent No.1
that the argument of the Appellant is a mere after thought is
supported by specific observation of the Respondent No.1 in the
impugned order. It is submitted that it has been mentioned in
Annexure V to the impugned order itself that the Appellant did
get a part of the equipment purchased from REL, installed/
commissioned by REL for which separate payment for “services”
was made in the year 2005-06. The Appellant’s letter dated
4.10.2004 only informed the Respondent No.1 of its intention to
get the HVDS scheme executed on turn key basis. As
mentioned at (1) above, in the Appellant’s letter dated
27.07.2006 also, HVDS is one of the schemes for which payment
for ‘services’ rendered was made to REL. The relevant extract
of the letter has been reproduced above. For the purpose of

88
making the disallowance in Annexure-V to the Tariff Order, only
the purchase of equipment has been taken into account. It is
specifically mentioned in annexure V that no disallowance is
made out of payment made to REL for ‘services’ as it is difficult
to decipher the element of profit therein passed to REL.
It is submitted that the Appellant is trying to mislead the
Hon’ble Tribunal by saying that vide its letter dated 4.10.2004 it
had sought approval for awarding the contracts on a lump sum
turn key basis. The fact is that vide this letter it only expressed
its intention to award such a contract. When the Appellant
submitted the letter dated 4.10.2004, it was noted in the file in
the office of the Respondent No. 1 that no details in respect of
the EPC contract were available. It was observed at page 27 of
the file noting in the same file, that “M/s BSES was asked to
furnish a tender document alongwith the terms and conditions
and list of firms. However no such documents were ever filed
and are not available on our records.” A copy of the notings on
page 27 of the file mentioned is annexed hereto as
ANNEXURE-19.
The purchase orders placed on REL also show that the format
for purchases for all vendors including REL is same and there is
no mention in the purchase order placed on REL that this is part
of any EPC contract. This again establishes that the appellant
had simply placed orders for purchase of materials on REL and
the ‘EPC contract” is an afterthought. A sample of such
purchase order is annexed hereto as ANNEXURE-20.

89
It is submitted that the above discussion clearly shows that the
purchase amounting to Rs. 868.69 crore from REL in 2004-05
was only purchase of goods and the EPC part was different for
which payment of Rs.178.70 crore was made to REL for
‘Services’ in 2005-06.
Moreover, in an EPC contract property in the project including
the equipment etc. forming part thereof, passes to the
Contractee only when the contract is completed as ownership
over the goods continues with the Contractor until they are used
and incorporated in project implementation. Transfer of
property during execution work in an EPC contract is predicated
on the principle of accession. Thus unless the goods are
incorporated in implementation, transfer of property does not
take place. In respect of the same, it has been held in H&K
Rolling Mills 120 STC 179, by the Hon’ble Apex Court that
"notwithstanding that the Contractor in an EPC Contract
purchased goods from vendor, transfer of property in these goods
to the owner took place only when the contract was executed and
not earlier than that.” Reliance is also placed on Studio
Kamalalya 89 STC 307 and Beejoy Processing Industry 92 STC
503. It is therefore submitted that the sale would be completed
in an EPC contract only when the contract is completed i.e.
implemented and handed over. As such, Sales Tax in respect of
an EPC contract, including the equipment etc. forming part
thereof, is payable only when the contract is completed. It is
pertinent to mention that in the instant case, REL filed the sales
tax return in respect of the goods in question purchased/sold in
2004-05, for 2004-05 itself when virtually none of the goods in

90
question were admittedly installed/commissioned in 2004-05.
The goods themselves were purchased towards the end of the
year and installed in subsequent years. In fact, quite a
substantial portion of the goods purchased from REL in 2004-05
are yet to be installed & commissioned. These goods have been
subjected to sales tax by the assessing authority in 2004-05.
Accordingly it is submitted that had it been an EPC contract,
the goods could not have been offered or subjected to Sales Tax
in 2004-05 and the REL would also not have described the same
as goods sold in 2004-05.
In the light of the aforesaid, it becomes absolutely unambiguous
that the contracts for purchase of the goods in question with
REL were not EPC contracts but for “purchase of goods” only. It
is submitted that by forwarding this argument, the Appellant is
just trying to cover up its own wrong doing which was intended
to take the electricity consumers of Delhi for a ride at great cost.
It is further submitted that the Appellant has filed no evidence
whatever to show that the goods were purchased on the basis of
transparent competitive bidding. In view of the same, the
Appellant’s claim to have complied with the guidelines of
Ministry of Power, Government of India is inaccurate and based
on its own interpretation of the same.
8.5.14. That the contents of para 8.5.14 are wrong and vehemently
denied. It is submitted that the contention of the Appellant
that the reliance on the trading account of REL to allege
exorbitant rates of profit is in disregard of the nature of the

91
work executed by REL and the scope of trading account, is
unsustainable in facts and in law. It is submitted that as has
been explained in detail in the preceding paragraph, the
contract for execution/commissioning of capital works schemes,
with REL was clearly separate from the contract for purchase of
equipment. It is submitted that the same is supported by
conclusive evidence as detailed in the preceding paragraph. On
the contrary, it is submitted that there is no evidence placed on
record by the Appellant to indicate that the payment made to
REL for purchase of electrical equipment/ material included any
EPC element therein. In the absence of any evidence placed on
record by the Appellant, its claim that even the payment made
to REL for purchase of capital goods included some EPC element
is clearly incorrect, unsubstantiated and based on assumptions.
8.5.15 The contents of para 8.5.15 are misleading and hence denied. It
is submitted that the letters dated 04.10.2004 and 06.10.2004
as relied upon by the Appellant were written by the appellant
for seeking approval of the Commission for some capital
expenditure schemes for the year 2004-05. The approval sought
was the initial ‘in principle’ approval. The relevant extract of
the letter dated 4.10.2004 is reproduced hereunder:
“We are enclosing herewith samples of price quotations of
various reputed manufacturers of equipment as
justification for the indicated cost of equipment and
materials as part of Annexure 4.”
A bare perusal of the letter and Annexure-4 thereto, makes it
amply clear that the rates mentioned in the Annexure-4 thereto

92
are clearly the rates informally obtained from different
manufacturers and are not rates obtained through competitive
bidding. It is pertinent to mention here that the name of REL
is nowhere to be found in the said description. As has been
mentioned above, the Respondent No.1’s initial ‘in principle’
kind of approval is keeping in view several factors including a
broad examination of cost. However, the main emphasis at that
time is on the following:
a) necessity
c) pay back period
projections.
It is further submitted that, initial approval is only an estimate
of the Utility as also of the Respondent No.1. It is submitted
that at the time of final approval for tariff fixation, proper
prudence check is conducted and the main emphasis then is on
verification of actual cost, actual quantity of equipment used,
whether the scheme has been properly implemented and put to
use after requisite legal approvals like permission of the
electrical inspector etc. The Appellant is relying only on the
initial ‘in principle’ approval in respect of some of the schemes,
and that too without filing any evidence to show that the goods
in question were purchased from REL even at these rates

93
whereas the disallowance in question has been made by way of a
prudence check at the time of final approval for tariff
determination. It is further submitted that while making the
disallowance in Annexure V of the impugned order, the
Respondent No.1 has nowhere mentioned that examination and
approval of the various capital expenditure schemes is an
onerous task and that the Respondent No.1 has any hesitation
in this regard and accordingly the contention of the Appellant
with respect of the same is incorrect.
submitted that the contention of the Appellant that the
Respondent No.1 did not make any effort to bring on record any
evidence that identical or similar turn key contracts were
executed by other utilities at a lower value is misleading and not
in consonance with the facts and law.
It is submitted that the onus of proving that the contracts in
question were turn-key contracts and justifying the
reasonableness of the capital expenditure was upon the
Appellant particularly when there was prima facie evidence to
show that the goods purchased from the Group Company REL
were at exorbitant prices giving the REL a mark up of 68% over
their cost and the Appellant was duly required to show cause
about it.
It is submitted that the appellant was given proper opportunity
to justify the cost as the cost appeared artificially inflated in
favour of the vendor but the Appellant completely failed to
adduce any evidence for proving reasonableness of the cost.

94
It is submitted that merely making a self serving averment
without any evidence to support the same that the goods were
purchased through competitive bidding and at arm’s length
principle does not constitute adequate or infallible proof. The
Respondent No.1 had provided the appellant with the evidence
in the form of information confirmed by VAT Department of
Government of NCT of Delhi, showing that the goods were
purchased from the Group Company REL at exorbitant prices
but the Appellant failed to adduce any evidence whatever in
support of its claim that the goods were purchased at market
rate. It is submitted that for supplying the goods in question to
the appellant, REL had also made the purchases from a number
of unconnected, third party vendors which were therefore clearly
at market rate. It is submitted that there could be no better
proof available of market rate for such large purchases at the
relevant time than the rates at which the goods were purchased
by REL. In accordance thereof the Respondent No.1 relied upon
the same.
8.5.17. The contents of para 8.5.17 are misleading and hence denied. It
is submitted that the allegation that the disallowance has been
made with a pre-meditated mind is totally baseless. Such an
unsubstantiated allegation should not have been made by a
Utility which claims to be acting responsibly. It is submitted
that the goods in question were clearly purchased at a highly
inflated cost to pass on huge and very substantial profit to the
Group Company REL at the cost of electricity consumers of
Delhi. The best indication of the market rates at the relevant

95
time is the rate at which the goods were purchased by REL from
a number unconnected third party vendors. The goods
purchased by the appellant were at a price 68% higher than the
price paid by REL for purchasing the same goods. It is
submitted that while making the disallowance of the capital
expenditure in Annexure V to the impugned order, the
Respondent No.1 has nowhere accepted that the appellant had
complied with all the requisite procedures and processes and
therefore it is incorrect for the appellant to make such a claim.
It is further submitted that the Respondent No.1 is perfectly
right in stating that substance of the transaction has to be seen.
It is a well settled principle of law that in a fiscal transaction it
is not the form or the nomenclature but the substance which has
to be looked into. This is particularly true in case of inter-se
transactions between two group companies.
8.5.18. The contents of para 8.5.18 are misleading and hence denied.
The fact that the appellant’s accounts are audited and
approved by an in-house Board of Directors does not preclude it
from proper examination and verification by regulatory
authorities. It must at all time, before all regulatory and
judicial forums, satisfy the test of reasonableness of its claims
and expenses. Hence this proposition put forth by the appellant
is not acceptable. It is submitted that the Respondent No.1 has
a legal duty to examine and approve the capital expenditure
schemes of the appellant. There is an initial ‘in principle’
approval and there is a final approval where a proper prudence
check is done. The Respondent No.1 cannot abdicate its

96
statutory obligations only because the appellant’s accounts are
audited and approved by the Board of Directors. Further,
audit of accounts merely establishes the fact that expenditure of
‘x’ amount has been incurred. It does not constitute proof of
reasonableness of the expenditure.
It is incorrect to say that the transactions in question had the
approval of Govt. of NCT of Delhi. In letter dated 30.10.2007,
Principal Secretary Power, Govt. of NCT of Delhi wrote to
Chairman DERC as under:
“Dear Mr. Singh,
This is in continuation to my earlier d.o. letter dated 14th

November,2006 regarding mismanagement of funds by both
BYPL and BRPL by following a practice of procurement of goods
and services at a significantly marked up price from the sister
company i.e. M/s Reliance Energy. Kindly find enclosed the
notes of Hon’ble Minister of Power and Finance on the same
issue where it has been stated that the electricity meters were
imported by M/s. Reliance Energy Limited for both BYPL/BRPL
at a higher cost to the tune of Rs.1233 crores during the year
2004-05 and there is a need to enquire into the matter by the
Commission.
You may appreciate the fact that this is a matter of great

concern to the Government, being a 49% shareholder in the
distribution business as it may have an adverse implication on
the consumer tariff. The details of the matter may be looked
into and special audit of the meter procurement issue may be
got conducted by the Commission at the earliest as desired by
the Hon’ble Minister for Power, GNCTD. A report in this
regard may be sent to the Government on this.
Regards,
Yours sincerely,
Sd/-
97
(RAKESH MEHTA)”
The above letter amply illustrates the concern of the
Government with respect to these transactions. A photocopy of
this letter is annexed hereto as ANNEXURE-21.
is submitted that in this para, the appellant has repeatedly
alleged that there is a prescribed procedure under the Electricity
Act/ Rules for looking into the transactions carried out by
DISCOMS with its subsidiaries on an arms length basis which
has not been followed by the Respondent No.1. It is however
submitted that the appellant has not mentioned such a
procedure in clear terms. It is submitted that perhaps, by way of
such a claim, the Appellant refers to Section 128 of the
Electricity Act 2003 under which the Respondent No.1 can get
certain matters investigated by appointing an Investigating
Authority if there is a violation of the terms of licence or
provisions of the Act/ Rules/ Regulations. As has been stated
supra, the disallowance of capital expenditure/ capitalisation in
question has been made by the Respondent No.1 in exercise of
its powers to conduct a prudence check of the expenditure
claimed by the appellant in its Annual Revenue Requirement
(ARR), which forms part of its tariff petition. For truing up of
the expenses for earlier years also a prudence check is required
to be made by the Respondent No.1 as provided in rule A/12 of
the Distribution Tariff Regulation issued by the DERC and
notified in the official gazette on 30.5.2007. It is submitted that
the instant disallowance is not based on a violation of the licence

