Draft template for the Performance Audit of Power Transmission Utilities

Executive Summary
(Executive Summary would appear here)

Introduction
1.1
With a view to supply reliable and quality power to all by

2012, the Government of India (GoI) prepared the National Electricity Policy (NEP) in February 2005 which stated that the Transmission System required adequate and timely investment besides efficient and coordinated action to develop a robust and integrated power system for the country. It also, inter-alia recognized the need for development of National and State Grid with the coordination of Central/ State Transmission Utilities. Transmission of electricity and Grid operations in Uttar Pradesh are managed and controlled by Uttar Pradesh Power Transmission Company Limited (Company) which is mandated to provide an efficient, adequate and properly coordinated Grid management and transmission of energy. The Company was incorporated on (Date and Year) under the Companies Act 1956, and reports to the Energy Department. 1.2 The Management of the Company is vested with a Board of Directors

comprising (Number of Directors) members appointed by the State Government. The day-to-day operations are carried out by the Chairman cum Managing Director who is the Chief Executive of the Company with the assistance of Director (Operation), Director (Projects), Director (Finance), Director (Human Resources), Director (Commercial) and Company Secretary. During 2007-08, (Number) MUs of energy was transmitted by the Company which increased to (Number) MUs in 2011-12, i.e. an increase of (Number) per cent during 2007-12. As on 31 March 2012, the Company had transmission network of (Number) Ckm and (Number) substations (SSs) with installed capacity of (Number) Mva, capable of annually transmitting (Number) MUs at 220 Kv. The turnover of the Company was ` (Number) crore in 2011-12, which was equal to (Number) per cent State Gross Domestic Product respectively. It employed (Number) employees as on 31 March 2012.

A Performance Audit on (Factual Position) was included in the Report of the Comptroller and Auditor General of India (Civil/ Commercial), Government of State for the year ended 31 March Year. The Report was discussed by COPU in Month and Year. The COPU gave (Month and Year) its recommendations in its (Number) Report.

Scope and Methodology of Audit

1.3 The present Performance Audit conducted during February 2012 to (Month

and Year) covers performance of the Company during 2007-08 to 2011-12. Audit examination involved scrutiny of records of different wings at the Head Office, State Load Despatch Centre (SLDC), (Number) out of (Number) Zones, each headed by an Chief Engineer and (Number) out of (Number) Circles headed by Superintending Engineers. The Company constructed (Number) SSs (capacity : Number Mva) and (Number) lines (capacity : Number Ckm) as well as augmented existing transformation capacity by (Number) Mva during the review period. Out of these, (Number) SSs (capacity : Number Mva), (Number) lines (capacity : Number Ckm) and augmentation of existing transformation capacity by (Number) Mva were examined. (The criteria adopted for selection of sub-stations may be clearly stated here.) (Besides the criteria for selection of sub-stations should be a balanced mix of good and bad performing sub-stations based on risk analysis of the Units covered.) The methodology adopted for attaining audit objectives with reference to audit criteria consisted of explaining audit objectives to top management, scrutiny of records at Head Office and selected units, interaction with the auditee personnel, analysis of data with reference to audit criteria, raising of audit queries, discussion of audit findings with the Management and issue of draft review to the Management/ Government for comments.

Audit Objectives
1.4 The objectives of the performance audit were to assess whether: Perspective Plan was prepared in accordance with the

guidelines of the National Electricity Policy/ Plan and State

Electricity Regulatory Commission (SERC) and assessment of impact of failure to plan, if any; Operation and maintenance of transmission system was carried out in an economical, efficient and effective manner; The transmission system was developed and commissioned in an economical, efficient and effective manner; Disaster Management System was set up to safeguard its operations against unforeseen disruptions; Effective failure analysis system was set up; Effective and efficient Financial Management system with emphasis on timely raising and collection of bills and filing of Aggregate Requirement Revenue (ARR) for tariff revision in time; Efficient and effective system of Procurement of material and inventory control mechanism; Efficient and effective energy conservation measures were undertaken in line with the National Electricity Plan (NEP) and establishment of Energy Audit System; and There is a monitoring system in place to - review existing/ ongoing projects, take corrective measures to overcome deficiencies identified respond promptly and adequately to Audit/ Internal audit observations.

Audit Criteria
1.5 The audit criteria adopted for assessing the achievement of the audit

objectives were: Provisions of National Electricity Policy / Plan and National Tariff Policy; Perspective Plan and Project Reports of the Company; Standard procedures for award of contracts with reference to principles of economy, efficiency, effectiveness, equity and ethics; ARR filed with SERC for tariff fixation, Circulars, Manuals and MIS reports; Manual of Transmission Planning Criteria (MTPC); Code of Technical Interface (CTI)/ Grid Code consisting of planning, operation, connection codes;

Directions from State Government / Ministry of Power (MoP); Norms/Guidelines issued by SERC/Central Electricity Authority (CEA); Report of the Committee constituted by the Ministry of Power recommending the Best Practices in Transmission Report of the Task force constituted by the Ministry of Power to analyse critical elements in transmission project implementation; and

Reports of Regional Power Committee (RPC)/ Regional Load Dispatch Centre (RLDC).

Audit Methodology 1.6 Audit followed the following mix of methodologies: Review of Agenda notes and minutes of Company/Board/ RPC/ RLDC, annual reports, accounts and regional energy accounts (REA); Scrutiny of loan files, physical and financial progress reports; Analysis of data from annual budgets and physical as well as financial progress with completion reports; Tariff fixed by State Electricity Regulatory Commissions(SERC); Scrutiny of records relating to project execution, procurement receipt of funds and expenditure; and Interaction with the Management during entry and exit conference. Brief description of transmission process 1.7 Transmission of electricity is defined as bulk transfer of

power over long distances at high voltages, generally at 132 KV and above. Electric power generated at relatively low voltages in power plants is stepped up to high voltage power before it is transmitted to reduce the loss in transmission and to increase efficiency in the Grid. Sub-stations (SSs) are facilities within the high voltage electric system used for stepping-up/ stepping down voltages from one level to another, connecting electric systems and switching equipment in

and out of the system.

