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AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • 1. Shri U.K Tyagi, PGCIL
  • 2. Shri M.M Mondal, PGCIL
  • 3. Shri Mohd. Mohsin, PGCIL
  • 4. Shri R. Prasad, PGCIL
Judges
  • Pramod Deo
  • Chairperson
  • S. Jayaraman, Member
  • V.S Verma, Member
Acts
  • attached.DEPRECIATION20. 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
Attorney(S)
  • 1. Shri U.K Tyagi, PGCIL
  • 2. Shri M.M Mondal, PGCIL
  • 3. Shri Mohd. Mohsin, PGCIL
  • 4. Shri R. Prasad, PGCIL
Judges
  • Pramod Deo
  • Chairperson
  • S. Jayaraman, Member
  • V.S Verma, Member
Acts
  • attached.DEPRECIATION20. 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. 314/2009 (Transmission Tariff Revision)

Factual and Procedural Background

This petition seeks revision of transmission tariff on account of additional capital expenditure for the Bhadrawati–Chandrapur 400 kV D/C transmission line including bays at Bhadrawati (Power Grid) switching station (extension) and Chandrapur (MSEB) switchyard (extension) (the transmission line) in the Western Region for the period 1.4.2008 to 31.3.2009, under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 (“the 2004 regulations”). The petitioner also sought reimbursement of the petition filing fee, licence fee and other expenditure in connection with filing the petition, and revision of tariff from the date of commercial operation up to 31.3.2009 to reflect increase in admitted capital cost including additional initial spares.

Key project approvals and dates recorded in the opinion:

  • Investment approval by petitioner's Board of Directors dated 13.7.2004: estimated cost Rs. 3,338 lakh (including IDC Rs. 150 lakh).
  • Revised cost approval by Board memorandum dated 29.1.2007: estimated cost Rs. 4,109 lakh (including IDC Rs. 47 lakh).
  • Commercial operation date (COD) of the transmission line: 1.5.2006.

Procedural history summarised from the opinion:

  • Earlier Order dated 28.5.2008 in Petition No. 145/2007 approved initial transmission charges.
  • Commission revised transmission charges by order dated 18.6.2009 in Petition No. 56/2009 for the period 1.4.2007 to 31.3.2009 after accounting for additional capital expenditure up to 31.3.2008.
  • The present petition (Petition No. 314/2009) was filed to revise tariff further to include additional capital expenditure (including initial spares adjustments) through 31.3.2009; the present order disposes Petition No. 314/2009.
  • No reply was filed by any of the respondents.

Legal Issues Presented

  1. Whether the additional capital expenditure claimed (including committed liabilities and payments) for the transmission assets up to 31.3.2009 is admissible for capitalisation and inclusion in tariff under the 2004 regulations (in particular Regulation 53).
  2. Whether the increase in admitted value of initial spares should be reflected in the tariff calculations (including any rectification of omission for the year 2006-2007).
  3. Whether the petitioner is entitled to reimbursement of the petition filing fee, licence fee and other expenditure incurred in connection with filing the petition.
  4. How tariff components (return on equity, interest on loan, depreciation, interest on working capital, O&M expenses) should be calculated in accordance with the 2004 regulations after admitting additional capital expenditure.

Arguments of the Parties

Petitioner's Submissions

  • The petitioner requested revision of transmission tariff for the Bhadrawati–Chandrapur transmission line on account of additional capital expenditure for the period up to 31.3.2009, relying on the 2004 regulations.
  • Requested revision of tariff from the date of commercial operation to 31.3.2009 to reflect increased admitted capital cost, including effects of additional initial spares.
  • Claimed reimbursement of the petition filing fee, licence fee and other expenditure relating to filing the petition.
  • Provided detailed year-wise capital expenditure figures and supporting computations for tariff components (depreciation, interest on loan, return on equity, interest on working capital, O&M expenses) for the years 2006-2007 through 2008-2009.
  • Submitted calculations in support of interest on working capital, and the breakdown of additional capital expenditure by year (2006-07, 2007-08, 2008-09) and by asset category (line, substation, PLCC, building, etc.).

