Delhi Electricity Regulatory Commission(Treatment Of Income From Other Business Of Transmission Licensee And Distribution Licensee) Regulations, 2005

Delhi Electricity Regulatory Commission (Treatment Of Income From Other Business Of Transmission Licensee And Distribution Licensee) Regulations, 2005 1. Short title, extent and commencement. 2. Definitions and interpretation. 3. Intimation of other business. 4. Account. 5. Prohibitions and Financial Implications. 6. Powers of the Commission. 7. Issue of orders and practice Directions. 8. Power to remove difficulties. 9. Power to amend. 10. Procedure for investigation, inquiries etc. The Delhi Electricity Regulatory Commission(Treatment Of Income From Other Business Of Transmission Licensee And Distribution Licensee) Regulations, 2005 Published vide Notification No. F.8/(21) DLRC/2005-06/3103 dated 28th November, 2005 Dl34 [28th November, 2005] 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 Delhi Electricity Regulatory Commission hereby makes the following Regulations providing for the treatment of Other Business of Transmission and Distribution licensees and the proportion of revenues from Other Business to be utilized for Licensed Business and for matters incidental and ancillary thereto: 1. Short title, extent and commencement. - (i) These Regulations may be called the Delhi Electricity Regulatory Commission (Treatment of Income from Other Business of Transmission Licensee and Distribution Licensee) Regulations, 2005. (2) These Regulations shall be applicable to all intra-state Transmission Licensees and the Distribution Licensees in the National Capital Territory of Delhi, except any local authority engaged, before the commencement of the Act, in the business of distribution of electricity in the National Capital Territory of Delhi. (3) These Regulations shall come into force from the date of its publication in the Official Gazette. 2. Definitions and interpretation. - In these Regulations, unless the context otherwise requires: (a) "Act" means the Electricity Act, 2003 (36 of 2003); (b) "Commission" means the Delhi Electricity Regulatory Commission; (c) "License" means a license granted under Section 14 of the Act to undertake intrastate Transmission or Distribution of Electricity in the State; (d) "Licensed Business" shall mean the function and activities, which the Licensee is required to undertake in terms of the License granted or being a deemed Licensee under the Act. (e) "Licensee" means a person who has been granted a license; (f) "Other Business" means any business of the Licensee other than the licensed business; (g) "State’ means National Capital Territory of Delhi; (h) Words and expressions occurring in these Regulations and not defined herein above shall bear the same meaning assigned to them in the Act. 3. Intimation of other business. - (1) In the event a Licensee engages in any Other Business for optimum utilization of the assets, he shall give prior intimation in writing to the Commission of such Other Business including the following details: (a) The nature of the Other Business; (b) (i) the proposed capital investment in the Other Business; (c) the proposed capital investment in the Licensed Business for supporting the Other Business; (c) the nature and extent of the use of assets and facilities of the Licensed Business for the 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 carry out 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 affecting maintenance of the activities of the Licensed Business. (2) The Licensee shall have the absolute responsibility to ensure that the utilization of the assets and facilities of the Licensed Business for 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 Other Business activities, separate accounting records, such as amounts of any revenue, cost, asset, liability, reserve, or provision which has been charged from or to any Other Business together with a description of the basis of that charge or determined by apportionment or allocation between the various business activities together with a description; (b) prepare on a consistent basis from such records accounting statements for each financial year comprising a profit and loss account, a balance sheet and a statement of source 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 give a true and fair view of the revenue, costs, assets, liabilities, reserves reasonably attributable to the business to which the statements relate; (d) submit to the Commission such information that is required to review the additional cost incurred by the licensee for Other Business; (e) submit copies of the accounting statements and Auditor’s report not later than six months after the close of the financial year to which they relate; and (f) also comply with other statutory requirements under the Companies Act 1956, or any other Acts/ Rules as may be applicable. (2) The Licensee shall establish to the satisfaction of the Commission that the Other Business duly bear an appropriate share of overhead costs and other common costs. 5. Prohibitions and Financial Implications. -(1) The Licensee shall not in any manner utilize the assets and facilities of the Licensed Business or otherwise directly or indirectly allow the activities 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 the other Business or for any activities other than the Licensed Business. (3) The Licensee shall duly pay for all costs accounted for in the Licensed Business which have been incurred for Other Business and in the event of such cost being incurred commonly for both the Licensed Business and Other Business, apportion such cost and ensure due payment of apportioned costs to the Licensed Business from the Other Business. (4) The revenue derived from the Other Business shall commensurate with prevailing market condition for such similar business activities. (5) In addition to the sharing of costs under sub-clause (3) above, the Licensee shall account for and ensure due payment to the Licensed Business a certain proportion of revenues from the other Business. As a general principle, the Licensee shall retain 20% of the revenues arising on account of Other Business and pass on the remaining 80% of the revenues to the regulated business. Provided that in case a change in the above provision regarding sharing of revenues is considered by the licensee, he may approach the Commission for change of the aforesaid sharing formula, with proper justification, for approval of the Commission. 6. Powers of the Commission. - (1) The Commission may at any time direct investigation of the assets and facilities of the Licensed Business being used for the Other Business of the Licensee to determine: - (a) whether the costs and expenses are being appropriately adjusted and paid as mentioned in clause 5 above; (b) whether the revenues of the Other Business are in accordance with provisions of sub-clause 4 of Regulation 5 and are reasonably and properly accounted for to determine the gross revenues and the amounts payable to the Licensed Business. (2) The Commission may authorize any officer of the Commission or any professional person or expert or consultant to carry out the investigation under sub-clause (1) above and submit a report to the Commission. (3) The Commission may, after considering the report under sub-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 revenue 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 Electricity Act, 2003 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 is necessary or expedient for removing the difficulties. 9. Power to amend. - The Commission may, at any time add, vary, alter or modify any provisions of these Regulations by amendment. 10. Procedure for investigation, inquiries etc. - All inquiries, investigations and adjudication shall be done by the Commission through proceedings as per the provisions of its Conduct of Business Regulations.