The step up transmission SSs at the

generating stations use transformers to increase the voltages for transmission over long distances. Transmission lines carry high voltage electric power. The step down transmission SSs thereafter decreases voltages to sub transmission voltage levels for distribution to consumers. needed to deliver electricity at specific voltages. Electrical energy cannot be stored; hence generation must be matched to need. Therefore, every transmission system requires a sophisticated system of control called Grid management to ensure balancing of power generation closely with demand. A pictorial representation of the transmission process is given below: The distribution system includes lines, poles, transformers and other equipment

Audit Findings
1.8 We explained the audit objectives to the Company during an Entry

Conference held on Date. Subsequently, audit findings were reported to the Company and the State Government in Month and Year and discussed in an Exit Conference held on Date. The Exit Conference was attended by (Factual Position may be stated here). The Company/ State Government replied to audit findings in Month and Year. The views expressed by them have been considered while finalising this Performance Audit. The audit findings are discussed in subsequent paragraphs. Planning and Development National Electricity Policy/Plan

1.9

The

Central

Transmission

Utility

(CTU)

and

State

Transmission Utilities (STUs) have the key responsibility of network planning and development based on the National Electricity Plan in coordination with all concerned agencies. At the end of 10th Plan (March 2007), the transmission system in the country at 765/HVDC/400/230/220/kV stood at 1.98 lakh circuit kilometres (CKM) of transmission lines which was planned to increased to 2.93 lakh CKM by end of 11th Plan i.e. March 2012. The National Electricity Plan assessed the total inter-regional transmission capacity at the end of 2006-07 as 14100 MW and further planned to add 23600 MW in 11 plan capacity to 37,700 MW. Similarly, the Companys transmission network at the beginning of 2007-08 consisted of (Number) Extra High Tension (EHT) SSs with a transmission capacity of (Number) MVA and (Number) CkM of EHT transmission lines. The transmission network as on 31 March 2012 consisted of (Number) EHT SSs with a transformation capacity of (Number) MVA and -(Number) CkM of EHT transmission lines. The STU is responsible for planning and development of the intrastate transmission system. Assessment of demand is an important pre-requisite for planning capacity addition. The State Electricity Regulatory Commission (SERC) authorised (Month and year) the Company to prepare a State Electricity Plan (SEP). Audit comment, if any, on non preparation of State Electricity plan or if prepared by the State, observations thereon along with statement of facts. Transmission network and its growth 1.10 The transmission capacity of the Company at EHT level during 2007-08 to 2011-12 is given below bringing the total inter-regional

Sl. No Description

200708

200809

200910

201011

2011-12

Total

A. Number of Sub-stations (Numbers) 1 2 3 4 5 At the beginning of the year Additions planned for the year Added during the year Total sub stations at the end of the year (1+3) Shortfall in additions (2-3)

B. Transformers capacity (MVA) 1 2 3 4 5 Capacity at the beginning of the year Additions/ augmentation planned for the year Capacity added during the year Capacity at the end of the year (1+3) Shortfall in additions/ augmentation

C Transmission lines (CKM) 1 2 3 4 5 At the beginning of the year Additions planned for the year Added during the year Total lines at the end of the year (1+3) Shortfall in additions (2-3)

The field office may make suitable comments relating to adequacy of transmission network with respect to growth of power consumption, planning for creation of infrastructure etc

Line Graph: Increasing trend in shortfall in addition of Substations in numbers as well as accretion to transformation capacity (Dummy Figures)

30 25 20 15 10 5 0 2007-08 2008-09 2009-10 2010-11 9 8 4 10

26

2011-12

Shortfall in sub-station

Line Graph: Increasing trend in shortfall in addition of lines in Circuit Kilometres (Dummy Figures)
1400 1200 1000 800 600 400 200 0 -200 -400 2007-08 2008-09 2009-10 2010-11 2011-12 -11 -153 662 Increase/Shortfall in additions of line planned 829 1279

Against the targeted construction of (Number) EHT SSs and laying of (Number) CkM of EHT lines, the Company constructed (Number) EHT SSs and (Number) CkM EHT lines during the five year period (achievement of (Number) per cent and (Number) per cent respectively). The transmission capacity added was (Number) MVA for the five year period ending 2011-12. The particulars of voltage-wise capacity additions planned, actual additions, shortfall in capacity, etc., during review period are given in the Annexure 1. Audit comment on the main reasons for shortfall in capacity addition and slippages in achieving the target by the Company to be discussed.

Project management of transmission system 1.11 A transmission project involves various activities from

concept to commissioning. Major activities in a transmission project are (i) Project formulation, appraisal and approval phase and (ii) Project Execution Phase. For reduction in project implementation period, the Ministry of Power, Government of India constituted a Task Force on transmission projects (February 2005) with a view to: analyze the critical elements in transmission project implementation, implementation from the best practices of CTU and STUs, and suggest a model transmission project schedule for 24 months duration. The task force suggested and recommended (July 2005) the following remedial actions to accelerate the completion of Transmission systems. Undertake various preparatory activities such as surveys, design & testing, processing for forest & other statutory clearances, tendering activities etc. in advance/parallel to project appraisal and approval phase and go ahead with construction activities once Transmission Line Project sanction/approval is received; Break-down the transmission projects into clearly defined packages such that the packages can be procured & implemented requiring least coordination & interfacing and at same time it attracts competition facilitating cost effective procurement; and Standardise designs of tower fabrication so that 6-12 months can be saved in project execution. 1.12 Shortcomings of the Company to be highlighted with regard to the recommendation of the Task Force. Further, though transmission projects were broken down into packages, the Company did not allot the packages to different contractors which culminated in abnormal delays in execution of the projects. Notwithstanding the elaborate guidelines given by the Task Force

