This document is a summer intern report submitted by Swati Pawar to Powergrid Corporation of India Ltd. It includes an acknowledgements section thanking various individuals and organizations that supported her internship. It also includes a table of contents that lists sections on the company profile and bank reconciliation statement. The company profile section provides details on Powergrid Corporation of India Ltd., including its role and operations in electricity transmission across India as well as regulations set by the Central Electricity Regulatory Commission. The bank reconciliation statement section outlines the bank reconciliation process.
1. POWERGRID CORPORATION
OF INDIA LTD.
A SUMMER INTERN REPORT
Submitted by
SWATI PAWAR
in partial fulfillment of Summer Internship for the award of the degree
of
B.COM(H)
From Shri Ram College of
Commerce
2. ACKNOWLEDGEMENT
The internship opportunity I had with Powergrid Corporationof India was a
great chance for learning and professionaldevelopment. Therefore, I consider
myself as a very lucky individual as I was provided with an opportunity to be a
part of it. I am also grateful for having a chance to meet so many wonderful
people and professionals who led me though this internship period.
MY SINCERE AND SPECIAL THANKS ARE DUE TO ________________, ________________
AND_________________ INTERNAL PROJECT SUPERVISOR, WHO HAS BEEN A WONDERFUL
GUIDE AND HELPED ME IN SUCCESSFULLY COMPLETION OF MY PROJECT.
I ALSO EXPRESS MY THANKS TO ALL MY FRIENDS AND FAMILY MEMBERS WHO HAVE BEEN A GREAT
HELP AT TIMES FOR
MY SINCERE AND SPECIAL THANKS ARE DUE TO ________________, ________________
AND_________________ INTERNAL PROJECT SUPERVISOR, WHO HAS BEEN A WONDERFUL
GUIDE AND HELPED ME IN SUCCESSFULLY COMPLETION OF MY PROJECT.
I ALSO EXPRESS MY THANKS TO ALL MY FRIENDS AND FAMILY MEMBERS WHO HAVE BEEN A GREAT
HELP AT TIMES FOR PROVIDING NECESSARY SUPPORT TOWARDS COMPLETING THIS PROJECT.
I WOULD ALSO LIKE TO THANK ALL THOSE FACULTY MEMBERS AND STAFF MEMBERS WHO HAVE
SHARED THEIR VALUABLE TIME, EXPERIENCE, AND KNOWLEDGE AND PROVIDED THEIR
UNCONDITIONAL SUPPORT AND GUIDANCE IN COMPLETING MY STUDIES INCLUDING THIS
PROJECT.
3. SUKANYA SHARMA
TABLE OF CONTENTS
1.CompanyProfile
About the company,
CERC norms,
2.Bank Reconciliation Statement
COMPANY PROFILE
POWERGRID was incorporated in October 1989 and started its commercial
operation in 1992. POWERGRID was formed with the mandate to build, operate
and maintain AC (Alternate Current) & HVDC (High Voltage Direct Current)
transmission systems including Load Dispatch facilities under Central sector. About
one third of the total generating capacity in India is transmitted through
POWERGRID system. Power Grid is India’s principal electric power transmission
company. It own and operate most of India’s interstate and inter-regional electric
power transmission system(the “ISTS”). In that capacity, as on 31stMarch, 2011,
company owns and operates a transmission network of about 82,355 cktkms of
inter-State transmissionlines, 135 nos. of EHV & HVDC substations with
transformationcapacityof about93,050MVAandwheels about50%of totalpower
generated in the Country. Transmission systemavailability of 99.80%, bestever so
far, was achieved in the history of the Company and projects worth about `7,313
Crorewere commissioned during the year. POWERGRID is also entrusted with role
of Central Transmission Utility (“CTU”) by GoI. As CTU it is required to:
4. Undertake transmission of electricity through the inter-state transmission
system;
Discharge all functions of planning and co-ordination relating to inter-state
transmission systems, with certain specified authorities and stakeholders;
Ensure development of an efficient, coordinated and economical system of
inter-state transmission lines for smooth flow of electricity from generating
stations to load centres; and
Provide non-discriminatory open access to its transmission system for use by
any licensee or generating companyon payment oftransmission charges and to
any consumer on payment of transmission charges and a surcharge thereon in
accordance with the Electricity Act.
