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Himachal Pradesh Electricity Distribution Management Responsibility Act, 2014

(Act No. 5 of 2015)

Last Updated 7th March, 2020 [hp271]

(a) "Action Plan" shall have the meaning assigned to it in section 3 of this Act;

(b) "Aggregate Technical and Commercial Loss" or "AT& C Loss" means the difference between the energy input into the distribution system and the energy realised wherein the energy realised shall be equal to the product of energy billed and collection efficiency;

(c) "Authority" means the Central Electricity Authority referred to in sub- section (1) of section 70 of the Electricity Act;

(d) "Board" shall have the meaning assigned to it under the Electricity Act, 2003;

(e) "Collection efficiency" means the ratio of total revenue realized to the total revenue billed for the same year;

(f) "Electricity Act" means the Electricity Act, 2003 as in force;

(g) "fiscal responsibility and budget management limit" means limit imposed on State Government borrowings from Central Government under the statute relating to fiscal responsibility and budget management of the State, as may be in force from time to time;

(h) "Financial Restructuring Plan or "FRP" means a plan for financial restructuring of the Distribution Licensee as notified by the State Government in accordance with the provisions of the Financial Restructuring Scheme notified by the Central Government in terms of Office Memorandum No. 20/11/2012-APDRP, dated 5th October, 2012;

(i) "Key Performance Indicators (KPIs)" means the performance standards laid by the State Commission, if any, and/or in the Financial Restructuring Plan, if any, and till such time the KPIs are laid down, the KPIs as provided for in the Schedule to this Act;

(j) "Nodal Bank" means the bank nominated by the Department of Financial Services, for the purposes of financial restructuring of the State Distribution Licensee and for the purposes of co-ordination with the State Government, State Distribution Licensee and the participating Lenders;

(k) "prescribed" means prescribed by rules made by the State Government under this Act;

(l) "Schedule" means Schedule appended to this Act;

(m) "State Commission" means the Himachal Pradesh Electricity Regulatory Commission constituted under section 82 of the Electricity Act, 2003 (36 of 2003);

(n) "State Distribution Licensee" or "Distribution Licensee" means the Himachal Pradesh State Electricity Board Ltd. constituted under sub-section (1) of section 5 of the Electricity (Supply) Act, 1948 (54 of 1948) or the Government Company or the Department under the State Government engaged in distribution of electricity; and

(o) "State Government" means the Government of Himachal Pradesh.

(a) State Electricity Distribution Strategy Statement laying down the policies and strategies of the State Government for achieving the Key Performance Indicators, for the ensuing financial year, relating to the conditions or provisions provided under sections 4, 5, 6 and 8 and description of other activities which have potential implications on financial and operational turn-around of the State Distribution Licensee;

(b) action plan, on long-term, medium term and short-term basis, laying down time bound programme to-

(i) execute strategic priorities to achieve Key Performance Indicators;

(ii) monitor and ensure compliance of the Key Performance Indicators, and strategic priorities;

(iii) feedback loop for in/mid-course corrections; and

(iv) such other actions as may be required to meet the obligations cast under this Act on the State Government and achieve the objectives of this Act:

(c) State Electricity Distribution Performance Statement laying down an assessment of compliance, by the State Electricity Distribution Licensee or the State Government, as the case may be, with the conditions or provisions provided under sections 4, 5, 6 and 8 of this Act.

(a) that the State Distribution Licensee estimates the demand, Aggregate Technical and Commercial loss and availability of electricity on long term basis and contracts with the approval of the State Commission, through long or medium or short term agreements for purchase of power to meet the demand;

(b) that the State Distribution Licensee prepares, with the approval of the State Commission, a time bound road map for Aggregate Technical and Commercial loss reduction:

(c) that the State Distribution Licensee undertakes energy accounting and auditing of all 33 kV feeders, 11 kV feeders and Distribution Transformers alongwith consumer indexing and time bound metering of each category of consumers and in doing so the Distribution Licensee should consider latest developments in metering technologies:

(d) that if the State Government requires the grant of any subsidy to any consumer or class of consumers, the State Government shall declare the quantum of subsidy in advance categorically stating the consumer or the class of consumers to whom it is to be provided and in doing so, the State Government shall be guided by the Regulations for Multi Year Distribution Tariff evolved by Forum of Regulators;

(e) create annual budgetary provision and also timely release of subsidies, if committed, in accordance with section 65 of the Electricity Act, 2003 on actual basis;

(f) ensure that there are no arrears of electricity charges for electricity supplied to various Departments and Institutions of the State Government on or before the date of coming into force of this Act, and in case of failure to do so, it would be adjusted against the budgetary grant:

(g) set up, within one year from the date of coming into force of this Act, special courts, where it has not been done, to tackle theft of electricity in accordance with sections 153 to 157 of the Electricity Act, 2003;

(h) ensure that the State Load Dispatch Centre is operated within six months from the date of coming into force of this Act, by a Government company or any authority or corporation (other than the State Transmission Utility) established or constituted by or under any State Act, as may be notified by the State Government, and provide for other measures which shall ensure functional and financial autonomy, independent and sustainable revenue streams and adequate manpower:

(i) provide for the formation of subsidiaries, joint venture companies or other schemes of division, amalgamation, merger or reconstruction or arrangements in relation to the State Distribution Licensee which shall promote the profitability and viability of the resulting entity, ensure economic efficiency, public private partnership, encourage competition and protect consumer interests; and

(j) such other measures as may be prescribed.