Committee for timely completion of the projects, the Company failed to execute several SSs and Lines during 2007-12 as detailed below:
Capaci ty in kV SSs 400 220 132 Total Line s Total No. constructed No. test checked by Audit Delay in construction (Numbers) Time overrun1 (range in months) SS s Line s Cost overrun(` in crore)

SSs

Line s

SSs

Line s

SSs

Lines

Reasons for delay to be mentioned Besides, instances of non-compliance with regulations for measures relating to Safety and Electric Supply, failure to obtain requisite approvals from Power & Telecommunication Co-ordination, Committee (PTCC), Airport & Railways, forest & environmental clearance etc. in time leading to failure to energise transmission lines may be brought out. Mismatch between Generation Capacity and Transmission facilities 1.13 National Electricity Policy envisaged augmenting

transmission capacity taking into account the planning of new generation capacities, to avoid mismatch between generation capacity and transmission facilities. The transmission facilities to be provided by Company to match with the generating companys generation plans could not be provided in time due to delay in execution of transmission evacuation works, which ultimately resulted in mismatch between generation capacities and transmission facilities and consequent evacuation of the power with the existing and already overloaded transmission lines.
Sl.No. Project Generating companys plan Companys plan Result of mismatch

Test checked in audit

10

Case study with suitable audit comments from field offices. Construction of SSs without assessing load requirements 1.14 For construction of a SS, the load growth and anticipated increase of demand in future along with permissible limits of voltage regulations are required to be considered mandatory, prior to taking up of the project, so that unnecessary expenditure can be avoided. The load forecasts for the proposed new schemes should also consider the anticipated physical and financial benefit to be derived. Case study with suitable audit comments. Performance of transmission system 1.15 The performance of the Company mainly depends on efficient maintenance of its EHT transmission network for supply of quality power with minimum interruptions. In the course of operation of sub-stations and lines, the supply-demand profile within the constituent sub-systems is identified and system improvement schemes are undertaken to reduce line losses and ensure reliability of power by improving voltage profile. These schemes are for augmentation of existing transformer capacity, installation of additional transformers, laying of additional lines and installation of capacitor banks. The performance of the Company with regard to O&M of the system is discussed in the succeeding paragraphs.

Transmission capacity 1.16 The Company in order to evacuate the power from the Generating Stations and to meet the load growth in different areas of the State constructs lines and SSs at different EHT voltages. A Transformer converts AC voltage and current to a different voltage

11

and current at a very high efficiency. The voltage levels can be stepped up or down to obtain an increase or decrease of AC voltage with minimum loss in the process. The evacuation is normally done at 220 kV SSs. The transmission capacity (220 kV) created vis--vis the transmitted capacity (peak demand met) at the end of each year by the Company during the 5 years ending March 2012 are as follows:
Transmission capacity (in MVA) Year Installed After leaving 30 per cent towards margin 2007-08 2008-09 2009-10 2010-11 2011-12 Peak demand including noncoincident demand Excess/ shortage (3-4)

From the above table it could be observed that the overall transmission capacity was in excess of the requirement for every year. The existing transmission capacity excluding 30 per cent towards redundancy worked out to an excess of (Number) MVA to the end of March 2012 which worked out to ` (Number) crore (` (Number) crore per 100 MVA PTR) which was a burden passed on to the consumer. Existence of extra/idle capacity in the transmission network and prevalence of overloads, high voltages on certain places reflects unscientific planning in creation of transmission network. Sub-stations Adequacy of Sub-stations 1.17 Manual on Transmission Planning Criteria (MTPC) stipulates the permissible maximum capacity for different SSs i.e., 320 MVA for 220 kV and 150 MVA for 132 kV SSs. Scrutiny of the maximum

12

capacity levels of SSs revealed ---- numbers of 220 kV and ---numbers of 132 kV SSs exceeded the permitted levels. It was also observed that every SS of capacity 132 kV and above should have at least two transformers. Further, the Transmission Planning and Security Standards issued by (State ERC) indicated that the size and number of transformers in the SS shall be planned in such a way that in the event of outage of any single transformer the remaining transformer(s) could still supply 80 per cent of the load. Voltage management 1.18 The licensees using intra-state transmission system should make all possible efforts to ensure that grid voltage always remain within limits. As per Indian Electricity Grid code STUs should A maintain voltages ranges between 380-420 KV, 198-245 KV and 119-145 KV in 400KV, 220 KV and 132 KV line respectively. Performance Audit of the 220/132 kV bus voltages in (Number) and (Number) divisions of the (Number) Zone for the period (Month) to (Month) revealed that in (Number) SSs the voltages recorded ranged between (Number) and (Number) KV while in (Number) SSs voltage recorded ranged between (Number) and (Number) KV. Thus, to provide quality power and reduce the transmission losses the Company should ensure that the maximum and minimum voltages are maintained as per the norms. Lines EHT lines 1.19 As per MTPC permissible line loading cannot normally be more than the Thermal Loading Limit (TLL). The TLL limits the temperature attained by the energized conductors and restricts sag and loss of tensile strength of the lines. The TLL limits the maximum power flow of the lines. As per MTPC the TLL of 132 kV line with ACSR2 Panther 210 sq. mm. conductor was 366 amps. Scrutiny of the line loadings on the 132 kV feeders revealed that, (Number) numbers of feeders out of (Number) numbers of feeders in (Number) Zone were loaded above 366 amps. Loading of the lines beyond
2