98
terms/ Act/ Rules/ Regulations and as such action under section
128 was not considered. However, it is submitted that even in
such case, it is not mandatory for the Respondent No.1 to
appoint an Investigating Authority. The Respondent No.1 can
itself investigate the issues and take action and this is what the
Respondent No.1 did in the instant case.
Dehors the aforesaid, it is submitted that the reference made by
the Appellant to Clause 10.1 of the licence is irrelevant as the
Respondent No.1 has yet to issue the directions/orders to
operationalise it. Further is submitted that Clause 5.7 of the
licence is also not applicable as the relationship between the
appellant and REL is not one of a subsidiary and a holding
company. Initially, the appellant was a subsidiary of BSES
which later became REL. However, BSES in its Annual
Accounts for the year 2002-03 declared that due to restructuring
of its financial investments, the appellant ceased to be a
subsidiary of BSES. Ever since, the appellant is no longer a
subsidiary of BSES / REL. Thus no violation of terms of the
licence or the Act/Rules, has been shown and even if there was,
the procedure adopted by the Respondent No.1 was perfectly
legal as mentioned supra.
submitted that Respondent No.1 has never expressed its
inability to discharge its obligations or wash its hands of
examining and approving the capital expenditure schemes. As
repeatedly mentioned above, approval of capital expenditure
schemes by the Respondent No.1 is a two stage process. There

99
is an initial approval and a final approval. This procedure has
been followed by the Respondent No.1 since its inception which
is legally correct and has stood the test of time.
It is submitted that the Appellant’s claim that the Respondent
No.1 should have developed skills to handle such problems is
probably hinting at their oft repeated claim that the market rate
of the capital goods purchased by the appellant from REL should
have been independently verified by the Respondent No.1 by
making market enquiries etc., instead of relying on the purchase
rates of REL. The onus of proving that the capital goods in
question were purchased from REL at market rates was on the
appellant particularly when the rates at which the appellant
had purchased these goods, were found to be exorbitant i.e. 68%
higher than the purchase price of REL and the appellant was
duly required to show cause about it. The appellant totally
failed to discharge this onus. For the reasons repeatedly stated
above supra there could have been no better proof of the market
rates prevalent at the relevant time than the rates at which
REL purchased the capital goods in question, for supplying the
same to the appellant. It is submitted that the appellant
desires that the Respondent No.1 should develop an expertise to
verify the rates of such purchases in some other manner without
mentioning what is wrong with the evidence relied upon by the
Respondent No.1. The appellant also does not want to discharge
the onus upon it of proving the reasonableness of the
expenditure claimed by it in its ARR which forms part of its
tariff petition. In his dissent note, the Member seems to be of
the same view as the appellant without mentioning as to what is

100
wrong with the evidence relied upon by the Respondent No.1 i.e.
the purchase rates of REL.
The Appellant is repeatedly harping on the assertion that after
the initial ‘in principle’ approval, the Respondent No.1 cannot
make any changes by way of prudence check at the stage of final
approval. This claim is totally incorrect and not acceptable as
the initial ‘in principle’ kind of approval is only an estimate - of
the Appellant as well as the Respondent No.1. It is submitted
that proper prudence check is possible only in respect of actuals
after implementation of the scheme. The procedure adopted by
the Respondent No.1 in this regard is explained in detail in its
submissions in para 8.5.8 above and the same are not being
repeated here for the sake of brevity.
It is further submitted that the appellant is heavily relying on
the Member’s dissent note even though both do not pertain to
the same thing. All through, the appellant is talking of only the
initial ‘in principle’ approval before implementation of the
scheme, given on estimate which according to the appellant
should be considered final whereas the Member is talking only
about the final approval after completion of the scheme. In the
light of the aforesaid, the contention of the Appellant in the
paragraph under reply is misplaced and deserves to be
dismissed.
is submitted that the Appellant is again harping on the cost
approved by the respondent No.1. The Appellant had also stated
before the Respondent No.1, in tariff proceedings, that the goods

101
in question were purchased from REL at rates approved by the
Respondent No.1. However, no evidence whatever has ever been
filed showing that the goods were in fact so purchased. It is also
not clear whether the so called approval was initial ‘in principle’
approval or final approval for capitalization at the time of tariff
fixation. If the former, why the same would not be subject to
prudence check at the time of final approval. As mentioned
above, the instant disallowance of capitalization was made by
way of a prudence check of the purchases made by the appellant
from Group Company REL, at the time of final approval of
capital expenditure/ capitalization during tariff fixation
proceedings. The appellant’s plea of having made the purchases
in question from group company REL at Respondent No.1’s
approved rates, is thus wholly misleading and deserves to be
rejected.
The Appellant has claimed that there is no evidence introduced
by the Respondent No.1 to show what the competitive rates for
such purchases were. Contrary to the same, it is submitted that
the onus for proving the reasonableness of the expenses claimed
in its ARR which forms part of its tariff petition, was on the
appellant particularly when the purchases made by it from its
group company REL were found to be at exorbitant rates and
the appellant was duly required to show cause about it. As has
been repeatedly submitted, the Appellant failed to do so. In
view of the same, it is submitted that there is definitely very
good evidence available on record in the form of rates at which
REL purchased these very goods from open market from a

102
number of independent third party vendors. There can be no
better evidence of market rates of such large purchases at the
relevant time and in the light of the same the contention of the
Appellant is baseless and devoid of any sanctity. It is further
submitted by way of clarification that the respondent No.1 does
not maintain any list of approved rates of capital goods for
making purchases either from REL or anyone else.
is submitted that the hardship alleged to be caused to Appellant,
as enumerated by the Appellant in the para under reply, as a
result of disallowance of the capital expenditure/capitalisation in
question is a product of the fancy of the Appellant. It is
submitted that contrary to the hardship alleged to be caused to
the Appellant, the Appellant has played a fraud of a serious
nature to the detriment of the common consumers of Delhi. It is
accordingly submitted that exemplary cost be imposed on the
Appellant.
Re: Lower approval of Capitalization from fresh investment during the

MYT Period
hence denied. It is submitted that the Appellant has alleged that
Respondent No.1 has approved low Capitalization Schedule to the
extent of only 50% of the fresh investment for the MYT period. It is
further submitted that according to the Appellant, the Respondent
No.1 has not made any provision to carry forward the un-approved
Capital Expenditure i.e. the amount not considered towards
capitalization, therefore a low Capitalization Schedule has been

103
prescribed. It is submitted that the Appellant has contemplated that as
a distribution entity the nature of capital schemes to be executed by
them are such that they generally do not take more than one year to
execute and as against this general trend, Respondent No.1 has
approved only 50% of the fresh Investment towards capitalization.
Denying the aforesaid contentions of the Appellant, the Respondent
No. 1 most respectfully submits that the Appellant has for reasons best
known to them failed to take cognizance of the facts stated in the
Impugned Order simply to add on to the points of Appeal and to
unlawfully depict a higher monetary impact which is misleading. It is
submitted that the Appellant has under para 8.5.25 of Appeal stated
opening CWIP as ZERO for FY08. It is however submitted that in the
MYT Petition, the Appellant had itself stated the opening CWIP as Rs.
323.36 Crore for FY 08. A copy of the relevant extract of the MYT
Petition is annexed hereto as ANNEXURE-22. Further, it is submitted
that, the details of the capital works in progress (CWIP) for each year
of the Control Period and the proposed capitalization stated by the
Appellant in MYT Petition is reflected under para 4.162 of the
Impugned Order and Table 90 as reproduced below:
Table 90 : Proposed CWIP for the Control Period (Rs Cr)
Particular FY08 FY09 FY10 FY11
Opening CWIP 323.36 143.36 123.48 108.46

Additions to CWIP 380.00 484.00 474.74 392.84
Capitalisation of Investment 560.00 503.88 489.76 414.82
Investment capitalised out of
258.69 64.67 0.00 0.00
opening CWIP till FY 07
opening CWIP for investments 0.00 78.69 123.48 108.46
from FY 08 onwards
301.31 360.52 366.28 306.36
fresh investment
Closing CWIP 143.36 123.48 108.46 86.48
104
It is submitted that the Respondent No.1 has analysed the available
details to consider provisional capitalization for the Control Period and
the same would be subjected to true-up at the end of the Control
Period. Based on the analysis of all relevant aspects pertinent to the
Capitalization of Assets, the Respondent No.1 has determined the
capitalisation schedule for the investments proposed during the
Control Period as reflected in Table 91 of Impugned Order which is
reproduced below :
Table 91 : Approved CWIP for the Control Period (Rs Cr)
Scheme FY08 FY09 FY10 FY11
607.30 532.30
Opening CWIP 1157.30 757.30
475.00 350.00
Net Additions to CWIP 128.24 390.85
550.00 450.00
Capitalisation of Investment 528.24 540.85
Investment capitalised out of 312.50 35.25
464.12 345.43
opening CWIP till FY 07
0.00 239.75
opening CWIP for investments 0.00
from FY 08 onwards
Investment capitalised out of 237.50 175.00
64.12 195.43
fresh investment
532.30 432.30
Closing CWIP 757.30 607.30
It is submitted that a comparison of the details submitted by the
Appellant under Para 8.5.25 of the Appeal with Table 91 in the
Impugned order clearly indicates that the fundamental difference lies
with regard to consideration of opening CWIP (Capital work in
progress) for FY 2007-08. Accordingly, the Capitalization for MYT
Period as considered by the Respondent No.1 is basically on account of
the following listed in order of priority:
• Investment capitalized out of opening CWIP till end of FY 2006-07.

105
• Investment capitalized out of fresh investment during MYT period.
• Investment capitalized out of opening CWIP for investments from
FY 2007-08 onwards.
It is further submitted that with respect to capitalization in the
Control Period, the Respondent No.1 has further mentioned at para
4.166 of the Impugned Order that “The Commission would like to
clarify that capitalisation approved below is provisional and is
subjected to true-up on the basis of actual capital investment made
and the schemes commissioned by the Petitioner.” In the light of the
aforesaid submissions the contention of the Appellant is unsustainable.
It is further submitted that the contention of the Appellant that most
of its capital schemes generally do not take more than one year to
execute, is not borne out of the facts as can be observed from the trend
of Capital Expenditure and Asset Capitalization for the past years as
claimed by the Appellant. The details in this regard are as under:-
All figures are in Rs. Crore)

S. FINANCIAL YEAR TOTAL
2002-03 2003-04 2004-05 2005-06 2006-07
1. Capital 71.54 114.57 538.49 711.16 398.88 1834.64
Investment
as claimed
by the
Appellant
2. Asset 44.51 106.28 265.25 765.85 311.99 1493.88
Capitalizati
on as
claimed by
the
Appellant
The capital expenditure and assets capitalization for past 5 years
approved by the Respondent No. 1 is shown below:
All figures are in Rs. Crore)

S. FINANCIAL YEAR TOTAL
2002-03 2003-04 2004-05 2005-06 2006-07
106
1. Capital 76.38 114.56 538.75 618.54 306.21 1654.44

Investment
as approved
by the
Commissio
n
2. Asset 18.72 106.29 93.38 131.54 147.21 497.14
Capitalizati
on as
approved
by the
Commissio
n
It is submitted that a bare perusal of the above Table indicates the
difference between the Capital Investment in a year and the respective
Asset Capitalization as per submission of the Appellant. This clearly
brings out the following facts:
¾ The opening CWIP for FY 2007-08 is certainly not ZERO as has
been contemplated by the Appellant.
¾ The Capital Schemes are not completed within the same year of
conception as is being stated by the Appellant.
Having regard to the aforesaid, it is submitted that the contentions of
the Appellant in the paras under reply are purely concocted..
8.6 Re: Impact of Lower Approval of Capex and Capitalization
8.6.1 The contents of para 8.6.1 are misleading and hence merit no reply. It
is pertinent to mention that the contention of the Appellant that the
disallowance of capital expenditure and capitalization during the
Policy Direction period has resulted in lower approval of Depreciation,
Return on equity and Interest is unsustainable in facts. It is pertinent
to mention here that though the Respondent No.1 has adopted a
different approach at variance from to its own regulatory practice till
FY 2006-07 but the same is in consonance with the MYT Regulations.

