This petition has been filed for determination of transmission tariff in respect of KAHALGAON Stage-II Phase-I Transmission System in Eastern Region, Northern Region and Inter-regional link between Northern and Western Region (hereinafter called “the transmission system”) for the period from 1.4.2009 to 31.3.2014 in accordance with the provisions of the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009, (hereinafter referred to as “the 2009 regulations”). The petitioner has sought the following reliefs:

(a) Approve the Additional Capital Expenditure during 2009-2010 to 2011-2012 as per 20.0 to 22.0 of the petition.

(b) Approve the Transmission tariff for the assets covered under the petition.

(c) Allow grossing up of base rate of return with the applicable tax rate as per the Finance Act for the relevant year and direct settlement of tax liability between the generating company/transmission licensees and the beneficiaries/long term transmission customers on year to year basis.

(d) In case the assets being combined to calculate the transmission charges, allow the petitioner to recover full depreciation (90% of the gross block) of the assets during its useful life reckoning from the date of actual date of commercial operations.

(e) Approve the reimbursement, of expenditure, by the beneficiaries towards petition filing fee, and publishing of notices in newspapers in terms of Regulation 42 of the 2009 regulations, and other expenditure (if any) in relation to the filing of petition.

(f) Allow the petitioner to bill and recover Service Tax on Transmission charges separately from the respondents, if at any time, the exemption from service tax is withdrawn and transmission is notified as a taxable service.

(g) Allow the petitioner to bill and recover licence fee separately from the respondents

(h) Pass such other relief as Hon'ble Commission deems fit and appropriate under the circumstances of the case and in the interest of justice.

2. The petitioner has submitted that it has executed the various elements of the transmission system associated with the Kahalgaon Stage II Phase I Transmission System as per the details given hereunder:

(A) PART-I (Eastern Region)

(a) Asset-I: 400 kV D/C kahalgaon - Patna transmission line (including 1 × 50 MVAR line Reactor), 1×80 MVAR Bus Reactor with associated bays, 2 nos. 220 kV line bays and 400& 220 kV bays for ICT - I at Patna Substation. (Date of commercial operation: 1.5.2007).

(b) Asset-II: 400 kV D/C Maithon - Ranchi transmission line along with associated bays, 400/220 kV 315 MVA ICT-II along with associated bays at Ranchi substation and 220 kV Patratu and Chandil bays at Ranchi substation (Date of commercial operation: 1.6.2007).

(c) Asset-III: 80 MVAR Bus Reactor at Ranchi and 2 nos. of 220 kV line bays at Ranchi (Date of commercial operation: 1.9.2007).

(d) Asset-IV: ICT-I at Patna substation (Date of commercial operation: 1.11.2007).

(e) Asset V: 400/220 kV ICT-I at Ranchi substation along with associated bays and 2 nos. line bays at Patna substation (Date of commercial operation: 1.7.07).

(f) Asset VI: ICT-II at Patna substation along with associated bays (Date of commercial operation: 1.1.2008).

(B) PART-II (Northern Region)

(g) Asset VII: 400kv Balia-Lucknow Ckt. I&II, 400 kv Balia-Mau Ckt-I, 400kv D/c Patna-Balia line including associated Bays at Patna&Balia (Date of commercial operation: 1.5.2007).

(h) Asset VIII: 400kv Balia-Mau Ckt. II, 40% FSC at Lucknow and 400kv D/c Lucknow-Balia line (Date of commercial operation: 1.6.2007).

(i) Asset IX: 80 MVAR Bus reactor at Biharshariff substation (Date of commercial operation: 1.7.2007).

(j) Asset X: 400kv Lucknow-Bareilly Ckt. I&II (Date of commercial operation: 1.8.2007)

(k) Asset XI: 400kv Biharshariff-Balia line Ckt. I with associated bays (Date of commercial operation: 1.9.2007)

(l) Asset XII: 400kv Biharshariff-Balia line Ckt. II with associated bays (Date of commercial operation: 1.11.2007)

(C) PART-III (Western Region-Northern Region)

(m) Asset XIII: 400kv Agra - Gwalior 765 kv S/C TL including respective bays at Agra and Gowalior S/S (Date of commercial operation: 1.4.2007)

3. The transmission charges for the Transmission Assets I to VI under Part I were initially approved by the Commission vide its order dated 6.5.2009 in Petition No. 1/2009 which was subsequently revised vide order dated 18.5.2010 in Petition No. 50/2010. The transmission charges during the period 2004-09 in respect of Asset Nos. VII to XI have been determined by the Commission vide order dated 13.5.2009 in Petition No. 6/2009 which was subsequently revised vide order dated 2.6.2010 in petition No. 4/2010. The transmission charges for Asset XIII during 2004-09 were approved by the Commission vide order dated 29.4.2009 in Petition No. 167/2008 which was subsequently revised vide order dated 8.4.2010 in Petition No. 313/2009.

4. The petitioner has claimed the following transmission charges:

(Rs. in lakh)

Part - 1 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 4528.66 4565.33 4571.77 4571.77 4571.77 Interest on Loan 4752.45 4407.07 4019.68 3621.08 3221.99 Return on equity 4556.71 4595.96 4604.09 4604.09 4604.09 Interest on Working Capital 360.24 358.74 355.32 351.60 348.12 O & M Expenses 1435.99 1518.27 1605.20 1696.91 1793.74 Total 15634.05 15445.37 15156.06 14845.45 14539.71 Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 8340.76 8422.96 8470.13 8472.23 8472.23 Interest on Loan 8942.70 8309.64 7621.58 6869.38 6112.70 Return on equity 8354.44 8443.89 8496.28 8499.57 8499.57 Interest on Working Capital 636.03 632.24 626.13 617.06 608.14 O & M Expenses 2032.66 2149.17 2272.24 2402.10 2538.99 Total 28306.59 27957.90 27486.36 26860.34 26231.63 Part - III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 1010.97 1011.87 1011.87 1011.87 1011.87 Interest on Loan 1089.73 998.47 906.09 813.59 721.09 Return on equity 1003.33 1004.22 1004.22 1004.22 1004.22 Interest on Working Capital 73.42 72.05 70.65 69.28 67.94 O & M Expenses 174.31 184.32 194.80 206.03 217.77 Total 3351.76 3270.93 3187.63 3104.99 3022.89

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

(Rs. in lakh)

Part-I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 215.40 227.74 240.78 254.54 269.06 O & M expenses 119.67 126.52 133.77 141.41 149.48 Receivables 2605.68 2574.23 2526.01 2474.24 2423.29 Total 2940.75 2928.49 2900.56 2870.19 2841.83 Interest 360.24 358.74 355.32 351.60 348.12 Rate of Interest 12.25% 12.25% 12.25% 12.25% 12.25%

(Rs. in lakh)

Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 304.90 322.38 340.84 360.32 380.85 O & M expenses 169.39 179.10 189.35 200.18 211.58 Receivables 4717.77 4659.65 4581.06 4476.72 4371.94 Total 5192.06 5161.13 5111.25 5037.22 4964.37 Interest 636.03 632.24 626.13 617.06 608.14 Rate of Interest 12.25% 12.25% 12.25% 12.25% 12.25% Part - III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 26.15 27.65 29.22 30.90 32.67 O & M expenses 14.53 15.36 16.23 17.17 18.15 Receivables 558.63 545.16 531.27 517.50 503.82 Total 599.31 588.17 576.72 565.57 554.64 Interest 73.42 72.05 70.65 69.28 67.94 Rate of Interest 12.25% 12.25% 12.25% 12.25% 12.25%

6. No comments or suggestions have been received from the general public in response to the notices published by the petitioner under section 64 of the Electricity Act, 2003. Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) has filed reply to the petition.