Aluminium Conductor Steel Reinforced

13

capacity resulted in voltage fluctuations, higher transmission losses and frequent interruptions/breakdowns. Bus Bar Protection Panel (BBPP) 1.20 Bus bar is used as an application for interconnection of the incoming and outgoing transmission lines and transformers at an electrical Sub-station. BBPP limits the impact of the bus bar faults on the entire power network which prevents unnecessary tripping and selective to trip only those breakers necessary to clear the bus bar fault. As per Grid norms and Best Practices in Transmission System, BBPP is to be kept in service for all 220 kV SSs to maintain system stability during Grid disturbances and to provide faster clearance of faults on 220 kV buses. We observed that out of (Number) of 220 kV SSs ((Number) were single bus SSs and (Number) were double bus SSs) where BBPP is required to be installed, Company provided the panel at (Number) SSs and in the remaining (Number) SSs the BBPP was not yet provided. It was observed that out of (Number) SSs where BBPP is available; only (Number) are in service and remaining (Number) were not in working condition and out of (Number), (Number) had become old and obsolete, not repairable/yet to be repaired and at (Number) SSs though panels were installed, they were yet to be commissioned. Maintenance Performance of Current transformers (CT) 1.21 Current transformers are one of the most important and costintensive components of electrical energy supply networks, thus it is of special interest to prolong their life duration while reducing their maintenance expenditure. In order to gather detailed information about the operation conditions of CTs, various kinds of oil analysis like the standard oil Dissolved Gas Analysis (DGA) tests are generally conducted. For CT insulation a combination of an insulating liquid and a solid insulation impregnated therewith are used. For an evaluation of the actual condition of this insulating system usually a DGA is used, as failures inside the CT lead to a degradation of the liquid insulation in such a way that the

14

compound of the gases enables an identification of the failure cause. The table below indicates status of failure of transformers during the years 2007-08 to 2011-12:
Yea r No. of transform ers at the beginning of the year No. of transform ers failed No. of transform ers failed within guarantee period No. of transform ers failed within normal working life Expenditure on repair and maintenanc e

Case Study Working of hot lines division/sub divisions 1.22 Regular and periodic maintenance of transmission system is of utmost importance for its un-interrupted operation. Apart from scheduled patrolling of lines following techniques are prescribed in the Report of the Committee for updating the Best practices of Transmission in the country for maintenance of lines: Hot Line Maintenance Hot Line Washing. Hot line Puncture Detection of Insulators. Preventive Maintenance by using portable earthing hot line tools. Vibration Measurement of the line. Thermo-scanning. Pollution Measurement of the equipment. The hot line technique (HLT) envisages attending to maintenance works like hot spots, tightening of nut and bolts, damages to the conductor, replacement of insulators etc. of SSs and lines without switching off. This includes thermo scanning of all the lines and SSs towards preventive maintenance. HLT was introduced in India in 1958. As on April 2007 the Company had (Number) hotline divisions and (Number) sub divisions with manpower strength of (Number) which increased to (Number, (Number) (Number) respectively as on 31 March 2012 Audit Observation and comment Transmission losses

15

1.23 While energy is carried from the generating station to the consumers through the Transmission & Distribution (T&D) network, some energy is lost which is termed as T&D loss. Transmission loss is the difference between energy received from the generating station/Grid and energy sent to DISCOMs. The details of transmission losses from 2007-08 to 2011-12 are given below:
Particulars Unit 2007-08 Power received for transmission Net power transmitted Actual Transmission loss MUs 2008-09 Year 2009-10 2010-11 2011-12

MUs MUs percentage

Target Transmission loss as per the CEA norm Target Transmission loss as per SERC norms Transmission loss in excess of SERC norm (Valued at realization per unit as at para 1.9 row 4).

percentage

percentage

MUs Rate per unit in `. ` in crore

It could be seen from the above that the transmission losses were on (Nature of Trend) trend and (exceeded/within) the CEA norm of four per cent in all the five years as also the yearly norm fixed by the SERC years upto (Year). The value of transmission loss suffered by the Company in excess of the norm fixed by the SERC for the period 2007-08 to 2011-12 was (Number) MU valued at ` (Amount) crore. Field office to calculate the transmission loss suffered by the Company with reference to the norms fixed by the SERC for the period 2007-08 to 2011-12. The field office may also offer suitable comment on transmission losses and compare these losses to the targets envisaged in the Report of the 17th Electric Power Survey Committee. Grid Management

16

Maintenance of Grid and performance of SLDC 1.24 Transmission and Grid Management are essential functions for smooth evacuation of power from generating stations to the DISCOMs/consumers. Grid Management ensures moment-tomoment power balance in the interconnected power system to take care of reliability, security, economy and efficiency of the power system. Grid management in India is carried out in accordance with the standards/directions given in the Grid Code issued by CEA. National Grid consists of five regions viz., Northern, Eastern, Western, North Eastern and Southern Grids, each of these having a Regional Load Despatch Centre (RLDC), an apex body to ensure integrated operation of the power system in the concerned region. The (Name of the State) State Load Despatch Centre (SLDC), a constituent of (Name of the Region) Regional Load Despatch Centre (RLDC), (Location), ensures integrated operation of power system in the State. The State Government notified (Month) that the SLDC shall be operated by the Company. The SLDC is assisted by (Number) Area Load Despatch Centres (ALDCs) for data acquisition and transfer to SLDC and supervisory control of 132 kV and 33 kV equipments. The SLDC levies and collect such fees and charges from the generating companies and licensees engaged in intra-state transmission of electricity as specified by the SERC. Infrastructure for load monitoring 1.25 Remote Terminal Units/Sub-station Management Systems (RTUs/SMSs) are essential for monitoring the efficiency of the transmission system and the loads during emergency in load dispatch centres as per the Grid norms for all SSs. We observed that there were (Number)of ----------- kV SSs and (Number) generators, out of which (Number) (----- per cent) of ---------- kV SSs and (Number) (---per cent) of generators only were provided with RTUs for recording real time data for efficient Energy Management System. Further, the SLDCs were not integrated among themselves and the SLDCs did not have any data storing or back up facilities thus reducing them to observation centres.

