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Citation Codes
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citation codes
Case Number
Attorney(S)
  • Shri A.K. Verma, PGCIL, Shri Mukesh Bhakar, PGCIL, Shri Amit Yadav, PGCIL and Shri Amit Jain, PGCIL, Advocate, ;
  • None, Advocate,
Judges
  • P.K. Pujari
  • Chairperson
  • I.S. Jha, Member
Acts
  • 25 of 40 Order in Petition No. 507/TT/2019 Capital Cost 45. Regulation 19(3) and (5) of the 2019 Tariff Regulations
  • Capital (IWC) 65. Regulation 34(1)(c), (3) and (4) and Clause (7) of Regulation 3 of the 2019 Tariff Regulations
  • SECTION 64 ELECTRICITY ACT 2003
  • Regulation 25 (1) (d) of 2019 Tariff Regulations 300.00 Page 29 of 40 Order
  • sub-clause (ii) of clause (2) of Regulation 72
  • INCOME TAX ACT 1961
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Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Shri A.K. Verma, PGCIL, Shri Mukesh Bhakar, PGCIL, Shri Amit Yadav, PGCIL and Shri Amit Jain, PGCIL, Advocate, ;
  • None, Advocate,
Judges
  • P.K. Pujari
  • Chairperson
  • I.S. Jha, Member
Acts
  • 25 of 40 Order in Petition No. 507/TT/2019 Capital Cost 45. Regulation 19(3) and (5) of the 2019 Tariff Regulations
  • Capital (IWC) 65. Regulation 34(1)(c), (3) and (4) and Clause (7) of Regulation 3 of the 2019 Tariff Regulations
  • SECTION 64 ELECTRICITY ACT 2003
  • Regulation 25 (1) (d) of 2019 Tariff Regulations 300.00 Page 29 of 40 Order
  • sub-clause (ii) of clause (2) of Regulation 72
  • INCOME TAX ACT 1961
See more information ...
Smart Summary

Order Summary: Petition No. 507/TT/2019 (Power Grid Corporation of India Ltd.)

Factual and Procedural Background

The petition was filed by Power Grid Corporation of India Ltd. (the Petitioner), a deemed transmission licensee, seeking truing-up of transmission tariff for the period 1.4.2014 to 31.3.2019 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (the 2014 Tariff Regulations), and determination of tariff for the period 1.4.2019 to 31.3.2024 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (the 2019 Tariff Regulations). The petition concerned three assets (collectively the Combined Asset): (i) a 400 kV, 125 MVAR Bus Reactor with associated bay at Biharsharif Sub-station (Asset-I); (ii) a 220 kV/132 kV, 160 MVA ICT-I with associated bay at Purnea Sub-station (Asset-II); and (iii) a 220 kV/132 kV, 160 MVA ICT-II with associated bay at Purnea Sub-station (Asset-III). These assets formed part of an augmentation project.

The Petitioner set out multiple reliefs (approving trued-up tariffs for 2014-19 and tariffs for 2019-24, allowing additional capitalization, adjustment of ROE on account of tax changes, reimbursement of filing/publication fees, separate billing of licensee and RLDC fees, adjustment for floating interest rates, claim for initial spares and capital spares, and permission to file a separate petition for security expenses). The Respondents were distribution licensees and transmission utilities in the Eastern Region; none filed a reply. Public notices were published under Section 64 of the Electricity Act, 2003 and no public comments were received.

The Commission heard the Petitioner on 26.2.2020, directed filing of additional information which the Petitioner submitted by affidavit dated 13.3.2020 (and other affidavits on 28.9.2019, 18.2.2020 and 25.2.2020). The order disposes of Petition No. 507/TT/2019.

Legal Issues Presented

  1. Whether the trued-up Annual Fixed Charges (AFC) for the 2014-19 tariff block for the three transmission assets should be approved under Regulation 8 of the 2014 Tariff Regulations.
  2. Whether the transmission tariff for the 2019-24 tariff block for the Combined Asset (Assets I, II and III treated together) should be determined under Regulation 8 of the 2019 Tariff Regulations, including computation of capital cost, additional capitalization, debt-equity, ROE, interest on loan, depreciation, O&M, and interest on working capital.
  3. Whether the Additional Capital Expenditure (ACE) claimed up to 31.3.2019 and projected ACE for 2019-24 (including balance/retention payments and works deferred within cut-off dates) should be allowed under relevant provisions of the 2014 and 2019 Tariff Regulations.
  4. Whether the Petitioner may recover adjustments to Return on Equity (ROE) arising from changes in applicable tax (MAT/corporate tax) directly from beneficiaries and true up the grossed-up ROE in accordance with the Tariff Regulations.
  5. Whether reimbursement of petition filing fee and publication expenses, and separate billing/reimbursement of licensee fee and RLDC fees and charges, are allowable under the 2019 Tariff Regulations.
  6. Whether floating interest rate changes impacting interest on loan during 2019-24 may be adjusted/recovered from beneficiaries at truing up.
  7. Whether claims for initial spares and capital spares, and security expenses (filed separately), are admissible and how they should be treated for the respective tariff periods.

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 proceeded on the basis of the petition, the affidavits filed by the Petitioner (dated 28.9.2019, 18.2.2020, 25.2.2020 and 13.3.2020), and the material on record. The reasoning and analytical steps expressly set out in the order are summarized below (all steps and legal bases are taken directly from the opinion text):

  1. Regulatory framework and scope:
    • The truing up for 2014-19 was conducted under Regulation 8 of the 2014 Tariff Regulations; determination for 2019-24 was carried out under Regulation 8 of the 2019 Tariff Regulations.
    • The order explicitly applies relevant provisions of the 2014 Tariff Regulations (for truing up and ACE for 2014-19) and of the 2019 Tariff Regulations (for determination of tariff for 2019-24) as cited in the text (specific regulations referenced throughout: Regs. 8, 13, 14, 19, 24–35, 70, etc.).
  2. Capital cost and additional capitalization:
    • The Commission considered admitted capital costs on COD previously allowed in orders dated 18.3.2016 (Petition No. 498/TT/2014) and 26.5.2016 (Petition No. 257/TT/2015). The capital costs as on COD adopted were: Asset-I 597.25 lakh, Asset-II 766.24 lakh, Asset-III 545.09 lakh.
    • Actual ACE up to 31.3.2019 was considered as per the Auditor’s Certificate filed; ACE claimed for 1.4.2019–31.3.2020 was accepted as estimated subject to true-up at contract close and audit.
    • The Commission allowed ACE for 2014-19 under Regulation 14(1)(i) of the 2014 Tariff Regulations where applicable; for 2019-24 it applied Regulation 19(3) and Regulation 24 (and related clauses) of the 2019 Tariff Regulations to treat combined admitted capital cost as on 1.4.2019 and to admit projected ACE subject to prudence and future truing up.
    • The combined trued-up capital cost as on 31.3.2019 (and treated as opening cost on 1.4.2019) was 2,340.95 lakh. Projected ACE for 2019-24 (2019-20) of 300.00 lakh (balance/retention payments and works deferred before cut-off) was allowed subject to truing up.
  3. Treatment of assets as a Combined Asset for 2019-24:
    • The Petitioner combined the three assets for 2019-24 and the Commission accepted the approach under the proviso to Regulation 8(1) of the 2019 Tariff Regulations to compute a single tariff for the Combined Asset.
    • Element-wise admitted costs were aggregated (sub-station equipment only had non-zero entries) to arrive at combined admitted capital cost used for WAL and depreciation calculations.
  4. Effective COD (E‑COD) and Weighted Average Life (WAL):
    • E‑COD for the Combined Asset was computed using admitted capital cost weights and asset COD dates, yielding an E‑COD of 1.9.2015 (as asserted by the Petitioner and computed in the order).
    • Using E‑COD, the lapsed life as of 1.4.2019 was taken as three years; WAL was determined using element-wise lives prescribed in the 2019 Tariff Regulations and admitted capital costs, resulting in WAL = 25 years for the Combined Asset and remaining useful life as on 31.3.2019 = 22 years. The order explicitly states that element-wise lives as defined in 2019 Regulations were applied, ignoring earlier element-wise lives under the 2014 Regulations for WAL determination.
  5. Debt-Equity, Interest on Loan (IOL), and Interest on Working Capital (IWC):
    • Debt-equity ratio of 70:30 was applied for capital cost as on COD and for ACE in 2014-19 as per Regulation 19 of the 2014 Tariff Regulations; for 2019-24 the admitted debt/equity for the Combined Asset was applied consistent with Regulation 18 of the 2019 Tariff Regulations (70:30).
    • IOL for 2014-19 was computed on the basis of actual loan data and weighted average rates (Regulation 26 of 2014 Regulations referenced). Repayments were taken equal to depreciation for the period. For 2019-24 IOL was computed in accordance with Regulation 32 of the 2019 Tariff Regulations using the weighted average rate prevailing as on 1.4.2019; floating rate adjustments were to be considered at true-up.
    • IWC was computed as per Regulation 28 of the 2014 Tariff Regulations for 2014-19 and Regulation 34 of the 2019 Tariff Regulations for 2019-24. Components used were one-month O&M, maintenance spares (15% of O&M), and receivables (2 months for 2014-19; 45 days for 2019-24 as per the 2019 Regulations). The applicable normative bank/bank-related rate was applied (e.g., 13.50% for certain years in 2014-19 calculations; 12.05% for 2019-24 based on bank rate as on 1.4.2019 plus prescribed margin as per the 2019 Regulations).
  6. Return on Equity (ROE) and taxation:
    • ROE was allowed in accordance with Regulations 24–31 of the 2014 Tariff Regulations (for truing up) and Regulations 30–31 of the 2019 Tariff Regulations (for 2019-24). The base ROE used was 15.50% (per the 2019 Regulations) and was grossed up for tax (MAT) as required by Regulation 31 of the 2019 Tariff Regulations.
    • The Commission used the effective MAT rates notified/arrived at in a prior order (Petition No. 274/TT/2019) and accepted the Petitioner’s revised MAT rate for 2019-20 in view of the Taxation Laws (Amendment) Ordinance, 2019; a MAT rate of 17.472% was used for grossing up ROE for 2019-20 (subject to truing up with actual tax paid in line with Regulation 31(3)).
  7. Depreciation and O&M:
    • Depreciation for both the 2014-19 truing up and for 2019-24 was computed using the Straight Line Method at rates specified in the applicable Tariff Regulations (2014 Rules for the truing up period and 2019 Rules for 2019-24). For the Combined Asset the allowed depreciation rates and computations are set out using the admitted opening gross block, ACE, average gross block and the prescribed rates.
    • O&M expenses for the assets were allowed in accordance with the normative rates in Regulation 29(3) of the 2014 Tariff Regulations for the truing-up period and Regulation 35(3) of the 2019 Tariff Regulations for the 2019-24 period. The Petitioner’s O&M claims for 2019-24 were accepted as per the applicable norms and allowed as claimed.
  8. Specific claims and other reliefs:
    • Initial spares were claimed by the Petitioner and the Commission computed allowable ceilings consistent with Regulation 13(d)(iii) of the 2014 Tariff Regulations and allowed initial spares within the ceiling (the order sets out the plant & machinery base and ceilings accepted).
    • Reimbursement of filing fee and publication expenses was allowed under Regulation 70(1) of the 2019 Tariff Regulations, to be recovered directly from beneficiaries on pro-rata basis. Reimbursement of license fee and RLDC fees and charges was allowed as per Regulation 70(3) and (4).
    • GST on transmission charges was considered premature for allowance because GST was not levied on transmission of electricity at present; therefore the claim for GST recovery could not be entertained at the time of the order (the Petitioner may raise the issue if/when GST is imposed).
    • Security expenses were not claimed in the petition; the Petitioner was permitted to file a separate petition for overall security expenses and consequential IWC, which would be dealt with under the 2019 Tariff Regulations.