7. MSEDCL in its reply has submitted that the petitioner has claimed huge amount of Rs. 5067.76 lakhs towards additional capital expenditure which includes Rs. 2759.75 lakhs for 2009-2010, Rs. 2182.32 lakhs for 2010-2011 and Rs. 125.69 lakhs for 2011-2012 under final/retention payments for combined assets. In spite of the request made by the beneficiaries, the petitioner has not submitted the category wise detailed breakup of the retention and balance payment. MSEDCL has also objected to the petitioner's claim for reimbursement of filing fee and other expenditure in relation to filing of petition, service tax and licence fee. The petitioner, in its rejoinder has clarified the nature of the additional capital expenditure as under:

(a) For Part I assets, the balance payments relate to contract closing, settlement of LD recovery and other adjustments.

(b) For Part II assets, the additional capital expenditure is on account of balance and final payments subject to reconciliation to various contractors, namely, BHEL, Seimens Ltd., Seimens AG, ABB ans RPG for the works related to sub-station, transmission lines and PLCC. Some expenditure is on account of balance payments to Gupta Builders and PS Mishra Builders for building and civil works.

(c) In respect of Part III assets, the additional expenditure is on account of final erection and supply bills to ABB for Gwalior sub-station expansion.

The petitioner has submitted that it is claiming petition filing fees, service tax and licence fee as per the 2009 regulations.

8. Having heard the representatives of the parties and examined the material on record, we proceed to dispose of the petition.

CAPITAL COST

9. As per the last proviso to clause (2) of Regulation 7 of the 2009 regulations, in case of the existing projects, capital cost admitted by the Commission prior to 1.4.2009 and the additional capital expenditure projected to be incurred for the respective year of the tariff period 2009-14 as may be admitted by the Commission, shall form the basis for determination of tariff.

10. The capital cost admitted by the Commission as on 31.3.2009 has been taken into consideration for the purpose of determination tariff during 2009-14. Details of capital cost are given in the table as under:

Asset Date of commercial operation Approved Cost as per RCE Admitted Cost as on 31.3.2009 (Rs. in lakh) PART-I (Eastern Region) (Notional DOCO: 01.01.2008) a)400 kv D/C kahalgaon - Patna transmission line (including 1 × 50 MVAR line Reactor), 1 × 80 MVAR Bus Reactor with associated bays, 2 nos. 220 kV line bays and 400 & 220 kV bays for ICT - I at Patna Substation 01.05.2007 51130.00 50551.66 b)400kv D/C Maithon - Ranchi transmission line along with associated bays, 400/220 kV 315 MVA ICT-II along with associated bays at Ranchi substation and 220 kV Pataru and Chandil bays at ranchi substation 01.06.2007 28903.00 28294.47 c) 80 MVAR Bus Reactor at Ranchi and 2 nos. of 220 kV line bays at Ranchi 01.09.2007 2275.00 1768.47 d)ICT-I at Patna substation 01.11.2007 1056.00 988.54 e)400/220 kV ICT-I at Ranchi substation along with associated bays and 2 nos. line bays at Patna substation 01.12.2007 3129.00 2699.01 f) ICT-II at Patna substation along with associated bays 01.01.2008 2409.00 1993.08 Total 88902.00 86295.23 PART-II (Northern Region) (Notional DOCO: 01.11.2007) g)400kv Balia-Lucknow Ckt. I&II, 400 kv Balia-Mau Ckt-I, 400kv D/c Patna-Balia line including associated Bays at Patna & Balia 01.05.2007 79593.00 75381.60 h)400kv Balia-Mau Ckt. II, 40% FSC at Lucknow and 400kv D/c Lucknow-Balia line 01.06.2007 5701.08 5269.71 i) 80 MVAR Bus reactor at Biharshariff substation 01.07.2007 944.00 852.94 j) 400kv Lucknow-Bareilly Ckt. I & II 01.08.2007 29628.56 28809.97 k) 400kv Biharshariff-Balia line Ckt. I with associated bays 01.09.2007 37340.51 35723.49 l) 400kv Biharshariff-Balia line Ckt. II with associated bays 01.11.2007 12983.92 12497.48 Total 166191.07 158535.19 PART-III (Western Region-Northern Region) (DOCO: 01.04.2007) m) 400kv Agra - Gwalior 765 kv S/C TL including respective bays at Agra and Gowalior S/S 01.04.2007 20129.44 19120.18 Total 20129.44 19120.18 Grand Total 275222.51 263950.60

ADDITIONAL CAPITAL EXPENDITURE

11. Details of the projected additional capital expenditure claimed by the petitioner in respect of Part - I, Part - II and Part - III are as under:

(Rs. in lakh)

Part - I Asset Nature of expenditure (a) 2009-2010 (Balance/Retention Payment) 39.52 Building & Civil works 271.25 Substation 2010-2011 (Balance/Retention Payment) 50.00 Building & Civil works 30.00 Substation (b) 2009-2010 (Balance/Retention Payment) 60.00 Substation 187.75 Transmission Line 2010-2011 (Balance/Retention Payment) 50.00 Building & Civil works 40.00 Substation (c) 2009-2010 (Balance/Retention Payment) 55.00 Substation 2010-2011 (Balance/Retention Payment) 50.00 Building & Civil works 40.00 Substation (d) 2009-2010 NIL 2010-2011 NIL (e) 2009-2010 (Balance/Retention Payment) 57.40 Building & Civil works 228.50 Substation 2010-2011 (Balance/Retention Payment) 20.00 Building & Civil works (f) 2009-2010 (Balance/Retention Payment) 16.21 Building & Civil works 271.25 Substation 2010-2011 (Balance/Retention Payment) 10.00 Building & Civil works 20.00 Substation TOTAL 1496.88 Part - II (g) 2009-2010 (Balance/Retention Payment) 260.51 Building & Civil works 19.50 Transmission Line 502.72 Substation 25.09 PLCC 2010-2011 (Balance/Retention Payment) 400.00 Building & Civil works 577.30 Substation 36.68 PLCC 2011-2012 (Balance/Retention Payment) 125.69 Building & Civil works (h) 2009-2010 (Balance/Retention Payment) 47.30 Building & Civil works 133.08 Substation 4.86 PLCC 2010-2011 (Balance/Retention Payment) 60.00 Building & Civil works 328.00 Substation 7.11 PLCC (i) 2009-2010 NIL 2010-2011 NIL (j) 2009-2010 (Balance/Retention Payment) 72.94 Transmission Line 16.00 Substation 2010-2011 (Balance/Retention Payment) 139.00 Transmission Line 190.80 Substation (k) 2009-2010 (Balance/Retention Payment) 36.41 Building & Civil works 287.76 Transmission Line 50.01 Substation 3.74 PLCC 2010-2011 (Balance/Retention Payment) 9.00 Building & Civil works 40.47 Substation 5.47 PLCC (1) 2009-2010 (Balance/Retention Payment) 36.41 Building & Civil works 38.85 Substation 3.74 PLCC 2010-2011 (Balance/Retention Payment) 10.00 Building & Civil works 63.02 Substation 5.47 PLCC TOTAL 3536.93

12. Notional dates of commercial operation of the assets under Part I, Part II and Part III are 1.1.2008, 1.11.2007 and 1.4.2007 respectively. Accordingly, the cut-off date of combined assets under Part I is 31.3.2010 and that of the combined assets under Part II and Part III is 31.3.2009

13. Under the 2009 regulations, additional capital expenditure after cut-off date is not permissible towards undischarged liability. On the contrary the corresponding provision under Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004, (hereinafter referred to as “the 2004 regulations”) provided for allowing additional capital expenditure after cut-off date towards undischarged liability. The petitioner, however, vide its affidavit dated 12.1.2011 prayed that Commission may exercise its power to relax under regulation 44 and admit the projected additional capital expenditure under Regulation 9(2) of the 2009 regulations.

