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AMICUS AI
Citation Codes
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citation codes
Case Number
Advocates
  • 1. Shri U.K Tyagi, PGCIL
  • 2. Shri V.V Sharma, PGCIL
  • 3. Shri M.M Mondal, PGCIL
  • 4. Shri Mohd. Mohsin, PGCIL
  • 5. Shri R. Krishnaswami, TNEB
Judges
  • Pramod Deo
  • Member
  • S. Jayaraman
  • Member
  • Member
  • V.S Verma
Acts
  • 2006-2007 2007-2008 2008-2009 61.47 61.56 61.56INTEREST ON LOAN14. Clause (1) of regulation 56
  • attached.DEPRECIATION18. Sub-clause (a) of clause (ii) of Regulation 56
  • sub-clause (b) of clause (ii) of Regulation 56
  • clauses (1) and (2) of Regulation 53
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Advocates
  • 1. Shri U.K Tyagi, PGCIL
  • 2. Shri V.V Sharma, PGCIL
  • 3. Shri M.M Mondal, PGCIL
  • 4. Shri Mohd. Mohsin, PGCIL
  • 5. Shri R. Krishnaswami, TNEB
Judges
  • Pramod Deo
  • Member
  • S. Jayaraman
  • Member
  • Member
  • V.S Verma
Acts
  • 2006-2007 2007-2008 2008-2009 61.47 61.56 61.56INTEREST ON LOAN14. Clause (1) of regulation 56
  • attached.DEPRECIATION18. Sub-clause (a) of clause (ii) of Regulation 56
  • sub-clause (b) of clause (ii) of Regulation 56
  • clauses (1) and (2) of Regulation 53
See more information ...
Smart Summary

Structured Summary of the Opinion — Petition No. 49/2009

Factual and Procedural Background

The petitioner filed this revision petition seeking revision of transmission tariff on account of additional capital expenditure incurred during 2006-2007 in respect of 40% Fixed Series Compensation on the 400 kV Gooty–Neelmangala transmission line (Circuit II) at Gooty under the FSC project in the Southern Region. The reliefs sought were revision of tariff for the period 1.4.2006 to 31.3.2009 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 ("the 2004 regulations") and reimbursement of the petition filing fee and other expenses connected with filing the petition.

The investment approval for the transmission scheme was originally accorded by the petitioner’s Board on 22.10.2002 with an estimated cost of Rs. 5,793 lakh (including IDC Rs. 443 lakh). The transmission asset was declared under commercial operation on 1.5.2006. The Commission had earlier approved transmission charges in an order dated 23.3.2007 in Petition No. 129/2006 for the period 1.5.2005 to 31.3.2009 based on a capital cost of Rs. 1,382.59 lakh as on DOCO and Rs. 1,461.40 lakh as on 31.3.2006 (after accounting for additional capitalization of Rs. 78.81 lakh for 2005–06).

The petitioner claimed additional capitalization of Rs. 4.19 lakh during 2006–2007 (balance/retention payments for the sub-station) and sought revision of transmission charges for 2006–2007, 2007–2008 and 2008–2009. The Tamil Nadu Electricity Board filed the reply to the petition. The Commission considered the petitioner’s submissions and the relevant provisions of the 2004 regulations and issued the order disposing of Petition No. 49/2009.

Legal Issues Presented

  1. Whether the additional capital expenditure of Rs. 4.19 lakh incurred during 2006–2007 in respect of the transmission asset is allowable for capitalization and thus for revision of transmission tariff for the period 1.4.2006 to 31.3.2009 under the 2004 regulations.
  2. Whether the petitioner is entitled to reimbursement of the petition filing fee and other expenses connected with filing the petition.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Commission's analysis proceeds by applying the specific provisions of the 2004 regulations and by recalculating tariff components after allowing the additional capitalisation where justified. The court's reasoning and calculations are set out in discrete parts below, reflecting the structure of the opinion.

Capitalisation — applicability of regulations

  • The Commission examined the nature of the additional expenditure (Rs. 4.19 lakh) and found it to be in respect of committed liabilities — deferred liabilities for works/services which had materialised and were within the original scope of work.
  • On that basis, the additional expenditure was held allowable for capitalisation under clauses (1) and (2) of Regulation 53 of the 2004 regulations. The capital cost as on 1.4.2007 was accordingly taken as Rs. 1,465.59 lakh (Rs. 1,461.40 lakh as on 1.4.2006 plus Rs. 4.19 lakh additional capitalisation during 2006–2007).