Holding and Implications

Holding: The petition was disposed of with the Commission admitting the trued-up Annual Fixed Charges for the 2014-19 period and determining the Annual Fixed Charges for the 2019-24 period for the assets as detailed in the order. The Commission accepted the Petitioner’s submissions and audited figures subject to the adjustments and truing-up principles explained in the order.

Core Ruling: DISPOSED OF

Direct effects and specific outcomes adopted in the order (as stated in the opinion):

  • The trued-up Annual Fixed Charges after review for 2014-19 were approved and specific yearly AFC figures are provided in the order for each asset (the order contains detailed tables showing allowed AFC for Assets I, II and III for 2014-19; the Commission’s allowed figures differ from prior allowed AFC mainly on account of the tax/grossing-up calculation).
  • The Combined Asset’s tariff for 2019-24 was determined with the Combined Asset admitted capital cost as on 1.4.2019 of 2,340.95 lakh and projected ACE of 300.00 lakh for 2019-20 (subject to true-up), yielding total completion cost of 2,640.95 lakh for the 2019-24 block. The order contains detailed annual AFC components for 2019-24 (depreciation, IOL, ROE, IWC, O&M) and total annual AFC for each year of the block.
  • ROE was allowed grossed up for MAT; the Commission used the applicable MAT rate (including the revised MAT rate for 2019-20 due to the 2019 Ordinance) and directed truing up of grossed-up ROE based on actual tax paid as required by the 2019 Tariff Regulations.
  • IOL and IWC were computed and allowed as per the relevant Tariff Regulations; adjustments for floating interest rates and any subsequent true-up issues are to be addressed at the time of truing up.
  • Reimbursement of petition filing fee and publication expenses, and separate recovery of licensee fee and RLDC fees/charges were allowed in accordance with the 2019 Tariff Regulations.
  • GST on transmission charges was not allowed at this stage as GST was not levied on transmission at present; hence the claim was premature.
  • Security expenses and capital spares claims were not allowed in this petition; the Petitioner may file separate applications which will be adjudicated under the 2019 Tariff Regulations and subject to true up.
  • Billing, collection and disbursement of the approved transmission charges are to be governed by the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 (for 2014-19) and Regulation 57 of the 2019 Tariff Regulations (for 2019-24), as applicable.

Broader implications: The order applies the detailed provisions of the 2014 and 2019 Tariff Regulations to the facts of the petition and resolves the specific accounting and tariff elements (capital cost, ACE, debt-equity, ROE grossing-up for tax, IOL, depreciation, O&M, IWC) for the assets in question. The opinion does not purport to establish new legal precedent beyond application of the cited regulatory provisions; where estimates were used (e.g., projected ACE, tax rate for 2019-20) the order makes express provision for future truing up in accordance with the regulations.

This summary is based exclusively on the text of the provided opinion and does not add information beyond what the opinion states.

Signed by the Commission in the published order: Chairperson (P. K. Pujari) and Member (I.S. Jha).

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    Power Grid Corporation Of India Limited, Saudamini v. Bihar State Power (Holding) Company Ltd. And Others

    The present petition has been filed by Power Grid Corporation of India Ltd. (hereinafter referred to as the Petitioner), a deemed transmission licensee, for truing up of tariff for the period from 1.4.2014 to 31.3.2019 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred to as the 2014 Tariff Regulations) and for determination of tariff for the period from 1.4.2019 to 31.3.2014 under Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (hereinafter referred to as the 2019 Tariff Regulations) in respect of Asset-I: 400 kV, 125 MVAR Bus Reactor along with associated bay at Biharsharif Sub-station, Asset-II: 220 kV/132 kV, 160 MVA ICT-I along with associated bay at Purnea Sub-station and Asset-III:

    220 kV/132 kV, 160 MVA ICT-II along with associated bay at Purnea Sub-station (hereinafter collectively referred to as the transmission assets/ Combined Asset) Page 3 of 40 Order in Petition No. 507/TT/2019 under Part-II i.e. Augmentation of transformation capacity and reactive compensation in Eastern Region (hereinafter referred to as the transmission project).

    2. The Petitioner has made the following prayers in this Petition:-

    1) Approve the trued-up Transmission Tariff for 2014-19 block and transmission tariff for 2019-24 block for the assets covered under this petition, as per para 10.2 and 11.0 in the instant petition.

    2) Approve the Completion cost and Additional Capitalization incurred during 2014-

    19 & 2019-24.

    3) Allow the Petitioner to recover the shortfall or refund the excess Annual Fixed Charges, on account of Return on Equity due to change in applicable Minimum Alternate/Corporate Income Tax rate as per the Income Tax Act, 1961 (as amended from time to time) of the respective financial year directly without making any application before the Commission as provided in Tariff Regulation 2014 and Tariff regulations 2019 as per para 10.2 and 11.0 for respective block.

    4) Approve the reimbursement of expenditure by the beneficiaries towards petition filing fee, and expenditure on publishing of notices in newspapers in terms of Regulation 70 (1) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019, and other expenditure (if any) in relation to the filing of petition.

    5) Allow the Petitioner to bill and recover Licensee fee and RLDC fees and charges, separately from the respondents in terms of Regulation 70 (3) and (4) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019.

    6) Allow the Petitioner to bill and adjust impact on Interest on Loan due to change in Interest rate on account of floating rate of interest applicable during 2019-24 period, if any, from the respondents.

    7) Allow the Petitioner to claim initial spares.

    8) Allow the Petitioner to file a separate petition before Honble Commission for claiming the overall security expenses and consequential IOWC on that security expenses as mentioned at para 11.6 in the instant petition.

    9) Allow the Petitioner to claim the capital spares at the end of tariff block as per actual. 10) Allow the Petitioner to bill and recover GST on Transmission Charges separately from the respondents, if GST on transmission is levied at any rate in future. Further, any taxes including GST and duties including cess etc. imposed by any statutory/Govt./municipal authorities shall be allowed to be recovered from the beneficiaries. and pass such other relief as the Honble Commission deems fit and appropriate under the circumstances of the case and in the interest of justice Page 4 of 40 Order in Petition No. 507/TT/2019

    3. The Respondents are the distribution licensees and transmission utilities, who are procuring transmission services from the Petitioner, mainly beneficiaries of Eastern Region. Background

    4. The brief facts of the case are as follows:- (a) The Investment Approval for the transmission project was accorded by the Board of Directors of PGCIL on 27.6.2012 for 9197 lakh including IDC of

    290 lakh for Part I (i.e. Augmentation of transformation capacity and reactive compensation in NR) and for 3080 lakh including IDC of 125 lakh for Part-II (i.e. Augmentation of transformation capacity and reactive compensation in ER) based on April 2012 price level. (b) The Revised Cost Estimate (RCE) was approved by the Board of Directors of the Petitioner vide Memorandum No. C/CP/RCE Aug. Tfr NR and ER Part-II dated 11.3.2016 at 3294 lakh including IDC of 86 lakh based on the August, 2015 price level. (c) The scope of work covered in the Augmentation of Transformation Capacity and Reactive Compensation in Northern and Eastern Region is as under:- Part-I: Augmentation of transformation capacity in Northern Region: Sub-station:-

    (i) 1x315 MVA, 400/220 kV transformer at Nalagarh Sub-station alongwith associated bays;

    (ii) 1x315 MVA, 400/220 kV transformer at Abdullapur Sub-station alongwth associated bays;

    (iii) 1x500 MVA, 400/220 kV transformer at Amritsar Sub-station alongwith associated bays and 3 nos. of 220 kV line bays;

    (iv) 4x105 MVA, 400/220 kV transformer at Kisenpur Sub-station alongwith associated bays. Part-II: Augmentation of Transformation capacity and Reactive compensation in Eastern Region: Page 5 of 40 Order in Petition No. 507/TT/2019 Sub-station:-

    (i) 2x160 MVA, 220/132 kV transformer at Purnea Sub-station alongwith associated bays;

    (ii) 1x125 MVAR, 400 kV Bus Reactor at Biharsharif Sub-station alongwith associated bays. (d) As per the Investment Approval dated 27.6.2012, the instant assets were scheduled to be put into commercial operation within 20 months i.e. by 27.2.2014. (e) The details of the assets covered in the instant petition and the time over- run in respect of these assets are as follows:- Asset Covered in Petition COD Time over-run Time over- condoned Asset-I No. 498/TT/2014 30.3.2015 13 months 6 months Asset-II No. 257/TT/2015 3.4.2016 25 months and

    7 days condoned Asset-III No. 257/TT/2015 11.6.2015 15 months and

    15 days condoned (h) The transmission tariff was allowed for the instant assets for the 2014-19 period vide order dated 18.3.2016 in Petition No. 498/TT/2014 and order dated 26.5.2016 in Petition No. 257/TT/2015. The revised transmission tariff claimed by the Petitioner based on truing up is given as under:- Project 2014-15 2015-16 2016-17 2017-18 2018- 19 Asset-I AFC approved 0.91 203.24 249.85 259.93 257.09 Revised AFC based on truing up 0.90 174.61 183.30 189.43 192.71 Asset-II AFC approved -- -- 149.19 172.38 175.67 Revised AFC based on truing up -- -- 136.90 139.86 136.24 Asset-III AFC approved -- 88.04 136.84 155.69 159.38 Revised AFC based on truing up -- 88.15 124.56 123.32 120.08 Page 6 of 40 Order in Petition No. 507/TT/2019

    5. The Petitioner has served the petition on the Respondents and notice was also published in the newspapers in accordance with Section 64 of the Electricity Act, 2003 (hereinafter referred to as the Act). No comments or suggestions have been received from the general public in response to the aforesaid notices published in the newspapers by the Petitioner. None of the Respondents have filed their reply.