107
It is further submitted that the RRB has been determined based on
Capitalization rather than Capital Expenditure and the same is in line
with the provisions of the MYT Regulations, effective from FY 07
onwards. It is further submitted that the lower approval of RoCE and
Depreciation for MYT Period is line with the lower approval of Capex
and Capitalization by the Respondent No.1. It is denied that according
to the Appellant the Impugned Order does not even indicate the
amount of return approved by the Respondent No. 1 for each year of
the MYT control period.
8.6.2 The contents of para 8.6.2 are wrong and hence denied. It is denied
that the disallowance of capital expenditure and capitalization by the
Respondent No.1 is erroneous and unreasonable and deserves to be
dismissed.
8.6.3 In the para under reply the Appellant has reproduced the provisions of
the MYT Regulation. It is pertinent to mention here that the
Respondent No.1 has followed the methodology specified in the MYT
Regulations, 2007 for determining the Return on Capital Employed
(RoCE). The Respondent No.1 has allowed RoCE based on the MYT
regulation as per which the return is on Net Fixed Asset (NFA)
basis.The relevant Clauses/paras pertinent to Return on Capital
Employed (RoCE) as per the MYT Regulations, are reproduced
hereunder:
“ 5.5 Return on Capital Employed (RoCE) shall be used to

provide a return to the Distribution Licensee, and shall cover all
financing costs, without providing separate allowances for
interest on loans and interest on working capital.
5.6 The Regulated Rate Base (RRB) shall be used to calculate

the total capital employed which shall include the original cost
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of assets and working capital, less the accumulated depreciation.

Capital work in progress (CWIP) shall not form part of the RRB.
Consumer Contribution, capital subsidies / grants shall be
deducted in arriving at the RRB.
5.7 The RRB shall be determined for each year of the Control
Period at the beginning of the Control Period based on the
approved capital investment plan with corresponding
capitalisation schedule and normative working capital.
5.8 The Regulated Rate Base for the ith year of the Control
Period shall be computed in the following manner:
RRBi = RRB i-1 + ∆ABi /2 + ∆WCi;
Where,
‘i’ is the ith year of the Control Period, i = 1,2,3,4 for the
first Control Period;
RRBi: Regulated Rate Base for the ith year of the Control Period;
∆ABi: Change in the Regulated Rate Base in the ith year of the
Control Period. This component shall be the average of the value
at the beginning and end of the year as the asset creation is
spread across a year and is arrived at as follows:
∆ABi = Invi – Di – CCi;
Where,
Invi: Investments projected to be capitalised during the ith year
of the Control Period and approved;
Di: Amount set aside or written off on account of Depreciation of
fixed assets for the ith year of the Control Period;
CCi: Consumer Contributions pertaining to the ∆RRBi and
capital grants/subsidies received during ith year of the

109
Control Period for construction of service lines or creation
of fixed assets;
RRB i-1: Regulated Rate Base for the Financial Year preceding
the ith year of the Control period. For the first year of the
Control Period, RRB i-1 shall be the Regulated Rate Base
for the Base Year i.e. RRBO;
RRBO = OCFAO – ADO – CCO;
Where;
OCFAO: Original Cost of Fixed Assets at the end of the Base
Year available for use and necessary for the purpose of
the Licenced business;
ADO: Amounts written off or set aside on account of depreciation
of fixed assets pertaining to the regulated business at the
end of the Base Year;
CCO: Total contributions pertaining to the OCFAo, made by the
consumers towards the cost of construction of
distribution/service lines by the Distribution Licensee and
also includes the capital grants/subsidies received for this
purpose;
∆WCi: Change in normative working capital requirement in the
ith year of the Control Period, from the (i-1)th year. For the
first year of the Control Period (i=1), ∆WC1 shall be taken
as the normative working capital requirement of the first
year. Working capital for Wheeling of electricity shall
consist of
i) Receivables for two months of Wheeling Charges; and
ii) Operation and maintenance expenses for one month.

110
5.9 Return on Capital Employed (RoCE) for the year ‘i’ shall
be computed in the following manner:
RoCE = WACCi* RRBi
Where,
WACCi is the Weighted Average Cost of Capital for each
year of the Control Period;
RRB - Regulated Rate Base is the asset base for each year of the
Control Period based on the capital investment plan and working
capital.
5.10 The WACC for each year of the Control Period shall be computed
at the start of the Control Period in the following manner:
 D/E   1 
Where, WACC =   ∗ rd +  ∗ re
1 + D / E  1 + D / E 
D/E is the Debt to Equity Ratio and for the purpose of

determination of tariff, debt-equity ratio as on the Date of
Commercial Operation in case of new distribution line or
substation or capacity expanded shall be 70:30. Where equity
employed is in excess of 30%, the amount of equity for the
purpose of tariff shall be limited to 30% and the balance amount
shall be considered as notional loan. The interest rate on the
amount of equity in excess of 30% treated as notional loan shall
be the weighted average rate of the loans of the Licensee for the
respective years and shall be further limited to the prescribed
rate of return on equity in the Regulations. Where actual equity
employed is less than 30%, the actual equity and debt shall be
considered.
rd is the Cost of Debt and shall be determined at the beginning

of the Control Period after considering Licensee’s proposals,
present cost of debt already contracted by the Licensee, and
other relevant factors (risk free returns, risk premium, prime
lending rate etc.);
111
re is the Return on Equity and shall be determined at the

beginning of the Control Period after considering CERC norms,
Licensee’s proposals, previous years’ D/E mix and other relevant
factors. The cost of equity for the Wheeling Business shall be
considered at 14% post tax.”
8.6.4-8.6.12 The contents of paras 8.4.6 to 8.6.12 are misconceived and hence
denied. It is submitted that during the Policy Direction period (FY03 to
FY07), the Respondent No.1 has allowed 16% return on average
equity/ free reserves and interest on loans approved for capital
investment in the respective years. The addition in equity/ free
reserves and loans in each year were determined on the basis of capital
investment approved in the respective year. Thus, the return allowed
during each year of the Policy Direction period was dependent on the
Capital Investment approved during that year. In the light of the same
it is submitted that the contention of the Appellant is unsustainable
and deserves to be dismissed.
It is further submitted that for the Control Period the return allowed
to the Appellant shall be as per the methodology specified in the MYT
Regulation, 2007. As per Regulation, the return for the year shall be
determined by multiplying the weighted average cost of capital
employed to the average of “Net Fixed Asset” for each year. Thus, the
return allowed each year is to the extent of assets capitalised (net of
depreciation and consumer contribution) in the respective year and not
on the capital investment for that year. The addition in equity/ free
reserves and debt during each year of the Control Period is also to the
extent of assets capitalised in that year.
It is submitted that as the closing value of CWIP in FY07 represents
the capital works that are still in progress, the same cannot be
112
considered as the part of the Gross Fixed Assets before capitalisation.
Thus the Respondent No.1 has not considered the closing CWIP of
FY07 for calculating the RRB for the base year.
It is submitted that the Respondent No.1 has also observed that for the
calculation of addition in Net Fixed Assets during each year of the
Control Period, the Appellant has reduced the gross assets capitalised
by depreciation and the amount of consumer contribution estimated to
be received during that year. It is submitted that the Respondent No.1
is of the view that the amount of consumer contribution received
during a year relates to the capital investment in that year and not to
the asset capitalised in the year. Thus the Respondent No.1 has
determined in the impugned order that the amount of consumer
contribution be reduced from the Gross Asset addition based on the
submission made by the Appellant and the asset capitalisation
approved by the Respondent No.1.
It is pertinent to bring to the notice of this Hon’ble Tribunal that the
Appellant has in para 8.6.4 of the instant appeal mentioned that “the
Appellant was assured a return on equity of 16% on equity and free
reserve to the extent invested as indicated in the Policy Direction”.
However, it is submitted that the Appellant has at para 8.12.5 of the
instant appeal mentioned that “the guaranteed RoE of 16% will be
made available to the Distribution companies provided that free
reserve/internal accruals available to such companies must necessarily
be invested in distribution business, which has been put into beneficial
use for the purpose of electricity distribution and retail supply””
A bare perusal of the aforementioned submissions of the Appellant
makes it amply clear that the Appellant has contradicted itself and
113
presented facts in a manner and directed to mislead this Hon’ble
Tribunal.
It is further pertinent to bring to the notice of this Hon’ble Tribunal
that the Respondent No.1 in the Impugned Order has allowed return
even on capital invested but not capitalized, for Policy Direction period
as allowed in the previous Tariff Order although the Respondent No.1
should be allowing ROE and Interest Expenses only after the asset is
capitalized and put in use. However, for the Control Period, the
Respondent No.1 was guided by the MYT Regulation and has strictly
adhered to the same.
It is submitted that Respondent No.1 also accepts that the point of not
including the CWIP was raised by the Appellant in its meeting held in
the Respondent No.1. However, it is submitted that in the said
meeting, it was made very clear to the Appellant that the MYT
Regulations are being followed and it was pertinent to mention here
that it was never represented to the Appellant that closing CWIP of FY
06-07(end of policy period) will be included in opening RRB for FY07-
08(start of control period). It is submitted that by way of submitting
inaccurate facts the Appellant has attempted to mislead this Hon’ble
Tribunal.
8.6.13 The contents of para 8.6.13 are blatantly wrong and hence denied. It is
submitted that the Appellant in the para under reply has stated that
“the Impugned Order does not even indicate the amount of return
approved by the DERC. The Appellant prays that the DERC be
directed to provide the return for each year of the MYT period”. It is
submitted that the contentions is absolutely baseless and could have
been conceived only on a non reading of the Impugned Order. The

114
relevant paras with respect to the return allowed by the Respondent
No.1 in the Control Period, are reproduced below from the sake of
ready refrence;
“4.229 For determining the WACC, the Commission has followed the
methodology specified in the MYT Regulations, 2007. Debt to
equity ratio has been considered on the closing values of debt
and equity (including free reserves) approved by the
Commission for each year. The cost of equity has been
considered at 14% and the cost of debt has been determined by
dividing total interest cost (on approved loans) by average debt
approved for that year.”
“4.232 The Commission feels that the Petitioner has misunderstood the
methodology specified for calculating the RoCE and Supply
margin for Wheeling and Retail Supply business respectively. As
per Clause 5.38 of the MYT Regulations, 2007,
“The Commission shall specify a retail supply margin for
the Retail Supply Business in MYT order based on the
Allocation statement provided by the Distribution
Licensee. The Cost allocated to Retail Supply Business as
per allocation statement shall be considered while
determining supply margin.”………
“The Commission shall specify the retail supply margin in

such a manner that the return from the Wheeling and
Retail Supply business shall not exceed 16% of equity”
4.233 The intention of the above provision of the MYT Regulation,

2007 is that the Wheeling business shall be allowed a RoCE to
the extent of asset allocated to it and the Retail Supply business
shall be allowed a supply margin that would cover all the
expenses plus RoCE (that allocated to Retail Supply Business)
plus an additional return such that the total return from the
Wheeling and Retail Supply Business shall not exceed 16% of
equity.
4.234 Thus the Commission has allocated the RoCE approved above
into Wheeling and Retail Supply considering the following:
115
(a) RRB allocated to the respective business, as discussed in
Table 111.
(b) Debt and Equity in the proportion of allocation of total
GFA into Wheeling and Retail supply for each year”
4.259 As per the MYT Regulations 2007, the supply margin to be

allowed for the Retail Supply business shall cover all the
expenses of the retail supply business (except Power Purchase
& Transmission cost), RoCE allocated to retail supply business
and shall also provide an additional return such that the total
return from the Wheeling and Retail business shall not exceed
16% of equity.”
8.7 Re: Administrative & General Expenses (“A&G)
At the outset the Respondent No.1 would like to bring to the notice of
this Hon’ble Tribunal the following submissions:
• Submission of the Appellant
The Appellant states that Respondent No.1 has disallowed Rs.9.50
crores incurred by the Appellant in the FY 2004-05 while truing up
the expenses for FY 2004-05. It states that out of the total A&G
expenses of Rs.37.37 crores as per the audited accounts, the
Respondent No.1 has allowed only Rs.29.04 crores and has also not
allowed bank charges of Rs.1.17 crores as per its audited accounts.
• Status of MYT Regulations
The Respondent No.1 has approved the O&M expenses (A&G,
R&M, Employee Expenses) based on the methodology described in
the MYT Regulations, 2007 notified on 30.05.2007. As far as the
MYT Regulations are concerned, it is the conscious view of the
Respondent No.1 that since they are drafted in accordance with the
provisions of the law and notified, they have a binding effect on all
the utilities concerned including the appellant.

116
• ATE Order dated 23.05.2007
This Hon’ble Tribunal in its Order dated 23.05.2007 directed the
Respondent No.1 to allow Consultancy charges, telephone postal
and telax charges, conveyance and travel charges as claimed by the
petitioner. However, as far as the legal expenses are concerned, this
Hon’ble Tribunal held that the Commission has to approve all the
legal expenses incurred by the Appellant except for those expenses
which the Respondent No.1 can specifically point out to be
imprudent.(Para 3.118, page 96 BRPL Order FY 08-11).
• Expenses claimed vis-à-vis expenses approved by the Respondent

No.1
The Respondent No.1 has, in its tariff order of 2004-05 allowed Rs.
17.29 crores towards A&G expenses against Rs.32.20 crores claimed
by the Appellant. While doing first true up in the year 2005-06, the
Respondent No.1 allowed Rs. 29.04 crores against actuals of
Rs.41.11crores claimed by the petitioner for valid reasons explained
in the Tariff Order of 2005-06. The Appellant has not challenged
this order.
In the second true up for FY 2004-05, in the year 2006-07, the
Respondent No.1 has allowed Rs.26.98 crores of A&G expenses
against an amount of Rs.37.37 crores claimed by the Appellant.
(Table 3.14, Page 118/177, BRPL Tariff Order 2006-07). This order
was challenged by the Appellant and this Hon’ble Tribunal vide
order dated 23.05.07 held that the second truing up can be done by
the Respondent No. 1 only in case of if there is any difference in
provisional and audited accounts.