Debt–Equity Ratio and Equity Treatment

  • The petitioner considered the additional capitalisation in the debt–equity ratio at 70:30 and the Commission found this approach to be in order.
  • The opinion provides figures showing equity as considered for tariff calculations, with an "Equity as on 1.4.2007" amount of Rs. 439.69 lakh used for return-on-equity computations.

Return on Equity

  • Regulation 56(iii) of the 2004 regulations prescribes that return on equity be computed on the equity base @ 14% per annum.
  • The Commission applied the regulation and allowed revised return on equity for each year: Rs. 61.47 lakh (2006–2007), Rs. 61.56 lakh (2007–2008) and Rs. 61.56 lakh (2008–2009).

Interest on Loan — normative approach and calculations

  • The opinion recites clause (1) of Regulation 56 (and its sub-clauses) governing interest on loan: computation loan-wise, treatment of loan outstanding as on 1.4.2004, normative repayment for 2004–09, re-financing principles, moratorium treatment and swapping of loans.
  • The Commission adopted a normative methodology: gross loans and repayment schedules from the earlier order (23.3.2007) were used; the notional loan arising from additional capitalisation was added to the loan amount as on 31.3.2006 to arrive at the adjusted gross (normative) loan; normative repayments then applied; where normative repayment in a year is less than depreciation, the excess depreciation is treated as normative repayment (moratorium treatment).
  • Using weighted average rates of interest on actual loans, the Commission applied the weighted average rate to the average normative loan to compute interest on loan. The resulting revised interest on loan figures were Rs. 78.50 lakh (2006–2007), Rs. 72.97 lakh (2007–2008) and Rs. 66.97 lakh (2008–2009).
  • The Commission indicated detailed loan-wise calculations and a separately attached annexure showing the computation of weighted average rate of interest.

Depreciation

  • The Commission applied Regulation 56(ii)(a)–(d) for depreciation: historical cost as value base; straight-line method at rates in Appendix II; residual value 10%; depreciation chargeable from first year of operation and pro rata for part years.
  • Depreciable value and remaining depreciable value were computed and annual depreciation allowed was Rs. 52.69 lakh (2006–2007), Rs. 52.76 lakh (2007–2008) and Rs. 52.76 lakh (2008–2009).

Advance Against Depreciation (AAD)

  • The Commission applied sub-clause (b) of clause (ii) of Regulation 56, which defines AAD = loan repayment amount as per regulation 56(i) subject to a ceiling of 1/10th of loan minus depreciation as per schedule, and permits AAD only where cumulative repayment exceeds cumulative depreciation.
  • The Commission calculated AAD by: (i) computing 1/10th of gross notional loan; (ii) considering cumulative repayments of notional loan; and (iii) taking depreciation as computed. The AAD allowed was Rs. 8.93 lakh (2006–2007), Rs. 18.94 lakh (2007–2008) and Rs. 18.94 lakh (2008–2009).

Operation & Maintenance (O&M) Expenses

  • The Commission applied clause (iv) of Regulation 56 which prescribes per ckt-km and per bay norms for O&M. Since line length and number of bays remained unchanged, O&M expenses as taken in the earlier order dated 23.3.2007 were retained for tariff calculations.

Interest on Working Capital

  • The components of working capital and the approach are set out and applied in accordance with Regulation 56(v):
  • Maintenance spares: Regulation 56(v)(1)(b) provides maintenance spares @ 1% of historical cost escalated @ 6% p.a. from DOCO. The petitioner had claimed maintenance spares after accounting for additional capitalisation, but the Commission did not accept maintenance spares on the additional capitalisation for present computation and worked them on historical cost as on DOCO with escalation.
  • O&M expenses for one month were taken as a component per Regulation 56(v)(1)(a), on the basis used in the earlier order.
  • Receivables were taken as two months’ average billing on target availability level per Regulation 56(v)(1)(c).
  • Rate of interest on working capital: per Regulation 56(v)(2) the normative rate is the short-term PLR of SBI as on the relevant date; the petitioner claimed 10.25% (SBI PLR as on 1.4.2005) and the Commission allowed 10.25%.
  • Using these components, revised interest on working capital was computed and allowed as Rs. 5.82 lakh (2006–2007), Rs. 6.02 lakh (2007–2008) and Rs. 6.05 lakh (2008–2009).