Respondents

No reply was filed by any of the respondents; the opinion records that fact.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The opinion undertakes a statutory and arithmetic analysis strictly within the framework of the 2004 regulations. The court's reasoning proceeds in the following logical steps (as set out in the opinion):

  1. Admissibility of additional capital expenditure:
    • The Court examined the petitioner's year-wise submissions of additional capital expenditure and found that the 2008-2009 additions represented committed liabilities (final and retention payments) arising from works/services within the original scope. On that basis the Court allowed capitalization of the claimed additional expenditure under clauses (1) and (2) of Regulation 53 of the 2004 regulations.
  2. Initial spares and rectification:
    • The opinion notes prior orders: initial spares were earlier restricted to a percentage (1.5%) of capital cost in the order dated 28.5.2008 (Petition No. 145/2007) and later revised in the order dated 18.6.2009 (Petition No. 56/2009). The petitioner submitted that the effect of increase in admitted capital cost on initial spares for 2006-2007 was not inadvertently considered; the Court examined its earlier order dated 18.6.2009 and found an inadvertent omission of transmission charges for 2006-2007 which has been rectified in this order.
  3. Computation of total capital cost:
    • Based on admitted capital cost at COD and the admitted additional capitalisation for each year, the Court computed gross capital cost progression from the date of commercial operation through 1.4.2009. The table in the opinion shows gross block rising from Rs. 2,958.20 lakh (COD) to Rs. 3,779.90 lakh as on 1.4.2009 after admitting additions for 2006-07, 2007-08 and 2008-09.
  4. Debt–equity ratio and equity base:
    • The petitioner had applied a 70:30 debt–equity split (70.01:29.99 in 2008-09). The Court applied the restriction in the 2004 regulations limiting equity for tariff purpose to 30% (i.e., restricting debt–equity to 70:30) and computed the notional/average equity figures for each year accordingly.
  5. Return on equity:
    • Applying clause (iii) of Regulation 56 of the 2004 regulations, the Court computed return on equity @ 14% per annum on the average equity base determined in accordance with Regulation 54. The opinion records the revised return on equity allowed for each year (Rs. 122.98 lakh, Rs. 150.75 lakh and Rs. 155.09 lakh for 2006-07, 2007-08 and 2008-09 respectively).
  6. Interest on loan:
    • The Court applied clause (1) of Regulation 56 to compute interest on loan. The methodology followed (as described in the opinion) included: taking gross loan, cumulative repayments, weighted average rate of interest on actual loan (as per prior order dated 18.6.2009), addition of notional loan for additional capitalisation to arrive at a normative loan, application of normative repayments (including treating moratorium where normative repayment < depreciation), and applying the weighted average interest rate on the average loan during the year. The opinion provides a detailed year-wise loan computation and the resulting interest on loan figures (Rs. 163.64 lakh, Rs. 193.60 lakh and Rs. 191.49 lakh for 2006-07, 2007-08 and 2008-09 respectively).
  7. Depreciation:
    • Depreciation was computed in accordance with sub-clause (a) of clause (ii) of Regulation 56 — i.e., based on historical cost, straight-line method, residual value 10% (maximum 90% depreciation), land excluded. The Court computed depreciable value and applied the prescribed rates to arrive at the annual depreciation figures for each year (Rs. 90.51 lakh, Rs. 111.35 lakh and Rs. 115.19 lakh respectively).
  8. Advance Against Depreciation (AAD):
    • The opinion explains the regulatory test for AAD (sub-clause (b) of clause (ii) of Regulation 56) and notes that the petitioner had not claimed AAD; consequently AAD was not considered.
  9. Operation & Maintenance (O&M) expenses:
    • The Court applied the O&M norms in clause (iv) of Regulation 56. Since line length and number of bays remained unchanged, O&M expenses taken in the previous tariff order (dated 28.5.2008) were continued for tariff calculations.
  10. Interest on working capital:
    • The Court applied Regulation 56(v) to define working capital components — maintenance spares (1% of historical cost escalated at 6% p.a. from COD), one month O&M, receivables equivalent to two months' billing — and used the short-term SBI Prime Lending Rate applicable as of the relevant date for rate of interest on working capital.
    • The petitioner claimed interest on working capital @ 10.25% based on SBI PLR as on 1.4.2006; the Court allowed this rate as consistent with the 2004 regulations and computed the resulting interest on working capital for each year (Rs. 12.55 lakh, Rs. 14.77 lakh and Rs. 15.22 lakh respectively).
  11. Filing fee and licence fee:
    • The Court noted the Commission's separate general order dated 11.9.2008 in Petition No. 129/2005 (Suo-motu) which decided that petition filing fee shall not be reimbursed during the tariff period 2004–09 as it has been factored into O&M norms; that decision was applied in the present case and filing fee was not reimbursed. The opinion states that the decision on licence fee will be communicated separately.
  12. Final computation and recovery:
    • After applying the above principles and computations, the Court produced revised transmission charges (year-wise) and directed that the petitioner shall recover the additional transmission charges from the respondent in one instalment; sharing of these charges shall be in accordance with the 2004 regulations. The petitioner is also entitled to other charges (income-tax, incentive, surcharge, other cess and taxes) as per the 2004 regulations.