PGCIL have also been entrusted by the GoI with the statutory role of Central
Transmission Utility (“CTU”). In this role, they operate as one of the chief agencies
responsiblefor the planning and development of the country’s nationwidepower
transmission network, including interstate networks. Since 1994 the GoI has
progressively entrusted us with the operation of the Regional Load Despatch
Centres (“RLDCs”)ineach of the fiveregionsinto which Indiaisdivided for purposes
of power transmission and regulation. On the subsidiary company set up by your
Company for Independent system operation viz. Power System Operation
Corporation Ltd (POSOCO), POWERGRID has transferred the movable assets and
liabilities to POSOCO w.e.f. 1stOctober, 2010. POSOCO is now fully functional and
has started billing the constituents for fees and charges from 1st October, 2010 in
terms of CERC Regulations on Fees and Charges of Regional Load Despatch Centre
Consultancy- since Fiscal 1995, consultancy division has provided transmission-
related consultancy services to more than 90 clients in over 200 domestic and
international projects. In consultancy role, wealso facilitate the implementation of
various GoI-funded projects for thedistribution of electricity to end-users, such as
the ‘Accelerated Power Development and Reform Programme’ (“APDRP”)in urban
and semi-urban areas and the ‘Rajiv Gandhi Grameen Vidhyutikaran Yojana’ (the
“RGGVY”) in rural areas.
Telecommunication- PGCIL has also diversified into the telecommunications
business,bycreating a telecommunications networkprincipallyusing ouroverhead
5. transmission infrastructure. Itown and operate a fibre-optic cable network that as
on March 31, 2007 was over 19,000 kilometres long and connected over 60 Indian
cities, including all major metropolitan areas. They have been leasing bandwidth
on this network to more than 60 customers, including major telecom operators
such as Bharat Sanchar Nigam Limited, Videsh Sanchar Nigam Limited, Tata
Teleservices Limited, Reliance Communications Limited and Bharti Airtel Limited.
PGCIL have been designated a Mini-Ratna Category-I public sector undertaking
since October 1998, which provides it with a greater delegation of powers to
undertake new projects without Government approval, subject to an investment
ceiling set by the Government. A major development in the transmissionsector is
that tariff based competitive bidding has been effectivefor transmission projects
w.e.f. 06th January, 2011. Competitive bidding, however, is not applicable for
transmission projects requiring up gradation/strengthening of existing
transmission lines and associated sub-stations and also not for projects for which
Bulk Power Transmission Agreement/Transmission ServiceAgreement (BPTA/TSA)
have been signed upto 05.01.2011. I wish to sharewith you that POWERGRID had
already signed BPTAs for nine nos. of High Capacity Power Transmission Corridors
which have a tentative cost estimate of about `58000 crore, to be executed
progressively through XII Plan and for a no. of other projects.
After the Issue, the President of India continues to hold 69.42% of the total paid-
up equity capital of POWERGRID.
Areas of operation:
The corporation’s parent business is “Transmission of power” through inter-state
transmission system yet the corporation is undertaking following activities also:-
Development of Inter-State transmission Systems
6. Planning & Design.
Construction.
Quality Assurance & Inspection.
Operation & Maintenance. Grid Management
Establishment of modern Load Dispatch Centers
Real-time Grid Operation.
Optimum scheduling & dispatch.
Energy accounting including settlements.
Diversification
Broad band Telecom Services.
Sub-transmission.
Distribution.
Rural Electrification.
Consultancy.
Entertainment.
To participate in long distance Trunk Telecommunication business ventures.
To assistvarious SEBs and other utilities in up gradation of skills & sharing of
expertise by organizing regular conferences, tailor made training workshops
etc.