Computation and Summary of Revised Tariff

  • The Commission recalculated and summarised the revised annual transmission charges for the transmission asset for each year taking into account the allowed additional capitalisation and the normative treatments. The totals allowed were Rs. 237.83 lakh (2006–2007), Rs. 243.88 lakh (2007–2008) and Rs. 239.18 lakh (2008–2009).
  • Component-wise totals for each year (Depreciation, Interest on Loan, Return on Equity, Advance Against Depreciation, Interest on Working Capital and O&M) are set out in the order and were used to arrive at the totals above.

Holding and Implications

Core Ruling: Petition No. 49/2009 is disposed of with revision of transmission charges allowed on the basis set out in the order.

Direct consequences and practical implications explicitly stated in the opinion:

  • The additional capitalization of Rs. 4.19 lakh incurred during 2006–2007 is allowed and has been capitalised for tariff purposes under clauses (1) and (2) of Regulation 53 of the 2004 regulations.
  • The Commission allowed the recalculated transmission charges for the transmission asset for the years 2006–2007, 2007–2008 and 2008–2009 — the totals being Rs. 237.83 lakh, Rs. 243.88 lakh and Rs. 239.18 lakh respectively.
  • The petitioner is to recover the additional transmission charges from the respondent in three monthly instalments.
  • Reimbursement of the petition filing fee has not been allowed: the Commission refers to a separate general order dated 19.2.2008 in Petition No. 127/2007 in which it was decided that the petitioner shall not be allowed reimbursement of the petition filing fee.
  • The petitioner is entitled to other charges (income-tax, incentive, surcharge and other cess and taxes) in accordance with the 2004 regulations.
  • No new judicial precedent is stated to have been laid down by this order; the decision applies the provisions of the 2004 regulations to the facts before the Commission and disposes the petition on that basis.

This summary is limited to and strictly based on the information contained in the provided opinion. No information beyond the opinion has been added or inferred.

Show full summary ...

    Power Grid Corporation Of India Limited v. Karnataka Power Transmission Corporation Ltd.

    This petition has been filed for revision of transmission tariff on account of additional capital expenditure incurred during 2006-2007 in respect of 40% Fixed Series Compensation on 400 kV Gooty-Neelmangala transmission line (Ckt-II) (the transmission asset) at Gooty under FSC project (the transmission scheme) in Southern Region for the period from 1.4.2006 to 31.3.2009, based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004, (hereinafter referred to as “the 2004 regulations”). The petitioner has also prayed for reimbursement of the petition filing fee and other expenditure in connection with the filing of the petition.

    2. The investment approval for the transmission scheme was accorded by the Board of Directors of the petitioner company vide letter dated 22.10.2002 at an estimated cost of Rs. 5793 lakh, including IDC of Rs. 443 lakh. The transmission asset was declared under commercial operation on 1.5.2006

    3. The transmission charges for the transmission asset were approved by the Commission in its order dated 23.3.2007 in Petition No. 129/2006 for the period 1.5.2005 to 31.3.2009 based on capital cost of Rs. 1382.59 lakh as on the date of commercial operation and Rs. 1461.40 lakh as on 31.3.2006, after considering additional capital expenditure of Rs. 78.81 lakh for the period 1.5.2005 to 31.3.2006 The summary of the transmission charges approved by the said order dated 23.3.2007 is extracted hereunder:

    (Rs. in lakh)

    2005-2006 (Pro rata) 2006-2007 2007-2008 2008-2009 Depreciation 46.93 52.61 52.61 52.61 Interest on Loan 73.87 78.38 72.73 66.76 Return on Equity 54.75 61.38 61.38 61.38 Advance against Depreciation 0.00 9.01 18.87 18.87 Interest on Working Capital 5.07 5.81 6.01 6.04 O & M Expenses 26.81 30.42 31.63 32.90 Total 207.43 237.61 243.23 238.55

    4. The relevant details of the completion cost etc. of the transmission assets claimed by the petitioner are as under:

    (Rs. in lakh)

    Capital expenditure up to 1.5.2005 Additional Capitalization during 2005-2006 Capital expenditure as on 1.4.2006 Additional Capitalization during 2006-2007 Capital expenditure as on 1.4.2007 1382.59 (As per order dated 23.3.2007) 78.81 1461.40 4.19 1465.59