14. We have considered the submission of the petitioner. In a number of petitions filed by the petitioner, the issue of admissibility of additional capital expenditure incurred or projected to be incurred after the cut-off date on account of balance and retention payment has been considered and the Commission has granted relaxation of Regulation 9(2) of 2009 regulations to allow capitalisation of such expenses after the cut-off date. The Commission has granted general relaxation of Regulation 9(2) of 2009 regulations in Petition No. 176/2010 to permit capitalization of expenditure on account of balance and retention payment after the cut-off date in respect of the other assets of the petitioner. Accordingly, we allow capitalization of the additional capital expenditure projected to be incurred by the petitioner after the cut-off date in respect of the assets covered under part I, II and III.

DEBT-EQUITY RATIO

15. Clause (2) of Regulation 12 of the 2009 regulations inter alia provides that,—

“(2) In case of the generating station and the transmission system declared under commercial operation prior to 1.4.2009, debt-equity ratio allowed by the Comission for determination of tariff for the period ending 31.3.2009 shall be considered.”

16. Details of debt-equity considered by the petitioner as on 1.4.2009 are as under:

Approved Admitted as on 31.03.2009 Combined Assets-PART-I (Eastern Region) Amount (Rs. Lakh) % Amount (Rs. Lakh) % Debt 0.00 0.00% 60406.64 70.00% Equity 0.00 0.00% 25888.59 30.00% Total 0.00 0.00% 86295.23 100.00% Combined Assets-PART-II (Northern Region) Amount (Rs. Lakh) % Amount (Rs. Lakh) % Debt 0.00 0.00% 110974.49 70.00% Equity 0.00 0.00% 47560.70 30.00% Total 0.00 0.00% 158535.19 100.00% Asset-PART-III (Western Region-Northern Region) Amount (Rs. Lakh) % Amount (Rs. Lakh) % Debt 0.00 0.00% 13385.71 70.01% Equity 0.00 0.00% 5734.47 29.99% Total 0.00 0.00% 19120.18 100.00%

17. As regards the projected additional capital expenditure during 2009-2010 and 2010-2011 for the transmission assets, the same has been segregated in the debt-equity ratio of 70:30 in our tariff calculations.

18. Equity base for calculation of tariff, consequent to additional capital expenditure (referred to as ACE in the table below) is as under:

Description Equity on 1.4.2009 Notional equity due to ACE for the period 2009-2010 Total equity considered for tariff calculations for the period 2009-2010* Notional equity due to ACE for the period 2010-2011 Total equity considered for tariff calculations for the period 2010-2011* Notional equity due to ACE for the period 2011-2012 Total equity considered for tariff calculations for the period 2011-2012* Notional equity due to ACE for the period 2012-2013 Total equity considered for tariff calculations for the period 2012-14* PART-I (ER) 25888.59 356.06 26066.62 93.00 26291.15 0.00 26337.65 0.00 26337.65 PART-II (NR) 47560.70 461.68 47791.53 561.70 48303.22 37.71 48602.92 0.00 48621.78 PART-111 (WR-NR) 5734.47 10.19 5739.56 0.00 5744.65 0.00 5744.65 0.00 5744.65

* Average equity corresponding to ACE has been considered for working of the ROE

RETURN ON EQUITY

19. Regulation 15 of the 2009 regulations provides that,—

“15. (1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with regulation 12.

(2) Return on equity shall be computed on pre-tax basis at the base rate of 15.5% to be grossed up as per clause (3) of this regulation:

Provided that in case ofprojects commissioned on or after 1st April, 2009, an additional return of 0.5% shall be allowed if such projects are completed within the timeline specified in Appendix-II:

Provided further that the additional return of 0.5% shall not be admissible if the project is not completed within the timeline specified above for reasons whatsoever.

(3) The rate of return on equity shall be computed by grossing up the base rate with the normal tax rate for the year 2008-2009 applicable to the concerned generating company or the transmission licensee, as the case may be:

Provided that return on equity with respect to the actual tax rate applicable to the generating company or the transmission licensee, as the case may be, in line with the provisions of the relevant Finance Acts of the respective year during the tariff period shall be trued up separately for each year of the tariff period along with the tariff petition filed for the next tariff period.

(4) Rate of return on equity shall be rounded off to three decimal points and be computed as per the formula given below:

Rate of pre-tax return on equity = Base rate/(1-t)

Where t is the applicable tax rate in accordance with clause (3) of this regulation.”

20. The Petitioner has prayed for invocation of the provisions of Regulation 44 of the 2009 regulations for relaxation of Regulation 15(3) thereof so that grossing up the base rate of ROE may be allowed considering the tax rates viz., MAT, surcharge, any other cess, charges, levies etc., as per the relevant Finance Acts. This issue has already been taken cognizance of in the Commission's order dated 3.8.2010 in Petition No. 17/2010 wherein a decision has been taken to address the issue raised by the petitioner. Relevant portion of the said order is extracted as under:

“We are of the view that this issue of ‘grossing up the base rate with the normal tax rate for the year 2008-2009’ is generic in nature and therefore, it will be appropriate to make suitable provisions in the 2009 regulations to cater to any future changes in the tax rate. Accordingly, we direct the staff of the Commission to prepare and submit draft amendment to the 2009 regulations for allowing grossing up of base rate of return with the applicable tax rate as per the Finance Act for the relevant year and direct settlement of tax liability between the generating company/transmission licensee and the beneficiaries/long term transmission customers on year to year basis. Any under/over recovery on account of direct settlement of tax liability shall be subject to the final adjustment at the time of true up exercise.”