To offer Total Solutions and to meet specific needs of the customers.
Introduce other value added services such as Video
conferencing, Virtual Local Area Network (VLAN), Voice over
Internet Protocol (VoIP).
7. CENTRAL ELECTRICITY REGULATION COMMISSION (CERC)
The Electricity Act 2003 has empowered the CERC to specify the terms and
conditions for the determination of tariff in respect of the generating companies
that are either owned by the Central Government or supply power to more than
one State. The CERC is also empowered to determine the tariff that can be levied
by transmission licensees for inter-State transmission of electricity. After the
enactment ofthe Electricity Act2003,theCERC hadcome outwith tariffregulations
for the period 2004-09 in March 2004. With these regulations set to expire on
March 31,2009,theCERC hasnotified new tariff regulationsfor the next regulatory
period 2009-14. Thenew regulations willapply to all generating stations (excluding
stations based on non-conventional energy sources) and transmission
licenseesprovided that the tariffs for these entities have not been determined
through bidding process in accordance with the guidelines issued by the Central
Government. Further, the grace period of three years for government utilities to
competitively bid the projects willcome to an end by 2011, and hencethesenorms
will be applicable to projects set up by PSUs as well that will either be existing on
that date or the agreement for such projects have been executed. The new
regulations are also important for the various State Electricity Regulatory
Commissions (SERCs) as they are guided by these regulations while framing their
own tariff principles for the State sector utilities concerned. Prior to constitution of
CERC, Tariff was notified by Ministry Of Power for a five year block. The ministry of
power had defined the normative factors for transmission charges that can be
levied by POWERGRID to electricity board for fiveyear block 1997-2002.Now CERC
determines the norms of electricity tariffs, guided by the tariff policy issued by GOI
8. and the provisions of the electricity act 2003. Ithas issued the regulations setting
forth certain parameters for generation and transmission tariffs. Tariff is set at a
level intended to compensate the licensee for the construction of project and for
operating the project thereafter. CERC defines tariff structure for 5 year block e.g.
“CERC 04-09 Norms” and “CERC 09-14 Norms”. Few changes were done in 09-14
block ,the Impactof the changes are discussed by analysing a case where the data
forOf Power for a fiveyear block. The ministry of power had defined the normative
factors for transmission charges that can be levied by POWERGRID to electricity
board for fiveyear block 1997-2002. Now CERCdetermines thenorms of electricity
tariffs, guided by the tariff policy issued by GOI and theprovisions of the electricity
act 2003. It has issued the regulations setting forth certain parameters for
generation and transmission tariffs. Tariff is set at a level intended to compensate
the licenseefor theconstructionof projectand foroperating theprojectthereafter.
CERC defines tariff structure for 5 year block e.g. “CERC 04-09 Norms” and “CERC
09-14 Norms”. Few changes were done in 09-14 block ,the Impact of the changes
arediscussedbyanalysinga casewherethedata fora transmissionlinewhoseDate
Of Commercial Operation(DOCO) was after 01.04.2009and tariff computed using
both the Norms and the difference in the two analysed.
Promotes
Efficiency, economy and competition in bulk electricity supply.
Regulates
The tariff of generating companies, owned or controlled by the government of
India, any other generating company, which have a composite scheme for
generation and sale of electricity in more than one state and the inter-state
transmission of energy, including the tariff of transmission utility
The Central Electricity Regulation Commission shall consist of the following
members:
A chairman and three other members
9. The chairman of the central electricity authority shall be the member, Ex-
officio
The central commission shall appoint a secretary to exercise and perform
under control of the chairperson.
The tariff of generating companies, owned or controlled by the government of
India, any other generating company, which have a composite scheme for
generation and sale of electricity in more than one state and the inter-state
transmission of energy, including the tariff of transmission utility
The Central Electricity Regulation Commission shall consist of the following
members:
A chairman and three other members
The chairman of the central electricity authority shall be the member, Ex-
officio
The central commission shall appoint a secretary to exercise and perform
under control of the chairperson.