117
In the MYT Petition (true up) for FY 2008-11, the arrears of
expenses as per the ATE Order as claimed by the Appellant for the
FY 2004-05 stands Rs. 2.06 cores (table 56, page 122, MYT petition,
BRPL FY 2008-11). The Respondent No.1 has, accordingly,
approved Rs 29.04 crores in the final true up in the MYT Order
2008-11 as claimed by the Appellant.
• MYT Tariff Order
The Respondent No.1 has, in accordance with the ATE Order
allowed the actual Consultancy Charges, telephone, postal and
telex charges, Service Tax, travelling and conveyance. The
Respondent No.1 has also approved the legal expenses incurred by
the petitioner provisionally and directed the petitioner to submit
case-wise details and their expenses where either the Courts have
found the litigation by the petitioner frivolous or the Courts has
pronounced the decision against the petitioner. On receipt of such
information, the Respondent No.1 will finally approve the legal
expenses. (Para 3.120 of BRPL MYT Order 2008-11).
A. Disallowance of A&G expenses incurred in FY 200405
It is submitted that from a bare perusal of the aforesaid
submissions it is amply clear that the Respondent No.1 has not
disallowed any A&G expenses and has approved A&G expenses for
the FY 05 as claimed by the Appellant in the MYT Petition. In the
light of the aforesaid, it is submitted that the instant issue is a
frivolous issue raised by the Appellant only to misguide this
Hon’ble Tribunal.
8.7.1 The contents of para 8.7.1 are wrong and hence denied. In the light of
the aforementioned submissions it is submitted that the contention of

118
the Appellant that the truing up exercise undertaken by the
Respondent No.1 is contrary to the principles of truing up as upheld by
this Hon’ble Tribunal vide its Order 23.05.2007 is without any basis
and wrong to its own knowledge. It is pertinent to mention here that
the Respondent No.1 has allowed the A&G expenses for the year 2004-
05 as claimed by the Appellant in its MYT petition under the heading
“arrears of expenses as per ATE Order”..
8.7.2 The contents of para 8.7.2 needs no reply.
8.7.3-8.7.7 The contents of paras 8.7.3-8.7.7 are misleading and hence
impugned order is not in consonance with the judgment of the Hon’ble
Tribunal in Appeal No.266/2006 is not sustainable. It is submitted that
the said order of the Hon’ble Tribunal inter alia states that the
Respondent No.1 has to accept the anticipated expenditure given by
the utility and the true up exercise is mentioned to fill the gap between
the actual expenses at the end of the year and anticipated expenses in
the beginning of the year and the exception with respect to the same
could be where the Respondent No.1 has reason to differ with the
statement of utility and records reasons thereof or where the
Respondent No.1 is able to suggest some method of reducing the
anticipated expenditure. In that context, it may be noted that the
Respondent No.1 has approved Rs.29.04 crores towards A&G expenses
in the first true up FY 2004-05 citing reasons like higher consultancy
charges, claiming of meter reading and bill distribution expenses as a
part of the A&G expenses and non-submission of any details for
increase in expenses in accordance with the directives of the
Respondent No.1 and also after the prudence check of other
expenditure incurred under this head. It is further submitted that the

119
Appellant has claimed an amount of Rs. 2.06 crores towards arrears of
expenses in its MYT petition for the year 2004-05 and hence, the
Respondent No.1 has retained the earlier approved expenses of
Rs.29.04 crores, instead of Rs.26.98 crores approved in the second true
up. In the light of the aforesaid submissions it is submitted that the
contentions of the Appellant in the para under reply are absolutely
concocted
submitted that in light of the afore-said facts, whatever the Appellant
has claimed in the arrears of expenses as per the MYT Petition, the
same has been given effect to by the Respondent No.1 in the impugned
Order and hence the issue of improper disapproval and allowance
thereof with carrying cost does not merit consideration.
B. Incorrect determination of A&G Expenses for the Base Year FY 2007
8.7.9-8.7.10. The contents of the paras 8.7.9-8.7.10 are misleading and hence
Respondent No.1 has deducted “one time expenses” to the tune of 4.26
crores incurred by the Appellant despite it being specifically brought to
the notice of the Respondent No.1 that such “one time expenses” will
be incurred even during the Control Period and therefore they should
not be deducted while computing the amount for the Base Year 2007,
is completely devoid of any legal sanctity and against the prudence
expected to be displayed by a utility bearing public responsibility.
With respect to the same Respondent No.1 would like to bring to the
notice of the Hon’ble Tribunal the following :
• MYT Regulations
120
As per the MYT Distribution Regulations, 2007 Clause 5.3, the
O&M expenses (a part of which is A&G expenses) for the base year
shall be approved by the Respondent No.1 taking into account the
latest available audited accounts, business plan filed by the
Licensee, estimates of the actuals for the base year, prudence check
and any other factor considered appropriate by the Respondent
No.1
• MYT Tariff Order extract
The Respondent No.1 has determined at Para 3.122, of the
impugned order that “The Appellant has, vide letter dated
16.02.2008 submitted that increase in the bank charges are mainly
due to refinancing of DPCL loans and expenses relating to bank
charges for executing various agreements. It has also submitted
that it had incurred Rs 3.45 crores towards refinancing of the DPCL
and SVRS loan and this expense is non-recurring in nature. The
Petitioner has also submitted that out of the total consultancy
charges incurred in FY 2007, Rs. 0.80 crores is non-recurring in
nature. For determining the base for the control period, the
Respondent No.1 has excluded these one time expenses.
A bare perusal of the aforesaid submissions makes it amply clear, as
has been explained in the following paragraphs, that the contention of
the Appellant is misfound and an attempt to mislead this Hon’ble
Tribunal.
In support thereof it is submitted that the A&G expenses for the
Appellant for FY06 were Rs 48.47 Cr which increased to Rs 66.65 Cr
(i.e an increase of 37.5%) for FY07. It is submitted that the Respondent

121
No.1 has vide letter dated 16 February 2008 sought explanation from
the Appellant for a steep increase in the A&G expenses.
8.7.11-8.7.12 The contents of the paras 8.7.11-8.7.12 are wrong and hence
denied. It is submitted that the contention of the Appellant with
respect to “one time expense” deserves no consideration. It is
submitted that the Respondent No.1 out of the total A&G expenses,
Revenue Stamp Charges, Consultancy Charges and Bank Charges
which had increased significantly over this period.
The Appellant in its letter no RCM/07-08/1066 dated 16 February,
2008 and RCM/07008/1102 dated 21 February, 2008 had submitted to
the Respondent No.1 that the Bank charges have Rs 3.45 Cr as
abnormal expenses (Rs.3.45 crores was paid to M/s IDBI towards
upfront & processing fee for refinancing of DPCL Loan and SVRS
Loan). The Appellant had also submitted that it may incur these
charges in future on account of bank charges for taking loan for its
Capital Investment Program, providing bank guarantee while signing
the PPA with existing and prospective generators, swapping of existing
loans in the event of lower interest regime.

122
With respect to the aforesaid submission of the Appellant, it is
pertinent to mention that the Appellant has taken loan in each year of
the Policy Direction Period also for capital investment and the
Respondent No.1 has not considered that as abnormal non-recurring in
nature. The Respondent No.1 has considered only refinancing charges
as abnormal expenses. It is submitted that in future, if the Appellant
again incurs abnormal bank charges on account of refinancing of loans
to lower interest rate loans, the Respondent No.1 would, based on the
practice followed by it in the past, allow the Appellant to pass on these
expenses to the consumers, in addition to the approved A&G expense,
in the event the Appellant passes on the benefit of lower interest rate
to consumer.
It is submitted that the Appellant in the aforesaid letter also
submitted that it had incurred Rs 0.80 Cr of consultancy charges which
was of one time in nature and hence abnormal expense.
It is submitted that the Respondent No.1 has excluded abnormal
expenses from A&G expenses of the Appellant as including these
expenses in computing the base A&G expenses would have distorted
the actual picture of A&G expenses and would have been contrary to
the spirit of MYT Regulations. It is pertinent to mention here that the
Respondent No.1 has approved A&G expenses for the Petitioner as per
the MYT Regulations and has not deviated from it.
It is submitted that these are not part of the routine expenditure of the
Appellant and hence the Respondent No. 1 deemed it appropriate that
the same does not merit consideration for inclusion in the Base. It is
further submitted that since the A&G expenditure is a controllable
parameter and any increase or decrease in such expenditure will be to

123
the account of the Appellant, the Respondent No.1 has to exercise
extra caution not to load the consumer with extra burden.
In the light of the aforesaid submissions the Respondent No.1,
therefore, has rightly, not considered Rs.4.25 crores for determining
the base level of A&G expenses for Control Period as all the abnormal
factors have to be removed to arrive at a normal figure for a reasonable
increase, specifically so, when the Appellant itself is informing about
the one time nature of the expenses in question. Hence, it is most
respectfully submitted that the Hon’ble Tribunal may be pleased to set
aside the plea of the Appellant regarding recalculation of the Base
Year with respect to such abnormal/one time expense.
C. Power purchase obligations to be discharged by the Appellant during

the MYT period; non-inclusion of any amount on account of new
initiative proposed by the appellant in the MYT period and non-
inclusion of any amount on account of the increased consumer base
projected by the appellant
8.7.13-8.7.33. The contents of paras 8.7.13-8.7.33 are wrong and hence
denied. It is submitted that the issues raised by the Appellant in the
paragraph under reply, namely (I) power purchase obligations to be
discharged by the Appellant during the MYT period; (II) non-inclusion
of any amount on account of new initiative proposed by the appellant
in the MYT period and (III) non-inclusion of any amount on account of
the increased consumer base projected by the appellant. Even if a
cursory mention is there in the MYT Petition, the same was not
quantified and asked for specifically and hence it had been deemed to
be included in the total amount claimed by the Appellant, which has
been duly considered by the Respondent No.1. Accordingly, it is
submitted that a new issue, not being a part of the Impugned Order
124
cannot be raised at the appellate stage for the first time and hence the
same deserves to be dismissed.
Without prejudice to the aforesaid it is submitted that the Respondent
No.1 has approved the A&G expenses as per the methodology framed
in the MYT Regulations. Accordingly, it is submitted that the
contention of the Appellant regarding non-inclusion of power purchase
obligation discharged, new incentive proposed & expenses on account
of the increased consumers in the A& G expense is not correct as the A
& G expenses submitted by the Appellant are inclusive of all the
provisions made on account of above issues, which are duly considered
by the Respondent No.1, while approving the A&G expenses. Although
the Appellant is asking for an increase in the expenses on the above
issues, but there is no justification or mention of the expenses and
their reasonableness so as to enable the Respondent No.1 to view the
performance, actions and initiatives of the Appellant. Merely
specifying the heads of expenditure does not make the Appellant
eligible for approval of such expenses as a pass through.
Further, it is pertinent to mention here that during the public hearing
from 08.01.2008 to 11.01.2008, the consumers were complaining about
the quality of service and the problems they have to face, while dealing
with the officials of the Appellant. Moreover, that they have neither
complied with the directives of the Respondent No.1 nor the MYT
Regulations or Delhi electricity Supply code and the Standards of
Performance Regulations, 2007 notified on 18 April 2007.
In the light of the aforementioned submissions the Respondent No.1
most respectfully submits that the Appellant is free to take any new
initiative during the MYT period but at the same time Appellant has to
125
justify the new initiative by cost benefit analysis. If cost benefit
analysis of any new initiative is positive, it would mean that whatever
expenses the Appellant is incurring on account of new initiatives, the
Appellant is saving more money than that. It is further pertinent to
mention that the MYT framework introduced by the Respondent No.1
does not restrict the Appellant; it gives freedom to the Appellant to
manage its operation effectively and efficiently. Unlike the past
regulation, it rewards the Appellant for better management of the
operation and higher efficiency.
8.8 Re: Disallowances on account of Employee Expenses
A. No provision for Special Voluntary Retirement Scheme (SVRS) related

expenses.
8.8.1-.8.8.5 The contents of paras 8.8.1 to .8.8.5 are wrong and hence denied.
The Respondent No.1 most respectfully submits that the contention of
the Appellant that the Respondent No.1 has without assigning any
reasons denied the Appellant the payments on account of terminal
benefits is unsustainable in fact and in law. In support thereof the
Respondent No.1 would like to draw the attention of this Hon’ble
Tribunal to the following:
• It is submitted that the Respondent No.1 has completely amortised
the initial out go of Rs.132.66 crores claimed by the petitioner in
respect of SVRS offered to the employees in the FY 2004, by the FY
2007 along with the carrying cost @ 8% p.a..
• It is further submitted that vide the impugned order the
Respondent No.1 has held that:
“The ATE in its Order dated 23.5.2007 held that the