21. Detailed calculations of the Return on Equity in respect the transmission assets under Part I, Part II and Part III are as under:

(Rs. in lakh)

Part - I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Equity 25888.59 Addition due to Additional Capitalisation 0.00 Opening Equity 25888.59 25888.59 26244.65 26337.65 26337.65 26337.65 Addition due to Additional Capitalisation 356.06 93.00 0.00 0.00 0.00 Closing Equity 26244.65 26337.65 26337.65 26337.65 26337.65 Average Equity 26066.62 26291.15 26337.65 26337.65 26337.65 Return on Equity (Base Rate) 15.50% 15.50% 15.50% 15.50% 15.50% Tax rate for the year 2008-2009 11.330% 11.330% 11.330% 11.330% 11.330% Rate of Return on Equity (Pre Tax) 11.33% 17.481% 17.481% 17.481% 17.481% 17.481% Return on Equity (Pre Tax) 4556.71 4595.96 4604.09 4604.09 4604.09 Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Equity 47560.70 Addition due to Additional Capitalisation 0.00 Opening Equity 47560.70 47560.70 48022.37 48584.07 48621.78 48621.78 Addition due to Additional Capitalisation 461.68 561.70 37.71 0.00 0.00 Closing Equity 48022.37 48584.07 48621.78 48621.78 48621.78 Average Equity 47791.53 48303.22 48602.92 48621.78 48621.78 Return on Equity (Base Rate) 15.50% 15.50% 15.50% 15.50% 15.50% Tax rate for the year 2008-2009 (MAT) 11.330% 11.330% 11.330% 11.330% 11.330% Rate of Return on Equity (Pre Tax) 11.33% 17.481% 17.481% 17.481% 17.481% 17.481% Return on Equity (Pre Tax) 8354.44 8443.89 8496.28 8499.57 8499.57 Part - III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Equity 5734.47 Addition due to Additional Capitalisation 0.00 Opening Equity 5734.47 5734.47 5744.65 5744.65 5744.65 5744.65 Addition due to Additional Capitalisation 10.19 0.00 0.00 0.00 0.00 Closing Equity 5744.65 5744.65 5744.65 5744.65 5744.65 Average Equity 5739.56 5744.65 5744.65 5744.65 5744.65 Return on Equity (Base Rate) 15.50% 15.50% 15.50% 15.50% 15.50% Tax rate for the year 2008-2009 11.33% 11.33% 11.33% 11.33% 11.33% Rate of Return on Equity (Pre Tax) 17.481% 17.481% 17.481% 17.481% 17.481% Return on Equity (Pre Tax) 1003.33 1004.22 1004.22 1004.22 1004.22

INTEREST ON LOAN

22. Regulation 16 of the 2009 regulations provides that,—

“16. (1) The loans arrived at in the manner indicated in regulation 12 shall be considered as gross normative loan for calculation of interest on loan.

(2) The normative loan outstanding as on 1.4.2009 shall be worked out by deducting the cumulative repayment as admitted by the Commission up to 31.3.2009 from the gross normative loan.

(3) The repayment for the year of the tariff period 2009-14 shall be deemed to be equal to the depreciation allowed for that year:

(4) Notwithstanding any moratorium period availed by the generating company or the transmission licensee, as the case may be the repayment of loan shall be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed.

(5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project:

Provided that if there is no actual loan for a particular year but normative loan is still outstanding, the last available weighted average rate of interest shall be considered:

Provided further that if the generating station or the transmission system, as the case may be, does not have actual loan, then the weighted average rate of interest of the generating company or the transmission licensee as a whole shall be considered.

(6) The interest on loan shall be calculated on the normative average loan of the year by applying the weighted average rate of interest.

(7) The generating company or the transmission licensee, as the case may be, shall make every effort to re-finance the loan as long as it results in net savings on interest and in that event the costs associated with such re-financing shall be borne by the beneficiaries and the net savings shall be shared between the beneficiaries and the generating company or the transmission licensee, as the case may be, in the ratio of 2:1.

(8) The changes to the terms and conditions of the loans shall be reflected from the date of such re-financing.

(9) In case of dispute, any of the parties may make an application in accordance with the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999, as amended from time to time, including statutory re-enactment thereof for settlement of the dispute:

Provided that the beneficiary or the transmission customers shall not withhold any payment on account of the interest claimed by the generating company or the transmission licensee during the pendency of any dispute arising out of re-financing of loan.”

23. In these calculations, 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 average loan have been considered as per the petition.

(b) The repayment for the tariff period 2009-14 shall be deemed to be equal to the depreciation allowed for that period.

(c) Moratorium period availed by the transmission licensee, the repayment of the loan shall be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed.

(d) Weighted average rate of interest on actual average loan worked out as per (a) above is applied on the notional average loan during the year to arrive at the interest on loan.

(e) The methodology followed for the calculation of weighted average Rate of Interest in case of floating interest loans in Petition 132/2010 has been adopted in the instant petition. Accordingly, the interest on Loan has been calculated on the basis of the rate prevailing as on 01.04.2009 Any change in rate of Interest subsequent to 1.4.2009 will be considered at the time of truing up.

24. Detailed calculation of Weighted Average Rate of Interest is enclosed as Annexure to this order. Details of the calculation of Interest on Loan are as under:

(Rs. in lakh)

Part-I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Loan 60406.64 Addition due to Additional Capitalisation 0.00 Gross Normative Loan 60406.64 60406.64 61237.46 61454.46 61454.46 61454.46 Cumulative Repayment upto Previous Year 4158.63 8687.29 13252.62 17824.39 22396.17 Net Loan-Opening 56248.01 52550.17 48201.83 43630.06 39058.29 Addition due to Additional Capitalisation 830.82 217.00 0.00 0.00 0.00 Repayment during the year 4528.66 4565.33 4571.77 4571.77 4571.77 Net Loan-Closing 52550.17 48201.83 43630.06 39058.29 34486.52 Average Loan 54399.09 50376.00 45915.95 41344.18 36772.41 Weighted Average Rate of Interest on Loan 8.7363% 8.7484% 8.7544% 8.7584% 8.7620% Interest 4752.45 4407.07 4019.68 3621.09 3221.99 Part-II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Loan 110974.49 Addition due to Additional Capitalisation 0.00 Gross Normative Loan 110974.49 110974.49 112051.74 113362.36 113450.35 113450.35 Cumulative Repayment upto Previous Year 7266.96 15607.72 24030.68 32500.81 40973.05 Net Loan-Opening 103707.54 96444.02 89331.68 80949.53 72477.30 Addition due to Additional Capitalisation 1077.24 1310.62 87.98 0.00 0.00 Repayment during the year 8340.76 8422.96 8470.13 8472.23 8472.23 Net Loan-Closing 96444.02 89331.68 80949.53 72477.30 64005.07 Average Loan 100075.78 92887.85 85140.61 76713.41 68241.18 Weighted Average Rate of Interest on Loan 8.9359% 8.9459% 8.9517% 8.9546% 8.9575% Interest 8942.70 8309.64 7621.57 6869.38 6112.69 Part-III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Gross Notional Loan 13385.71 Addition due to Additional Capitalisation 0.00 Gross Normative Loan 13385.71 13385.71 13409.48 13409.48 13409.48 13409.48 Cumulative Repayment upto Previous Year 970.83 1981.80 2993.67 4005.54 5017.40 Net Loan-Opening 12414.88 11427.68 10415.81 9403.94 8392.07 Addition due to Additional Capitalisation 23.77 0.00 0.00 0.00 0.00 Repayment during the year 1010.97 1011.87 1011.87 1011.87 1011.87 Net Loan-Closing 11427.68 10415.81 9403.94 8392.07 7380.21 Average Loan 11921.28 10921.74 9909.87 8898.01 7886.14 Weighted Average Rate of Interest on Loan 9.1410% 9.1420% 9.1433% 9.1435% 9.1438% Interest 1089.73 998.47 906.09 813.59 721.09

DEPRECIATION

25. Regulation 17 of the 2009 regulations provides for computation of depreciation in the following manner, namely:

“17. (1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission.

(2) The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset.

Rovided that……………………………………………

Provided further that………………………………………..