Establishment of central advisory committee to advice the central
commission.
The central commission was established on 24.07.1998.
Powers and functions of CERC
The powers and functions of CERC inter alia include the following:
To regulate the inter-state transmission of energy including tariff of
transmission utilities.
To promotecompetition, efficiency and economy in the activities ofthe power
industry.
10. To aid and advice the central government in the formation of tariff policy,
which shall be :
Fairs to consumers
Facilitate mobilisation of adequate resources for the power sector.
To associate with the environmental regulatory agencies to develop
appropriate policies and procedures for environmental regulation of power.
To frame guidelines in matter of electricity tariff
To arbitrate or adjudicate upon disputes involving generating companies or
transmission utilities in regard to matters connected with (a) to (c).
To aid and advice the central government orany other matter related to central
commission.
Bank Reconciliation Statement
A Bank reconciliation is a process that explains the difference between the bank balance shown in
an organization's bank statement, as supplied by the bank, and the corresponding amount shown in
the organization's own [accounting] records at a particular point of time.[1]
Such differences may occur, for example, because a cheque or a list of cheques issued by the
organisation has not been presented to the bank, a banking transaction, such as a credit received,
or a charge made by the bank, has not yet been recorded in the organization's books, or either the
bank or the organisation itself has made an error.
It may be easy to reconcile the difference by looking at very recenttransactions in either the bank
statement or the organisation's own accounting records (cash book) and seeing if some combination
of them tallies with the difference to be explained. Otherwise it may be necessary to go through and
match every transaction in both sets of records since the last reconciliation, and see what
transactions remain unmatched. The necessary adjustments should then be made in the cash book,
or any timing differences recorded to assist with future reconciliations.
For this reason, and to minimise the amount of work involved, it is good practice to carry out such
reconciliations at reasonably frequent intervals. Reconciliations are generally performed by
specialised accounting software though the understanding of what occurs is important for a
successful reconciliation. Also, Bank reconciliation statement is a statement prepared on a
11. particular day to reconcile the bank balance as per Cash book or Bank statement showing entries
causing difference between the two balances.
Bank Reconciliation Process
Step 1. Adjusting the Balance per Bank
We will demonstrate the bank reconciliation process in several steps. The first step is to adjust
the balance on the bank statement to the true, adjusted, or corrected balance. The items necessary for
this step are listed in the following schedule:
Deposits in transit are amounts already received and recorded by the company, but are not yet
recorded by the bank. For example, a retail store deposits its cash receipts of August 31 into the
bank's night depository at 10:00 p.m. on August 31. The bank will process this deposit on the
morning of September 1. As of August 31 (the bank statement date) this is a deposit in transit.
Because deposits in transit are already included in the company's Cash account, there is no need to
adjust the company's records. However, deposits in transit are not yet on the bank statement.
Therefore, they need to be listed on the bank reconciliation as an increase to the balance per bank in
order to report the true amount of cash.
A helpful rule of thumb is "put it where it isn't." A deposit in transit is on the company's books, but it
isn't on the bank statement. Put it where it isn't: as an adjustment to the balance on the bank statement.
Outstanding checks are checks that have been written and recorded in the company's Cash account,
but have not yet cleared the bank account. Checks written during the last few days of the month plus
a few older checks are likely to be among the outstanding checks.
Because all checks that have been written are immediately recorded in the company's Cash
account, there is no need to adjust the company's records for the outstanding checks. However, the
outstanding checks have not yet reached the bank and the bank statement. Therefore, outstanding
checks are listed on the bank reconciliation as a decrease in the balance per bank.
Recall the helpful tip "put it where it isn't." An outstanding check is on the company's books, but it
isn't on the bank statement. Put it where it isn't: as an adjustment to the balance on the bank statement.
Bank errors are mistakes made by the bank. Bank errors could include the bank recording an
incorrect amount, entering an amount that does not belong on a company's bank statement, or
omitting an amount from a company's bank statement. The company should notify the bank of its
12. errors. Depending on the error, the correction could increase or decrease the balance shown on the bank
statement. (Since the company did not make the error, the company's records are not changed.)