    5. Based on the above additional capital expenditure, the petitioner has claimed the revised transmission charges for the years 2006-2007, 2007-2008 and 2008-2009 as under:

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Depreciation 52.69 52.76 52.76 Interest on Loan 78.50 72.97 66.97 Return on Equity 61.47 61.56 61.56 Advance against Depreciation 8.93 18.95 18.95 Interest on Working Capital 5.82 6.02 6.05 O & M Expenses 30.42 31.63 32.90 Total 237.83 243.89 239.19

    6. The details submitted by the petitioner in support of its claim for interest on working capital are given hereunder:

    2006-2007 2007-2008 2008-2009 Maintenance Spares 14.59 15.46 16.39 O & M expenses 2.54 2.64 2.74 Receivables 39.64 40.65 39.87 Total 56.77 58.75 59.00 Rate of Interest 10.25% 10.25% 10.25% Interest 5.82 6.02 6.05

    7. The reply to the petition has been filed by the Tamil Nadu Electricity Board.

    CAPITAL COST

    8. The details submitted by the petitioner in support of its claim for additional capital expenditure are given hereunder:

    Year Amount (Rs. in lakh) Nature and details of expenditure 2007-2008 Sub-station = Rs. 4.19 lakh Total = Rs. 4.19 lakh Balance/retention payments

    9. It is found that the additional capital expenditure claimed is in respect of committed liabilities. These are part of the deferred liabilities relating to works/services which have since materialised, and are within the original scope of work. Therefore, the additional expenditure sought to be capitalised is allowed under clauses (1) and (2) of Regulation 53 of the 2004 regulations.

    TOTAL CAPITAL COST

    10. Based on the above, capital cost for the purpose of tariff for transmission line as on 31.3.2008 works out as under:

    (Rs. in lakh)

    Capital expenditure up to 1.5.2005 Additional Capitalization during 2005-2006 Capital expenditure as on 1.4.2006 Additional Capitalization during 2006-2007 Capital expenditure as on 1.4.2007 1382.59 78.81 1461.40 4.19 1465.59

    DEBT- EQUITY RATIO

    11. The petitioner has considered the amount of additional capitalization in the debt-equity ratio of 70:30. This has been found to be in order. Accordingly, for the purpose of tariff, equity considered for the transmission line is as under:

    (Rs. in lakh)

    Equity as on 1.5.2005 (As per order dated 23.3.2007) Notional additional equity during 2005-2006 Average equity for 2005-2006 Equity as on 1.4.2006 Notional additional equity during 2006-2007 Average equity for 2006-2007 Equity as on 1.4.2007 414.79 23.64 426.61 438.43 1.26 439.06 439.69

    RETURN ON EQUITY

    12. As per clause (iii) of regulation 56 of the 2004 regulations, return on equity shall be computed on the equity base determined in accordance with regulation 54 @ 14% per annum. Equity invested in foreign currency is to be allowed a return in the same currency and the payment on this account is made in Indian Rupees based on the exchange rate prevailing on the due date of billing.

    13. Equity as given the table under para 11 above has been considered. The tariff for the years 2006-2007 has been allowed on average equity. Accordingly, revised return on equity allowed each year is given as under:

    (Rs. in lakh)

    Return on equity 2006-2007 2007-2008 2008-2009 61.47 61.56 61.56

    INTEREST ON LOAN

    14. Clause (1) of regulation 56 of the 2004 regulations inter alia provides that,—

    (a) Interest on loan capital shall be computed loan wise on the loans arrived at in the manner indicated in regulation 54.

    (b) The loan outstanding as on 1.4.2004 shall be worked out as the gross loan in accordance with Regulation 54 minus cumulative repayment as admitted by the Commission or any other authority having power to do so, up to 31.3.2004 The repayment for the period 2004-09 shall be worked out on a normative basis.

    (c) The transmission licensee shall make every effort to re-finance the loan as long as it results in net benefit to the beneficiaries. The costs associated with such re-financing shall be borne by the beneficiaries.

    (d) The changes to the loan terms and conditions shall be reflected from the date of such re-financing and benefit passed on to the beneficiaries.

