AERC Organisational Profile

1 “Accounting Statement” means for each financial year, accounting statements for the Licensed Business comprising a profit and loss account, a balance sheet and a statement of sources and application of funds, together with notes thereto as detailed under the Companies Act, 1956 (1 of 1956) and such other particulars and details in the manner as the Commission may direct from time to time. If the Trading Licensee engages in any business or activity in addition to the Licensed Business , the accounting statements shall comply with the regulations of the Commission dealing with the treatment of Other Business of Trading Licensees and show separately the amounts of any revenue, cost, asset, liability, reserve or provision, which has been either:

(a) charged from the Licensed Business to any Other Business or vice versa together with a description of the basis of that charge; or

(b) determined by apportionment or allocation between the Licensed Business and any Other Business of the Trading Licensee together with a description of the basis of the apportionment or allocation.

“Act” means the Electricity Act, 2003 (36 of 2003)

“Annual Accounts” means the accounts of the Trading Licensee prepared in accordance with the provisions of the Companies Act, 1956 and/or in such other manner as may be directed by the Commission from time to time in terms of the provisions of the Act;

“Area of Activity” means the area of activity stated in the Trading Licence within which the Trading Licensee is authorised to trade;

“Auditor” means the Trading Licensee’s auditors holding office in accordance with the requirements of Sections 224 to 234A or Section 619 as appropriate, of the Companies Act 1956 (1 of 1956);

“Authorised”, in relation to any Person, business or activity, means authorised by licence granted under Section 14 of the Act or deemed to be granted under the first second third and fifth proviso to Section 14 of the Act or exemption granted under Section 13 of the Act and the regulations of the Commission;

“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);

“Deemed Licensee” means a person authorised under the first, second, third and fifth proviso to section 14 of the Act.

“Distribution” means the conveyance or wheeling of electricity by means of a Distribution System;

"Distribution Code" means the set of rules, requirements, procedures, and standards approved by the Commission governing electric utilities in the operation and maintenance of their distribution systems, and which defines and establishes the relationship of the distribution systems with the facilities or installations of the parties connected thereto;

“Grid Code” means the set of rules, requirements, procedures approved by the Commission under clause (h) of sub-section (1) of section 86 of the Act for the Assam State Transmission System, covering all material technical aspects relating to connections to and the operation of the Grid, the use of a Distribution System, or (in so far as relevant to the operation and use of a Distribution System) the operation of electric lines and electrical plant connected to the Distribution System, the Distribution Systems, or the system of any Supplier, and shall include the Interim Grid Code;

“Licence” means the licence under section 14 of the Act under which the Licensee is authorised to conduct the Licensed Business;

“Licensed Business” means the business of Intra State Trading in electricity in the State as authorised under the licence;

“Other Business” means business of the Trading Licensee other than the Licensed Business;

“Person” shall include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person;

“Regulations” means the regulations made by the Commission, under the provisions the Act;

“Specific Conditions” means the conditions in addition to or in variation of the General Conditions which the Commission may lay down specifically for a trading licensee;

“State” means the State of Assam;

“State Government” means the Government of the State of Assam;

“Trading Business” means the Authorised business of an Electricity Trader in the Area of Operation allowed under the Trading Licence granted;

“Trading Licensee” means a person who has been granted by the Commission under section 14 of the Act a Trading Licence to undertake intra-state electricity trading in the State of Assam and shall include Deemed Licensee for the purpose;

“Transmission Licensee” means the entity, which has been granted a Transmission Licence by the Commission or is a deemed Licensee under the first, second, third or fifth proviso of Section 14 of the Act authorized to transmit electricity and includes ASEB and any of its successor entity under the provisions of section 131 of the Act;

“Transfer” shall include the sale, exchange, gift, lease, licence, loan, securitisation, mortgage, charge, pledge or grant of any other encumbrance or otherwise permitting of any encumbrance to subsist;

1.2 Words, terms and expressions to which meanings are assigned by the Electricity Act 2003 (36 of 2003) (hereinafter called the `Act’) shall have the same meaning in these General Conditions.