    6. The hearing in this matter was held on 26.2.2020 and the order was reserved. The Petitioner was directed to submit certain information and the same was filed by the Petitioner vide affidavit dated 13.3.2020.

    7. This order is issued considering the submissions made by the Petitioner in the petition accompanied by affidavits dated 28.9.2019, 18.2.2020, 25.2.2020 and 13.3.2020.

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

    9. The Petitioner has filed the instant petition for truing up of transmission tariff for the 2014-19 period in accordance with Regulation 8 of the 2014 Tariff Regulations and determination of transmission tariff of the 2019-24 period under Regulation 8 of the 2019 Tariff Regulations. Truing up of Annual Fixed Charges for the 2014-19 Tariff Period

    10. The details of the transmission charges claimed by the Petitioner in respect of the instant assets are as under: - Page 7 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Asset-I Particulars 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 Depreciation 0.17 33.54 36.43 38.59 39.88 Interest on Loan 0.19 35.31 35.57 34.76 32.86 Return on Equity 0.19 37.57 40.78 43.21 44.76 Interest on working capital 0.03 5.89 6.15 6.36 6.50 O & M Expenses 0.32 62.30 64.37 66.51 68.71 Total 0.90 174.61 183.30 189.43 192.71 ( in lakh) Asset-II Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 42.03 44.07 44.07 Interest on Loan 44.89 43.47 39.79 Return on Equity 47.06 49.34 49.47 Interest on working capital 2.92 2.98 2.91 O & M Expenses 0.00 0.00 0.00 Total 136.90 139.86 136.24 ( in lakh) Asset-III Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Depreciation 27.04 39.01 39.66 39.66 Interest on Loan 28.83 39.07 36.49 33.20 Return on Equity 30.30 43.68 44.40 44.52 Interest on working capital 1.98 2.80 2.77 2.70 O & M Expenses 0.00 0.00 0.00 0.00 Total 88.15 124.56 123.32 120.08

    11. The details of the Interest on Working Capital claimed by the Petitioner in respect of the instant assets are as under:- ( in lakh) Asset-I Particulars 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 O & M Expenses 4.96 5.19 5.36 5.54 5.73 Maintenance Spares 8.93 9.35 9.66 9.98 10.31 Receivables 27.91 29.10 30.55 31.57 32.12 Total 41.80 43.64 45.57 47.09 48.16 Rate of Interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on Working Capital 0.03 5.89 6.15 6.36 6.50 Page 8 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Asset-II Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 0.00 0.00 0.00 Maintenance Spares 0.00 0.00 0.00 Receivables 22.94 23.31 22.71 Total 22.94 23.31 22.71 Rate of Interest (%) 12.80 12.80 12.80 Interest on Working Capital 2.92 2.98 2.91 ( in lakh) Asset-III Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 O & M Expenses 0.00 0.00 0.00 0.00 Maintenance Spares 0.00 0.00 0.00 0.00 Receivables 18.24 20.76 20.55 20.01 Total 18.24 20.76 20.55 20.01 Rate of Interest (%) 13.50 13.50 13.50 13.50 Interest on Working Capital 1.98 2.80 2.77 2.70 Capital Cost

    12. The Commission vide order dated 18.3.2016 in Petition No. 498/TT/2014 allowed the capital cost of 597.25 lakh as on COD for Asset-I and vide order dated 26.5.2016 in Petition No. 257/TT/2015 allowed capital cost of 766.24 lakh and 545.09 lakh as on COD for Assets-II and III respectively .

    13. The Petitioner in the instant petition, vide Auditors Certificate dated 18.7.2019, has submitted the actual capital cost incurred upto COD, Additional Capital Expenditure (ACE) upto 31.3.2019 and estimated ACE during the period 1.4.2019 to 31.3.2020. The details of apportioned approved cost, capital cost as on COD and ACE incurred upto 31.3.2019 as claimed by the Petitioner for instant transmission assets are as under:- Page 9 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Asset FR Appor- tioned Approved Cost Appor- tioned Approved Cost Capital cost as on COD Additional capitalisation (claimed) Total completion cost as on 31.3.2019 2015-16 2016-17 2017-18 2018-19 Asset-I 1176.7 1233.10 597.25 75.92 33.45 48.61 0.00 755.23 Asset-II 956.19 1123.78 766.24 0.00 68.40 0.00 0.00 834.64 Asset-III 956.19 993.51 545.09 181.49 24.50 0.00 0.00 751.08

    14. The Petitioner has claimed capital cost of 597.25 lakh, 766.24 lakh and 545.09 lakh for Assets-I, II and III respectively as on their date of commercial operation including IDC, IEDC and Initial Spares. Initial Spares

    15. The Petitioner has claimed Initial Spares of 46.00 lakh, 22.60 lakh and 22.60 lakh for Assets-I, II and III respectively in the instant petition. The Petitioner vide affidavit dated 25.2.2020 submitted the revised Plant and Machinery cost for computing the allowable ceiling of Initial Spares. The Petitioner has, however, submitted that in the present petition, inadvertently Initial Spares in respect of Asset-I was claimed on the estimated completion cost including IDC and IEDC. The Petitioner has clarified that Plant and Machinery cost for computation of Initial Spares is considered as per Regulation 13(d)(iii) of the 2014 Tariff Regulations. The Initial Spares claimed and allowed for the instant assets are as under:- Page 10 of 40 Order in Petition No. 507/TT/2019 Assets Plant & Machinery cost upto cut-off date (excluding IDC and IEDC) claimed vide affidavit dated 25.2.2020 (A) ( in lakh) Initial Spares claimed ( in lakh) Ceiling Limit (%) Allowable Initial Spares Initial Spares allowed ( in lakh) D = [(A-B) *C /(100-C)] ( in lakh) Asset-I 863.83 46.00 6.0 52.20 46.00 Asset-II 811.45 22.60 6.0 50.35 22.60 Asset-III 811.45 22.60 6.0 50.35 22.60 TOTAL 2486.73 91.20 6.0 152.90 91.20 IDC and IEDC

    16. The Commission vide order dated 18.3.2016 in Petition No. 498/TT/2014 and vide order dated 26.5.2016 in Petition No. 257/TT/2015 approved the IDC and IEDC for the instant assets and the same is considered in the instant petition. The details of the IDC and IEDC allowed and considered for computation of capital cost and tariff for the instant assets are as under:- ( in lakh) Assets IDC Allowed IEDC Allowed Asset-I 2.33 9.07 Asset-II 43.90 69.29 Asset-III 11.20 18.43 Capital cost as on COD

    17. Accordingly, the capital cost allowed as on COD is summarized hereunder:- ( in lakh) Assets Capital Cost as on COD earlier allowed Capital Cost claimed as on Capital Cost allowed as on Asset-I 597.25 597.25 597.25 Asset-II 766.24 766.24 766.24 Asset-III 545.09 545.09 545.09 Page 11 of 40 Order in Petition No. 507/TT/2019 Additional Capital Expenditure (ACE)

    18. The Petitioner has claimed ACE for the assets covered in the instant petition as under:- ( in lakh) Additional Capitalisation (claimed) Assets 2015-16 2016-17 2017-18 As per Auditors Certificate Discharge of discharged As per Auditors Certificate Discharge of discharged As per Auditors Certificate Asset-I 73.59 2.33 33.45 0.00 48.61 Asset-II 0.00 0.00 24.50 43.90 0.00 Asset-III 170.29 11.20 24.50 000 0.00

    19. The Petitioner vide affidavit dated 25.2.2020 has submitted that ACE incurred for the instant assets is on account of undischarged liability towards final payment/ withheld payment due to contractual exigencies for works executed within the cut-off date. The ACE for the years 2015-16, 2016-17, 2017-18 and 2018-19 for assets has been claimed under Regulation 14(1)(i) of the 2014 Tariff Regulations.

    20. The Petitioner vide affidavit dated 25.2.2020 has also submitted that actual ACE upto 31.3.2019 is considered as per the Auditors certificate and ACE claimed for the period 1.4.2019 to 31.3.2020 is on estimated basis which may vary due to final claim/ reconciliation at the time of contract closing.

    21. The Petitioner has claimed Additional Capitalization during 2015-16 to 2018-19 period. It is observed that total estimated completion cost including Additional Capitalization during 2015-16 to 2018-19 period is within the approved apportioned capital cost.