Holding and Implications

Final Disposition: The Court disposed of Petition No. 314/2009 and allowed revision of transmission charges after admitting the additional capital expenditure claimed up to 31.3.2009 in accordance with the 2004 regulations.

Specific holdings and direct effects on parties:

  • Revised transmission charges allowed (summary totals as worked out in the order):
    • 2006-2007 — Total: Rs. 511.34 lakh (Depreciation Rs. 90.51; Interest on Loan Rs. 163.64; Return on Equity Rs. 122.98; Interest on Working Capital Rs. 12.55; O&M Rs. 121.65).
    • 2007-2008 — Total: Rs. 608.41 lakh (Depreciation Rs. 111.35; Interest on Loan Rs. 193.60; Return on Equity Rs. 150.75; Interest on Working Capital Rs. 14.77; O&M Rs. 137.95).
    • 2008-2009 — Total: Rs. 620.52 lakh (Depreciation Rs. 115.19; Interest on Loan Rs. 191.49; Return on Equity Rs. 155.09; Interest on Working Capital Rs. 15.22; O&M Rs. 143.53).
  • The petitioner is permitted to recover the additional transmission charges from the respondent in one instalment, and such charges shall be shared in accordance with the 2004 regulations.
  • Filing fee reimbursement was denied pursuant to the Commission's general order (Petition No.129/2005 dated 11.9.2008) — the filing fee had been factored into O&M norms for the tariff period 2004–09. The licence fee decision is to be communicated separately.
  • The petitioner is entitled to other charges (income-tax, incentive, surcharge and other cess and taxes) in accordance with the 2004 regulations.

Broader implications: The opinion applies existing tariff regulations (the 2004 regulations) and prior Commission orders to admit committed additional capital expenditure, adjust initial spares where appropriate and to recalculate tariff components strictly under the regulatory framework. The order does not announce new legal principles beyond the application of the 2004 regulations and prior Commission decisions; it effects a recalculation of tariff and directs recovery consistent with those regulations.

Disposition statement in the opinion: "This order disposes of Petition No. 314/2009."

Show full summary ...

    Power Grid Corporation Of India Limited v. Madhya Pradesh Power Transmission Company Ltd.

    This petition has been filed for revision of transmission tariff on account of additional capital expenditure in respect of Bhadrawati-Chandrapur 400 kV D/C transmission line including bays at Bhadrawati (Power Grid) switching station (extension) and Chandrapur (MSEB) switchyard (extension) (the transmission line) in Western Region during the period from 1.4.2008 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, licence fee and other expenditure in connection with the filing of the petition. The petitioner has further prayed revision of tariff from the date of commercial operation to 31.3.2009 due to increase in admitted capital cost considering additional initial spares.