17

Grid discipline by frequency management 1.26 As per Grid Code, the transmission utilities are required to maintain Grid discipline for efficient functioning of the Grid. All the constituent members of the Grid are expected to maintain a system frequency between 49 and 50.5 Hertz (Hz) (49.2 and 50.3 Hz with effect from (Month) of various reasons such as shortages in generating capacities, high demand, Grid indiscipline in maintaining load generation balance, inadequate load monitoring and management, Grid frequency goes below or above the permitted frequency levels. To enforce the Grid discipline, the SLDC issues three types of violation messages (A, B, C). Message A is issued when the frequency is less than 49.2 Hz and over-drawl is more than 50 MW or 10 per cent of schedule whichever is less. Violation B message is issued when frequency is less than 49.2 Hz and overdrawl is between 50 and 200 MWs for more than ten minutes or 200 MW for more than five minutes. Message C (serious nature) is issued 15 minutes after the issue of message B when frequency continues to be less than 49.2 Hz and over drawl is more than 100 MW or ten per cent of the schedule whichever is less. We observed that type (Name of Message) messages received were (Number) in 2077-08; it had increased to (Number) numbers during the period from March (Year) to March (Year). Thus, increase in the receipt of type (Name of Message) messages which put a question mark on the Grid discipline led to levy of penalty by CERC as detailed below: Grid discipline 1.27 For maintenance of Grid discipline the CERC takes up suomotu petition on over drawl of power from the Grid at a lower frequency thus putting the Grid to the risk. The Company had violated the Grid discipline resulting in payment of penalty as detailed below:

Sl.No .

Month and Year

Number of

Penalty levied

18

of violation

occasions of violation

(` in lakh)

1 2

(The field offices may analyse violation of Grid discipline of the Company and make suitable comment.) Backing Down Instructions (BDI) 1.28 When the frequency exceeds the ideal limits i.e. situation where generation is more and drawl is less (at a frequency above 50 Hz) SLDC takes action by issuing Backing down instructions (BDI) to the Generators to reduce the generation for ensuring the integrated Grid operations and for achieving maximum economy and efficiency in the operation of the power system in the State. Failure of the generators to follow the SLDC instructions would constitute violation of the Grid code and would entail penalties not exceeding ` (Amount). The Company issued BDI for (Number) MUs for compliance against which generators failed to comply for (Number) MUs during the period under review. The percentage of non-compliance of backing down was on high side which worked out (Number) per cent. (The Field offices may evolve suitable audit observations and impact to be ascertained.) Planning for power procurement 1.29 The Company draws long term supply plan taking into account the contracted generation capacity, allocation from central sector and future committed projects and evolve net additional requirement of power in consultation with the DISCOMs. It also draws day ahead plan for assessing its day to day power requirement. The details of total requirement of the State, total power supplied and shortage of power for the five years 2007-08 to 2011-12 are given below:
(Figures in MUs)

19

Sl.No. 1 2 3 4

Details Total power requirement Total power supplied3 Power short supplied Percentage of shortage

2007-08

2008-09

2009-10

2010-11

2011-12

It could be seen from the above that the percentage of shortage of power is on the ---------trend i.e., from (Number) in 2007-08 to (Number) per cent by 2011-12. The gap in demand supply position also leads to variation between actual generation or actual drawl and scheduled generation or scheduled drawl which is accounted through Unscheduled Interchange (UI) charges, worked out by SLDC for each 15 minutes time block. UI charges are levied for the supply and consumption of energy in variation from the pre-committed daily schedule. This charge varies inversely with the system frequency prevailing at the time of supply/consumption. Hence it reflects the marginal value of energy at the time of supply. The levying of UI charges acts as a commercial deterrent to curb over drawls from CGS4 during low frequency conditions. (Audit observation on overdrawal of power from CGS during low frequencywhich resulted in high power purchase by way of UI charges.) Disaster Management 1.30 Disaster Management (DM) aims at mitigating the impact of a major break down on the system and restoring it in the shortest possible time. As per the Best Practices, DM should be set up by all power utilities for immediate restoration of transmission system in the event of a major failure. It is carried out by deploying Emergency Restoration System, DG sets, vehicles, fire fighting equipments, skilled and specialized manpower.

Including generation, short and long term purchases and drawl from Central Generating Stations.
4

Central Generating Stations

20

Disaster Management Centre, National Load Dispatch Centre, New Delhi will act as a Central Control Room in case of disasters. As a part of DM programme mock drill for starting up generating stations during black start5 operations was being carried out by the Company every (Number) months. Inadequate facilities for DM 1.31 The SLDC identified (Number) major generating stations in the State out of which black start facilities were available in (Number) generating stations only indicating the inadequacy in the preparedness for DM. Diesel generating (DG) sets and synchroscopes6 form part of DM facilities at EHT SSs connecting major generating stations. The Company identified (Month) that out of (Number) numbers 220 kV SSs DG sets were available only in (Number) SSs (Number) numbers DG sets in working condition and (Number) numbers not in working condition) while only (Number) synchroscopes were available. Further, the Company did not identify vulnerable installations for provision of metal detectors and handing over the security of the sites to the Security Force to meet crisis arising due to terrorist attacks, sabotage and bomb threats. Audit observation on Disaster Management

Energy Accounting and Audit

1.32 Energy accounting and audit is necessary to assess and reduce the transmission losses. The transmission losses are calculated from the Meter Reading Instrument (MRI) readings obtained from Generation to Transmission (GT) and Transmission to Distribution (TD) Boundary metering points. As on 31 March 2012 there were (Number) interface Boundary metering points between TD (Number) and GT (Number) .While all the GT points were provided with (Type) class meters, (Number) TD points were provided with (Type) class meters and balance (Number) points were of (Type) class meters.
The procedure necessary to recover from partial or a total black out. In an AC electrical power system it is a device that indicates the degree to which two systems generators or power networks) are synchronised with each other.
5 6