(3) Land other than the land held under lease and the land for reservoir in case of hydro generating station shall not be a depreciable asset and its cost shall be excluded from the capital cost while computing depreciable value of the asset.

(4) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in Appendix-III to these regulations for the assets of the generating station and transmission system:

Provided that, the remaining depreciable value as on 31st March of the year closing after a period of 12 years from date of commercial operation shall be spread over the balance useful life of the assets.

(5) In case of the existing projects, the balance depreciable value as on 1.4.2009 shall be worked out by deducting the cumulative depreciation as admitted by the Commission up to 31.3.2009 from the gross depreciable value of the assets.

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

26. Combined assets under Part I, Part II and Part III have been assigned the notional date of commercial operation as 1.1.2008, 1.11.2007 and 1.4.2007 respectively. Since these assets will complete 12 years after 2013-2014, depreciation has been worked out on straight line method and at the rates specified in Appendix 3 of the 2009 regulations.

27. For the period 1.4.2009 to 31.3.2014, the depreciation has been worked out as under:

(Rs. in lakh)

Part - I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Rate of Depreciation 5.2120% 5.2094% 5.2075% 5.2075% 5.2075% Depreciable Value 90% 77440.66 78114.26 78253.76 78253.76 78253.76 Remaining Depreciable Value 73282.03 69426.97 65001.14 60429.36 55857.59 Depreciation 4528.66 4565.33 4571.77 4571.77 4571.77 Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Rate of Depreciation 5.2357% 5.2313% 5.2282% 5.2274% 5.2274% Depreciable Value 90% 142540.27 144075.33 144974.43 145031.00 145031.00 Remaining Depreciable Value 135273.32 128467.61 120943.75 112530.18 104057.95 Depreciation 8340.76 8422.96 8470.13 8472.23 8472.23 Part-III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Rate of Depreciation 5.2828% 5.2828% 5.2828% 5.2828% 5.2828% Depreciable Value 90% 17223.44 17238.72 17238.72 17238.72 17238.72 Remaining Depreciable Value 16252.61 15256.92 14245.05 13233.18 12221.31 Depreciation 1010.97 1011.87 1011.87 1011.87 1011.87

OPERATION&MAINTENANCE EXPENSES

28. Clause (g) of Regulation 19 the 2009 regulations prescribes the norms for operation and maintenance expenses based on the type of sub-station and line. The petitioner has calculated the operation and maintenance expenses in accordance with the above norms and the same are allowed as such.

INTEREST ON WORKING CAPITAL

29. As per the 2009 regulations the components of the working capital and the interest thereon are discussed hereunder:

(i) Receivables: As per Regulation 18(1)(c)(i) of the 2009 regulations, receivables will be equivalent to two months' average billing calculated on target availability level. The petitioner has claimed the receivables on the basis of 2 months' transmission charges claimed in the petition. In the tariff being allowed, receivables have been worked out on the basis of 2 months' transmission charges.

(ii) Maintenance spares: Regulation 18(1)(c)(ii) of the 2009 regulations provides for maintenance spares @ 15% per annum of the O&M expenses from 1.4.2009 The value of maintenance spares has accordingly been worked out.

(iii) O&M expenses: Regulation 18(1)(c)(iii) of the 2009 regulations provides for operation and maintenance expenses for one month as a component of working capital. The petitioner has claimed O&M expenses for 1 month of the respective year as claimed in the petition. This has been considered in the working capital.

(iv) Rate of interest on working capital: As per Regulation 18(3) of the 2009 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 1.4.2009 or on 1st 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 @ 12.25% based on SBI PLR as on 1.4.2009, which is in accordance with the 2009 regulations and has been allowed.

30. Interest on Working Capital has been worked out as under:

(Rs. in lakh)

Part - I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 215.40 227.74 240.78 254.54 269.06 O & M expenses 119.67 126.52 133.77 141.41 149.48 Receivables 2605.67 2574.23 2526.01 2474.24 2423.28 Total 2,940.74 2,928.49 2,900.56 2,870.19 2,841.82 Rate of Interest 12.25% 12.25% 12.25% 12.25% 12.25% Interest 360.24 358.74 355.32 351.60 348.12 Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 304.90 322.38 340.84 360.32 380.85 O & M expenses 169.39 179.10 189.35 200.18 211.58 Receivables 4717.76 4659.65 4581.06 4476.72 4371.94 Total 5,192.05 5,161.12 5,111.25 5,037.21 4,964.37 Rate of Interest 12.25% 12.25% 12.25% 12.25% 12.25% Interest 636.03 632.24 626.13 617.06 608.14 Part - III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Maintenance Spares 26.15 27.65 29.22 30.90 32.67 O & M expenses 14.53 15.36 16.23 17.17 18.15 Receivables 558.63 545.16 531.27 517.50 503.82 Total 599.30 588.16 576.72 565.57 554.63 Rate of Interest 73.41 72.05 70.65 69.28 67.94 Interest 12.25% 12.25% 12.25% 12.25% 12.25%

TRANSMISSION CHARGES

31. The transmission charges for the transmission assets under Part I, Part II and Part III of the transmission system has been computed as under:

(Rs. in lakh)

Part - I 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 4528.66 4565.33 4571.77 4571.77 4571.77 Interest on Loan 4752.45 4407.07 4019.68 3621.09 3221.99 Return on equity 4556.71 4595.96 4604.09 4604.09 4604.09 Interest on Working Capital 360.24 358.74 355.32 351.60 348.12 O & M Expenses 1435.99 1518.27 1605.20 1696.91 1793.74 Total 15634.05 15445.37 15156.06 14845.45 14539.71 Part - II 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 8340.76 8422.96 8470.13 8472.23 8472.23 Interest on Loan 8942.70 8309.64 7621.57 6869.38 6112.69 Return on equity 8354.44 8443.89 8496.28 8499.57 8499.57 Interest on Working Capital 636.03 632.24 626.13 617.06 608.14 O & M Expenses 2032.66 2149.17 2272.24 2402.10 2538.99 Total 28306.59 27957.90 27486.35 26860.34 26231.62 Part - III 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 Depreciation 1010.97 1011.87 1011.87 1011.87 1011.87 Interest on Loan 1089.73 998.47 906.09 813.59 721.09 Return on equity 1003.33 1004.22 1004.22 1004.22 1004.22 Interest on Working Capital 73.41 72.05 70.65 69.28 67.94 O & M Expenses 174.31 184.32 194.80 206.03 217.77 Total 3351.75 3270.93 3187.63 3104.99 3022.89

Application fee and the publication expenses

32. The petitioner has sought approval for the reimbursement of fee paid by it for filing the petition. In accordance with our decision in order dated 11.1.2010 in Petition No. 109/2009, the petitioner shall be entitled to recover the filing fee from the beneficiaries on pro rata basis.

33. The petitioner shall also be entitled for reimbursement of expenditure for publication of notices in connection with the present petition directly from the beneficiaries on pro rata basis.

Service Tax

34. The petitioner has made a specific prayer to be allowed to bill and recover the Service tax on Transmission charges separately from the respondents if at any time exemption from service tax is withdrawn and transmission of electricity is notified as a taxable service.

35. The above prayer is based on presumption only and is accordingly rejected.

Licence Fee

36. The matter is under consideration of the Commission and decision as and when taken will be applicable in case of the transmission assets under consideration in this petition.