    22. The cut-off date of Assets-I, II and III is 31.3.2018, 31.3.2019 and 31.3.2018 respectively. The actual audited Additional Capitalization claimed by the Petitioner is Page 12 of 40 Order in Petition No. 507/TT/2019 within the cut-off date and the same is considered for computation of total capital cost as on 31.3.2019. The admissible un-discharged liability of IDC as on COD is allowed as ACE during the year of its discharge. The Additional Capitalization claimed for the period 2015-16 to 2018-19 is allowed under Regulation 14(1)(i) of the 2014 Tariff Regulations as follows:- Asset-I ( in lakh) Cost as per revised approved apportionment: 1233.10 lakh Asset-I Capital cost as on COD Additional Capitalization Total capital cost including Additional Capitalization as on 31.3.2019 2015-16 2016-17 2017-18 As claimed 597.25 75.92 33.45 48.61 755.23 Approved in this order 597.25 75.92 33.45 48.61 755.23 Asset-II ( in lakh) Cost as per revised approved apportionment: 1123.78 lakh Asset-II Capital cost as on COD Additional Capitalization Total capital cost including Additional Capitalization as on 31.3.2019 2015-16 2016-17 2017-18 As claimed 766.24 0.00 68.4 0.00 834.64 Approved in this order 766.24 0.00 68.4 0.00 834.64 Asset-III ( in lakh) Cost as per revised approved apportionment: 993.51 lakh Asset-III Capital cost as on COD Additional Capitalization Total capital cost including Additional Capitalization as on 31.3.2019 2015-16 2016-17 2017-18 As claimed 545.09 181.49 24.5 0.00 751.08 Approved in this order 545.09 181.49 24.5 0.00 751.08 Page 13 of 40 Order in Petition No. 507/TT/2019 Debt-Equity Ratio

    23. The Petitioner has considered debt-equity ratio of 70:30 as on COD and for Additional Capitalization after COD. The debt-equity ratio of 70:30 has been considered for capital cost as on COD and ACE during the 2014-19 tariff period as provided under Regulation 19 of the 2014 Tariff Regulations. The same has been summarised as under: - Asset-I As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 418.08 70.00 528.67 70.00 Equity 179.17 30.00 226.56 30.00 Total 597.25 100.00 755.23 100.00 Asset-II As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 536.37 70.00 584.25 70.00 Equity 229.87 30.00 250.39 30.00 Total 766.24 100.00 834.64 100.00 Asset-III As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 381.56 70.00 525.75 70.00 Equity 163.53 30.00 225.33 30.00 Total 545.09 100.00 751.08 100.00 Interest on Loan (IOL)

    24. The Petitioner has claimed IOL based on actual interest rates for each year during the 2014-19 period. The Petitioner has prayed for change in interest rates prevailing as on 1.4.2019 for respective loans. The change in interest rate is due to floating rate of interest applicable for the project to be claimed/adjusted over the period of 5 years directly from the beneficiaries. We have considered the submissions of the Petitioner and accordingly calculated IOL based on actual interest rate, in Page 14 of 40 Order in Petition No. 507/TT/2019 accordance with Regulation 26 of the 2014 Tariff Regulations. IOL allowed is as under: -

    (i) 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.

    (ii) The repayment for the tariff period 2014-19 has been considered to be equal to the depreciation allowed for that period.

    25. The details of IOL calculated are as follows:- ( in lakh) Asset-I Particular 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 Gross Normative Loan 418.08 418.08 471.22 494.64 528.67 Cumulative Repayments upto Previous Year 0.00 0.17 33.71 70.14 108.73 Net Loan-Opening 418.08 417.91 437.51 424.51 419.94 Additions due to Additional Capitalization 0.00 53.14 23.42 34.03 0.00 Repayment during the year 0.17 33.54 36.43 38.59 39.88 Net Loan-Closing 417.91 437.51 424.51 419.94 380.07 Average Loan 417.99 427.71 431.01 422.22 400.00 Weighted Average Rate of Interest on Loan (%) 8.253 8.257 8.253 8.233 8.215 Interest on Loan 0.19 35.31 35.57 34.76 32.86 ( in lakh) Asset-II Particular 2016-17 (Pro-rata) 2017-18 2018-19 Gross Normative Loan 536.37 584.25 584.25 Cumulative Repayments upto Previous Year 0.00 42.03 86.10 Net Loan-Opening 536.37 542.22 498.15 Additions due to Additional Capitalization 47.88 0.00 0.00 Repayment during the year 42.03 44.07 44.07 Net Loan-Closing 542.22 498.15 454.08 Average Loan 539.29 520.18 476.11 Weighted Average Rate of Interest on Loan (%) 8.370 8.356 8.356 Interest on Loan 44.89 43.47 39.78 Page 15 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Asset-III Particular 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Gross Normative Loan 381.56 508.61 525.76 525.76 Cumulative Repayments upto Previous Year 0.00 27.06 66.07 105.73 Net Loan-Opening 381.56 481.55 459.69 420.03 Additions due to Additional Capitalization 127.04 17.15 0.00 0.00 Repayment during the year 27.06 39.01 39.66 39.66 Net Loan-Closing 481.55 459.69 420.03 380.37 Average Loan 431.55 470.62 439.86 400.20 Weighted Average Rate of Interest on Loan (%) 8.294 8.302 8.296 8.296 Interest on Loan 28.85 39.07 36.49 33.20 Return on Equity (ROE)

    26. The Petitioner is entitled for ROE for the instant assets in terms of Regulations

    24 and 25 of the 2014 Tariff Regulations. The Petitioner has submitted that it is liable to pay income tax at MAT rates and has claimed following effective tax rates for the 2014-19 tariff period:- Year Claimed effective tax (in %) Grossed up ROE (Base Rate/1-t) (in %) 2014-15 21.018 19.625 2015-16 21.382 19.716 2016-17 21.338 19.705 2017-18 21.337 19.704 2018-19 21.549 19.758

    27. The Commission in order dated 27.4.2020 in Petition No. 274/TT/2019 has arrived at the effective tax rate based on the notified MAT rates for the Petitioner and the same is given in the table below. The same MAT rates are considered for the purpose of grossing up of rate of ROE for truing up of the tariff of the 2014-19 tariff period in terms of the provisions of the 2014 Tariff Regulations. Year MAT Rate Grossed up ROE [Base Rate/(1-t)] 2014-15 20.961 19.610 Page 16 of 40 Order in Petition No. 507/TT/2019 Year MAT Rate Grossed up ROE [Base Rate/(1-t)] 2015-16 21.342 19.705 2016-17 21.342 19.705 2017-18 21.342 19.705 2018-19 21.549 19.758

    28. Accordingly, ROE allowed for the instant transmission assets is as follows:- ( in lakh) Asset-I Particulars 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 Opening Equity 179.17 179.17 201.95 211.98 226.56 Addition due to Additional Capitalization 0.00 22.78 10.03 14.58 0.00 Closing Equity 179.17 201.95 211.98 226.56 226.56 Average Equity 179.17 190.56 206.97 219.27 226.56 Return on Equity (Base Rate %) 15.500 15.500 15.500 15.500 15.500 Tax Rate applicable (%) 20.961 21.342 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.610 19.705 19.705 19.705 19.758 Return on Equity (Pre-tax) 0.19 37.55 40.78 43.21 44.76 ( in lakh) Asset-II Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Equity 229.87 250.39 250.39 Addition due to Additional Capitalization 20.52 0.00 0.00 Closing Equity 250.39 250.39 250.39 Average Equity 240.13 250.39 250.39 Return on Equity (Base Rate %) 15.500 15.500 15.500 Tax Rate applicable (%) 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.705 19.758 Return on Equity (Pre-tax) 47.06 49.34 49.47 ( in lakh) Asset-III Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Opening Equity 163.53 217.98 225.33 225.33 Addition due to Additional Capitalization 54.45 7.35 0.00 0.00 Closing Equity 217.98 225.33 225.33 225.33 Average Equity 190.75 221.65 225.33 225.33 Return on Equity (Base Rate %) 15.500 15.500 15.500 15.500 Tax Rate applicable (%) 21.342 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.705 19.705 19.758 Return on Equity (Pre-tax) 30.30 43.68 44.40 44.52 Page 17 of 40 Order in Petition No. 507/TT/2019 Depreciation

    29. The Petitioner has claimed depreciation considering capital expenditure of 597.25 lakh, 766.24 lakh and 545.09 lakh as on COD for Assets-I, II and III respectively and Additional Capitalization of 157.98 lakh, 68.4 lakh and 205.99 lakh for Assets-I, II and III respectively.

    30. We have considered the submission of the Petitioner and have computed depreciation considering capital expenditure as on COD and Additional Capitalization approved for 2014-19 period. The weighted average useful life of the assets has been considered as 25 years for all the assets in accordance with the relevant regulation. Details of depreciation allowed for the instant assets under Regulation 27 of the 2014 Tariff Regulations is as under: - ( in lakh) Asset-I Particulars 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 Opening Gross Block 597.25 597.25 673.17 706.62 755.23 Additional Capitalisation 0.00 75.92 33.45 48.61 0.00 Closing Gross Block 597.25 673.17 706.62 755.23 755.23 Average Gross Block 597.25 635.21 689.90 730.93 755.23 Rate of Depreciation (%) 5.28 5.28 5.28 5.28 5.28 Depreciable Value 537.53 571.69 620.91 657.83 679.71 Remaining Depreciable Value 537.53 571.52 587.19 587.69 570.98 Depreciation 0.17 33.54 36.43 38.59 39.88 ( in lakh) Asset-II Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Gross Block 766.24 834.64 834.64 Additional Capitalisation 68.40 0.00 0.00 Closing Gross Block 834.64 834.64 834.64 Average Gross Block 800.44 834.64 834.64 Rate of Depreciation (%) 5.28 5.28 5.28 Depreciable Value 720.40 751.18 751.18 Remaining Depreciable Value 720.40 709.14 665.08 Depreciation 42.03 44.07 44.07 Page 18 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Asset-III Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Opening Gross Block 545.09 726.58 751.08 751.08 Additional Capitalisation 181.49 24.50 0.00 0.00 Closing Gross Block 726.58 751.08 751.08 751.08 Average Gross Block 635.84 738.83 751.08 751.08 Rate of Depreciation (%) 5.28 5.28 5.28 5.28 Depreciable Value 572.25 664.95 675.97 675.97 Remaining Depreciable Value 572.25 637.89 609.90 570.25 Depreciation 27.06 39.01 39.66 39.66 Operation & Maintenance Expenses (O&M Expenses)

    31. The Petitioner has not claimed any O&M Expenses for Assets-II and III. The details of the O&M Expenses claimed by the Petitioner for Asset-I and allowed under Regulation 29(3) of the 2014 Tariff Regulations for purpose of tariff computation are as under:- ( in lakh) Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 Norm ( lakh/bay)

    400 kV Bay 60.30 62.30 64.37 66.51 68.71 Total O&M Expenses (Pro- rata) 0.33 62.30 64.37 66.51 68.71 Interest of Working Capital (IWC)

    32. The Petitioner is entitled to claim IWC as per Regulation 28(1)(c) of the 2014 Tariff Regulations as under:-

    i. Maintenance spares: Maintenance spares have been worked out based on 15% of Operation and Maintenance Expenses specified in Regulation 28.

    ii. O & M Expenses: O&M Expenses have been considered for one month of the allowed O&M Expenses.

    iii. Receivables: Page 19 of 40 Order in Petition No. 507/TT/2019 The receivables have been worked out on the basis of 2 months of annual transmission charges as worked out above.

    iv. Rate of interest on working capital: Rate of IWC is considered on normative basis in accordance with Clause (3) of Regulation 28 of the 2014 Tariff Regulations.