    (e) In case of dispute, any of the parties may approach the Commission with proper application. However, the beneficiaries shall not withhold any payment ordered by the Commission to the transmission licensee during pendency of any dispute relating to re-financing of loan;

    (f) In case any moratorium period is availed of by the transmission licensee, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and interest on loan capital shall be calculated accordingly.

    (g) The transmission licensee shall not make any profit on account of re-financing of loan and interest on loan;

    (h) The transmission licensee may, at its discretion, swap loans having floating rate of interest with loans having fixed rate of interest, or vice versa, at its own cost and gains or losses as a result of such swapping shall accrue to the transmission licensee:

    Provided that the beneficiaries shall be liable to pay interest for the loans initially contracted, whether on floating or fixed rate of interest.”

    15. In our calculation, the interest on loan has been worked out as detailed below:

    (a) Gross amount of loan, repayment of instalments as per the loan, rate of interest and weighted average rate of interest on actual loan have been considered as per order dated 23.3.2007 in Petition No. 129/2006.

    (b) Notional loan arising out of additional capitalisation for the year 200607 has been added in loan amount as on 31.3.2006 to arrive at total Notional loan. This adjusted Gross loan has been considered as normative loan for tariff calculations.

    (c) Tariff has been worked out considering normative loan and normative repayments. Once the normative loan is arrived at, it is considered for all purposes in the tariff. Normative repayments are worked out by the following formula:

    (d) Moratorium in repayment of loan has been considered with reference to normative loan and if the normative repayment of loan during the year is less than the depreciation during the year, it has been considered as moratorium and depreciation during the year has been deemed as normative repayment of loan during the year.

    (e) Weighted average rate of interest on actual loan worked out as per (i) above has been applied on the average loan during the year to arrive at the interest on loan.

    16. Based on above, revised year-wise interest on loan has been worked out as under:

    Details 2006-2007 2007-2008 2008-2009 Gross Normative Loan-Opening 1022.97 1025.90 1025.90 Cumulative Repayment up to Previous Year/date of commercial operation 46.93 108.54 180.25 Net Loan-Opening 976.04 917.36 845.65 Addition due to Additional Capitalisation 2.93 0.00 Repayment during the year 61.62 71.70 71.70 Net Loan-Closing 917.36 845.65 773.95 Average Loan 946.70 881.51 809.80 Weighted Average Rate of Interest on Loan 8.29% 8.277% 8.27% Interest 78.50 72.97 66.97

    17. The detailed calculations in support of the weighted average rate of interest are contained in Annexure attached.

    DEPRECIATION

    18. Sub-clause (a) of clause (ii) of Regulation 56 of the 2004 regulations provides for computation of depreciation in the following manner, namely:

    (a) The value base for the purpose of depreciation shall be the historical cost of the asset.

    (b) Depreciation shall be calculated annually based on straight line method over the useful life of the asset and at the rates prescribed in Appendix II to these regulations. The residual value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. Land is not a depreciable asset and its cost shall be excluded from the capital cost while computing 90% of the historical cost of the asset. The historical capital cost of the asset shall include additional capitalisation on account of Foreign Exchange Rate Variation up to 31.3.2004 already allowed by the Central Government/Commission.

    (c) On repayment of entire loan, the remaining depreciable value shall be spread over the balance useful life of the asset.

    (d) Depreciation shall be chargeable from the first year of operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis.

    19. Depreciation allowed has been worked out as below:

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Gross block as on 1st April of the year 1461.40 1465.59 1465.59 Addition due to Additional Capitalisation 4.19 0.00 — Gross Block 1465.59 1465.59 1465.59 Rate of Depreciation 3.6000% 3.6000% 3.6000% Depreciable Value 1316.73 1319.03 1319.03 Balance Useful life of the asset — — — Remaining Depreciable Value 1269.81 1210.49 1138.79 Depreciation 52.69 52.76 52.76

    ADVANCE AGAINST DEPRECIATION

    20. As per sub-clause (b) of clause (ii) of Regulation 56 of the 2004 regulations, in addition to allowable depreciation, the transmission licensee is entitled to Advance Against Depreciation, computed in the manner given hereunder:

    AAD = Loan repayment amount as per regulation 56(i) subject to a ceiling of 1/10th of loan amount as per regulation 54 minus depreciation as per schedule

    21. It is provided that Advance Against Depreciation shall be permitted only if the cumulative repayment up to a particular year exceeds the cumulative depreciation up to that year. It is further provided that Advance Against Depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation up to that year.