2 TERM:

The Trading Licence shall come into force on the date to be mentioned by the Commission in the order granting the licence and subject to the terms and conditions of the grant of licence, shall remain in force for the period mentioned in the Order

3 COMPLIANCE WITH LAWS, RULES AND REGULATIONS

3.1 The Trading Licensee shall comply with the provisions of the Act, Rules, Regulations, orders and directions issued by the Commission from time to time and the provisions of all other applicable laws.

3.2 The Trading Licensee shall act in accordance with these General Conditions except where the Trading Licensee is exempted from any provisions of these general conditions at the time of the grant of licence or otherwise specifically obtains the approval of the Commission for any deviation there from.

3.3. The Trading Licensee shall duly comply with and undertake the activities consistent with the State Grid Code, Distribution Code, Electricity Supply Code and other codes and standards, orders and directions of the National Load Despatch Centre, Regional Load Despatch Centre and the State Load Despatch Centre and other statutory authorities issued in the discharge of their functions Under the Act.

4 ACTIVITIES OF THE TRADING LICENSEE

4.1 The Trading Licensee may engage in the business of trading in electricity in the state.

4.2 The Trading Licensee shall not undertake transmission of electricity to any Person in the State;

4.3 The Trading Licensee shall not without the prior approval of the Commission:

(a) undertake any transaction to acquire by purchase or takeover or otherwise, the utility of any other Licensee;

(b) acquire any beneficial interest in any Generating Company of Generating Station;, or

4.4 The Trading Licensee shall seek approval of the Commission before making any loans to, or issuing any guarantee for any obligation of any Person, except when made or issued for the purposes of the Licensed Business. The loans to employees pursuant to their terms of service and trade advances in the ordinary course of business are excluded from the requirement to seek such approval.

4.5 The Trading Licensee shall not at any time transfer or assign his licence in any manner without the prior approval of the Commission

5 ACCOUNTS

5.1 Unless otherwise permitted by the Commission the financial year of the Trading Licensee for the purposes of these General Conditions and matters relating to the Licensed Business shall run from the first of April in an year to the thirty-first March in the succeeding year.

5.2 The Trading Licensee shall, in respect of the Licensed Business and any Other Business engaged in by the Trading Licensee:

(a) keep such accounting records as would be required to be kept in respect of each such business so that the revenues, costs, assets, liabilities, reserves and provisions of, or reasonably attributable to the Licensed Business are separately identifiable in the books of the Trading Licensee, from those of Other Business in which the Trading Licensee may be engaged;

(b) prepare on a consistent basis from such accounting records and deliver to the Commission, the Accounting Statements; namely:-

(i) in respect of the first six months of each financial year, a Half Yearly profit and loss account, cash flow statement and balance sheet together with such supporting documents and information as the Commission may direct from time to time such statements and documents to be published in the manner directed by the Commission;

(ii) in respect of the Accounting Statements prepared, an Auditor’s report for each financial year, stating whether in their opinion these statements have been properly prepared in accordance with this clause and give a true and fair view of the revenues, costs, assets, liabilities, reserves and provisions of, or reasonably attributable to such businesses to which the statements relate; and

(iii) a copy of each Half Yearly profit and loss account not later than three months after the end of the period to which it relates, and copies of the Accounting Statements and Auditor’s report not later than six months after the end of the financial year to which they relate.

5.3 The Trading Licensee shall not normally change the basis of charge or apportionment or allocation of revenues or expenses in relation to the preparation of the Accounting Statements in respect of a financial year from those applied in respect of the previous financial year, without prior intimation to the Commission. Any change, if proposed, in the basis of charge or apportionment of revenues or expenses shall be consistent with the provisions of the Companies Act, 1956, the Accounting Standards or Rules and further any guidelines issued by the Commission in this regard.

5.4 Where, in relation to the Accounting Statements in respect of a financial year, the Trading Licensee has changed the basis of charge or apportionment or allocation from those adopted for the immediately preceding financial year, the Trading Licensee shall, if directed by the Commission, (in addition to preparing Accounting Statements on those bases which it has adopted), prepare and deliver to the Commission such Accounting Statements on the basis which it applied in respect of the immediately preceding financial year.