21

Further, analysis of data for three months period from (Month) to (Month) of (Number) divisions with (Number) of feeders indicated existence of high percentage of losses in (Number) feeders ranging between (Number) to (Number) per cent, (Number) feeders had no meters and losses ranging between (Number) to (Number) per cent in (Number) feeders were noticed. It was also noticed that the negative losses were due to usage of different class of meters at input and output points and replacement of meters without compatibility to CTs and PT consequently making energy accounting and transmission losses worked out un-realistic. The field office may make suitable comments based on field analysis which may cover areas like periodical returns/reports of energy audit, their analysis and follow-up action thereon, etc.

Financial Management
1.33 One of the major objectives of the National Electricity Policy 2005 was

ensuring financial turnaround and commercial viability of Power Sector. The financial position of the Company for the five years ending 2011-12 is as under: (` in crore)
Particulars A. Liabilities Paid up Capital Reserves & Capital Grants) Deferred Tax Borrowings (Loan Funds) Current Liabilities & Provisions (CL) Total B. Assets Gross Block Less: Depreciation Capital Works-in-Progress (CWIP) Investments Surplus(including 2007-08 2008-09 2009-10 2010-11 2011-12

22

Particulars Current Assets, Loans and Advances (CA) Assets not in use Total Debt equity ratio Interest (net of IDC7capitalised) Total return Capital Employed % Return on Capital Employed

2007-08

2008-09

2009-10

2010-11

2011-12

Note: It may be ensured that formulas for working out debt equity retio, capital employed and percentage of return on capital employed should be as per Introductory Chapter (Overview of State PSUs)

It may be seen from the above that the Profit before tax /Loss of the Company increased/ decreased by (Number) per cent from ` (Number) crore in 2007-08 to ` (Number) crore in 2011-12. Further, the debt-equity ratio of the Company increased/ decreased from (Number) : (Number) to (Number) : (Number) during the Performance Audit period. (Please indicate the reasons also for the changes in the above). The Companys borrowings stood at ` (Number) crore as at 31 March 2012. Debt Equity Ratio increased from (Number) (2007-08) to (Number) (2011-12) due to increase in borrowings from `(Number) crore (2007-08) to ` (Number) crore (2011-12). Percentage of Return on Capital decreased /increased from (Number) (2007-08) to (Number) (2011-12) due to increase/dcrease in Capital Work-in-Progress from ` (Number) crore (2007-08) to ` (Number)crore (2011-12) and increase/decrease in Current Liabilities from ` (Number) crore (200708) to ` (Number) crore (2011-12). It was also observed that (Based on the figures in the table, the field office may give suitable comment on the overall financial position including trend analysis/ major variations under above heads indicating the reasons.) 1.34 The details of working results like revenue realisation, net surplus/loss and earnings and cost per unit of transmission are given below:
7

Interest during construction.

23

Sl.N o 1

Description

2007-08

2008-09

2009-10

2010-11

2011-12

Income Revenue Other income including interest/subsidy Total Income

2 (a) (b)

Transmission Installed capacity (MVA) Power received from generation units (MUs)8

(c)

Power purchased (MUs) Total

(d)

Loss in transmission (MUs) Net power transmitted (b)+(c)-(d) in MUs

3 (a) (i) (ii)

Expenditure Fixed cost Employees cost Administrative and General expenses

(iii) (iv)

Depreciation Interest and Finance charges (net after capitalisation) Total fixed cost

(b)

Variable cost - Repairs & Maintenance

(c) 4 5

Total cost 3 (a) + (b) Realisation (` per unit) Fixed cost (` per unit)
8

Including private generation.

24

Sl.N o 6 7

Description

2007-08

2008-09

2009-10

2010-11

2011-12

Variable cost (` per unit) Total cost (` per unit) (5+6) Contribution (` per unit) (4-6) Profit (+)/Loss(-) (4-7) (` per unit)

It may be seen from the above that though the realisation per unit increased/decreased from ` (Number) to ` (Number) during Performance Audit period ((Number) per cent), the cost per unit increased from ` (Number) to ` (Number) ((Number) per cent) during the corresponding period. Further, the contribution per unit had increased/decreased by (Number) per cent during the period 2007-12. It was also evident from the above table that ____, ________ and _______ (Factual Position may be stated) constituted the major elements of cost in 2011-12 which represented ____, ____ and ___ per cent of the total cost in that year respectively. On the other hand, ________ and _______ (Factual Position may be stated) constituted the major elements of revenue in 2011-12 which represented ____ and ___ per cent of the total revenue respectively. It was also observed that (Based on the figures in the table, the field office may give suitable comment on the working results bringing out trend analysis/ major variations along with analysis of reasons in Audit.) Recovery of cost of operations 1.35 During the last five years ending 2011-12, the profit/ loss per unit (Factual

Position may be stated) as given in the graph below:

25

5.95

7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5

4.16

5.02

1.01

0.93

6.24 0.71

6.16

6.22

6.66

5.65

6.88

2007-08

2008-09

1.2

2009-10 Cost per Unit

2010-11

Realisation per Unit

Profit/ Loss per Unit

(The field office may analyse the reasons and make suitable comments .

Elements of Cost
1.36 The percentage break-up of major elements of costs for

2011-12 is given below:

6% 12% 5%

8% 7%

Em ployee cost Interest & Finance charges R&M Fuel & Consum ables Depreciation Repairs & Maintenance

62%

Elements of revenue 1.37 Transmission charges constitute the major element of

revenue. The percentage break-up of revenue for 2011-12 is given below in the pie chart.