    22. The petitioner has claimed Advance Against Depreciation in the following manner:

    (i) 1/10th of gross loan is worked out from the gross notional loan.

    (ii) Cumulative loan as well as repayment of notional loan during the year have been considered.

    (iii) Depreciation as claimed in the petition.

    23. In our calculation, the Advance Against Depreciation has been worked out as under:

    (i) 1/10th of gross loan is worked out from the gross notional loan as per para 16 above.

    (ii) Repayment of cumulative loan as well as repayment of notional loan during the year have been considered as per para 16 above.

    (iii) Depreciation worked out in para 19 above has been considered.

    24. The details of Advance Against Depreciation allowed for transmission scheme are given hereunder:

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 1/10th of Gross Loan(s) 102.30 102.59 102.59 Repayment of the Loan 61.62 71.70 71.70 Minimum of the above 61.62 71.70 71.70 Depreciation during the year 52.69 52.76 52.76 (A) Difference 8.93 18.94 18.94 Cumulative Repayment of the Loan 108.54 180.25 251.95 Cumulative Depreciation/Advance against Depreciation 99.61 161.30 233.01 (B) Difference 8.93 18.94 18.94 Advance against Depreciation Minimum of (A) and (B) 8.93 18.94 18.94

    OPERATION & MAINTENANCE EXPENSES

    25. In accordance with clause (iv) of Regulation 56 the 2004 regulations, the following norms are prescribed for O & M expenses:

    Year 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 O&M expenses (Rs. in lakh per ckt-km) 0.227 0.236 0.246 0.255 0.266 O&M expenses (Rs. in lakh per bay) 28.12 29.25 30.42 31.63 32.90

    26. O&M expenses as taken for the tariff calculations as per order dated 23.3.2007 in Petition No. 129/2006 have been considered, since line length and number of bays remain unchanged.

    INTEREST ON WORKING CAPITAL

    27. The components of the working capital and the interest thereon are discussed hereunder:

    (i) Maintenance spares

    Regulation 56(v)(1)(b) of the 2004 regulations provides for maintenance spares @ 1% of the historical cost escalated @ 6% per annum from the date of commercial operation. The petitioner has claimed maintenance spares after accounting for additional capital expenditure. For the purpose of computation of maintenance spares, the historical cost is being taken as the cost on the date of commercial operation. Maintenance spares on additional capital expenditure are not being considered for the present. Therefore, the petitioner's claim in this regard is not being allowed. Accordingly, maintenance spares have been worked out on the historical cost and providing escalation from the date of commercial operation.

    (ii) O & M expenses

    Regulation 56(v)(1)(a) of the 2004 regulations provides for operation and maintenance expenses for one month as a component of working capital. O&M expenses as considered in the order dated 23.3.2007 in Petition No. 129/2006 have been considered.

    (iii) Receivables

    As per Regulation 56(v)(1)(c) of the 2004 regulations, receivables will be equivalent to two months average billing calculated on target availability level. Accordingly, in the tariff being allowed, receivables have been worked out on the basis 2 months' transmission charges.

    (iv) Rate of interest on working capital

    As per Regulation 56(v)(2) of the 2004 regulations, rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1.4.2004 or on 1 April of the year in which the project or part thereof (as the case may be) is declared under commercial operation, whichever is later. The interest on working capital is payable on normative basis notwithstanding that the transmission licensee has not taken working capital loan from any outside agency. The petitioner has claimed interest on working capital @ 10.25% based on SBI PLR as on 1.4.2005, which is in accordance with the 2004 regulations and has been allowed.

    28. The necessary computations in support of revised interest on working capital, as revised, are appended herein below:

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Maintenance Spares 14.59 15.46 16.39 O & M expenses 2.54 2.64 2.74 Receivables 39.64 40.65 39.86 Total 56.76 58.74 58.99 Rate of Interest 10.25% 10.25% 10.25% Interest 5.82 6.02 6.05

    TRANSMISSION CHARGES

    29. The revised transmission charges being allowed for the transmission asset for the years 2006-2007, 2007-2008 and 2008-2009 are summarised below:

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Depreciation 52.69 52.76 52.76 Interest on Loan 78.50 72.97 66.97 Return on Equity 61.47 61.56 61.56 Advance against Depreciation 8.93 18.94 18.94 Interest on Working Capital 5.82 6.02 6.05 O & M Expenses 30.42 31.63 32.90 Total 237.83 243.88 239.18

    30. The petitioner shall recover from the respondent the additional transmission charges in three monthly instalments. The petitioner has also sought reimbursement of filing fee paid. The Commission by its separate general order dated 19.2.2008 in Petition No. 127/2007 has decided that the petitioner shall not be allowed reimbursement of the petition filing fee.