    33. IWC allowed for the instant assets is as under:- Asset-I ( in lakh) Particulars 2014-15 (Pro-rata) 2015-16 2016-17 2017-18 2018-19 O & M Expenses 5.03 5.19 5.36 5.54 5.73 Maintenance Spares 9.05 9.35 9.66 9.98 10.31 Receivables 27.85 29.10 30.55 31.57 32.12 Total Working Capital 41.92 43.64 45.57 47.09 48.15 Rate of Interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 0.03 5.89 6.15 6.36 6.50 Accordingly, the IWC claimed by the Petitioner, allowed vide order dated 18.3.2016 in Petition No. 498/TT/2014 and trued up in the instant order in respect of Asset-I is shown in the table below:- ( in lakh) Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 Allowed earlier in order dated 18.3.2016 in Petition No. 498/TT/2014 0.02 6.54 7.65 7.94 7.95 As claimed by the Petitioner 0.03 5.89 6.15 6.36 6.50 Allowed after truing up 0.03 5.89 6.15 6.36 6.50 Asset-II ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 0.00 0.00 0.00 Maintenance Spares 0.00 0.00 0.00 Receivables 22.94 23.31 22.71 Total Working Capital 22.94 23.31 22.71 Rate of Interest (%) 12.80 12.80 12.80 Interest on working capital 2.92 2.98 2.91 Page 20 of 40 Order in Petition No. 507/TT/2019 Accordingly, the IWC claimed by the Petitioner for Asset-II, allowed vide order dated 26.5.2016 in Petition No. 257/TT/2015 and trued up in the instant order is shown in the table below:- ( in lakh) Particulars 2016-17 2017-18 2018-19 Allowed earlier in order dated 26.5.2016 in Petition No. 257/TT/2015 3.18 3.68 3.75 As claimed by the Petitioner 2.92 2.98 2.91 Allowed after Truing Up 2.92 2.98 2.91 Asset-III ( in lakh) Asset-III Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 O & M Expenses 0.00 0.00 0.00 0.00 Maintenance Spares 0.00 0.00 0.00 0.00 Receivables 18.24 20.76 20.55 20.01 Total Working Capital 18.24 20.76 20.55 20.01 Rate of Interest (%) 13.50 13.50 13.50 13.50 Interest on working capital 1.98 2.80 2.77 2.70 Accordingly, the IWC claimed by the Petitioner, allowed vide order dated 26.5.2016 in Petition No. 257/TT/2015 and trued up in the instant order in respect of Asset-III is shown in the table below:- ( in lakh) Particulars 2015-16 2016-17 2017-18 2018-19 Allowed earlier in order dated 26.5.2016 in Petition No. 257/TT/2015 1.98 3.08 3.50 3.59 As claimed by the Petitioner 1.98 2.80 2.77 2.70 Allowed after truing up 1.98 2.80 2.77 2.70 Annual Transmission Charges for the 2014-19 period

    34. Accordingly, the annual transmission charges in respect of the instant assets after truing up for the 2014-19 tariff period are as under:- Page 21 of 40 Order in Petition No. 507/TT/2019 Asset-I ( in lakh) Asset-I Particulars 2014-15 (Pro-rata) 2016-17 2016-17 2017-18 2018-19 Depreciation 0.17 33.54 36.43 38.59 39.88 Interest on Loan 0.19 35.31 35.57 34.76 32.86 Return on Equity 0.19 37.55 40.78 43.21 44.76 Int. on Working Capital 0.03 5.89 6.15 6.36 6.50 Op. and Maintenance 0.33 62.30 64.37 66.51 68.71 Total 0.92 174.59 183.30 189.43 192.71 ( in lakh) Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 Allowed earlier in order dated 18.3.2016 in Petition No. 498/TT/2014 0.91 203.24 249.85 259.93 257.09 As claimed by the Petitioner 0.90 174.61 183.30 189.43 192.71 Allowed after Truing Up 0.92 174.59 183.30 189.43 192.71 Asset-II ( in lakh) Asset-II Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 42.03 44.07 44.07 Interest on Loan 44.89 43.47 39.78 Return on Equity 47.06 49.34 49.47 Int. on Working Capital 2.92 2.98 2.91 Op. and Maintenance 0.00 0.00 0.00 Total 136.91 139.86 136.23 ( in lakh) Particulars 2016-17 2017-18 2018-19 Allowed earlier in order dated 26.5.2016 in Petition No. 257/TT/2015 149.19 172.38 175.67 As claimed by the Petitioner 136.90 139.86 136.24 Allowed after truing up 136.91 139.86 136.23 Asset-III ( in lakh) Asset-III Particulars 2016-17 (Pro-rata) 2016-17 2017-18 2018-19 Depreciation 27.06 39.01 39.66 39.66 Interest on Loan 28.85 39.07 36.49 33.20 Page 22 of 40 Order in Petition No. 507/TT/2019 Return on Equity 30.30 43.68 44.40 44.52 Int. on Working Capital 1.98 2.80 2.77 2.70 Op. and Maintenance 0.00 0.00 0.00 0.00 Total 88.19 124.56 123.32 120.08 ( in lakh) Particulars 2015-16 2016-17 2017-18 2018-19 Allowed earlier in order dated 26.5.2016 in Petition No. 257/TT/2015 88.04 136.84 155.69 159.38 As claimed by the Petitioner 88.15 124.56 123.32 120.08 Allowed after truing up 88.19 124.56 123.32 120.08

    35. The difference in the Annual Transmission Charges claimed by the Petitioner and that allowed after truing up is on account of the difference in the rate of tax claimed by the Petitioner. Determination of Annual Fixed Charges for the 2019-24 tariff period

    36. The Petitioner has submitted the tariff forms combining the Assets-I, II and III which achieved COD prior to 1.4.2019, as a single asset. Accordingly, as per proviso

    (i) of Regulation 8(1) of the 2019 Tariff Regulations, single tariff for the Combined Asset has been worked out for the 2019-24 tariff period.

    37. The Petitioner has claimed the following transmission charges for the Combined Asset for the 2019-24 tariff period:- ( in lakh) Particulars 2019-20 2020-21 201-22 2022-23 2023-24 Depreciation 131.52 139.44 139.44 139.44 139.44 Interest on Loan 103.91 101.30 89.90 78.51 66.90 Return on Equity 140.35 148.81 148.81 148.81 148.81 Interest on Working Capital 10.47 10.87 10.88 10.88 10.88 Operation and Maintenance 110.55 114.56 118.61 122.70 127.15 Total 496.80 514.98 507.64 500.34 493.18

    38. The Petitioner has claimed the following Interest on Working Capital (IWC) for the Combined Asset for the 2019-24 tariff period:- Page 23 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Maintenance Spares 16.58 17.18 17.79 18.41 19.07 O&M expenses 9.21 9.55 9.88 10.23 10.60 Receivables 61.08 63.49 62.58 61.69 60.64 Total 86.87 90.22 90.22 90.33 90.31 Rate of Interest 12.05 12.05 12.05 12.05 12.05 Interest on Working Capital 10.47 10.87 10.88 10.88 10.88 Effective Date of Commercial Operation (E-COD)

    39. The Petitioner has submitted E-COD of the Combined Asset as 1.9.2015. Accordingly, based on the trued up admitted capital cost and actual COD of all the assets, the E-COD has been worked out as follows:- Computation of Effective COD Asset Actual Admitted Capital Cost as on 31.3.2019 ( in lakh) Weight of the cost (%) No. of Days from last Weighted Days Effective COD (Latest COD Total weighted Days) Asset-I 30.3.2015 755.23 32.26 370.00 119.37 1.9.2015 Asset-II 3.4.2016 834.64 35.65 0.00 0.00 Asset- 11.6.2015 751.08 32.08 297.00 95.29 Total 2340.95 214.66

    40. The E-COD is used to determine the lapsed life of the project as a whole which is considered as three years as on 1.4.2019 (i.e. the number of completed years as on 1.4.2019 from E-COD). Weighted Average Life (WAL)

    41. The life as defined in Regulation 33 of the 2019 Tariff Regulations has been considered for determination of WAL.

    42. The Combined Asset may have multiple elements such as land, building, transmission line, sub-station and PLCC and each element may have different span Page 24 of 40 Order in Petition No. 507/TT/2019 of life. Therefore, the concept of WAL has been used as the useful life of the project as a whole.