    2. The investment approval for the transmission line was accorded by Board of Directors of the petitioner company vide letter dated 13.7.2004 at an estimated cost of Rs. 3338 lakh, which included IDC of Rs. 150 lakh. Subsequently, the approval for the revised cost estimates was accorded by the Board of Directors of the petitioner company vide Memorandum dated 29.1.2007 for an estimated cost of Rs. 4109 lakh, including IDC of Rs. 47.00 lakh. The transmission line was declared under commercial operation on 1.5.2006

    3. The transmission charges for the transmission line approved by the order dated 28.5.2008 in Petition No. 145/2007 were revised by the Commission vide its order dated 18.6.2009 in Petition No. 56/2009 for the period 1.4.2007 to 31.3.2009 after accounting for additional capital expenditure incurred up to 31.3.2008 The summary of the revised transmission charges approve by the said order dated 18.6.2009 is extracted hereunder:

    (Rs. in lakh)

    2007-2008 2008-2009 Depreciation 111.35 114.66 Interest on Loan 193.60 190.62 Return on Equity 150.75 154.43 Advance against Depreciation 0.00 0.00 Interest on Working Capital 14.77 15.18 O & M Expenses 137.95 143.53 Total 608.41 618.41

    4. The relevant details of the capital expenditure of the transmission assets claimed by the petitioner are as under:

    (Rs. in lakh)

    Apportioned approved cost Capital Expenditure as on 1.4.2008 Additional Capital Expenditure during 2008-2009 Capital expenditure as on 1.4.2009 4109.45 3748.12 (As per order dated 18.6.2009 31.78 3779.90

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

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Depreciation 90.51 111.35 115.19 Interest on Loan 163.64 193.60 191.49 Return on Equity 122.98 150.75 155.09 Advance against Depreciation 0.00 0.00 0.00 Interest on Working Capital 12.55 14.77 15.22 O & M Expenses 121.65 137.95 143.53 Total 511.33 608.42 620.52

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

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Maintenance Spares 29.58 31.21 33.08 O & M expenses 11.06 11.50 11.96 Receivables 92.97 101.40 103.42 Total 133.61 144.11 148.46 Rate of Interest 10.25% 10.25% 10.25% Interest 12.55 14.77 15.22

    7. No reply has been filed by any of the respondents.

    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 2006-2007 Building = Rs. 8.35 lakh Transmission line = Rs. 349.03 lakh Sub-station = Rs. 248.62 lakh PLCC = Rs. 8.66 lakh Total = Rs. 614.66 lakh Admitted vide order dated 28.5.2008 in Petition No. 145/2007 2007-2008 Transmission line = Rs. 162.32 lakh Sub-station = Rs. 12.94 lakh Total = Rs. 175.26 lakh Admitted vide order dated 18.6.2009 in Petition No. 56/2009 2008-2009 Transmission line = Rs. 6.94 lakh Sub-station = Rs. 24.84 lakh Total = Rs. 31.78 lakh Final and retention payments

    9. It is found that the additional capital expenditure claimed for year 2008-2009 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.

    Initial spares

    10. While approving the transmission charges, Commission vide order dated 28.5.2008 in Petition No. 145/2007 had restricted the value of initial spares to Rs. 53.47 lakh @ 1.5% of the cost as on 1.4.2007 as the initial spares amounting to Rs. 58.86 lakh were more than the 1.5% of the capital cost and consequently the tariff was worked out based on the cost of Rs. 2955.45 lakh as on the date of commercial operation. The petitioner was given liberty to approach the Commission for adjustment of cost of initial spares while claiming additional capital expenditure beyond 1.4.2007 Vide order dated 18.6.2009 in Petition No. 56/2009, initial spares were revised to Rs. 56.22 lakh on the basis of the capital cost of Rs. 2958.20 lakh as on 1.4.2008 The petitioner has submitted that the Commission did not inadvertently consider the effect of increase in admitted value of spares while calculating tariff for 2006-2007 due to the increase in the admitted capital cost as on the date of commercial operation and claimed by the petitioner.