5.5 The Accounting Statements under clause 5.2. above shall, unless or otherwise approved or directed by the Commission:

(a) be prepared and published with the Annual Accounts of the Trading Licensee, in the manner provided in these General Conditions or in the Specific Conditions;

(b) state the accounting policies adopted;

(d) be prepared in the form as the Commission may stipulate from time to time;

5.6 The references to costs or liabilities of, or reasonably attributable to Licensed Business or Other Business shall be construed as excluding taxation, and capital liabilities which do not relate principally to such Business and interest thereon.

5.7 The Trading Licensee shall ensure that the Accounting Statements in respect of each financial year prepared under clause 5.2 and the Auditor’s report in respect of each financial year are publicised in such manner as the Commission may direct and are made available to any Person requesting them at a price not exceeding the reasonable cost of duplicating them.

6 PROVISION OF INFORMATION TO THE COMMISSION

6.1 The Trading Licensee shall duly maintain the information as the Commission may direct under Section 128 of the Act. The Trading Licensee shall furnish to the Commission without undue delay such information, documents and details related to the Licensed Business or any Other Business of the Trading Licensee, as the Commission may require for its own purposes or for the purposes of the Government of India, Central Transmission Utility, Regional Load Dispatch Centre, State Government, the State Transmission Utility, The State Load Dispatch Centre, the Central Commission and/or the Central Electricity Authority.

6.2 The Trading Licensee shall within 3 months of the end of each financial year submit to the Commission a report indicating the activities undertaken during such financial year. The Trading Licensee shall, if so required by the Commission, publish a summary of the report in a manner approved by the Commission.

6.3 The Trading Licensee shall duly inform the Commission about any incident restricting it from meeting its obligation under the licence granted including any act of omission or commission by others and steps taken by the Trading Licensee to mitigate the effect of such incident .The Trading Licensee shall notify the Commission as soon as possible the occurrence of any other incident which materially affect any part of its Trading activities and in any event, by not later than two months from the date of such occurrence:

(a) submit a report to the Commission giving full details of the facts within the knowledge of the Trading Licensee regarding the incident and its cause; and

(b) Trading Licensee can reasonably furnish and state reasons as to why Trading Licensee requires more than two months for giving full report of such incident;

6.4 The Commission may by order, after providing an opportunity of hearing direct the Trading Licensee to provide such amount of compensation as the Commission may direct to persons’ who are affected or prejudiced by any act of commission, omission or negligence on the part of any of the employees or agents of the Trading Licensee.

6.5 The Trading Licensee shall also undertake such studies as the Commission may direct it to undertake from time to time in regard to the trading activities and any other matter concerning the Trading Business that the Commission considers necessary in the public interest. The Commission at its own discretion may require the submission of a report to be prepared by an independent person on the activities of the Trading Licensee at the cost and expense of the Trading Licensee.

7 CAPITAL ADEQUACY, CREDIT WORTHINESS NORMS TO MAINTAINED

7.1 The Trading Licensee shall duly comply with the Regulations, guidelines, directions and orders the Commission may issue from time to time in regard to the technical and financial parameters and norms to be maintained at all times by the Trading Licensee;

7.2 The non maintenance of the technical and financial parameters as per sub-clause (1) above shall amount to a material breach of the obligations of the Trading Licensee.

8 PAYMENT OF LICENCE FEES

8.1 Within such period as the Commission may direct, the Trading Licensee shall pay to the Commission the Licence Fees, initial and also periodic, mentioned in the Special condition in such manner as the Commission may direct.

8.2 Where the Trading Licensee fails to pay to the Commission any of the fees due under clause 8.1 by the due dates:

(a) without prejudice to other obligations, the Trading Licensee shall be liable to pay interest on the outstanding amount at a simple interest of 1.5 percent per month, the interest being payable for the period beginning on the day after which the amount became due, and ending on the day on which the payment is made to the Commission; and

(b) in the event of continued default by the Trading Licensee, the Commission may revoke the Trading Licence.

8.3 The Trading Licensee shall be entitled to take into account any fee paid under this Clause 8 excluding however any interest paid for delayed payment, as an expense in the determination of aggregate revenues to be charged to the Tariffs.