    43. The WAL has been determined based on the admitted capital cost of individual elements as on 31.3.2019 and their respective life as stipulated in the 2019 Tariff Regulations. The element-wise life as was defined in 2014 Tariff Regulations that prevailed at the time of actual COD of individual assets has been ignored for this purpose. The life as defined in the 2019 Tariff Regulations has been considered for determination of WAL. Accordingly, the WAL of the Combined Asset has been considered as 25 years as shown below:- ( in lakh) Admitted Capital Cost as on 31.3.2019 Particulars Combined Cost ( in lakh) Life as per 2019 Regulation (Years) Weight (a) x (b) Freehold Land 0.00 - - Leasehold Land 0.00 25 0.00 Building & Other Civil Works 0.00 25 0.00 Transmission Line 0.00 35 0.00 Sub-station Equipment 2340.95 25 58523.75 PLCC 0.00 15 0.00 Total 2340.95 25 58523.75 WAL = Total Weight/ Capital cost of the project 25 Years

    44. WAL as on 1.4.2019 as determined above is applicable prospectively (i.e. for the 2019-24 tariff period onwards) and no retrospective adjustment of the depreciation in previous tariff period is required to be done. As calculated in paragraph 39 of this order, the Effective COD of the assets is 1.9.2015 and the lapsed life of the project as a whole is considered three years as on 1.4.2019 (i.e. the number of completed years as on 1.4.2019 from Effective COD). Accordingly, WAL has been used to determine the remaining useful life as on 31.3.2019 to be 22 years. Page 25 of 40 Order in Petition No. 507/TT/2019 Capital Cost

    45. Regulation 19(3) and (5) of the 2019 Tariff Regulations provide as follows:-

    19. Additional Capitalization (3) The Capital cost of an existing project shall include the following: (a) Capital cost admitted by the Commission prior to 1.4.2019 duly trued up by excluding liability, if any, as on 1.4.2019; (b) Additional Capitalization and de-capitalization for the respective year of tariff as determined in accordance with these regulations; (c) Capital expenditure on account of renovation and modernisation as admitted by this Commission in accordance with these regulations; (d) Capital expenditure on account of ash disposal and utilization including handling and transportation facility; (e) Capital expenditure incurred towards railway infrastructure and its augmentation for transportation of coal upto the receiving end of generating station but does not include the transportation cost and any other appurtenant cost paid to the railway; and (f) Capital cost incurred or projected to be incurred by a thermal generating station, on account of implementation of the norms under Perform, Achieve and Trade (PAT) scheme of Government of India shall be considered by the Commission subject to sharing of benefits accrued under the PAT scheme with the beneficiaries. (5) The following shall be excluded from the capital cost of the existing and new projects: (a) The assets forming part of the project, but not in use, as declared in the tariff petition; (b) De-capitalised Assets after the date of commercial operation on account of replacement or removal on account of obsolescence or shifting from one project to another project: Provided that in case replacement of transmission asset is recommended by Regional Power Committee, such asset shall be de- capitalised only after its redeployment; Provided further that unless shifting of an asset from one project to another is of permanent nature, there shall be no de-capitalization of the concerned assets. (c) In case of hydro generating stations, any expenditure incurred or committed to be incurred by a project developer for getting the project site allotted by the State Government by following a transparent process; (d) Proportionate cost of land of the existing project which is being used for generating power from generating station based on renewable energy; and (e) Any grant received from the Central or State Government or any statutory body or authority for the execution of the project which does not carry any liability of repayment. Page 26 of 40 Order in Petition No. 507/TT/2019

    46. The Petitioner has combined the three assets for claiming tariff during the 2019-

    24 tariff period. The combined capital cost of all the assets as on 31.3.2019 allowed by the Commission is 2340.95 lakh and the same has been considered as opening capital cost as on 1.4.2019 for determination of tariff in accordance with Regulation

    19 of the 2019 Tariff Regulations.

    47. The Petitioner vide Auditors Certificate has claimed the capital cost of the individual assets which has been added to arrive at the capital cost claimed during the 2019-24 period for Combined Asset as per the following details:- ( in lakh) Assets Capital Cost claimed as on 2015-16 2016-17 2017-18 2018-19 Total Capital Cost as 31.3.2019 Asset-I 597.25 75.92 33.45 48.61 0.00 755.23 Asset-II 766.24 0.00 68.40 0.00 0.00 834.64 Asset-III 545.09 181.49 24.50 0.00 0.00 751.08

    48. The capital cost has been dealt in line with clause (3) of Regulation 19 of the 2019 Tariff Regulations. The element-wise capital cost (i.e. land, building, transmission line, sub-station and PLCC) as admitted by the Commission as on 31.3.2019 for instant assets are clubbed together and the combined capital cost has been considered as capital cost of the Combined Asset as on 1.4.2019, as per the following details:- ( in lakh) Element Asset-I Asset-II Asset-III Free hold Land 0.00 0.00 0.00 Leasehold Land 0.00 0.00 0.00 Building & Other Civil Works 0.00 0.00 0.00 Transmission Line 0.00 0.00 0.00 Sub-station Equipment 755.23 834.64 751.08 PLCC 0.00 0.00 0.00 Total 755.23 834.64 751.08 Page 27 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Particulars Combined Cost as on 1.4.2019 Freehold Land 0.00 Leasehold Land 0.00 Building & Other Civil Works 0.00 Transmission Line 0.00 Sub-station Equipment 2340.95 PLCC 0.00 TOTAL 2340.95 The trued-up capital cost of 2340.95 lakh for the Combined Asset is considered as admitted capital cost as on 1.4.2019 for working out the tariff for the 2019-24 tariff period. Additional Capital Expenditure

    49. Regulation 24 of the 2019 Tariff Regulations provides as under: -

    24. Additional Capitalization within the original scope and upto the cut-off date (1) The Additional Capital Expenditure in respect of a new project or an existing project incurred or projected to be incurred, on the following counts within the original scope of work, after the date of commercial operation and upto the cut-off date may be admitted by the Commission, subject to prudence check: (a) Undischarged liabilities recognized to be payable at a future date; (b) Works deferred for execution; (c) Procurement of initial capital spares within the original scope of work, in accordance with the provisions of Regulation 23 of these regulations; (d) Liabilities to meet award of arbitration or for compliance of the directions or order of any statutory authority or order or decree of any court of law; (e) Change in law or compliance of any existing law; and (f) Force Majeure events: Provided that in case of any replacement of the assets, the additional capitalization shall be worked out after adjusting the gross fixed assets and cumulative depreciation of the assets replaced on account of de-capitalization. (2) The generating company or the transmission licensee, as the case may be shall submit the details of works asset wise/work wise included in the original scope of work along with estimates of expenditure, liabilities recognized to be payable at a future date and the works deferred for execution.

    50. The Petitioner has claimed projected ACE of 300 lakh for the 2019-24 tariff period as under:- Page 28 of 40 Order in Petition No. 507/TT/2019 ( in lakh) Assets Expenditure as on 31.3.2019 Projected Add Cap 2019-24 Capital Cost as on 31.3.2024 2019-20 Asset-I 755.23 120.00 875.23 Asset-II 834.64 90.00 924.64 Asset-III 751.08 90.00 841.08 Total 2340.95 300.00 2640.95

    51. The Petitioner vide affidavit dated 25.2.2020 has submitted that ACE claimed for the period 1.4.2019 to 31.3.2020 is on estimated basis and may vary due to final claim/reconciliation at the time of contract closing. The contract wise details along with LOA No. for balance retention payments are as under:- Assets Parties Package LOA No. Balance/ retention payments claimed as per Auditors Certificate ( in lakh) 2019-20 Asset-I BHEL Sub- station Supply Service CC-CS/153-ER- I/SS/1945/G8/R/CA- 1/4737/4738/dated 8.8.2013 120.00 Asset-II CC-CS/153-ER- I/SS/1945/G8/R/CA- 1/4737/4738/dated 8.8.2013 90.00 Asset-III CC-CS/153-ER- I/SS/1945/G8/R/CA- 1/4737/4738/dated 8.8.2013 90.00

    52. The projected ACE is against the balance and retention payments for works executed before the cut-off date of the respective assets. The allowed ACE is summarized as under which shall be subject to true up:- ( in lakh) Particulars Regulation Combined Asset 2019-20 ACE to the extent of Balance and Retention Payments and works deferred for execution before cut-off date. Regulation 25 (1) (d) of 2019 Tariff Regulations 300.00 Page 29 of 40 Order in Petition No. 507/TT/2019 Capital cost for the 2019-24 tariff period

    53. Accordingly, the capital cost of the Combined Asset, considered for the tariff period 2019-24, subject to truing up, is as follows:- ( in lakh) Capital Cost allowed as on 1.4.2019 ACE allowed for the year 2019-20 Total Estimated Completion Cost upto 31.3.2024 2340.95 300.00 2640.95 Debt-Equity Ratio

    54. Regulation 18(3), 18(4) and 18(5) of the 2019 Tariff Regulations provides as under:-

    18. Debt-Equity Ratio: (3). In case of the generating station and the transmission system including communication, system declared under commercial operation prior to 1.4.2019, debt: equity ratio allowed by the Commission for determination of tariff for the period ending 31.3.2019 shall be considered: Provided that in case of a generating station or a transmission system including communication, system which has completed its useful life as on or after 1.4.2019, if the equity actually deployed as on 1.4.2019 is more than 30% of the capital cost, equity in excess of 30%shall not be taken into account for tariff computation; Provided further that in case of projects owned by Damodar Valley Corporation, the debt: equity ratio shall be governed as per sub-clause (ii) of clause (2) of Regulation 72 of these regulations. (4). In case of the generating station and the transmission system including communication, system declared under commercial operation prior to 1.4.2019, but where debt: equity ratio has not been determined by the Commission for determination of tariff for the period ending 31.3.2019, the Commission shall approve the debt: equity ratio in accordance with clause (1) of this Regulation. (5). Any expenditure incurred or projected to be incurred on or after 1.4.2019 as may be admitted by the Commission as Additional Capital Expenditure for determination of tariff, and renovation and modernisation expenditure for life extension shall be serviced in the manner specified in clause (1) of this Regulation.