Step 2. Adjusting the Balance per Books
The second step of the bank reconciliation is to adjust the balance in the company's Cash account
so that it is the true, adjusted, or corrected balance. Examples of the items involved are shown in the
following schedule:
Bank service charges are fees deducted from the bank statement for the bank's processing of the
checking account activity (accepting deposits, posting checks, mailing the bank statement, etc.)
Other types of bank service charges include the fee charged when a company overdrawsits checking
account and the bank fee for processing a stop payment order on a company's check. The bank might
deduct these charges or fees on the bank statement without notifying the company. When that
occurs the company usually learns of the amounts only after receiving its bank statement.
Because the bank service charges have already been deducted on the bank statement, there is no
adjustment to the balance per bank. However, the service charges will have to be entered as an
adjustment to the company's books. The company's Cash account will need to be decreased by the
amount of the service charges.
Recall the helpful tip "put it where it isn't." A bank service charge is already listed on the bank
statement, but it isn't on the company's books. Put it where it isn't: as an adjustment to the Cash
account on the company's books.
An NSF check is a check that was not honored by the bank of the person or company writing the
check because that account did not have a sufficient balance. As a result, the check is returned
without being honored or paid. (NSF is the acronym for not sufficient funds. Often the bank
describes the returned check as a return item. Others refer to the NSF check as a "rubber check"
because the check "bounced" back from the bank on which it was written.) When the NSF check
comes back to the bank in which it was deposited, the bank will decrease the checking account of
the company that had deposited the check. The amount charged will be the amount of the check
plus a bank fee.
Because the NSF check and the related bank fee have already been deducted on the bank
statement, there is no need to adjust the balance per the bank. However, if the company has not yet
13. decreased its Cash account balance for the returned check and the bank fee, the company must
decrease the balance per books in order to reconcile.
Check printing charges occur when a company arranges for its bank to handle the reordering of its
checks. The cost of the printed checks will automatically be deducted from the company's checking
account.
Because the check printing charges have already been deducted on the bank statement, there is no
adjustment to the balance per bank. However, the check printing charges need to be an adjustment
on the company's books. They will be a deduction to the company's Cash account.
Recall the general rule, "put it where it isn't." A check printing charge is on the bank statement, but it
isn't on the company's books. Put it where it isn't: as an adjustment to the Cash account on the
company's books.
Interest earned will appear on the bank statement when a bank gives a company interest on its
account balances. The amount is added to the checking account balance and is automatically on the
bank statement. Hence there is no need to adjust the balance per the bank statement. However, the
amount of interest earned will increase the balance in the company's Cash account on its books.
Recall "put it where it isn't." Interest received from the bank is on the bank statement, but it isn't on
the company's books. Put it where it isn't: as an adjustment to the Cash account on the company's
books.
Notes Receivable are assets of a company. When notes come due, the company might ask its bank to
collect the notes receivable. For this service the bank will charge a fee. The bank will increase the
company's checking account for the amount it collected (principal and interest) and will decrease the
account by the collection fee it charges.Since these amounts are already on the bank statement, the
company must be certain that the amounts appear on the company's books in its Cash account.
Recall the tip "put it where it isn't." The amounts collected by the bank and the bank's fees are on the
bank statement, but they are not on the company's books. Put them where they aren't:as adjustments
to the Cash account on the company's books.
Errors in the company's Cash account result from the company entering an incorrect amount,
entering a transaction that does not belong in the account, or omitting a transaction that should be in
the account. Since the company made these errors, the correction of the error will be either an
increase or a decrease to the balance in the Cash account on the company's books.
Step 3. Comparing the Adjusted Balances
After adjusting the balance per bank (Step 1) and after adjusting the balance per books (Step 2), the two
adjusted amounts should be equal. If they are not equal, you must repeat the process until the
balances are identical. The balances should be the true, correct amount of cash as of the date of the
bank reconciliation.