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ASSAM STATE ELECTRICITY REGULATORY COMMISSION

 

Regulations for TREATMENT OF OTHER BUSINESSES OF LICENSEES

 

Regulation No.________, dated____-03-2004

 

            In exercise of powers under Section 41 and 51 read with Section 181 of the Electricity Act 2003 (36 of 2003) and all powers enabling it in that behalf, the Assam State Electricity Regulatory Commission hereby makes the following regulations providing for the treatment of income of Other Businesses of Transmission and Distribution Licensees and the proportion of revenues from such other businesses to be utilised for Licensed Business and for matters incidental and ancillary thereto:

 

1.                   Short title, extent and commencement:-

 

(1)        These Regulations may be called the Assam State Electricity Regulatory Commission (Treatment of income of Other Businesses of Transmission Licensee and Distribution Licensee) Regulations, 2004.

 

(2)        These Regulations shall be applicable to all intra-state Transmission Licensees and the Distribution Licensees in the State.

 

(3)        These Regulations shall come into force from the date the Commission may, by notification appoint for the purpose.

 

2.            Definitions and interpretation:-

 

            In these Regulations, unless the context otherwise requires:

 

(a)                “Act” means the Electricity Act, 2003;

 

(b)               “Commission” means the Assam Electricity Regulatory Commission constituted under section 17 of the Electricity Regulatory Commissions Act, 1998 and which continues to be so under section 82 of the Electricity Act, 2003 (no.36 of 2003);

 

(c)                 “Licence” means a licence granted under Section 14 of the Act to undertake intra-state Transmission or Distribution of Electricity and shall include the Licence of a deemed Licensee under the Act;

 

(d)               “Licensed Business” shall mean the functions and activities which a Licensee is required to undertake in terms of his Licence.

 

(e)                “Licensee” means a person who has been granted a licence under the Act and shall include a Deemed Licensee under the Act;

 

(f)                 “Other Business” means any business of the Licensee other than the Licensed Business;

 

(g)                Words and expressions used herein and not specifically defined herein but defined in the Act shall have the meaning assigned to them under the Act.

 

3.            Intimation of other business:-

 

(1)        If a Licensee proposes to engage in any Other Business for optimum utilization of the assets of the Licensed Business, he shall give prior intimation in writing to the Commission of such Other Business with the following details:

 

(a)        the nature of the Other Business;

 

(b)        the proposed capital investment in the Other Business;

 

(c)        the nature and extent of the use of assets and facilities of the Licensed Business for such Other Business;

 

(d)        the impact of the use of assets and facilities for the Other Business on the Licensed Business and on the ability of the Licensee to duly carry out the duties and obligations of the Licensed Business; and

 

(e)        the manner in which the assets and facilities of the Licensed Business shall be used and justification that it will be used in an optimum manner without adversely affecting the maintenance of the activities of the Licensed Business.

 

(2)        The Licensee shall be responsible to ensure that the utilization of the assets and facilities of the Licensed Business for the Other Business shall not in any manner affect the performance of the obligations or the quality of service required from the Licensee under the Licensed Business and that any such utilization shall be entirely at the cost and risk of the Licensee.

 

4.      Account:-

 

(1)        The Licensee shall:

 

(a)        maintain for the activities of Other Business separate accounting records, including records of any revenue, cost, liability, reserve, or provision which has been charged from or to the Other Business together with a description of the basis of the charge;

 

(b)        prepare on a consistent basis from such records accounting statements for each financial year comprising of a profit and loss account, a balance sheet and a statement of sources and application of funds;

 

(c)        provide in respect of the accounting statements prepared, a report by the Auditors in respect of each Financial Year, stating whether in their opinion the statements have been properly prepared and they give a true and fair view of the revenue, costs, assets, liabilities, reserves reasonably attributable to the business to which the statements relate; and

 

(d)        submit to the Commission such additional information as may be required to review the additional cost incurred by the licensee for Other Business.

 

(2)        The Licensee shall submit copies of the accounting statements and Auditor’s report specified in Clause (a) above not later than six months after the close of the financial year to which they relate.

 

(3)        The Licensee shall if required by the Commission establish to the satisfaction of the Commission that the Other Business duly bears an appropriate share of overhead costs and other common costs.

 

5.         Financial Implications:-

 

(1)        The Licensee shall not in any manner utilize the assets and facilities of the Licensed Business for any other Business or otherwise directly or indirectly allow the activities of any Other Business to be undertaken in a manner that it results in the Licensed Business subsidising the Other Business in any manner.

 

(2)        The Licensee shall not in any manner, directly or indirectly encumber the assets and facilities of the Licensed Business for any Other Business or for any activities other than the Licensed Business.

 

(3)        The Licensee shall duly account for all costs accounted which have been incurred for Other Business from in the Licensed Business and in the event of such costs being incurred commonly for both the Licensed Business and Other Business, the Licensee shall apportion such costs.  All suh costs pertaining to Other Business shall be duly adjusted by the Licensee for the benefit of the Licensed Business.  

 

(4)        In addition to the sharing of costs under Clause (3) above, the Licensee shall account for and adjust in favour of the Licensed Business such percentage of the gross turnover of the Other Business as the Commission may decide, subject to the maximum of 10% of the gross turnover of each of the Other Business.

 

(5)        The cost to be shared from the Other Business under Clause (2) above and the amount to be adjusted in favour of the Licensed Business in terms of Clause (3) above shall be the income of the Licensed Business of the Licensee and shall be utilized for reducing the charges of transmission or wheeling, as the case may be, of electricity by the Licensee.

 

6.         Powers of the Commission:-

 

(1)        The Commission may at any time direct an inquiry to determine:

 

(a)                whether the costs and expenses are being appropriately adjusted in favour of the Licensed Business as mentioned in Regulation 5 above; and

 

(b)               whether the revenues of the Other Business are properly accounted for to determine the gross turnover and the amounts to be adjusted in favour of the Licensed Business, as mentioned in Regulation 5 above.

 

(2)        The Commission may authorize an Officer of the Commission or any other person to carry out the investigation under Clause (1) above and submit a report to the Commission.

 

(3)        The Commission may, after considering the report under Clause (2) above and after giving an opportunity of hearing to the Licensee, pass such orders as the Commission considers appropriate in regard to the costs and expenses to be shared by the Other Business and proportion of the turnover of the Other Business to be accounted as the income of the Licensed Business.

 

7.         Issue of orders and practice directions:-

 

Subject to the provisions of the Act and these Regulations, the Commission may, from time to time, issue Orders and Practice Directions in regard to the implementation of these Regulations and procedure to be followed on various matters, which the Commission has been empowered by these Regulations to direct, and matters incidental or ancillary thereto.

 

8.         Power to remove difficulties

 

            If any difficulty arises in giving effect to any of the provisions of these Regulations, the Commission may, by general or special order, do or undertake or direct the Licensee to do or undertake things which in the opinion of the Commission are necessary or expedient for removing the difficulties.

 

9.         Power to amend

 

The Commission may, at any time add, vary, alter, modify or amend any provisions of this Regulation.

 

(BY ORDER OF THE COMMISSION)