    11. We have perused our order dated 18.6.2009 in Petition No. 56/2009 and find that there is inadvertent omission of transmission charges for the year 2006-2007 and the same has been rectified in this order.

    TOTAL CAPITAL COST

    12. Based on the above, capital cost for the purpose of tariff for the transmission line as on 31.3.2009 works out as under:

    (Rs. in lakh)

    Capital expenditure as on the date of commercial operation Additional capital expenditure during 2006-2007 Capital expenditure as on 1.4.2007 Additional capital expenditure during 2007-2008 Capital expenditure as on 1.4.2008 Additional capital expenditure during 2008-2009 Capital expenditure as on 1.4.2009 2958.20 614.66 3572.86 175.26 3748.12 31.78 3779.90

    DEBT- EQUITY RATIO

    13. The petitioner has considered the amount of additional capitalization in the debt-equity ratio of 70:30 for the year 2006-2007 and 2007-2008 and 70.01:29.99 for the year 2008-2009. The debt-equity ratio of 70:30 has been restricted as per 2004 regulations. Accordingly, for the purpose of tariff, equity considered for the transmission assets is as under:

    (Rs. in lakh)

    Equity as on 1.5.2006 (As per order dated 28.5.2008) Notional additional equity during 2006-2007 Average equity for 2006-2007 Equity as on 1.4.2007 Notional additional equity during 2007-2008 Average equity for 2007-2008 Equity as on 1.4.2008 Notional additional equity during 2008-2009 Average equity for 2008-2009 Equity as on 1.4.2009 866.07 184.40 958.27 1050.47 52.58 1076.76 1103.05 9.53 1107.81 1112.58

    RETURN ON EQUITY

    14. 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.

    15. Equity as given in the table under para 12 above has been considered. The tariff for the year 2006-2007, 2007-2008 and 2008-2009 has been allowed on average equity. Accordingly, revised return on equity of Rs. 122.98, 150.75 and 155.09 lakh has been allowed for the year 2006-2007, 2007-2008 and 2008-2009, respectively.

    INTEREST ON LOAN

    16. 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 refinancing 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.”

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

    (a) Gross amount of loan, repayment of instalments and rate of interest and weighted average rate of interest on actual loan have been considered as per order dated 18.6.2009 in Petition No. 56/2009. There is no addition of actual loan for period 2008-2009.

    (b) Notional loan arising out of additional capitalization for the year 2008-2009 has been added in loan amount as on 31.3.2008 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. Normative repayments have been 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 (a) above has been applied on the average loan during the year to arrive at the interest on loan.

    18. Based on above, revised interest on loan for the year 2006-2007, 2007-2008 and 2008-2009 has been worked out as under:

    (Rs. in lakh)

    Details 2006-2007 2007-2008 2008-2009 Gross Normative Loan-Opening 2092.13 2522.39 2645.08 Cumulative Repayment up to Previous Year 0.00 90.51 201.86 Net Loan-Opening 2092.13 2431.88 2443.22 Addition due to Additional Capitalisation 430.26 122.68 22.25 Repayment during the year 90.51 111.35 115.19 Net Loan-Closing 2431.88 2443.22 2350.27 Average Loan 2262.01 2437.55 2396.75 Weighted Average Rate of Interest on Loan 7.89% 7.94% 7.99% Interest 163.64 193.60 191.49

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

    DEPRECIATION

    20. 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.

    21. 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 2958.20 3572.86 3748.12 Addition due to Additional Capitalisation 614.66 175.26 31.78 Gross Block 3572.86 3748.12 3779.90 Rate of Depreciation 3.0237% 3.0418% 3.0603% Depreciable Value 2938.98 3294.44 3387.61 Balance Useful life of the asset — — — Remaining Depreciable Value 2938.98 3203.93 3185.75 Depreciation 90.51 111.35 115.19

    ADVANCE AGAINST DEPRECIATION

    22. 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 1/10 of loan amount as per regulation 54 minus depreciation as per schedule

    23. 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.