37. The transmission charges allowed in this order shall be recovered on monthly basis in accordance with Regulation 23 and shall be shared by the respondents in accordance with Regulation 33 of the 2009 regulations.

38. This order disposes of Petition No. 300/2010.

Annexure

Name of the Company: PGCIL Name of the Tr. System: Part-I - Combined Kahalgaon Stage-I Phase-I (ER Only) Notional DOCO: 01.01.2008 Petition No.: 300/2010 Tariff setting Period: Tariff setting Period: 2009-14 CALCULATION OF WEIGHTED AVERAGE RATE OF INTEREST ON LOAN (Rs. in Lakhs) Details of Loan 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 1 Bond-XVIII Gross loan opening 19236.00 19236.00 19236.00 19236.00 19236.00 Cumulative Repayment upto DOCO/previous year 0.00 1603.00 3206.00 4809.00 6412.00 Net Loan-Opening 19236.00 17633.00 16030.00 14427.00 12824.00 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 1603.00 1603.00 1603.00 1603.00 1603.00 Net Loan-Closing 17633.00 16030.00 14427.00 12824.00 11221.00 Average Loan 18434.50 16831.50 15228.50 13625.50 12022.50 Rate of Interest 8.15% 8.15% 8.15% 8.15% 8.15% Interest 1502.41 1371.77 1241.12 1110.48 979.83 Rep Schedule 12 annual inatalments from 09-03-2010 2 Bond-XX Gross loan opening 23715.00 23715.00 23715.00 23715.00 23715.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 1976.25 3952.50 5928.75 Net Loan-Opening 23715.00 23715.00 21738.75 19762.50 17786.25 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 1976.25 1976.25 1976.25 1976.25 Net Loan-Closing 23715.00 21738.75 19762.50 17786.25 15810.00 Average Loan 23715.00 22726.88 20750.63 18774.38 16798.13 Rate of Interest 8.93% 8.93% 8.93% 8.93% 8.93% Interest 2117.75 2029.51 1853.03 1676.55 1500.07 Rep Schedule 12 annual inatalments from 07.09.2010 3 Bond-XXI Gross loan opening 3350.00 3350.00 3350.00 3350.00 3350.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 279.17 558.33 837.50 Net Loan-Opening 3350.00 3350.00 3070.83 2791.67 2512.50 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 279.17 279.17 279.17 279.17 Net Loan-Closing 3350.00 3070.83 2791.67 2512.50 2233.33 Average Loan 3350.00 3210.42 2931.25 2652.08 2372.92 Rate of Interest 8.73% 8.73% 8.73% 8.73% 8.73% Interest 292.46 280.27 255.90 231.53 207.16 Rep Schedule 12 Annual instalments from 11-10-2010 4 Bond-XXII Gross loan opening 5011.00 5011.00 5011.00 5011.00 5011.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 417.58 835.17 1252.75 Net Loan-Opening 5011.00 5011.00 4593.42 4175.83 3758.25 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 417.58 417.58 417.58 417.58 Net Loan-Closing 5011.00 4593.42 4175.83 3758.25 3340.67 Average Loan 5011.00 4802.21 4384.63 3967.04 3549.46 Rate of Interest 8.68% 8.68% 8.68% 8.68% 8.68% Interest 434.95 416.83 380.59 344.34 308.09 Rep Schedule 12 Annual instalments from 07-12-2010 5 Bond-XXIV Gross loan opening 2377.00 2377.00 2377.00 2377.00 2377.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 198.08 396.17 594.25 Net Loan-Opening 2377.00 2377.00 2178.92 1980.83 1782.75 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 198.08 198.08 198.08 198.08 Net Loan-Closing 2377.00 2178.92 1980.83 1782.75 1584.67 Average Loan 2377.00 2277.96 2079.88 1881.79 1683.71 Rate of Interest 9.95% 9.95% 9.95% 9.95% 9.95% Interest 236.51 226.66 206.95 187.24 167.53 Rep Schedule 12 Annual instalments from 26-03-2011 6 Bond-XVIII (For ACE 2007-2008) Gross loan opening 670.00 670.00 670.00 670.00 670.00 Cumulative Repayment upto DOCO/previous year 0.00 55.83 111.67 167.50 223.33 Net Loan-Opening 670.00 614.17 558.33 502.50 446.67 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 55.83 55.83 55.83 55.83 55.83 Net Loan-Closing 614.17 558.33 502.50 446.67 390.83 Average Loan 642.08 586.25 530.42 474.58 418.75 Rate of Interest 8.15% 8.15% 8.15% 8.15% 8.15% Interest 52.33 47.78 43.23 38.68 34.13 Rep Schedule 12 Annual instalments from 09-03-2010 7 Bond-XXVII (For ACE 2007-2008) Gross loan opening 1989.88 1989.88 1989.88 1989.88 1989.88 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 165.82 331.65 Net Loan-Opening 1989.88 1989.88 1989.88 1824.06 1658.23 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 165.82 165.82 165.82 Net Loan-Closing 1989.88 1989.88 1824.06 1658.23 1492.41 Average Loan 1989.88 1989.88 1906.97 1741.15 1575.32 Rate of Interest 9.47% 9.47% 9.47% 9.47% 9.47% Interest 188.44 188.44 180.59 164.89 149.18 Rep Schedule 12 Annual instalments from 31-03-2012 8 Bond-XXIX (For ACE 2008-2009 Drawl on 12.03.2009) Gross loan opening 819.00 819.00 819.00 819.00 819.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 68.25 Net Loan-Opening 819.00 819.00 819.00 819.00 750.75 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 68.25 68.25 Net Loan-Closing 819.00 819.00 819.00 750.75 682.50 Average Loan 819.00 819.00 819.00 784.88 716.63 Rate of Interest 9.20% 9.20% 9.20% 9.20% 9.20% Interest 75.35 75.35 75.35 72.21 65.93 Rep Schedule 12 Annual instalments from 12-03-2013 9 STBL from BOB 29.09.2008 to 14.12.2008 @12.5% Repalced by BOND XXVIII @ 9.33% from 15.12.2008 (ACE for 2008-2009 drawl on 15.12.2008) Gross loan opening 1666.81 1666.81 1666.81 1666.81 1666.81 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 138.90 Net Loan-Opening 1666.81 1666.81 1666.81 1666.81 1527.91 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 138.90 138.90 Net Loan-Closing 1666.81 1666.81 1666.81 1527.91 1389.01 Average Loan 1666.81 1666.81 1666.81 1597.36 1458.46 Rate of Interest 9.33% 9.33% 9.33% 9.33% 9.33% Interest 155.51 155.51 155.51 149.03 136.07 Rep Schedule 12 Annual instalments from 15.12.2012 10 Bridge loan from ICICI 01.09.2007 to 06.03.2008 @ 8% Replaced by Bond XXVI @ 9.3% from 07.03.2008 Gross loan opening 2047.00 2047.00 2047.00 2047.00 2047.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 170.58 341.17 Net Loan-Opening 2047.00 2047.00 2047.00 1876.42 1705.83 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 170.58 170.58 170.58 Net Loan-Closing 2047.00 2047.00 1876.42 1705.83 1535.25 Average Loan 2047.00 2047.00 1961.71 1791.13 1620.54 Rate of Interest 9.30% 9.30% 9.30% 9.30% 9.30% Interest 190.37 190.37 182.44 166.57 150.71 Rep Schedule 12 Annual instalments from 07.03.2012 11 Bond XXX (Add Cap for 2009-2010 Drwal on 31.03.2010) Gross loan opening 0.00 761.85 761.85 761.85 761.85 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 0.00 Net Loan-Opening 0.00 761.85 761.85 761.85 761.85 Additions during the year 761.85 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 0.00 63.49 Net Loan-Closing 761.85 761.85 761.85 761.85 698.36 Average Loan 380.93 761.85 761.85 761.85 730.11 Rate of Interest 8.80% 8.80% 8.80% 8.80% 8.80% Interest 33.52 67.04 67.04 67.04 64.25 Rep Schedule 12 Annual instalments from 29.09.2013 Total Loan Gross loan opening 60881.69 61643.54 61643.54 61643.54 61643.54 Cumulative Repayment upto DOCO/previous year 0.00 1658.83 6188.75 11055.07 16128.55 Net Loan-Opening 60881.69 59984.71 55454.79 50588.47 45514.99 Additions during the year 761.85 0.00 0.00 0.00 0.00 Repayment during the year 1658.83 4529.92 4866.32 5073.47 5136.96 Net Loan-Closing 59984.71 55454.79 50588.47 45514.99 40378.03 Average Loan 60433.20 57719.75 53021.63 48051.73 42946.51 Weighted Average Rate of Interest 8.7363% 8.7484% 8.7544% 8.7584% 8.7620% Interest 5279.61 5049.53 4641.75 4208.56 3762.96