    55. The debt and equity considered for the purpose of tariff for the 2019-24 tariff period is as follows:- Page 30 of 40 Order in Petition No. 507/TT/2019 Component Capital Cost as on 1.4.2019 ( in lakh) Total Cost as on 31.3.2024 ( in lakh) Debt 1638.68 70.00 1848.67 70.00 Equity 702.27 30.00 792.28 30.00 Total 2340.95 100.00 2640.95 100.00 Return on Equity

    56. Regulations 30 and 31 of the 2019 Tariff Regulations provide as under: -

    30. Return on Equity: (1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with Regulation 18 of these regulations. (2) Return on equity shall be computed at the base rate of 15.50% for thermal generating station, transmission system including communication system and run-of- river hydro generating station, and at the base rate of 16.50% for the storage type hydro generating stations including pumped storage hydro generating stations and run-of-river generating station with pondage: Provided that return on equity in respect of Additional Capitalization after cut- off date beyond the original scope excluding Additional Capitalization due to Change in Law, shall be computed at the weighted average rate of interest on actual loan portfolio of the generating station or the transmission system; Provided further that:

    i. In case of a new project, the rate of return on equity shall be reduced by 1.00% for such period as may be decided by the Commission, if the generating station or transmission system is found to be declared under commercial operation without commissioning of any of the Restricted Governor Mode Operation (RGMO) or Free Governor Mode Operation (FGMO), data telemetry, communication system upto load dispatch centre or protection system based on the report submitted by the respective RLDC;

    ii.in case of existing generating station, as and when any of the requirements under (i) above of this Regulation are found lacking based on the report submitted by the concerned RLDC, rate of return on equity shall be reduced by 1.00% for the period for which the deficiency continues;

    iii. in case of a thermal generating station, with effect from 1.4.2020:

    a) rate of return on equity shall be reduced by 0.25% in case of failure to achieve the ramp rate of 1% per minute;

    b) an additional rate of return on equity of 0.25% shall be allowed for every incremental ramp rate of 1% per minute achieved over and above the ramp rate of 1% per minute, subject to ceiling of additional rate of return on equity of 1.00%: Provided that the detailed guidelines in this regard shall be issued by National Load Dispatch Centre by 30.6.2019.

    31. Tax on Return on Equity: (1) The base rate of return on equity as allowed by the Commission under Regulation 30 of these regulations shall be grossed up with the effective tax rate of the respective financial year. For this purpose, the effective tax rate shall be considered on the basis of actual tax paid in respect of the financial year in line with the provisions of the relevant Finance Acts by the concerned generating Page 31 of 40 Order in Petition No. 507/TT/2019 company or the transmission licensee, as the case may be. The actual tax paid on income from other businesses including deferred tax liability (i.e. in come from business other than business of generation or transmission, as the case maybe) shall be excluded for the calculation of effective tax rate. (2) Rate of return on equity shall be rounded off to three decimal places and shall be computed as per the formula given below: Rate of pre-tax return on equity = Base rate / (1-t) Where t is the effective tax rate in accordance with clause (1) of this Regulation and shall be calculated at the beginning of every financial year based on the estimated profit and tax to be paid estimated in line with the provisions of the relevant Finance Act applicable for that financial year to the company on pro-rata basis by excluding the income of non-generation or non-transmission business, as the case may be, and the corresponding tax thereon. In case of generating company or transmission licensee paying Minimum Alternate Tax (MAT), t shall be considered as MAT rate including surcharge and cess. (3) The generating company or the transmission licensee, as the case may be, shall true up the grossed up rate of return on equity at the end of every financial year based on actual tax paid together with any additional tax demand including interest thereon, duly adjusted for any refund of tax including interest received from the income tax authorities pertaining to the tariff period 2019-24on actual gross income of any financial year. However, penalty, if any, arising on account of delay in deposit or short deposit of tax amount shall not be claimed by the generating company or the transmission licensee, as the case may be. Any under-recovery or over-recovery of grossed up rate on return on equity after truing up, shall be recovered or refunded to beneficiaries or the long term customers, as the case may be, on year to year basis.

    57. The Petitioner vide affidavit dated 18.2.2020 has submitted revised MAT rate applicable for 2019-20 period on account of Taxation Laws (Amendment) Ordinance, 2019 published in the Gazette dated 20.9.2019. Accordingly, MAT rate of 17.472% (Base Rate 15% + Surcharge 12% + Cess 4%) is used for grossing up ROE. The same shall be trued up with actual tax rate in accordance with Clause (3) of Regulation 31 of the 2019 Tariff Regulations. The ROE allowed for the Combined Asset under Regulation 30 of the 2019 Tariff Regulations is as under:- ( in lakh) Combined Asset Particulars 2019-20 2020-21 201-22 2022-23 2023-24 Opening Equity 702.27 792.27 792.27 792.27 792.27 Addition due to Additional Capitalization 90.00 0.00 0.00 0.00 0.00 Closing Equity 792.27 792.27 792.27 792.27 792.27 Average Equity 747.27 792.27 792.27 792.27 792.27 Page 32 of 40 Order in Petition No. 507/TT/2019 Return on Equity (Base Rate) (%) 15.500 15.500 15.500 15.500 15.500 Tax Rate applicable (%) 17.472 17.472 17.472 17.472 17.472 Applicable ROE Rate (%) 18.782 18.782 18.782 18.782 18.782 Return on Equity 140.35 148.80 148.80 148.80 148.80 Interest on Loan (IOL)

    58. Regulation 32 of the 2019 Tariff Regulations provides as under:-

    32. Interest on loan capital: (1) The loans arrived at in the manner indicated in Regulation 18 of these regulations shall be considered as gross normative loan for calculation of interest on loan. (2) The normative loan outstanding as on 1.4.2019 shall be worked out by deducting the cumulative repayment as admitted by the Commission upto 31.3.2019 from the gross normative loan. (3) The repayment for each of the year of the tariff period 2019-24 shall be deemed to be equal to the depreciation allowed for the corresponding year/period. In case of de-capitalization of assets, the repayment shall be adjusted by taking into account cumulative repayment on a pro rata basis and the adjustment should not exceed cumulative depreciation recovered upto the date of de-capitalisation of such asset. (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 depreciation allowed for the year or part of the year. (5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio after providing appropriate accounting adjustment for interest capitalized: 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 changes to the terms and conditions of the loans shall be reflected from the date of such re-financing.

    59. The weighted average rate of IOL has been considered on the basis of rate prevailing as on 1.4.2019. The Petitioner has prayed that the change in interest rate due to floating rate of interest applicable, if any, during 2019-24 tariff period will be Page 33 of 40 Order in Petition No. 507/TT/2019 adjusted. Accordingly, the floating rate of interest, if any, shall be considered at the time of true up. In view of the above, the IOL has been worked out in accordance with Regulation 32 of the 2019 Tariff Regulations. The IOL allowed is as follows:- ( in lakh) Combined Asset Particular 2019-20 2020-21 201-22 2022-23 2023-24 Gross Normative Loan 1638.68 1848.68 1848.68 1848.68 1848.68 Cumulative Repayments upto Previous Year 424.16 555.68 695.13 834.57 974.01 Net Loan-Opening 1214.52 1293.00 1153.55 1014.11 874.67 Additions to Additional Capitalization 210.00 0.00 0.00 0.00 0.00 Repayment during the year 131.52 139.44 139.44 139.44 139.44 Net Loan-Closing 1293.00 1153.55 1014.11 874.67 735.23 Average Loan 1253.76 1223.28 1083.83 944.39 804.95 Weighted Average Rate of Interest on Loan (%) 8.288 8.281 8.295 8.313 8.310 Interest on Loan 103.91 101.30 89.90 78.51 66.90 Depreciation

    60. Regulation 33(1), (2) and (5) of the 2019 Tariff Regulations provide as under:-

    33. Depreciation: (1) Depreciation shall be computed from the date of commercial operation of a generating station or unit thereof or a transmission system or element thereof including communication system. In case of the tariff of all the units of a generating station or all elements of a transmission system including communication system for which a single tariff needs to be determined, the depreciation shall be computed from the effective date of commercial operation of the generating station or the transmission system taking into consideration the depreciation of individual units: Provided that effective date of commercial operation shall be worked out by considering the actual date of commercial operation and installed capacity of all the units of the generating station or capital cost of all elements of the transmission system, for which single tariff needs to be determined. (2) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission. In case of multiple units of a generating station or multiple elements of a transmission system, weighted average life for the generating station of the transmission system shall be applied. 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. Page 34 of 40 Order in Petition No. 507/TT/2019 (5) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in Appendix-I 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 the effective date of commercial operation of the station shall be spread over the balance useful life of the assets.

    61. Depreciation for the Combined Asset has been worked out considering the admitted capital expenditure as on 31.3.2019 and accumulated depreciation upto 31.3.2019. The depreciation of the Combined Asset is worked out and allowed as under:- ( in lakh) Combined Asset Particulars 2019-20 2020-21 201-22 2022-23 2023-24 Opening Gross Block 2340.95 2640.95 2640.95 2640.95 2640.95 Additional Capitalisation 300.00 0.00 0.00 0.00 0.00 Closing Gross Block 2640.95 2640.95 2640.95 2640.95 2640.95 Average Gross Block 2490.95 2640.95 2640.95 2640.95 2640.95 Rate of Depreciation (%) 5.28 5.28 5.28 5.28 5.28 Depreciable Value 2241.86 2376.86 2376.86 2376.86 2376.86 Remaining Depreciable Value 1817.69 1821.17 1681.73 1542.29 1402.85 Depreciation 131.52 139.44 139.44 139.44 139.44 Operation & Maintenance Expenses (O&M Expenses)

    62. Regulation 35(3) and (4) of the 2019 Tariff Regulations provides as under:- (3) Transmission system: (a) The following normative operation and maintenance expenses shall be admissible for the transmission system: Particulars 2019- 2020- 2021- 2022- 2023- Norms for sub-station Bays ( Lakh per bay)

    765 kV 45.01 46.60 48.23 49.93 51.68

    400 kV 32.15 33.28 34.45 35.66 36.91

    220 kV 22.51 23.30 24.12 24.96 25.84

    132 kV and below 16.08 16.64 17.23 17.83 18.46 Norms for Transformers ( Lakh per MVA)

    765 kV 0.491 0.508 0.526 0.545 0.564

    400 kV 0.358 0.371 0.384 0.398 0.411

    220 kV 0.245 0.254 0.263 0.272 0.282

    132 kV and below 0.245 0.254 0.263 0.272 0.282 Norms for AC and HVDC lines ( Lakh per km) Single Circuit (Bundled Conductor with six or more sub-conductors) 0.881 0.912 0.944 0.977 1.011 Page 35 of 40 Order in Petition No. 507/TT/2019 Particulars 2019- 2020- 2021- 2022- 2023- Single Circuit (Bundled conductor with four sub-conductors) 0.755 0.781 0.809 0.837 0.867 Single Circuit (Twin & Triple Conductor) 0.503 0.521 0.539 0.558 0.578 Single Circuit (Single Conductor) 0.252 0.260 0.270 0.279 0.289 Double Circuit (Bundled conductor with four or more sub-conductors) 1.322 1.368 1.416 1.466 1.517 Double Circuit (Twin & Triple Conductor) 0.881 0.912 0.944 0.977 1.011 Double Circuit (Single Conductor) 0.377 0.391 0.404 0.419 0.433 Multi Circuit (Bundled Conductor with four or more sub-conductor) 2.319 2.401 2.485 2.572 2.662 Multi Circuit (Twin & Triple Conductor) 1.544 1.598 1.654 1.713 1.773 Norms for HVDC stations HVDC Back-to-Back stations (Rs Lakh per 500 MW) (Except Gazuwaka BTB)