26

6.95

2011-12

8%

Transmission Charges Other incom e

92%

Collection of SLDC charges 1.38 The SLDC charges were introduced from (YEAR) onwards and the Company did not levy these charges amounting to ` crore on numbers private generators/Open Access (OA) users upto (the relevant year) on the ground (reasons) which had no relevance to levy of SLDC charges. (Field offices to come up with relevant observation, if any) Thereafter, the Company levied and collected the SLDC charges amounting to ` crore through DISCOMs. Thus, delay in raising demand resulted in delayed realization of revenue of ` ----- crore with a consequential loss of interest of ` -------crore. Collection of surcharge from DISCOMs 1.39 The Company raises monthly transmission bills on (Name of Discoms) on the allocated capacities at the rates specified in the Tariff Orders. The bills are to be paid within (Number) days from the date of issue. The transmission agreement between the Company and (Name of Discoms) provided for opening of irrevocable revolving Letter of Credit (LC) in favour of the Company. In the event of failure to make payment within (Number) days from the due date the Company should invoke the LC. It was observed that no such LC was opened by any of the (Name of Discoms) till date () nor the provision for levy of penalty was included in the agreement.

27

We observed that, the demand notices served on (Name of Discoms) contained the provision for levy of surcharge at --- per cent per month if the bills are not realized by the due date. Scrutiny of the bills from 2006-07 to 2010-11 revealed delayed realization of the bills ranging from --- to --- days but the Company did not levy surcharge as provided in the bills due to non provision of the penalty clause in the agreement resulting in a loss of revenue of ` -----crore. (Field office to comment on the payment mode from the DISCOMs to the TRANSCO)

Tariff Fixation
1.40 The financial viability of the Company depends upon generation of surplus

(including fair returns) from the operations to finance their operating needs and future capital expansion programmes by adopting prudent financial practices. Revenue collection is the main source of generation of funds for the Company; the issues relating to tariff are discussed here under. The tariff structure of the power transmission company/ies is/are subject to revision approved by the respective State Electricity Regulatory Commission (SERC) after the objections, if any, received against Annual Revenue Requirement (ARR) petition filed by them within the stipulated dated. The Company was required to file the ARR for each year (Number) days before the commencement of the respective year (Factual position may be stated here). The SERC accepts the application filed by the Company with such modifications/conditions as may be deemed just and appropriate and after considering all suggestions and objections from public and other stakeholders. The table below shows the due date of filing ARR, actual date of filing, date of approval of tariff petition and the effective date of the revised tariff.

Year 2007-08 2008-09 2009-10

Due date of filing

Actual date of filing

Delay in days

Date of approval

Effective date

28

2010-11 2011-12

From the above it may be seen that (Factual position may be stated here based on the figures in the Table). Delay in filing ARR and consequential impact may be highlighted alongwith delay in replies to objections of SERC by TRANSCO 1.41 As per the Regulation (Number) of (the relevant year, terms and conditions for determination of tariff for transmission activity, the Company files an ARR with the SERC for the revenue required to meet the cost pertaining to the transmission business for each financial year which would be permitted to be recovered through tariffs and charges by the Commission. Thus, the main source of revenue of the Company is the transmission and SLDC charges. The ARR proposals made by the Company and approved by the Commission are given below:

Transmission Tariff Year Total capacity for transmis sion (MW) 200708 200809 200910 201011 TRANSCO Revenue Requirem ent (` crore) in Tariff , `/kW/ Mont h Total capacity for transmis sion (MW) State ERC Revenue Requirem ent (` crore) in Tariff , `/kW/ Mont h

29

201112

Further, as per the Regulation, whenever there is a gain or loss (excess/short) in the controllable items (O&M, Return on capital employed, Depreciation and non tariff income) the Company shall file before the Commission, which would review the same and make appropriate adjustments wherever required. Though the expenditure incurred was more than the approvals of the Commission, the Company did not take steps to claim the excess expenditure. This resulted in excess expenditure being incurred from their own sources and under realisation of transmission and SLDC charges. Further, the proposals for sharing of gains and losses with the users had to be filed by the Company as per regulations which would be looked into. Material Management 1.42 The key functions in material management are laying down inventory control policy, procurement of materials and disposal of obsolete inventory. The Company had formulated/not formulated any procurement policy and inventory control mechanism for economical procurement and efficient control over inventory. system exits same may be stated here) 1.43 Scrutiny of the records of the Company revealed the following: The details of Opening stock, purchases, issues and closing stocks for the period from 2007-08 to 2011-12 are detailed below:
(`in crore) Year Consumption (per annum) Consumption (per month) Net Closing stock (as per Balance sheet) 2007-08 2008-09 Closing stock in terms of months to consumption

(If

30

Year

Consumption (per annum)

Consumption (per month)

Net Closing stock (as per Balance sheet)

Closing stock in terms of months to consumption

2009-10 2010-11 2011-12

Though the Company had limited its closing stock to (Number) months consumption it had neither made any ABC analysis, nor fixed any standard minimum level or reorder level of their material requirement. Non-conducting of physical verification of stocks in the stores 1.44 There are (Number) Area Stores under the control of the Company. The Physical Verification (PV) of the stores was not being conducted annually. The PV was last conducted in (Number) store in (Year), (Number) stores in (Year) and (Number )stores in (Year). The value of non-moving, surplus, obsolete, unserviceable and scrap material as per the ERP statements in the last five years is given below:
(` in crore)

Particulars Surplus/obsolet e/ unserviceable/ scrap Non-moving Total

2007-08

2008-09

2009-10

2010-11

2011-12

From the above, it was observed that the value of the scrap, obsolete and non-moving stock was on increasing trend during (period) and the reconciliation of the above stock could not be

