Introduction

The case of Power Grid Corporation Of India Limited v. Madhya Pradesh Power Management Company Ltd. (Mppmcl) And Others adjudicated by the Central Electricity Regulatory Commission (CERC) on February 5, 2020, serves as a pivotal decision in the realm of electricity transmission tariff regulation in India. The petitioner, Power Grid Corporation of India Ltd. (PGCIL), sought the determination of Transmission Tariff for specific transmission assets for the tariff period of 2014-19. The core issues revolved around the approval of the Commercial Operation Date (COD), justification for time over-runs in asset commissioning, and the associated financial implications under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014.

Summary of the Judgment

PGCIL filed a petition to approve the Transmission Tariff for various transmission assets, including 220 kV Line Bays and 500 MVA ICTs at Damoh and Vadodara substations. Key prayers included the approval of tariff blocks, acknowledgment of capital costs, recovery of annual fixed charges, and billing adjustments for interest rates and GST. The primary contention was the delay in commissioning the assets, attributed by PGCIL to the non-commissioning of downstream assets by other entities like MPPTCL and GETCO.

CERC's order addressed each asset's COD and the associated time over-runs. While the COD for Asset-1 was tentatively approved with a provisional tariff pending final cost breakdown, COD approvals for Asset-2 and Asset-3 were scrutinized due to discrepancies in asset classification and lack of adequate justification for delays. The Commission ultimately disallowed time over-runs, attributing them to the petitioner's decisions rather than uncertainties beyond their control, and directed the tariff computations to be finalized upon submission of requisite documentation.

Analysis

Precedents Cited

The Judgment extensively referenced the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014, particularly Regulation 4(3), which defines the COD and conditions under which time overruns may be condoned. Previous orders, including petition no. 208/TT/2016 and review petition no. 6/RP/2018, were pivotal in shaping the Commission's stance on COD approvals and the procedural correctness in filing petitions.

The excerpts indicate reliance on prior rulings where time overruns due to non-completion of downstream assets were not condoned if attributable to the petitioner's inefficiency. This consistent approach underscores the Commission's emphasis on accountability and stringent adherence to project timelines.

Legal Reasoning

The Court meticulously dissected the submissions by both the petitioner and respondents. It emphasized the definition of COD under Regulation 4(3), highlighting that COD should reflect the date when the transmission system is in regular service after successful trial operations. The provision allows for exceptions only when delays are caused by factors beyond the licensee's control, necessitating formal approval from the Commission.

In this case, the petitioner attributed delays to the non-commissioning of downstream systems by entities like MPPTCL and GETCO. However, the Commission found inconsistencies in the petitioner's claims, especially regarding the timing of coordination efforts. The Commission held that initiating coordination after the Scheduled COD (SCOD) indicated a lapse in the petitioner's execution strategy. Additionally, the lack of documentation showcasing alternative use of assets or proactive measures to mitigate delays further weakened the petitioner's stance.

Consequently, the Commission refused to condone the time over-runs, deeming them as the petitioner's responsibility. The decision to approve provisional tariffs was contingent upon the submission of complete cost breakdowns and adherence to procedural mandates.

Impact

This Judgment reinforces the stringent application of tariff regulations, particularly concerning COD approvals and time over-run condonement. Future cases will likely scrutinize the proactive measures taken by transmission licensees to adhere to project timelines and the robustness of their coordination with upstream and downstream entities.

Additionally, the decision clarifies the non-acceptance of asset clubbing without adequate justification, ensuring that tariff determinations are precise and reflect actual operational statuses. This promotes transparency and accountability among transmission entities, fostering a more disciplined approach to project management and tariff filings.

Complex Concepts Simplified

Commercial Operation Date (COD)

Definition: COD refers to the date from which an element of the transmission system is in regular service for transmitting electricity and communication signals.

Regulation 4(3): Specifies how COD is determined and under what conditions a transmission licensee can seek approval for delayed COD due to factors beyond their control.

Time Over-Run

Meaning: The period by which the actual COD extends beyond the Scheduled COD (SCOD) as per initial project timelines.

Condoning Time Over-Run: Approval by the regulatory authority to account for delays, allowing for the extended period to be reflected in tariffs.

Proviso (ii) of Regulation 4(3)

Provision: Allows transmission licensees to seek approval for COD if delays are due to reasons not attributable to them, such as delays by other entities responsible for associated transmission systems.