    24. The petitioner has not claimed Advance Against Depreciation and, thereafter, Advance Against Depreciation has not been considered.

    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 28.5.2008 in Petition No. 147/2007 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. Accordingly, maintenance spares have been worked out on the historical cost and by 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 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 of 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 1.4.2006, 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 29.58 31.21 33.08 O & M expenses 11.06 11.50 11.96 Receivables 92.97 101.40 103.42 Total 133.61 144.11 148.46 Rate of Interest 10.25% 10.25% 10.25% Interest 12.55 14.77 15.22

    TRANSMISSION CHARGES

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

    (Rs. in lakh)

    2006-2007 2007-2008 2008-2009 Depreciation 90.51 111.35 115.19 Interest on Loan 163.64 193.60 191.49 Return on Equity 122.98 150.75 155.09 Advance against Depreciation 0.00 0.00 0.00 Interest on Working Capital 12.55 14.77 15.22 O & M Expenses 121.65 137.95 143.53 Total 511.34 608.41 620.52

    30. The petitioner shall recover from the respondent the additional transmission charges in one instalment and these charges shall be shared in accordance with the 2004 regulations.

    31. The petitioner has also sought reimbursement of filing fee paid. The Commission by its separate general order dated 11.9.2008 in Petition No. 129/2005 (Suo-motu) has decided that petition filing fee shall not be reimbursed during the tariff period 2004-09 as the same has been factored in O & M norms. The decision applied in the present case also. The decision on licence fee shall be communicated separately.

    32. 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.

    33. This order disposes of Petition No. 314/2009.

    CALCULATION OF WEIGHTED AVERAGE RATE OF INTEREST ON LOAN (Rs. in lakh) Details of Loan 2006-2007 2007-2008 2008-2009 1 Bond XVII Gross Loan opening 711.00 711.00 711.00 Cumulative Repayment up to the date of commercial operation/previous year 0.00 0.00 0.00 Net Loan-Opening 711.00 711.00 711.00 Additions during the year 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 Net Loan-Closing 711.00 711.00 711.00 Average Loan 711.00 711.00 711.00 Rate of Interest 7.39% 7.39% 7.39% Interest 52.54 52.54 52.54 Repayment Schedule 10 Annual instalments from 22.9.2009 2 Bond XVIII Gross Loan opening 1383.00 1383.00 1383.00 Cumulative Repayment up to the date of commercial operation/previous year 0.00 0.00 0.00 Net Loan-Opening 1383.00 1383.00 1383.00 Additions during the year 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 Net Loan-Closing 1383.00 1383.00 1383.00 Average Loan 1383.00 1383.00 1383.00 Rate of Interest 8.15% 8.15% 8.15% Interest 112.71 112.71 112.71 Repayment Schedule 12 Annual instalments from 9.3.2010 3 Bond XXVII Gross Loan opening 0.00 0.00 138.00 Cumulative Repayment up to the date of commercial operation/previous year 0.00 0.00 0.00 Net Loan-Opening 0.00 0.00 138.00 Additions during the year 0.00 138.00 0.00 Repayment during the year 0.00 0.00 0.00 Net Loan-Closing 0.00 138.00 138.00 Average Loan 0.00 69.00 138.00 Rate of Interest 9.47% 9.47% 9.47% Interest 0.00 6.53 13.07 Repayment Schedule 12 Annual instalments from 31.3.2012 Gross Loan opening 2094.00 2094.00 2232.00 Cumulative Repayment up to the date of commercial operation/previous year 0.00 0.00 0.00 Net Loan-Opening 2094.00 2094.00 2232.00 Additions during the year 0.00 138.00 0.00 Repayment during the year 0.00 0.00 0.00 Net Loan-Closing 2094.00 2232.00 2232.00 Average Loan 2094.00 2163.00 2232.00 Rate of Interest 7.89% 7.94% 7.99% Interest 165.26 171.79 178.33

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    Comments

    Power Grid Corporation Of India Limited v. Madhya Pradesh Power Transmission Company Ltd.
    (Apr 7, 2010)