Name of the Company: PGCIL Name of the Tr. System: Part-II - Combined Kahalgaon Stage-II Phase-I (NR only) Notional DOCO: 01.11.2007 Petition No.: 300/2010 Tarrif setting Period: Tarrif setting Period: 2009-14 CALCULATION OF WEIGHTED AVERAGE RATE OF INTEREST ON LOAN (Rs. in Lakhs) Details of Loan 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 1 Bond-XVIII Gross loan opening 20386.00 20386.00 20386.00 20386.00 20386.00 Cumulative Repayment upto DOCO/previous year 0.00 1698.83 3397.67 5096.50 6795.33 Net Loan-Opening 20386.00 18687.17 16988.33 15289.50 13590.67 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 1698.83 1698.83 1698.83 1698.83 1698.83 Net Loan-Closing 18687.17 16988.33 15289.50 13590.67 11891.83 Average Loan 19536.58 17837.75 16138.92 14440.08 12741.25 Rate of Interest 8.15% 8.15% 8.15% 8.15% 8.15% Interest 1592.23 1453.78 1315.32 1176.87 1038.41 Rep Schedule 12 annual inatalments from 09-03-2010 2 Bond-XX Gross loan opening 46889.00 46889.00 46889.00 46889.00 46889.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 3907.42 7814.83 11722.25 Net Loan-Opening 46889.00 46889.00 42981.58 39074.17 35166.75 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 3907.42 3907.42 3907.42 3907.42 Net Loan-Closing 46889.00 42981.58 39074.17 35166.75 31259.33 Average Loan 46889.00 44935.29 41027.88 37120.46 33213.04 Rate of Interest 8.93% 8.93% 8.93% 8.93% 8.93% Interest 4187.19 4012.72 3663.79 3314.86 2965.92 Rep Schedule 12 annual inatalments from 07.09.2010 3 Bond-XXI Gross loan opening 5151.00 5151.00 5151.00 5151.00 5151.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 429.25 858.50 1287.75 Net Loan-Opening 5151.00 5151.00 4721.75 4292.50 3863.25 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 429.25 429.25 429.25 429.25 Net Loan-Closing 5151.00 4721.75 4292.50 3863.25 3434.00 Average Loan 5151.00 4936.38 4507.13 4077.88 3648.63 Rate of Interest 8.73% 8.73% 8.73% 8.73% 8.73% Interest 449.68 430.95 393.47 356.00 318.52 Rep Schedule 12 Annual instalments from 11-10-2010 4 Bond-XXII Gross loan opening 7502.00 7502.00 7502.00 7502.00 7502.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 625.17 1250.33 1875.50 Net Loan-Opening 7502.00 7502.00 6876.83 6251.67 5626.50 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 625.17 625.17 625.17 625.17 Net Loan-Closing 7502.00 6876.83 6251.67 5626.50 5001.33 Average Loan 7502.00 7189.42 6564.25 5939.08 5313.92 Rate of Interest 8.68% 8.68% 8.68% 8.68% 8.68% Interest 651.17 624.04 569.78 515.51 461.25 Rep Schedule 12 Annual instalments from 07-12-2010 5 Bond-XXV Gross loan opening 791.00 791.00 791.00 791.00 791.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 65.92 131.83 Net Loan-Opening 791.00 791.00 791.00 725.08 659.17 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 65.92 65.92 65.92 Net Loan-Closing 791.00 791.00 725.08 659.17 593.25 Average Loan 791.00 791.00 758.04 692.13 626.21 Rate of Interest 10.10% 10.10% 10.10% 10.10% 10.10% Interest 79.89 79.89 76.56 69.90 63.25 Rep Schedule 12 Annual instalments from 12-06-2011 6 Bond-XXIV Gross loan opening 9349.00 9349.00 9349.00 9349.00 9349.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 779.08 1558.17 2337.25 Net Loan-Opening 9349.00 9349.00 8569.92 7790.83 7011.75 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 779.08 779.08 779.08 779.08 Net Loan-Closing 9349.00 8569.92 7790.83 7011.75 6232.67 Average Loan 9349.00 8959.46 8180.38 7401.29 6622.21 Rate of Interest 9.95% 9.95% 9.95% 9.95% 9.95% Interest 930.23 891.47 813.95 736.43 658.91 Rep Schedule 12 Annual instalments from 26-03-2011 7 Bond-XXVII (For ACE 2007-2008) Gross loan opening 3735.00 3735.00 3735.00 3735.00 3735.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 311.25 622.50 Net Loan-Opening 3735.00 3735.00 3735.00 3423.75 3112.50 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 311.25 311.25 311.25 Net Loan-Closing 3735.00 3735.00 3423.75 3112.50 2801.25 Average Loan 3735.00 3735.00 3579.38 3268.13 2956.88 Rate of Interest 9.47% 9.47% 9.47% 9.47% 9.47% Interest 353.70 353.70 338.97 309.49 280.02 Rep Schedule 12 Annual instalments from 31-03-2012 8 STBL from BOB 29.09.2008 to 14.12.2008 @12.5% Repalced by BOND XXVIII @ 9.33% from 15.12.2008 (ACE for 2008-2009 drawl on 15.12.2008) Gross loan opening 3333.19 3333.19 3333.19 3333.19 3333.19 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 277.77 Net Loan-Opening 3333.19 3333.19 3333.19 3333.19 3055.42 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 277.77 277.77 Net Loan-Closing 3333.19 3333.19 3333.19 3055.42 2777.66 Average Loan 3333.19 3333.19 3333.19 3194.31 2916.54 Rate of Interest 9.33% 9.33% 9.33% 9.33% 9.33% Interest 310.99 310.99 310.99 298.03 272.11 Rep Schedule 12 Annual instalments from 15.12.2012 9 Bond-XXVI From 07-03-2008 (Replacement of 8.00% ICICI loan: 20-08-2007 to 06-03-2008) Gross loan opening 13536.00 13536.00 13536.00 13536.00 13536.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 1128.00 2256.00 Net Loan-Opening 13536.00 13536.00 13536.00 12408.00 11280.00 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 1128.00 1128.00 1128.00 Net Loan-Closing 13536.00 13536.00 12408.00 11280.00 10152.00 Average Loan 13536.00 13536.00 12972.00 11844.00 10716.00 Rate of Interest 9.30% 9.30% 9.30% 9.30% 9.30% Interest 1258.85 1258.85 1206.40 1101.49 996.59 Rep Schedule 12 Annual instalments from 07.03.2012 10 Bond XXX (Add Cap for 2009-2010 Drwal on 31.03.2010) Gross loan opening 0.00 361.15 361.15 361.15 361.15 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 0.00 0.00 Net Loan-Opening 0.00 361.15 361.15 361.15 361.15 Additions during the year 361.15 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 0.00 0.00 30.10 Net Loan-Closing 361.15 361.15 361.15 361.15 331.05 Average Loan 180.58 361.15 361.15 361.15 346.10 Rate of Interest 8.80% 8.80% 8.80% 8.80% 8.80% Interest 15.89 31.78 31.78 31.78 30.46 Rep Schedule 12 Annual instalments from 29.09.2013 Total Loan Gross loan opening 110672.19 111033.34 111033.34 111033.34 111033.34 Cumulative Repayment upto DOCO/previous year 0.00 1698.83 9138.58 18083.50 27306.18 Net Loan-Opening 110672.19 109334.51 101894.76 92949.84 83727.16 Additions during the year 361.15 0.00 0.00 0.00 0.00 Repayment during the year 1698.83 7439.75 8944.92 9222.68 9252.78 Net Loan-Closing 109334.51 101894.76 92949.84 83727.16 74474.38 Average Loan 110003.35 105614.63 97422.30 88338.50 79100.77 Weighted Average Rate of Interest 8.9359% 8.9459% 8.9517% 8.9546% 8.9575% Interest 9829.82 9448.16 8721.00 7910.36 7085.44