(i) Principal Secretary (Finance) to the Government of Himachal Pradesh Chairperson;

(ii) Principal Secretary (Power) to the Government of Himachal Pradesh Member; and

(iii) Head of the State Distribution Licensee Member-Secretary.

(a) apart from receiving director’s remuneration, does not have any material pecuniary relationship or transaction with the State Distribution Licensee, its Directors, its senior management, its holding company, its subsidiaries and associates, and the State Government, which may affect the independence of the Director;

(b) is not related to persons occupying management positions at the Board level or at one level below the Board;

(c) is not a partner or an executive, or was not a partner or an executive during the preceding three years, of any of the following:-

(i) the statutory audit firm or the internal audit firm or tax audit firm or energy audit firm or management audit firm or risk audit firm or insurance audit firm, that is associated with the State Distribution Licensee; and

(ii) the panel of advocate(s) or legal firm(s) or consultant(s) and consulting firm(s) or expert(s) that have a material association with the State Distribution Licensee;

(d) is not a material supplier, service provider or customer or a lessor or lessee of the State Distribution Licensee, which may affect the independence of the Director;

(e) is not a substantial shareholder of the State Distribution Licensee i.e. owning 2% or more of the block of voting shares; and

(f) is a person of ability, integrity and standing, having qualification in engineering or law or economics or commerce or finance or management and having knowledge and experience in the areas of generation or transmission or distribution of electricity.

(a) variations in the actual power purchase cost and the power purchase cost approved by the State Commission;

(b) variations in the actual and approved expenditure of other items of the Aggregate Revenue Requirement such as but not limited to Operation and maintenance expenditure and capital expenditure; and

(c) variation between average cost of supply and average realization of revenue:

(a) timely filing of Annual Revenue Requirement and tariff petitions and adjustments on account of fuel and cost of power purchased by the State Distribution Licensee;

(b) prudent investment and capital expenditure planning; and

(c) financial management, to enable adequate and affordable electricity supply to consumers:

(a) Chief Secretary, Government of Himachal Pradesh:	Chairperson;
(b) Principal Secretary (Finance) to the Government of Himachal Pradesh:	Member;
(c) Principal Secretary (Power) to the Government of Himachal Pradesh:	Member-Secretary;
(d) Head of the State Distribution Licensee:	Member;
(e) Head of the State owned Generating Company:	Member;
(f) Head of the State owned Transmission Licensee:	Member;
(g) Representatives of the Nodal Bank and three major Lenders of the State Distribution Licensee:	Member; and
(h) Representative from Central Electricity Authority	Member.

(i) the reasons for deviation in fulfilling the obligations cast on the State Government under this Act;

(ii) whether such deviation is substantial and has potential implications on financial and operational turn-around of the State Distribution Licensee; and

(iii) the remedial measures that the State Government proposes to take on the recommendations made by the Committee established under section 10.

(i) the form of the State Electricity Distribution Management Statement referred to in section 3;

(ii) such other measures for long term planning as may be required under section 4; and

(iii) any other matter which is required to be, or may be, prescribed.

Schedule

(Sections 2(1)(l) and 3)

Illustrative Key Performance Indicators (KPIs)

(a) power Procurement with accurate Demand Estimation to mitigate Energy and Peak Shortages on long-term, medium term and short-term basis-undertake forecasting of demand and estimation of Aggregate Technical and Commercial losses within one year, procurement of power as per forecast from second year onwards and 100% electricity supply to consumers in next three to five years;

(b) payment of dues of electricity by Government Departments and Institutions.- the current dues have to be paid within due date of raising of bills;

(c) distribution loss reduction trajectory.- Aggregate Technical and Commercial losses to be reduced @3% per year for losses above 30% and @ 1.5% per year for losses below 30%;

(d) provisioning of subsidy.- it should be provided upfront by the Government by way of budgetary provision;

(e) energy accounting and energy auditing of all 33 kV feeders, 11 kV feeders and distribution transformers.- to be achieved within one and two years;

(f) 100% Metering and Consumer Indexing.- to be achieved within three years;

(g) setting up Special Courts for settling theft cases.- to be set up within one year, if not already set up.

(a) improvement in collection efficiency.- to be increased @ 1.5% per year if it is between 95 to 99%, @ 3% per year if it is between 90 to 95% and @ 5% per year if it is between 80 to 90%;

(b) recovery of past receivables.- past receivables to be reduced @ 20% per year till the normative level allowed by the Commission in the working capital computation;

(c) liquidation of pay ables and other liabilities.- 20% reduction every year till normative levels are achieved;

(d) Capital Expenditure alongwith its funding plan.- to get timely approved every year as per the norms specified by the Commission;

(e) quantum and rate of short term power purchase.- not more than 10 to 15% every year;

(f) discharge of Contingent liabilities.- 20% every year; and

(g) discharge of terminal benefit liabilities of the employees.- within one year for the past employees and for currently retiring - on the date of retirement;

(a) timely preparation and audit of Annual Accounts (Annual Accounts to be prepared within due date of 30thSeptember and realigned with the current accounting standards); and

(b) provision for bad and doubtful debts/write offs; IV Corporate Governance:

(a) number of Functional Directors. - as per Guidelines for Corporate Governance for Central Public Sector Undertakings; and

(b) number of Independent Directors. - as per Guidelines for Corporate Governance for Central Public Sector Undertakings;

(a) gap between Average Revenue Realization and Average Cost of Supply.- to be eliminated in a period of three to five years; and

(b) liquidation of Regulatory Assets.- to be liquidated in a period of three to five years.