Commission has to allow all the actual expenses towards the
employee cost including the contractual employees. As per the
126
ATE Order, the Commission has also allowed the Contractual

employee expenses (bill distribution and meter reading
expenses) while computing the savings available for SVRS
expense amortization.”
• It is further submitted that the Respondent No.1 has with respect to
the order of the Hon’ble High Court in the matter titled NDPL vs.
Govt. of NCT of Delhi made observation in paragraph No.3.104 to
3.109 of the impugned order which reproduced hereunder for the sake
of ready reference :
“3.104 The matter of aforesaid additional liabilities was argued

before the Hon’ble High Court of Delhi which has pronounced its
judgement on the issues of payment of terminal benefits
including pension, gratuity, earned leave, etc. to the VSS optees.
The High Court observed that the optees do not fall within the
description of those voluntarily retiring as per conditions of
service existing as on 1 July, 2002; they were induced to
contractually depart from employment. The Trust is not geared
to bear this sudden and substantial, unilaterally created burden;
the GoNCTD, too is not liable in terms of the Act or Rule 6(9) to
fund the payment of terminal benefits, of such VRS/SVSS
optees. The severance being achieved through contract between
the DISCOMs and the employees, the liability for payment of
terminal benefits, as well as commutation of pension and
monthly residual pension, is that of the DISCOMs.
3.105The Hon’ble High Court in its Order dated 2 July, 2007 has
directed as follows:
(a) The Pension Trust and GoNCTD are not liable to make
payment towards terminal benefits and residual pension
arising to those who opted VRS/VSS, formulated by the
DISCOMs. The employees of the DISCOMs who opted for
VRS/VSS and were relieved from employment are entitled
to payment of terminal dues (which expression would

127
include all accrued benefits such as gratuity, provident
fund, leave travel concession, leave encashment, payment
towards medical facilities, commutation of pension and
residual pension and such other payments as they are
entitled to in terms of the protected terms and conditions
of service under the Act and Rules) from the date of their
respective severance from employment. Such date of
severance shall be hereafter referred to be called
entitlement date.
(b) It is open to the DISCOMs to adopt the IPGCL Model of
paying pension, gratuity, leave encashment and other
liabilities to the optees, in terms of the letter of the
GoNCTD dated 11 November, 2004.
(c) The DISCOMs shall indicate to the Pension Trust, in
writing within two weeks from the date of this judgement
whether they are willing to accept IPGCL Model or not.
(d) In the event of the Petitioner not accepting the IPGCL
Model they shall be liable to pay additional contributions
to the Pension Trust (second option).
(e) For the purpose of deciding the additional contribution to
the pension trust on account of all the terminal benefits
and liabilities due to such optees, the matter shall be
referred to the arbitral tribunal. The arbitral tribunal
shall complete its proceedings and publish its award
within six months from the date of its constitution.

128
(f) The liability to pay residual pension i.e. monthly pension
from the date of this judgement in the event the
DISCOMs exercise the second option i.e. of going in for
actuarial calculation; shall be borne by the Petitioner for
the period till the award is published by the Tribunal and
payment made to the trust on the basis of such award, by
the concerned Petitioner.
(g) The payments made by the DISCOMs to the optees shall
also be subject to suitable adjustment/reckoning for the
actuarial exercise adjudication by the Tribunal.
(h) The liability of the Trust to make payments to the
VRS/VSS optees shall arise after the Petitioner deposits
the amount determined as additional contributions with
the pension trust.
(i) The VRS optees are entitled to interest on terminal
benefits, arrears of pension etc @ 8% p.a. from the date of
entitlement to payment. This shall be paid by the
DISCOMs.
3.106 The Commission directed BRPL, BYPL and NDPL to file the
details of additional Trust liabilities and other expenses related
to SVRS in the previous Tariff Order of FY07.
3.107 The DISCOMs (BRPL, BYPL and NDPL) have opted for second
option of actuarial valuation of the liabilities. The nomination
for the arbitral tribunal to be formed pursuant to the directions
of the High Court is under progress.

129
3.109 In a letter dated 12 February, 2008, BRPL have submitted to
the Commission that
“……The Hon’ble High Court held that “The Pension

Trust and GNCT are not liable to make payment towards
terminal benefits and residual pension arising to those
who opted VRS/VSS, formulated by the Petitioners
DISCOMs”. The DISCOMs have been given a choice of
adopt IPGCL Model or pay additional contributions to the
pension trust in a manner determined by the Hon’ble
High Court. The petitioner has opted for the second option
wherein the actuarial valuation of the liabilities as it is
more cost effective with much lower liability than the first
option of the IPGCL model. The nomination for the
committee to be formed pursuant to the directions of the
High Court order (order dated 2nd July 2007) is under
process and the Honorable Commission would be apprised
of the progress from time to time
The petitioner in its MYT submission had estimated the

additional liability at Rs 73 Crores in addition to the
existing arrangement of pension payment to the SVRS
optees up-to the date of there notional superannuation…
The petitioner had submitted that
a. it would be releasing Rs 20.67 Crores (Rs 12.38 Crores for
BRPL and Rs 8.29 Crores for BYPL) within one week of
passing the order
b. The balance amount of Rs 93 Crores (Rs 54.8 Crores for
BRPL and Rs 38.31 Crores for BYPL) towards gratuity
and commutation of pension shall be paid within four
weeks of passing of the order in terms of the proposed
settlement.
130
c. The above figures are tentative and final liability would
be based on the actuarial valuation of the committee.
The petitioner would continue to pay pension pursuant to
the high court order to individual employee who had
opted for SVRS up-to the date of notional
superannuation…”
Based on the aforesaid observations the Respondent No.1 submits as
under:
Sl. Claim of the Appellant as per Consideration by the Respondent

No. the MYT petition No.1 in the MYT Order
1. Initial one time outgo Completely amortised by the

Respondent No.1 along with carrying
cost of 8% as claimed by the
Appellant.
2. Monthly Pension Completely allowed by the

Respondent No.1 along with carrying
cost of @ 8% as claimed by the
Appellant.
As per the High Court Order, the

liability to pay residual pension, i.e.
monthly pension from the date of
judgement till the publication of
award by the Tribunal shall be borne
by the Appellant till the award is
published
3. Terminal benefits etc. As per the High Court Order, the

Appellants have exercised Option II,
which is Actuarial Model. According
to this Model, a lump sum amount as
determined by the Tribunal shall
have to be paid by the DISCOMs to
the Trust to compensate it for the
additional burden arising on them
due to accelerated retirements and
thereafter the Trust shall refund the
annual pension etc. together with
terminal benefits (gratuity, earned
leave, etc.) paid to the VRS optees.
Since as per the High Court Order,

the Tribunal is the competent
131
authority to calculate the NPV of the

amount of terminal benefits, which is
to be paid by the DISCOMs to the
Trust, the Respondent No.1 shall
allow that as and when the award of
the Tribunal is given.
It is submitted that based on the conjoint reading of the aforesaid
provisions, the Respondent No.1 believed that the Appallant would be
required to pay monthly pension till the outcome of the award of the
Tribunal. The Tribunal would decide the lump sum amount which the
Appellant would be required to pay for transfering all pension and
terminal benefit liability to the Pension Trust. This lump sum amount
would be for the additional pension requirement for the period before
the actual superannuation of the VSS optees and for shifting terminal
benefits of the VSS optees from the superannuation date to an early
date. The monthly pension payments being made to VSS optees shall
be appropriately taken up before the proceedings of the Tribunal by
the Appellant.
In view of the aforesaid understanding of the issue under
consideration, the Respondent No.1, in the impugned order, allowed
the monthly pension provisionally subject to the outcome of the
Tribunal award with the condition that any refund/relief provided on
this account to the Appellant by the Trust would be available for
adjustment towards the future employee expenses. It is submitted that
the Appellant is paying monthly pension to the SVRS optees from
FY05 onwards. The Respondent No.1 has approved the monthly
pension payment to SVRS optees in the truing up of FY07. The
Respondent No.1 has allowed carrying cost of 8% per annum for the
arrears of pension payment in FY05 and FY06 which is equal to

132
carrying cost proposed by the Appellant for amortization of SVRS
expenses.
With respect to the issue of payment of the terminal benefits by the
Appellant, it is most respectfully submitted that the actual liability of
the Appellant towards the trust shall be determined by the Tribunal at
a future date. The Appellant has been uncertain about the time of
constitution of the Tribunal. The Respondent No.1, in the Impugned
Order, recognised that delay in constitution of the tribunal is getting
translated into more intervening monthly pension payments by the
Appellant and is increasing the burden on the tariff. The Respondent
No.1 accordingly directed the Appellant to expedite the constitution of
the Tribunal; and also, sought clarification on the refund of the
intervening monthly pension payments. The Respondent No.1 also
directed the Appellant to inform the Respondent No.1 on any
interim/final Order on the aforesaid issue. It is further submitted that
the Respondent No.1 has observed that it is constrained not to consider
the payment made by the Appellant on account of terminal benefits. It
is submitted that the said constarin of the Respondent is on account of
the following factors;
(j) the amount of terminal benefits have to be determined by the
arbitral tribunal in accordance with the High Court Order;
(k) the Pensioners would not suffer as they are getting the
monthly pension for subsistence and shall get the terminal
benefits amount with interest as per the High Court Order;
(l) the Appellants would have no incentive to pursue the matter
if all the payments are allowed by the Respondent No.1 and
this may result into getting translated into more and more
133
monthly pensions and the resultant burden on the
consumers.
In addition to the aforesaid, it is submitted that a view would be taken
in the matter once the award of the Actuarial Tribunal would be
available.
In the light of the aforesaid submissions the Respondent No.1 has in
its best understanding of the issues, allowed one time payment and
monthly pension as a pass through and at the same time disallowed
the terminal benefits for the reasons stated supra. It is further
submitted that the Appellant in its submissions has not challenged the
understanding of the Respondent No.1 on the issue of SVRS payment.
Accordingly it is submitted that the contentions of the Appellant are
misconceived and an attempt to misguide this Hon’ble Tribunal.
B. The projections of increase in Salaries & Employees has been

disallowed by the DERC for the MYT Period.
8.8.6-8.8.27 It is submitted that the contents of paras 8.8.6-8.8.27 are
misleading and hence denied. It is submitted that the contention of
the Appellant that the Respondent No.1 has disallowed the projection
for increase in employee expenses and salaries as per the industry
practice, on account of power purchase obligations to be discharged by
the Appellant and on account of increase in consumer base of the
Appellant are misconceived and based on concocted facts. It is
submitted that the Respondent No.1 has in allowing the employee
expenses under the impugned order strictly adhered to the
methodology as detailed in the MYT Regulations 2007. It is submitted
that since the MYT Regulations are drafted in accordance with the
provisions of law and notified they have a binding effect on all the
134
utilities including the Appellant herein. Therefore, the Respondent
No.1 has in term of the provisions of the MYT Regulations observed in
the impugned order as under:
“In consideration of the above, the Commission has recognized

the uncontrollable nature of the Sixth Pay Commission’s
recommendations in determination of the employee expenses
during the Control period. The Commission has assumed that
the revision in the pay, if any, shall be applicable from January
1, 2006. The Commission has considered an increase of 10% in
total employee expenses for the values in FY 2006 (3 months)
and FY 2007 due to the same.”
It is submitted that in coming to the aforementioned observation in the
impugned order, the Respondent No.1 has calculated the revised
employees cost taking into consideration the break-up of employee
expenses between erstwhile DVB employees and non-DVB employees
as submitted by Appellant vide their letter dated 15th January, 2008
Para 4.110 at page 137, of BRPL MYT Order 2008-11. A copy of the
said letter is annexed hereto as ANNEXURE-23. It is further
submitted that since the arrears on account of employees expenses are
expected to be paid only in FY 2009, the Respondent No.1 has
considered the payment of arrears in employee expenses of FY 2009. It
is submitted that since the increase in the amount was not certain at
the time of issuance of the impugned order, it is observed in the
impugned order that the Respondent No.1 shall true up the impact on
account of Sixth Pay Commission’s recommendations based on the
actual impact of the same, and hence the concerns of the Appellant
with respect to the same being treated as an uncontrollable factor is
misconceived and deserves to be dismissed.