Name of the Company: POWERGRID Name of the Tr. System: Part-III - 400 kV Agra-Gwalior 765 kV S/C TL including respective bays at Agra and Gwalior Actual DOCO: 01.04.2007 Petition No.: 300/2010 Tarrif setting Period: 2009-14 CALCULATION OF WEIGHTED AVERAGE RATE OF INTEREST ON LOAN (Rs. in Lakhs) Details of Loan 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 1 Bond-XX Gross loan opening 7287.00 7287.00 7287.00 7287.00 7287.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 607.25 1214.50 1821.75 Net Loan-Opening 7287.00 7287.00 6679.75 6072.50 5465.25 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 607.25 607.25 607.25 607.25 Net Loan-Closing 7287.00 6679.75 6072.50 5465.25 4858.00 Average Loan 7287.00 6983.38 6376.13 5768.88 5161.63 Rate of Interest 8.93% 8.93% 8.93% 8.93% 8.93% Interest 650.73 623.62 569.39 515.16 460.93 Rep Schedule 12 equal Annual instalments from 07.09.2010 2 Bonds XXI Gross loan opening 877.00 877.00 877.00 877.00 877.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 73.08 146.17 219.25 Net Loan-Opening 877.00 877.00 803.92 730.83 657.75 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 73.08 73.08 73.08 73.08 Net Loan-Closing 877.00 803.92 730.83 657.75 584.67 Average Loan 877.00 840.46 767.38 694.29 621.21 Rate of Interest 8.73% 8.73% 8.73% 8.73% 8.73% Interest 76.56 73.37 66.99 60.61 54.23 Rep Schedule 12 equal Annual instalments from 11.10.2010 3 Bond-XXII Gross loan opening 1468.00 1468.00 1468.00 1468.00 1468.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 122.33 244.67 367.00 Net Loan-Opening 1468.00 1468.00 1345.67 1223.33 1101.00 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 122.33 122.33 122.33 122.33 Net Loan-Closing 1468.00 1345.67 1223.33 1101.00 978.67 Average Loan 1468.00 1406.83 1284.50 1162.17 1039.83 Rate of Interest 8.68% 8.68% 8.68% 8.68% 8.68% Interest 127.42 122.11 111.49 100.88 90.26 Rep Schedule 12 equal Annual instalments from 07.12.2010 4 Bond-XXIV Gross loan opening 2782.00 2782.00 2782.00 2782.00 2782.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 231.83 463.67 695.50 Net Loan-Opening 2782.00 2782.00 2550.17 2318.33 2086.50 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 231.83 231.83 231.83 231.83 Net Loan-Closing 2782.00 2550.17 2318.33 2086.50 1854.67 Average Loan 2782.00 2666.08 2434.25 2202.42 1970.58 Rate of Interest 9.95% 9.95% 9.95% 9.95% 9.95% Interest 276.81 265.28 242.21 219.14 196.07 Rep Schedule 12 Annual instalments from 26.03.2011 5 Bond-XXVI @ 9.30% w.e.f 07.03.2008 (Replaced SBI short Term Bridge Loan @ 7.95% w.e.f 24.08.2007 to 06.03.2008 (Add-Cap for 2007-2008) Gross loan opening 378.00 378.00 378.00 378.00 378.00 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 31.50 63.00 Net Loan-Opening 378.00 378.00 378.00 346.50 315.00 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 31.50 31.50 31.50 Net Loan-Closing 378.00 378.00 346.50 315.00 283.50 Average Loan 378.00 378.00 362.25 330.75 299.25 Rate of Interest 9.30% 9.30% 9.30% 9.30% 9.30% Interest 35.15 35.15 33.69 30.76 27.83 Rep Schedule 12 equal Annual instalments from 07.03.2012 6 Bond-XXVII (Add-Cap 2007-2008) Gross loan opening 803.12 803.12 803.12 803.12 803.12 Cumulative Repayment upto DOCO/previous year 0.00 0.00 0.00 66.93 133.85 Net Loan-Opening 803.12 803.12 803.12 736.19 669.27 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 0.00 66.93 66.93 66.93 Net Loan-Closing 803.12 803.12 736.19 669.27 602.34 Average Loan 803.12 803.12 769.66 702.73 635.80 Rate of Interest 9.47% 9.47% 9.47% 9.47% 9.47% Interest 76.06 76.06 72.89 66.55 60.21 Rep Schedule 12 equal Annual instalments from 31.03.2012 Total Loan Gross loan opening 13595.12 13595.12 13595.12 13595.12 13595.12 Cumulative Repayment upto DOCO/previous year 0.00 0.00 1034.50 2167.43 3300.35 Net Loan-Opening 13595.12 13595.12 12560.62 11427.69 10294.77 Additions during the year 0.00 0.00 0.00 0.00 0.00 Repayment during the year 0.00 1034.50 1132.93 1132.93 1132.93 Net Loan-Closing 13595.12 12560.62 11427.69 10294.77 9161.84 Average Loan 13595.12 13077.87 11994.16 10861.23 9728.30 Rate of Interest 9.1410% 9.1420% 9.1433% 9.1435% 9.1438% Interest 1242.73 1195.59 1096.66 993.10 889.54