    31. In addition to the transmission charges, the petitioner shall be entitled to other charges like income-tax, incentive, surcharge and other cess and taxes in accordance with the 2004 regulations

    32. This order disposes of Petition No. 49/2009.

    Annexure

    CALCULATION OF WEIGHTED AVERAGE RATE OF INTEREST ON LOAN

    (Rs. in lakh)

    Details of Loan 2005-2006 2006-2007 2007-2008 2008-2009 1 Bond XIII- OPTION - I Gross Loan opening 775.00 775.00 775.00 775.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 64.58 129.16 Net Loan-Opening 775.00 775.00 710.42 645.84 Additions during the year 0.00 0.00 0.00 0.00 Repayment during the year 0.00 64.58 64.58 64.58 Net Loan-Closing 775.00 710.42 645.84 581.26 Average Loan 775.00 742.71 678.13 613.55 Rate of Interest 8.63% 8.63% 8.63% 8.63% Interest 66.88 64.10 58.52 52.95 Repayment Schedule 12 Annual instalments from 31.7.2006 2 Bond XV Gross Loan opening 124.00 124.00 124.00 124.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 10.33 Net Loan-Opening 124.00 124.00 124.00 113.67 Additions during the year 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 10.33 10.33 Net Loan-Closing 124.00 124.00 113.67 103.34 Average Loan 124.00 124.00 118.84 108.51 Rate of Interest 6.68% 6.68% 6.68% 6.68% Interest 8.28 8.28 7.94 7.25 Repayment Schedule 12 Annual instalments from 23.2.2008 3 Bond XVII (Replaced IOB Bridge Finance Loan) Gross Loan opening 44.00 44.00 44.00 44.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 Net Loan-Opening 44.00 44.00 44.00 44.00 Additions during the year 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 0.00 Net Loan-Closing 44.00 44.00 44.00 44.00 Average Loan 44.00 44.00 44.00 44.00 Rate of Interest 6.99% 7.39% 7.39% 7.39% Interest 3.08 3.25 3.25 3.25 Repayment Schedule 10 Annual instalments from 22.9.2009 4 Bond XVIII (Date of Drawal 09-03-2006) Gross Loan opening 0.00 24.80 24.80 24.80 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 Net Loan-Opening 0.00 24.80 24.80 24.80 Additions during the year 24.80 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 0.00 Net Loan-Closing 24.80 24.80 24.80 24.80 Average Loan 12.40 24.80 24.80 24.80 Rate of Interest 8.15% 8.15% 8.15% 8.15% Interest 1.01 2.02 2.02 2.02 Repayment Schedule 12 Annual instalments from 9.3.2010 5 Bond XVIII Gross Loan opening 0.00 55.17 55.17 55.17 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 Net Loan-Opening 0.00 55.17 55.17 55.17 Additions during the year 55.17 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 0.00 Net Loan-Closing 55.17 55.17 55.17 55.17 Average Loan 27.59 55.17 55.17 55.17 Rate of Interest 8.15% 8.15% 8.15% 8.15% Interest 2.25 4.50 4.50 4.50 Repayment Schedule 12 Annual instalments from 9.3.2010 Gross Loan opening 943.00 1022.97 1022.97 1022.97 Cumulative Repayment upto DOCO/previous year 0.00 0.00 64.58 139.49 Net Loan-Opening 943.00 1022.97 958.39 883.48 Additions during the year 79.97 0.00 0.00 0.00 Repayment during the year 0.00 64.58 74.91 74.91 Net Loan-Closing 1022.97 958.39 883.48 808.57 Average Loan 982.99 990.68 920.94 846.03 Rate of Interest 8.291% 8.292% 8.277% 8.270% Interest 81.50 82.15 76.23 69.97
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    Comments

    Power Grid Corporation Of India Limited v. Karnataka Power Transmission Corporation Ltd.
    (Jun 26, 2009)