9 TERMS OF REVOCATION

9.1 Subject to the provisions of section 19 of the Act and the Regulations framed thereunder, the Commission may, at any time initiate proceedings against the Trading Licensee for revocation of the Trading Licence and if satisfied in such proceedings on the grounds for revocation duly considering the public interest, revoke the Trading Licence:

(a) where the Trading Licensee in the opinion of the Commission, makes material breach or wilful default in doing anything required of him by or under this Act or the rules or regulations made thereunder

(b) where the Trading Licensee violates any of the terms or conditions of his licence the breach of which is expressly declared by such licence to render it liable to revocation;

(c) where the Trading Licensee fails, within the period fixed in this behalf by his licence, or any longer period which the Commission may have granted therefore-

(i) to show, to the satisfaction of the Commission, that he is in a position to fully and efficiently discharge the duties and obligations imposed on him by his licence; or

(ii) to make deposits or furnish the security, or pay the fees or other charges required by his licence;

(d) where in the opinion of the Commission the financial position of the Trading Licensee is such that he is unable to fully and efficiently discharge the duties and obligations imposed on him; and

(e) Where the Trading Licensee has failed to maintain the technical requirements, capital adequacy and credit worthiness specified by the Commission.

(f) where the Trading Licensee has failed to comply with all the Regulations, codes, and standards and also orders and directions of the Commission or otherwise has committed an act which renders Trading Licence revocable on any other grounds stated in the Act or the Rules or Regulations framed there under.

9.2 Where in its opinion the public interest so requires, the Commission may revoke his licence as to the whole or any part of his area of Trading upon such terms and conditions as it thinks fit.

9.3 Before revoking a Trading Licence the Commission may make such alternate arrangement to be made for discharging the duties of the Trading Licensee which the Commission considers necessary in public interest and all such arrangement shall be at the cost and risk of the Trading Licensee.

10 AMENDMENT OF LICENCE CONDITIONS

10.1 These General Conditions of Licence may be altered or amended by the Commission at any time it deems fit if it is in public interest in exercise of powers under Section 18 of the Act. For any such alteration or amendment, before any alterations or amendments in the Trading Licence are made, the following provisions shall have effect:

(a) where the Trading Licensee has made an application under Section 18, sub-section (1) of the Act proposing any alteration or amendment in the General Conditions of License, the Trading Licensee shall publish a notice of such application with such particulars and in such manner as may be directed by the Commission;

(b) where any alterations or amendments in a license are proposed to be made otherwise than on the application of the Trading Licensee, the Commission may direct the Trading Licensee to publish the proposed alterations or amendments with such particulars and in such manner as the Commission consider to be appropriate;

(c) the Commission shall not make any alterations or amendments unless all suggestions or objections received within thirty days from the date of the first publication of the notice have been considered by the Commission.

11 DISPUTE RESOLUTION

The Commission shall be entitled to adjudicate the disputes or at its discretion nominate person(s) as arbitrator(s) to settle disputes between the Trading Licensee and any other licensees or between the Trading Licensee and generating companies in pursuance of clause (f) of sub-section (1) of section 86 read with section 158 of the Act and Regulations of the Commission.

12 TARIFF AND EXPECTED REVENUE CALCULATION

The Trading Licensee shall trade in electricity, in accordance with the provisions of the Act, the Regulations of the Commission, the tariff terms and conditions and other guidelines, orders and directions issued by the Commission from time to time.

13 MISCELLANEOUS

13.1 All issues arising in relation to interpretation of these General Conditions and as to the terms and conditions thereof shall be a matter for the determination of the Commission and the decision of the Commission on such issues shall be final, subject only to the right of appeal under section 111 of the Act.

13.2 The Commission may at the time of grant of Trading Licence waive or modify the application of any of the provisions of these General Conditions either in the order granting the licence or by Specific Conditions made applicable to a Trading Licensee

13.3 These General conditions contained herein shall apply to all applicants for grant of Trading Licence after the coming into force of the Act and also to all deemed Trading Licensees under section 14 proviso first, second, third and fifth of the Act

By Order of the Commission

Sd/-

Secretary, AERC

Dated:

Place:

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