135
It is further submitted that for the calculation of the employee
expenses for the Control period, the Respondent No.1 has considered
the following:
a) Revised employee expenses for the base year have been
escalated as per the escalation factors mentioned in Table 68 to
arrive at the employee expenses for the Control Period.
b) All arrears due to the impact of the 6th Pay Commission
recommendations would be payable in FY09. For the purpose of
projecting the arrears arising due to recommendation of the 6th
Pay Commission for FY08, the Commission has considered the
difference between the employee expenses for FY08 arrived by
escalating the revised employee expenses for FY07 (i.e.
Rs.146.19 Cr) and the employee expenses for FY08 arrived by
escalating the trued up employee expenses (net of SVRS
amortization) for FY07 (i.e. Rs. 137.60 Cr).
In view of the aforesaid detailed submissions the Respondent No.1
most respectfully submits that the contention of the Appellant vis-à-vis
disallowance of employee expenses is unsustainable. For the sake of
clarification it is submitted that the following methodology was
adopted by the Appellant to calculate employee expenses;
The Appellant has claimed Rs.137.60 crores towards the employee
expenses for the year 2006-07 in the petition, which have been allowed
by the Respondent No.1 and taken as a base. The Respondent No.1 has
made adjustments in regard to the SVRS amortisation and the
expected increase in the employee expenses pertaining to the DVB
employee on account of recommendations of the 6th Pay Commission in

136
the base. After the adjustment of the Base, the escalation factor
(calculated as per the MYT Regulations) is applied The Respondent
No.1 has, therefore, calculated the employee expenses as per the
methodology stated in the MYT Regulations and has also given due
regard to the submission of the Appellant.
8.9 Re: Disallowance of R&M Expenses
that the contention of the Appellant with respect to disallowance of
R&M expenses is not sustainable in view of the explanation provided
in the succeeding paragraphs.
A. Disallowance of R&M Expenses for FY 2004-05 & FY 2005-06
8.9.2-8.9.3 The contents of paras 8.9.2-8.9.3 are wrong and hence denied.
At the very outset is submitted that the petitioner did not claim
any amount on account of true up for the year 2004-05 in MYT
Petition. Hence, it is submitted that this issue is beyond the
scope of the present appeal and should not be considered.
Without prejudice to the aforesaid, the Respondent No.1 would
like to bring the following facts to the notice of this Hon’ble
Tribunal :
• With respect to the FY 2004-05, it is submitted that the
Respondent No.1 has approved Rs.52.57 crores towards the
R&M expenses in the Tariff Order of 2004-05. The
Respondent No.1 has in its Tariff Order for FY 2004-05
directed the Appellants to take prior approval for any
increase in the R&M expenses during the FY 2004-05 beyond

137
the approved R&M expenses before committing/incurring an
expense. A copy of the relevant extract of the same is
annexed hereto as ANNEXURE-24. Page 3-84 of Tariff Order
of BRPL 2004-05).
It is submitted that in the tariff Order of 2005-06 considering
that the Appellant has not submitted any detail for increase
in expenses from Rs 68.99 crores to Rs. 92.14 crores, the
Respondent No.1 has, while truing up, approved an amount
of Rs. 68.99 crores towards the R&M expenses after checking
the prudence of the expenditure incurred this order was not
challenged by the Appellant. It is submitted that the
Respondent No.1 approved the same figure of Rs. 68.99
crores in second truing up for FY 2004-05 in the Tariff Order
of 2006-07 .This order was challenged by the Appellant and
this Hon’ble Tribunal vide order dated 23.05.07 held that the
second truing up can be done by the Respondent No. 1 only in
case of if there is any difference in provisional and audited
accounts. The Respondent No. 1 has not disallowed any R &
M Expenses for FY 2004-05 in the impugned order. The
Appellant has not claimed any additional amount in its MYT
Regulation against the R & M expenses for FY 2004-05 under
the heading “arrears of expenses as per ATE order” (Table
No 56 page 122 MYT Petition BRPL FY 2008-11) . A copy of
the relevant extract of the same is annexed hereto as
ANNEXURE-25.
• It is further submitted that the Respondent No.1 had
approved an amount of Rs. 71.75 crores for the FY 2005-06

138
and had directed the Appellant to take prior approval for any
increase in the R&M expenses during the FY 2005-06 beyond
the R&M expenses approved before Committing/incurring an
expense. A copy of the relevant extract of the same is
annexed hereto as ANNEXURE-26.
• It is submitted that the Respondent No.1 approved an
amount of Rs. 71.75 crores in the first true up as the
Respondent No.1 opined in the previous orders that with the
execution of Capital works under the various scheme, the
extent of R&M works decrease over a period, thus reducing
the R&M expenses, however keeping in view the adequate
attention towards the preventive maintenance of existing
assets as well as assets capitalised during the last four years
against the Appellants claim of Rs. 73.60 crores. It is
submitted that while doing the second true up, the
Respondent No.1 has, in respect of R&M expenses of 2005-06,
observed as follows:
“The Petitioner has claimed R&M expenses for FY 2006

as Rs.73.60 Crore, which is 5% higher than the approved
R&M expenses. The Petitioner also did not apply for
prior approval from the Commission before exceeding
R&M expenses beyond Rs.71.75 Crore limit set by the
Commission. Therefore, the Commission disallows the
higher expense claimed by the Petitioner and maintains
the R&M expenses of Rs 71.75 crore for FY 2006.”(Para
3.125 at Page 97 of MYT Tariff Order of BRPL)
In the light of the aforesaid and having regard to the fact that the
Appellant in terms of the tariff order did not seek prior approval before
139
exceeding R&M expenses beyond the limit set by the Respondent No.1,
the Respondent No. 1 was constrained to reject the same.
B. Disallowance of R&M Expenses for FY 2006-07
8.9.9-8.9.15 The contents of para 8.9.9 to 8.9.15 are misleading and hence
denied. It is submitted that the contention of appellant with respect to
disallowance of R&M expenses for the FY 2006 -07 is unsustainable. It
is submitted that the Respondent No.1 would like to bring the
following facts to the notice of this Hon’ble Tribunal :
It is submitted that the Respondent No.1 had approved an
amount of Rs.70.98 crores as claimed by the Appellant in the
Tariff Order of 2006-07. The Respondent No.1 had also given a
direction to the Appellant to take prior approval for any increase
in the R&M expenses during the FY 2006-07 beyond the R&M
expenses approved before committing/incurring an expense.
While doing the true up in the Impugned Order, the Respondent
No.1 has, in respect of R&M expenses of 2006-07, observed as
follows:
“For the FY 2006-07, the Petitioner did not apply for prior
approval from the Commission before exceeding R&M
expenses beyond Rs.70.98 crore limit set for FY 2007.
Therefore, the Commission denied the higher expense of
Rs.89.49 crore claimed by the Petitioner and approves
R&M expenses of Rs.70.98 crore of R&M expenses for FY
2007.”
In the light of the aforesaid and having regard to the fact that the
Appellant in terms of the tariff order did not seek prior approval before
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exceeding R&M expenses beyond the limit set by the Respondent No.1,
the Respondent No. 1 was constrained to reject the same.
II. Impact of disallowance of R&M Expenses during the Period FY 2007-

08 to FY 2010-11
denied. It is submitted that the contention of the Appellant that it
would suffer drastically due to inaccurate computation of the K factor
and accordingly the Respondent be directed to recompute the same is
unsustainable and devoid of any force. It is submitted that the
Respondent No.1’s view on the K factor as regards to R&M are as
below:
R&Mn = K*GFA n-1 and the calculation thereof the K factor is

indicated in the Tariff Order for FY 2008-11 at the Para 4.140 to
4.142.
k factor is based on the opening GFA and the R&M expenses

approved by the Respondent No.1 and represent a percentage of
R&M expenses to the opening GFA as has been mentioned in
the impugned Tariff Order.
It is submitted that a bare perusal of the aforesaid makes it amply
clear that the view of the Respondent No.1 with respect to the K factor
is in strict consonance with the MYT Regulations. Accordingly, It is
submitted that the contention of the Appellant vis-à-vis recompilation
of K factor is misconceived based on the fact that the MYT Regulations
are binding on the Appellant.
C. Non-inclusion of any amount on account of the Uncontrollable factors

as projected by the Appellant in the MYT Petition
denied. It is submitted that the Respondent No.1 has approved the

141
O&M expenses (A&G, R&M, Employee Expenses) based on the
methodology described in the MYT Regulations notified on 30.05.2007.
As has been stated supra the MYT Regulations are binding on the
Appellant. It is submitted that as per the clause 5.3 of MYT
Regulations, 2007:
“The O&M expenses for the Base Year shall be approved by the
Commission taking into account the latest available audited
accounts, business plan filed by the Licensees, estimates of the
actuals for the Base Year, prudency check and any other factor
considered appropriate by the Commission.”
With regard to the aforesaid it is submitted that in addition to the
audited accounts, the estimates of the actuals etc. there is a factor of
‘Prudence check’ and any other factor considered appropriate by the
Respondent No.1. The Respondent No.1 has accordingly based on the
prudence check and giving due consideration to the relevant factors
and submissions of the Appellant, approved a certain figure for the
R&M Expenses and it is very logical that on the same very figure the K
factor is to be calculated.
It is submitted that the Appellant has displayed sheer inefficiency and
non-compliance to the directive of the Respondent No.1 by not applying
for the additional increase in the expenses under the pretext of
practical realities of business etc. The Respondent No.1 has, in
practical consideration of the Commercial practices and taking
cognizance of the nature of expenses, has given a wide choice to the
Appellant to incur the expenditure prudently and come to the
Respondent No.1 for approval even before it could be included in the
petition. It is submitted that the Appellant has failed to take
advantage of the opportunity given to the Appellant by the Respondent
No.1. In the light of the aforesaid the contention that the R&M
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expenses are inappropriately disallowed in misconceived and deserves
to be dismissed. It is submitted that the O & M expenses per unit for
the Appellant is one of the highest amongst the DISCOM in the
country. The relevant chart in support of the aforesaid fact is annexed
herewith and marked as ANNEXURE-27.
It is further submitted that contention of the Appellant vis-avis non-
inclusion of the R&M expenses under the category of uncontrollable
factor is misconceived in view of the fact that Clause 4.16 of the MYT
Regulations, 2007 specifies the principles for controllable and
uncontrollable parameters and inter alia states that any surplus or
deficit on account of O&M expenses shall be to account of the licensees
and shall not be trued up in ARR. Accordingly, R&M expense being
part of the O&M expense, is a controllable parameter. The Respondent
No.1 has, therefore, in accordance with the MYT Regulations, 2007,
notified on 30.05.2007, determined the amount of the R&M expenses.
Having regard to the aforesaid, it is submitted that the contention of
the Appellant deserves to be dismissed.
8.10. Re: Depreciation
8.10.1 The contents of para 8.10.1 are wrong and hence denied. It is
No.1 has denied the Appellant its depreciation entitlement as provided
by the order of the Hon’ble Supreme Court 15.02.2007 read with the
order of this Hon’ble Tribunal dated 23.05.2007 is inaccurate and
devoid of any legal sanctity. It is submitted that the contention of the
Appellant that the Respondent No.1 has misconstrued the aforesaid
order of the Hon’ble Supreme Court and the Hon’ble Tribunal by
applying a uniform rate of depreciation @ 6.69% is based on

143
misinterpretation of the aforesaid orders and therefore deserves to be
dismissed. Further, as has been held by this Hon’ble Tribunal, the
issue of depreciation is no longer res integra. The Hon’ble Supreme
Court directed the matter for the Policy Period and this has been duly
followed by the Respondent No.1. The Appellant cannot reagitate the
issue once again.
No.1 has flouted and misapplied the principles underlying the decision
of the Hon’ble Supreme Court to the facts of the present case is based
on misinterpretation of the directions of the Hon’ble Supreme Court
issued vide the said order. It is pertinent to mention here that the
Respondent No.1 has calculated the depreciation in the impugned
order in absolute consonance with the directions of the Hon’ble
Supreme Court and this Hon’ble Tribunal.
submitted that though the Appellant has contented in the preceding
and the succeeding paragraphs that the rate of depreciation has to be
in consonance with the MOP Notification the weighted average of
which has been determined by the Hon’ble Supreme Court to be 6.69%,
the Appellant in its estimations of depreciation has calculated the
depreciation @ 7.5% which is neither the individual rates as provided
in the MOP Notification nor the weighted average of the individual
rates provided in schedule VI to the said notification. Therefore, the
impact of disallowance of depreciation worked out by the Appellant in
the paragraph under reply is a work of its own assumptions and

144
fancies and not in consonance with the law as determined by the
Hon’ble Supreme Court.
8.10.4 -8.10.5 The contents of para 8.10.4 & 8.10.5 are wrong and hence
denied. It is submitted that the propositions derived by the Appellant
on an interpretation of the order of the Hon’ble Supreme Court and
Hon’ble Tribunal dated 15.02.2007 and 23.05.2007 are misconceived
and an attempt to mislead this Hon’ble Tribunal. It is submitted that
on the cojoint reading of the aforesaid order the Appellant has
observed as under:
“ (a) The Hon’ble Supreme Court as well as this Hon’ble

Tribunal upheld the proposition that the rates specified in
the MOP Notifications shall apply in the manner
indicated without resorting to any derivation of the rate of
depreciation based on the fair life of assets;
(b) The percentage of depreciation is specified for each item of

equipment and that alone has to be adopted to work out
depreciation on straight line method;
(c) The rate of 6.69% as the applicable rate of depreciation

had been upheld for the entire Policy Direction period on
the total fixed assets. The DERC in the BST Order had
observed that “ideally, the depreciation is to be estimated
by apply different rates of depreciation for various classes
of assets.”
It is submitted that by way of submission of the aforesaid
proposition the Appellant is trying to blow hot and cold at the
same time. It is submitted that the reliance by the Appellant on
the BST order of the Respondent No.1 is misplaced as the
Appellant had assailed the very order before the Hon’ble
Supreme Court.. Accordingly, it is submitted that the