    834 864 894 925 958 Gazuwaka HVDC Back-to-Back station ( Lakh per 500 MW) 1,666 1,725 1,785 1,848 1,913

    500 kV Rihand-Dadri HVDC bipole scheme (Rs Lakh) (1500 MW) 2,252 2,331 2,413 2,498 2,586

    500 kV Talcher- Kolar HVDC bipole scheme (Rs Lakh) (2000 MW) 2,468 2,555 2,645 2,738 2,834

    500 kV Bhiwadi-Balia HVDC bipole scheme (Rs Lakh) (2500 MW) 1,696 1,756 1,817 1,881 1,947

    800 kV, Bishwanath-Agra HVDC bipole scheme (Rs Lakh) (3000 MW) 2,563 2,653 2,746 2,842 2,942 Provided that the O&M expenses for the GIS bays shall be allowed as worked out by multiplying 0.70 of the O&M expenses of the normative O&M expenses for bays; Provided further that:

    i. the operation and maintenance expenses for new HVDC bi-pole schemes commissioned after 1.4.2019 for a particular year shall be allowed pro-rata on the basis of normative rate of operation and maintenance expenses of similar HVDC bi-pole scheme for the corresponding year of the tariff period;

    ii. the O&M expenses norms for HVDC bi-pole line shall be considered as Double Circuit quad AC line;

    iii. the O&M expenses of 500 kV Mundra-Mohindergarh HVDC bipole scheme (2000 MW)shall be allowed as worked out by multiplying 0.80 of the normative O&M expenses for 500 kV Talchar-Kolar HVDC bi-pole scheme (2000 MW);

    iv. the O&M expenses of 800 kV Champa-Kurukshetra HVDC bi-pole scheme (3000 MW) shall be on the basis of the normative O&M expenses for 800 kV, Bishwanath-Agra HVDC bi-pole scheme;

    v. the O&M expenses of 800 kV, Alipurduar-Agra HVDC bi-pole scheme (3000 Page 36 of 40 Order in Petition No. 507/TT/2019 MW)shall be allowed as worked out by multiplying 0.80 of the normative O&M expenses for 800 kV, Bishwanath-Agra HVDC bi-pole scheme; and

    vi. the O&M expenses of Static Synchronous Compensator and Static Var Compensator shall be worked at 1.5% of original project cost as on commercial operation which shall be escalated at the rate of 3.51% to work out the O&M expenses during the tariff period. The O&M expenses of Static Synchronous Compensator and Static Var Compensator, if required, may be reviewed after three years. (b) The total allowable operation and maintenance expenses for the transmission system shall be calculated by multiplying the number of sub-station bays, transformer capacity of the transformer (in MVA) and km of line length with the applicable norms for the operation and maintenance expenses per bay, per MVA and per km respectively. (c) The Security Expenses and Capital Spares for transmission system shall be allowed separately after prudence check: Provided that the transmission licensee shall submit the assessment of the security requirement and estimated security expenses, the details of year-wise actual capital spares consumed at the time of truing up with appropriate justification. (4) Communication system: The operation and maintenance expenses for the communication system shall be worked out at 2.0% of the original project cost related to such communication system. The transmission licensee shall submit the actual operation and maintenance expenses for truing up.

    63. The O&M Expenses claimed by the Petitioner for the instant assets are as follows:- ( in lakh) Particulars 2019-20 2020-21 201-22 2022-23 2023-24 O&M for bays (as per norms)

    400 kV Bay 32.15 33.28 34.45 35.66 36.91 O&M for transformers (as per norms)

    220 kV 0.25 0.25 0.26 0.27 0.28 Total O&M Expenses 110.55 114.56 118.61 122.70 127.15

    64. The O&M Expenses claimed by the Petitioner are in accordance with Regulation 35(3) of the 2019 Tariff Regulations. Hence, they are allowed as claimed. Interest on Working Capital (IWC)

    65. Regulation 34(1)(c), (3) and (4) and Clause (7) of Regulation 3 of the 2019 Tariff Regulations provide as under:

    34. Interest on Working Capital: (1) The working capital shall cover: Page 37 of 40 Order in Petition No. 507/TT/2019 (c) For Hydro Generating Station (including Pumped Storage Hydro Generating Station) and Transmission System:

    (i) Receivables equivalent to 45 days of annual fixed cost;

    (ii) Maintenance spares @ 15% of operation and maintenance expenses including security expenses; and

    (iii) Operation and maintenance expenses, including security expenses for one month. (3) Rate of interest on working capital shall be on normative basis and shall be considered as the bank rate as on 1.4.2019 or as on 1st April of the year during the tariff period 2019-24 in which the generating station or a unit thereof or the transmission system including communication system or element thereof, as the case may be, is declared under commercial operation, whichever is later: Provided that in case of truing-up, the rate of interest on working capital shall be considered at bank rate as on 1st April of each of the financial year during the tariff period 2019-24. (4) Interest on working capital shall be payable on normative basis notwithstanding that the generating company or the transmission licensee has not taken loan for working capital from any outside agency.

    3. Definitions - In these regulations, unless the context otherwise requires:- (7) Bank Rate means the one-year marginal cost of lending rate (MCLR) of the State Bank of India issued from time to time plus 350 basis points;

    66. The Petitioner has submitted that it has claimed IWC for the 2019-24 period considering the bank rate as on 1.4.2019.

    67. The IWC is worked out in accordance with Regulation 34 of the 2019 Tariff Regulations. The rate of IWC is considered as 12.05%. The components of the working capital and interest thereon have been considered as follows:- ( in lakh) Particulars 2019-20 2020-21 201-22 2022-23 2023-24 O & M Expenses 9.21 9.55 9.88 10.23 10.60 Maintenance Spares 16.58 17.18 17.79 18.41 19.07 Receivables 61.08 63.49 62.58 61.69 60.64 Total Working Capital 86.88 90.22 90.26 90.32 90.30 Rate of Interest (%) 12.05 12.05 12.05 12.05 12.05 Interest on working capital 10.47 10.87 10.88 10.88 10.88 Annual Fixed Charges for the 2019-24 Tariff Period Page 38 of 40 Order in Petition No. 507/TT/2019

    68. The annual fixed charges for the combined transmission asset for the tariff period 2019-24 are summarized below:- ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 131.52 139.44 139.44 139.44 139.44 Interest on Loan 103.91 101.30 89.90 78.51 66.90 Return on Equity 140.35 148.80 148.80 148.80 148.80 Interest on Working Capital 10.47 10.87 10.88 10.88 10.88 Operation and Maintenance 110.55 114.56 118.61 122.70 127.15 Total 496.80 514.97 507.63 500.34 493.17 Filing Fee and Publication Expenses

    69. The Petitioner has sought reimbursement of fee paid by it for filing the petition and publication expenses. The Petitioner shall be entitled for reimbursement of the filing fees and publication expenses in connection with the present petition, directly from the beneficiaries on pro-rata basis in accordance with Regulation 70(1) of the 2019 Tariff Regulations. Licence Fee and RLDC Fees and Charges

    70. The Petitioner shall be entitled for reimbursement of licence fee and RLDC fees and charges in accordance with Regulation 70(4) and (3) respectively of the 2019 Tariff Regulations. Goods and Services Tax

    71. The Petitioner has submitted that GST if imposed at any point of time in future on charges of Transmission of Electricity, the same shall be borne and be additionally paid by the Respondents to the Petitioner and the same shall be charged and billed separately by the Petitioner. Further, additional taxes, if any, are to be paid by the Page 39 of 40 Order in Petition No. 507/TT/2019 Petitioner on account of demand from Government/Statutory authorities, the same may be allowed to be recovered from the beneficiaries.

    72. We have considered the above submissions and prayer of the Petitioner and are of the opinion that GST is not levied at present on transmission of electricity, thus it cannot be entertained at this juncture being pre-mature. Security Expenses

    73. The Petitioner has submitted that security expenses for the instant assets are not claimed in the instant petition and it would file a separate petition for claiming the overall security expenses and the consequential Interest on Working Capital. The Petitioner has requested to consider the actual security expenses incurred during 2018-19 for claiming estimated security expenses for 2019-20 which shall be subject to true up at the end of the year based on the actuals. The Petitioner has submitted that similar petition for security expenses for 2020-21, 2021-22, 2022-23 and 2023-24 shall be filed on a yearly basis on the basis of the actual expenses of previous year subject to true up at the end of the year on actual expenses. The Petitioner has submitted that the difference, if any, between the estimated security expenses and actual security expenses as per the audited accounts may be allowed to be recovered from the beneficiaries on yearly basis. We have considered the submissions of the Petitioner. Any application filed by the Petitioner in this regard will be dealt with in accordance with the appropriate provisions of the 2019 Tariff Regulations. Capital Spares Page 40 of 40 Order in Petition No. 507/TT/2019

    74. The Petitioner has sought reimbursement of capital spares at the end of tariff block. The Petitioners claim, if any, shall be dealt with in accordance with the provisions of the 2019 Tariff Regulations. Sharing of Transmission Charges

    75. The billing, collection and disbursement of the transmission charges approved in this order shall be governed by the provisions of Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010, as amended from time to time as provided in Regulation 43 of 2014 Tariff Regulations for the 2014-19 tariff period and Regulation 57 of the 2019 Tariff Regulations for the 2019-24 tariff period.

    76. This order disposes of Petition No. 507/TT/2019. sd/- sd/- (I.S. Jha) (P. K. Pujari) Member Chairperson

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