31

made as the PV of all the stores are not being done annually. The Company had not taken action to conduct survey reports and dispose of the scrap/obsolete material, which could have earned revenue and resulted in creation of space for stocking of other materials. (Case study of excess procurement if any may be stated here) Monitoring and Control 1.45 The performance of the SSs and lines of 400/220/132 kV on various parameters like Maximum and Minimum voltage levels, breakdowns, voltage profiles should be recorded /maintained as per the Grid code standards. We noted that the year-wise cumulative performance of the SSs and lines were neither being maintained nor consolidated for evaluation of annual performance of the SSs and lines. However, the field Divisions of TL&SS units compile the monthly MIS reports indicating the performance of the units as well as equipments installed. Though, these booklets are forwarded to the Corporate Office, they are not being kept month-wise and yearwise for verification. Further, verification of MIS reports of TL&SS, revealed that details regarding programmed overhauls of equipments like CB9 s, due dates of next oil change, OLTC10 operations, dates of maintenance works, performance of SS batteries, performance of relays, cause-wise analysis of feeder breakdowns were (Audit observation and relvant comments) Review of the envisaged benefits of T&D schemes 1.46 The Company executed and commissioned (Number) EHT SSs and erected a total length of (Number) CKM of EHT lines during review period. While approving the T&D schemes, the Company envisaged benefits in terms of reduction in line losses, improvement in voltage levels and the load growth to be achieved by the new schemes. It was, however, observed (Audit observation and relvant comments)
9

10

Circuit Breaker. On Load Tap Changer.

32

Internal Controls and Internal Audit 1.47 Internal control is a process designed for providing

reasonable assurance for efficiency of operations, reliability of financial reporting and compliance with applicable laws and statutes which is designed to ensure proper functioning as well as effectiveness of the internal control system and detection of errors and frauds. Companys internal control system and audit observation thereon. Audit Committee 1.48 The Company constituted an Audit Committee (AC) as required under Section 292A of the Companies Act, 1956. As per the Terms of Reference of the AC, the AC should meet four times in a year. Thus, in a span of five years, the AC should have met for a minimum number of 20 times. However, the AC met only on (Number) occasions. As per Section 292A (5), the internal auditors should also attend all the meetings, but the same was not complied with, in any of the meetings. (Field offices may evaluate efficacy of STUs Committee and make suitable audit observation.) Audit

33

Annexure- 1 Statement showing voltage-wise capacity additions planned, actual additions and shortfall during five years up to 201112
(Referred to in paragraph -----)

Sl. No. (1)

Description (2)

2007-08 (3)

2008-09 (4)

2009-10 (5)

2010-11 (6)

2011-12 (7)

765 kV Sub-Stations (Numbers) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3)

765 kV Transformers Capacity (MVA) 1 2 3 4 5 At the beginning of the year Additions/ augmentation Planned for the year Actual Additions during the year Capacity at the end of the year (1+3) Shortfall in Additions/ Augmentation (2-3)

765 kV Lines (CKM) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3)

400 kV Sub-Stations (Numbers) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 14 NIL NIL 14 0 14 NIL NIL 14 0 14 02 NIL 14 02 14 06 NIL 14 06 14 04 NIL 14 04

34

Sl. No. (1)

Description (2)

2007-08 (3)

2008-09 (4)

2009-10 (5)

2010-11 (6)

2011-12 (7)

400 kV Transformers Capacity (MVA) 1 2 3 4 5 At the beginning of the year Additions/ augmentation Planned for the year Actual Additions during the year Capacity at the end of the year (1+3) Shortfall in Additions/ Augmentation (2-3) 7930 NIL NIL 7930 0 7930 390 NIL 7930 390 7930 2000 855 8785 1145 8785 5370 NIL 8785 5370 8785 2890 75 8860 2815

400 kV Lines (CKM) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 4259 NIL NIL 4259 NIL 4259 225 NIL 4259 225 4259 197 NIL 4259 197 4259 769 NIL 4259 769 4259 725 NIL 4259 725

220 kV Sub-Stations (Numbers) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 48 08 01 49 07 49 08 05 54 03 54 05 03 57 02 57 27 06 63 23 63 19 04 67 15

220 kV Transformers Capacity (MVA) 1 2 3 4 5 At the beginning of the year Additions/ augmentation Planned for the year Actual Additions during the year Capacity at the end of the year (1+3) Shortfall in Additions/ Augmentation (2-3) 12570 2480 660 13230 1820 13230 2810 1500 14730 1310 14730 1780 1120 15850 660 15850 7560 2270 18120 5290 18120 5920 1520 19640 4400

220 kV Lines (CKM) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 6669 125 140 6809 (-)15 6809 868 95 6904 773 6904 853 91 6996 762 6996 1348 391 7386 957 7386 1697 258 7644 1439

35

Sl. No. (1)

Description (2)

2007-08 (3)

2008-09 (4)

2009-10 (5)

2010-11 (6)

2011-12 (7)

132 kV Sub-Stations (Numbers) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 214 25 08 222 17 222 17 14 236 03 236 17 24 260 (-)07 260 45 09 269 36 269 37 06 275 31

132 kV Transformers Capacity (MVA) 1 2 3 4 5 At the beginning of the year Additions/ augmentation Planned for the year Actual Additions during the year Capacity at the end of the year (1+3) Shortfall in Additions/ Augmentation (2-3) 15755 1500 1339 17094 161 17094 1910 1963 19057 (-)53 19057 1503 1203 20260 300 20260 3720 1819 22079 1901 22079 2720 1759 23838 961

132 kV Lines (CKM) 1 2 3 4 5 At the beginning of the year Additions Planned for the year Actual Additions during the year At the end of the year (1+3) Shortfall in Additions (2-3) 10202 1275 580 10862 695 10862 503 522 11384 (-)19 11384 540 589 11973 961 11973 1550 446 12419 1104 12419 1356 331 12750 1025

36