145
proposition arrived at by the Appellant are misconceived and
cannot be relied upon.
submitted that the contention of the Appellant that Respondent
No.1 has misconstrued the Hon’ble Supreme Court’s
depreciation order and ignore the factual reality is
unsustainable in law and in fact. It is submitted that the
Appellant has challenged the levy of uniform rate of
depreciation @ 6.69% which is in absolute consonance with the
directions of the Hon’ble Supreme Court, as explained by the
Respondent No.1 herein below, and accordingly the said
challenge is without any basis.
submitted that the letter dated 24.12.2007 was only a
clarificatory letter issued by the Appellant to submit the
inadvertent mistakes caused by it in the calculation of the
amount of depreciation.
hence denied. It is submitted that the contention of the
Appellant that neither the ATE depreciation order 1 and 2 nor
Supreme Court order stipulated that 6.69% is the only rate of
depreciation, is misconceived and based on an inaccurate
interpretation of the said orders by the Appellant. It is pertinent
to mention here that the Hon’ble Supreme Court vide its order
dated 15.02.2007 has held the rate of depreciation in terms of
MOP Notification works out an average as 6.69%. The relevant
para of the said order is reproduced hereunder:

146
“According to ATE, the method adopted by DERC to

calculate depreciation on the basis of the fair life was
contrary to the abovementioned BST Order and Policy
Directions as well as MOP Notifications. Further,
according to ATE, the rate of depreciation in terms of
MOP Notification works out an average of 6.69%.
According to ATE, even the BST Order issued by DERC
proceeds on the basis that depreciation is admissible at a
rate for an identical equipment and, therefore, there was
no reason to treat the DISCOMs herein differently.
According to ATE, the Policy Directions of GoNCTD did
not indicate depreciation at the rate of 6.69% but while
passing the BST Tariff Order dated 22-2-2002, DERC had
granted depreciation at the same rate of 6.69%.
According to ATE, the BST Tariff Order dated 22-2-2002
constituted a parameter for the DISCOMs herein for the
transition period of 5 years. According to ATE, 16%
return on equity was guaranteed. This was not in
dispute. However, according to ATE, 16% of the return on
equity can be arrived at only if allowable expenditure is
made admissible. Lastly, according to ATE, depreciation
has been allowed by DERC at the rate of 6.69% to
TRANSCO and GENCO and, therefore, there was no
reason to treat the DISCOMs herein differently.
According to ATE, MOP Notification dated 29-3-1994
enabled the DISCOMs herein to claim the accelerated
rate of depreciation so that the utility can meet higher
capital expenditure and higher operational expenditure
requirements. Thus, by the impugned order dated 29-9-
2006 ATE confirmed and reiterated in detail its earlier
order (dated 24-5-2006) in favour of the DISCOMs herein
holding that the rate of depreciation fixed by DERC at
3.75% was erroneous and that the denial of depreciation
to the utility at 6.69% was not sustainable either in law or
in facts…………….we state that our judgment is confined
to the facts of the present case alone and the reasoning
given hereinabove is in the context of the period of 5
147
years. This judgment should not be construed to apply for

all times. It is confined to the transition period only.”
A bare perusal of the aforesaid makes it amply clear that the Hon’ble
Supreme Court has directed the rate of depreciation as 6.69% . It is
submitted that Appellant is trying to mislead this Hon’ble Court by
stating that the Hon’ble Supreme Court has nowhere provided the rate
depreciation to be 6.69%. It is submitted that a bare perusal of the
table submitted by the Appellant in para.8.10.3 shows that the figure
of additional Rs. 64.7 crores arrived at by the Appellant is by
calculating depreciation @ 7.5%. It is submitted that the rate of
depreciation @ 7.5% is neither specified in the Hon’ble Supreme Court
order nor provided in the MOP Notifications. Accordingly, It is
submitted that the estimation arrived at by the Respondent No.1 is
erroneous and incomplete disregard of the direction of the Hon’ble
Supreme Court.
8.10.10-8.10.11 The contents of paras 8.10.10-8.10.11 are wrong and
hence denied. It is submitted that the contention of the Appellant
that the rate of 6.69% was upheld by the Hon’ble Supreme Court only
in the absence of break up of assets and accordingly as the Appellant
has submitted the detailed break up of its assets, the depreciation
ought to be provided at individual rates is not sustainable in the light
of the fact that the 6.69% rate of depreciation is based on the weighted
average rate of individual rate of depreication assets notified by the
MOP Notification and upheld by the Hon’ble Supreme Court in its
order dated 15.02.2007. Further, it is pertinent to mention that the
individual break up of assets which the Appellant is placing reliance
upon has not been approved by the Appellant and accordingly could
not have been relied upon to calculate the depreciation entitlement of

148
the Appellant. It is submitted that as the issue is no longer res integra
and the rate of depreciation has been finalized by the Hon’ble Supreme
Court, the Respondent No.1 does not possess the power or the
jurisdiction to go beyond the ruling of the Hon’ble Supreme Court. It is
submitted that while arriving at the depreciation approved by the
Respondent No.1 in the impugned order the Respondent No.1 is guided
by the Supreme Court Order dated 15.02.2007 in Civil Appeal No.
2733/2006 and subsequent Order of the ATE dated 23.05.2007. The
Supreme Court has in its Order dated 15.02.2007 upheld the rate of
rate of depreciation in terms of MOP Notification to an average as
6.69%. for the entire Policy Direction period. The ATE, in its order
dated 23.05.2007 held that the Respondent No.1 has to allow carrying
cost on such additional depreciation for the entire Policy Direction
period @ 9%. It is also held that the Respondent No.1 has to allow
depreciation @6.69% and Carrying cost @ 9% on the assets acquired
out of APDRP grants.
In view of the above Orders of the Supreme Court and the ATE, the
Respondent No.1 has allowed depreciation on the opening GFA for the
year which includes assets created from APDRP grants @ 6.69% for the
Policy Direction period along with the carrying cost @9%. Hence, the
contention of the Appellant regarding claiming of the additional
amount of Rs. 64.7 crores on account of depreciation, which is arrived
at by applying 7.5% on the opening GFAs approved by the Respondent
No.1 is not correct and maintainable in law.
8.11 Re: Erroneous Calculation of Advance Against Depreciation (“AAD”)

for the MYT Period.
149
submitted that the claim of the Appellant that it has been severely
affected by a lower approval of Advance Against Depreciation (AAD) to
the tune of Rs.128 crores is based on inaccurate methodology as
computed by the Appellant and hence denied.
hence denied. It is submitted that in arriving at the figures for AAD
the Respondent No.1 has worked in strict adherence to the provisions
of the MYT Regulations, 2007. It is submitted that as per the MYT
Regulation Clause 5.18 in addition to the allowable depreciation, the
Distribution Licensee shall be entitled to Advance Against
Depreciation, computed in the manner given hereunder:
AAD = Loan (raised for capital expenditure) repayment amount

based on loan repayment tenure, subject to a ceiling of 1/10th of
loan amount minus depreciation as calculated on the basis of
these Regulations;
Provided that Advance Against Depreciation in a year shall be

restricted to the extent of difference between cumulative
repayment and cumulative depreciation up to that year.
It is submitted that the Opening Balance Sheet of the Appellant, inter
alia, contains the following entries:
(i). Equity Capital:
It is submitted that the same is considered by the Respondent
No.1 and the return is allowed on the equity contained in the
Opening Balance sheet.
(ii). Secured loans paid to the Holding company:
It is submitted that the Respondent No.1 has recognised this
loan and allowed all the refinancing charges and the interest on
the loan swapped.
(iii). Security Deposits:

150
It is submitted that, with respect to the same, the Appellant
claims to accept a liability of Rs.11 crores only as per the
opening balance sheet and not the entire amount of security
deposits. It is submitted that the matter is sub-judice before the
Hon’ble High Court of Delhi. A copy of the writ petition filed by
appellant is annexed hereto as ANNEXURE-28.
Having regard to the aforesaid, it is submitted that when any
document is considered, it is considered in totality and not in
parts. The said opening balance sheet forms the basis of
privatisation process and transfer of assets and liabilities to the
various utilities. Therefore, the same has to be considered in
harmonious manner and not in seclusion to the other. It is
submitted that it is not justified that the Appellant will take a
return based on the equity in the opening balance sheet,
accepting a liability towards the Security deposits as per the
opening balance sheet and claiming the refinancing and interest
charges as per the loans in the opening balance sheet, which are
in its favour but when it comes to the accumulated depreciation,
the stand of the Appellant changes to the contrary. It is
submitted that if the Appellant accepts one side of the Balance
sheet it is equally imperative that it accepts the other side of the
same as the other side is balance and reflection of the first side
in different terms.
With regard to the submission of the Appellant vis-à-vis
computation of AAD, it is submitted that though as per the
transfer scheme, the Appellant has certain accumulated
depreciation (to the tune of Rs. 383 crores), but the transfer
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scheme has no where mentioned that it would not be considered
for calculation of accumulated depreciation. It is further
submitted that the Table 106 of the Impugned Order contains
the AAD approved by the Respondent No.1. In this table the
figure of Rs. 499.30 crores written against ‘depreciation
considered for CAPEX and WC for previous years’ is the
cumulative figure of the depreciation considered and given effect
by the Respondent No.1 in its respective Tariff Orders from
2002-03 to 2006-07. Hence from the FY 2007-08, this figure is
considered as a base figure. It is submitted that while approving
the depreciation considered for CAPEX and WC in the previous
years starting from 2002-03, the Respondent No.1 has not
considered the utilisation of Rs.383 crores as the depreciation
appearing in the Opening Balance Sheet of the Discom. Hence,
the Respondent No.1 has considered only the total depreciation
figures approved and considered during the Control Period
excluding Rs.383 crores. Table 14 at page 80 of the above-said
order, on the other hand, represents the annual depreciation
approved by the Respondent No.1 on year to year basis for debt
repayment, working capital requirement and capital investment
respectively. In other words, it is submitted that, Table 14 only
represents the approval of the depreciation for each year of the
Policy Period and their utilisation in the respective years under
different heads.
It is submitted that since Rs. 383 crores of depreciation has not
been given effect and considered during the Policy Period, that
amount is deemed to have been available with the Discom for
utilisation and hence this amount of Rs. 383 crores is considered

152
under the head ‘Cumulative Depreciation’ considered for AAD. It
is submitted that, in view of the above, the Respondent No.1 has
given effect to the utilisation of Rs. 383 crores in the opening
AAD considered for the FY 2007-08 since it has not considered
depreciation of Rs.383 crores for utilisation in any of the
previous year.
8.11.6 The contents of the para 8.11.6 are wrong and hence denied. In
view of the submissions made in the preceding para it is
submitted that the contention of the appellant vis-à-vis
inaccurate computation of AAD is misconceived and deserves to
be dismissed.
8.12 Re: Inclusion of Sundry Creditors as source of ‘Means of Finance’
8.12.1-8.12.2 The contents of the paras 8.12.1to 8.12.2 which are matter of
record are not denied. Rest of the paragraph is wrong and hence
denied.
8.12.3-8.12.7 The contents of the paras 8.12.3 to 8.12.7 are misleading and
hence denied. It is submitted that the contention of the Appellant that
the Respondent No.1 has deviated from the practice adopted by it in
the previous orders with respect to computation of ‘Means of Finance’
in the impugned order is baseless. It is submitted that while
computing the ‘Means of Finance’ the Respondent No.1 has not
deviated from its approach. In this regard, it is pertinent to mention in
the Tariff Order of 2005-06, the Appellant had vide letter reference no.
RCM/06-07/387 dated 25th April 2006 submitted the actual source of
funding corresponding to capital expenditure of Rs.923.06 crore. A copy
of the said letter is annexed hereto as ANNEXURE-29. It is submitted

153
that from the bare perusal of the said letter it is amply clear that the
Appellant had itself submitted that the capital expenditure of Rs.
545.31 crore is funded through Sundry Creditors in FY 2004-05. (Page
3.27, Para 3.9.1 of Tariff Order of 2005-06 for BRPL BRPL A copy of
the relevant extract of the Tariff Order of 2005-06 is annexed as
ANNEXURE-30.
It is submitted that since the Appellant has itself submitted the
Sundry creditors to be one of the means of finance, accordingly, the
Respondent No.1 had approved Rs.146.85 crores of Sundry Creditors
while approving the “Means of Finance” for 2004-05.
However, it is submitted that while doing the second true-up for the
FY 2004-05, the Respondent No.1 has done recasting of the “Means of
Finance” based on the additional depreciation allowed by it in the said
Order which, it is pertinent to mention, includes the approval of
closing value of Sundry Creditors in the year end of Rs.20.77 crores
instead of earlier Rs.146.85 crores ( Reliance is placed on Page 108 of
BRPL Tariff Order 2006-07).Copy of the same is annexed hereto as
ANNEXURE-31.
It is further submitted that the Respondent No.1 has retained the
same order of priority of means of finance as adopted in the Tariff
Order dated June 26, 2003, for the FY 2004-05, FY 2005-06 and FY
2006-07, which is as follows:
• Consumer Contribution
• Unutilised Depreciation including available unutilised
depreciation of the previous years
• APDRP Funds available during the year

154
• Balance Funds required - balance fund requirement is assumed to
be met through a mix of debt and equity by applying a normative
debt to equity ratio of 70:30
FY 2004-05
It is submitted that the Respondent had analysed in detail the
“Means of Finance” proposed by the Appellant in its Petition and
in its subsequent submissions. The Respondent No.1 had
considered actual receipt of consumer contribution of Rs. 59.91
Crore during FY 2004-05. As no APDRP funds were available
during FY 2004-05, the Respondent No.1 had not considered the
same for funding capital expenditure. It is submitted that,
considering the uncertainty in availability of APDRP funds over
past 2 years, the Respondent No.1 did not considered the same for
FY 2005-06. If the Appellant would be able to draw down funds
under APDRP Scheme, the same shall be considered while truing
up the expenses for FY 2005-06.
Further, for FY 2004-05, it is submitted that, the Respondent
No.1 had considered the actual loan of Rs 207 Crore availed by
the Appellant for funding capital expenditure. Further, the
Respondent No.1 had considered the funding through internal
accrual (free reserves) to the extent of Rs 88.71 Crore based on
normative Debt: Equity Ratio considering the actual debt of Rs
207 Crore. It is submitted that after considering all these sources
of financing i.e. Consumer Contribution, unutilised depreciation,
Debt and Internal Accruals, for the balance captial expenditure,
the Respondent No.1 had considered the funding through sundry
creditors. The extent of funding through sundry creditors as

155
considered by the Respondent No.1 is Rs 146.85 Crore as against
Rs 545.31 considered by the Appellant.
It is further submitted that, the Respondent No.1 had obtained
the details of sundry creditors and the time period for making
payment to sundry creditors. It is submitted that the Appellant
had submitted that the sundry creditors represent the credits
given by various vendors/suppliers for supply of
equipment/material and the Appellant has to make payments to
sundry creditors within first three to six months of FY 2005-06.
FY 2005-06
It is submitted that the Respondent No.1 has adopted the same
priority of “Means of Finance” as discussed above. It is further
submitted that the Respondent No.1 had also considered the
funding of sundry creditors through the loan and free reserves
based on normative Debt:Equity Ratio. The Respondent No.1 had
considered funding of investments through internal accruals to
the extent of Rs. 88.71 Crore during FY 2004-05 and Rs. 142.56
Crore during FY 2005-06, respectively. It is submitted that in
case, the return on equity during the year be less than the
requirement of funding through internal accrual based on debt to
equity ratio of 70:30, the Respondent No.1 had considered
unutilised internal accruals of FY 2002-03, FY 2003-04 and FY
2004-05 for funding of capital investments. It is further
submitted that if the requirement of internal accruals would not
have been met by considering unutilised reserves for previous

156
years, the Respondent No.1 had also considered loan funding
towards the same.
FY 2006-07
It is submitted that Respondent No.1 has considered actual receipt of
consumer contribution of Rs. 39.44 crores during FY 2005-06. The
Respondent No.1 has also considered a normative loan of Rs. 203.20
crores for funding Capital Expenditure. Further, the Respondent
No.1 has considered funding through internal accrual (free reserves)
to the extent of Rs 87.08 Crores based on normative debt equity ratio
of 70:30. The Respondent No.1 has considered funding of sundry
creditors through loan and free reserves based on normative Debt:
Equity Ratio of 70:30. In case, the return on equity during the year is
less than the requirement of funding through internal accrual based
on normative debt equity ratio, the Respondent No.1 has considered
unutilised internal accruals of FY 2002-03 to FY 2005-06 for funding
of capital investments. If the requirement of internal accruals is not
met by considering the unutilised reserves for previous years, the
Respondent No.1 has considered loan funding towards the same.
It is submitted that for FY 2006-07, the Respondent No.1 has
considered the funding of investment based on the same philosophy
considered for the FY 2005-06
Accordingly it is submitted that the Respondent No.1 has included
sundry creditors as a Means of Finance in tariff order for FY07.
However, the Respondent No.1, by way of clarification submits that if
Respondent No.1 has considered sundry creditors as a Means of
Finance for any year, it has allowed funding of this sundry creditor in
157
the next year’s means of finance in addition to the funding of
capitalization approved by the Respondent No.1 for next year. It is
therefore, most respectfully brought to the notice of this Hon’ble
Tribunal that the Respondent No.1 has not deviated from its
approach but has included Sundry creditors also as one of the Means
of Finance, based on the Appellant own submission.
In light of the aforesaid, it is submitted that the contention of the
Appellant that the Respondent No.1 has deviated from the approach
adopted by it in the previous tariff orders is unsustainable and
deserves to be dismissed.
8.13 Lower Approval of Interest Rates for the Loans to be raised by the
Appellant during MYT Period.
submitted that the contention of the Appellant that the Appellant is
aggrieved by approval of a lower interest rate per loans to be
undertaken by Appellant during the Control Period is unsustainable.
It is submitted that the Appellant has wrongly submitted that the
interest rates for loans to be undertaken by Appellant during the
Control Period , restrict the commercial ability of the Appellant to
raise loans is baseless and inaccurate in view of the facts of the case.
8.13.2-8.13.3 The contents of paras 8.13.2-8.13.3 needs no reply.
8.13.4 The contents of para 8.13.4 are wrong and denied. It is submitted
that the contention of the Appellant that Respondent No.1 has
selectively narrowed down all the loans carrying an interest rate in
the range of 1.75% to 2.75% below the PLR and has made those rates
as the general norms for the loans to be taken during the MYT
period, is blatantly wrong. It is submitted that the Respondent No.1

158
has arrived at its finding after a prudent analysis of the issue. It is
submitted that as has been observed in para 4.221 of the Impugned
Order, the Respondent No.1 has analysed the terms and conditions of
the loan taken by the Appellant in FY 2007 and noticed that the
Appellant has managed to procure the funds in the range of 1.75% to
4.75% below the PLR. Thus, for the control period, the Respondent
No.1 considered that Appellant would be able to raise the funds at
2.75% below SBI PLR. It is submitted that though, the Respondent
No.1 has stipulated a certain interest rate of 9.5% for all loans that
the appellant may raise, it has also stipulated in Para 4.223 of the
impugned Order that shall true up the means of finance for the
control period as the assed capitalization is subjected to true up. It
may true up the interest rate considered for new loans to be taken for
capital investment and for working capital requirement if there is a
deviation in the PLR of the scheduled commercial banks by more 1%
at either side.
It is submitted that as per the MYT Regulations, Explanatory Notes,
cost of debt shall be determined at the beginning of the Control
period after considering the Licensee’s proposal, present cost of Debt
already contracted by the Licensee, and the other relevant factors
(risk free returns, risk premium, Prime lending rate etc.) It pertinent
to mention here that the Respondent No.1 has, in consonance with
the provisions of the MYT Regulations, after a detailed analysis of
the funds procured by the Appellant, determined the interest rate as
2.75% below the SBI PLR. An extract of the interest rates on the
existing loans and the proposed loans which have been considered by
the Respondent No.1 in determining the interest rate under the
Impugned Order is annexed hereto as ANNEXURE-32. It is further

159
pertinent to mention that the Appellant has baselessly challenged
interest rate determined by the Respondent No.1 from the bare
perusal of the extract annexed that it had been possible for the
Appellant to procure loan on interest rates as low as 4.75% below the
SBI PLR as against the mark of 2.75 as determined by the
Respondent No.1
In the light of the aforesaid, it is submitted that the approval of the
interest rate for the loans raised by the appellant during the MYT
period does not tantamount to lower approval of the interest rates
and is in order.
9. The contents of para 9 are denied for the want of knowledge.
10-17 The contents of paras 10-17 (wrongly numbered as 13) merit no reply.
18 The Relief clause is wrong and denied. No grounds has been made out
by the Appellant for grant of any relief whatsoever and the appeal is
liable to be dismissed with exemplary cost.
Respondent No. 1
VERIFICATION:
Verified at New Delhi on this 2nd day of May 2008, that the contents of
paras 1 to 17 of the reply on merits are true to my knowledge based on the
records maintained by the Respondent No. 1 in its normal course of
business and whereas the contents of para I to VI of the preliminary
objections and para 18 of the reply on merits and the legal averments in
the reply are based on the legal advice received and believed to be true.
Last para is prayer to this Hon’ble Court.

160
Respondent No. 1
THROUGH:
Luthra & Luthra

Law Offices
Counsel for the Defendant No. 1
103, Ashoka Estate,
Barakhamba Road,
New Delhi-110018.
New Delhi
Dated:
161
NEW DELHI
APPEAL No. OF _36___ 2008
IN THE MATTER OF:
BSES RAJDHANI POWER LIMITED ……APPELLANT
VERSUS

COMMISSION & ORS
…RESPONDENTS
AFFIDAVIT
I, Mr. Amarendra.K. Tewary, S/o. Mr. Triloki Tewary, age about 53 years,
residing at D II/ 11, Pandara Road, New Delhi, do hereby solemnly affirm
and declare as under:
1. That the Deponent is the duly authorized representative of Respondent
No.1 to, sign, verify, file and defend any case for and on behalf of
Respondent No.1 and as such competent to defend this appeal on
behalf of the Respondent No.1.
2. That the deponent is fully conversant with the facts of the case and
hence competent to swear this affidavit.
3. That the accompanying reply has been prepared under my instructions

and the contents of the same are true and correct to the best of my
knowledge and belief.
DEPONENT
VERIFICATION:
I, the above deponent, hereby verify that the contents of my above affidavit
are true and correct, no part of it is false and nothing material has been
concealed there from.
Verified at New Delhi on this day the 2nd day of May, 2008.
DEPONENT

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1

The Matter is listed for hearing on 9th July 2008

BEFORE HON’BLE APPELLATE TRIBUNAL FOR ELECTRICITY

APPEAL No. OF _36_ 2008

IN THE MATTER OF:

BSES RAJDHANI POWER LIMITED

DELHI ELECTRICITY REGULATORY

2 ANNEXURE 1: Copy of incomplete supporting affidavits

3 ANNEXURE-2: Copy of the presentation on Sales

4 ANNEXURE 3: Copy of letter dated 1.4.2008 from

5 ANNEXURE-4: : Copy of the letter dated August 07, 2007

6 ANNEXURE-5 Copy of the judgment dated reported as

7 ANNEXURE-6: Copy of “Working Group of Power” of 11th

8 ANNEXURE-7: : Copies of the Certificates issued by the

9 ANNEXURE-8: Copy of the Minutes of the Meeting dated

10 ANNEXURE-9: Copies of the order passed by the Hon’ble

11 ANNEXURE-10: Copy of the order dated 29th August 2006

13 ANNEXURE-12: Copy of the letter dated 23.01.06 from the

14 ANNEXURE-13(Colly): Copies of letters dated 30.6.2006

15 ANNEXURE-14: Copy of minutes of the meeting dated

16 ANNEXURE-15: Copies of documents submitted by the

17 ANNEXURE-16: Copy of the format of Quality Progress

18 ANNEXURE-17: Copy of the disclosure made by the

19 ANNEXURE-18: Copy of the appellant’s letter dated

20 ANNEXURE-19: Copy of the notings on page 27 on the file

21 ANNEXURE-20: Copy of sample of purchase order

22 ANNEXURE-21: Photocopy of the letter dated 30.10.07

23 ANNEXURE-22: Copy of the relevant extract of the MYT

24 ANNEXURE-23: Copy of the letter dated 15th January,

25 ANNEXURE-24: A copy of the relevant extract of the Tariff

26 ANNEXURE-25: Copy of the relevant extract of the Tariff

27 ANNEXURE-26: Copy of the relevant extract of the Tariff

28 ANNEXURE-27: Copy of the relevant chart evidencing that

29 ANNEXURE-28: Copy of the Writ Petition filed by

30 ANNEXURE-29: Copy of the letter letter dated 25th April

31 ANNEXURE-30: Copy of the Tariff Order of 2005-06

32 ANNEXURE-31: Copy of the BRPL Tariff Order 2006-07.

33 ANNEXURE-32: Extract of the interest rate on the existing

34 Reply to the Application for Interim Relief.

Luthra & Luthra

BEFORE HON’BLE APPELLATE TRIBUNAL FOR ELECTRICITY

APPEAL No. __36__ OF 2008

IN THE MATTER OF:

BSES RAJDHANI POWER LIMITED

DELHI ELECTRICITY REGULATORY

REPLY ON BEHALF OF RESPONDENT No.1

MOST RESPECTFULLY SHOWETH;

submission made in the Appeal which is contrary to and inconsistent with

present reply. It is submitted that the Respondent No.1 (Delhi Electricity

Regulatory Commission/ DERC) is a State Regulatory Commission

constituted by the Government of NCT of Delhi on March 3, 1999 under the

provisions of the Electricity Regulatory Commissions Act, 1998 and Mr.

Amarendra.K. Tewary, Secretary is the duly authorized representative of

Respondent No.1 and as such competent to defend this appeal on behalf of

the Respondent No.1.

I. It is submitted at the very outset that the present appeal deserves

outright dismissal for the want of proper verification and supporting

affidavits as per the procedure of law. It is submitted that the

affidavits filed by the Appellant herein supporting the instant appeal

are contrary to the requirement of the rules as framed under the

Appellate Tribunal for Electricity (Procedure, Form, Fee and Record of

Proceedings) Rules, 2007. It is pertinent to mention here that the

APPEAL No. 36 OF 2008