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Case Number

Petition No. 4/TT/2020

Attorney(S)

: Shri S.S. Raju, PGCIL
: Shri Manish Kr. Choudhary, Advocate, BSPHCL
Shri A.K. Verma, PGCIL
Shri B. Dash, PGCIL
Shri Amit K. Jain, PGCIL

Judges

P.K. Pujari
Chairperson
I.S. Jha, Member
Arun Goyal, Member

Acts

Regulation 70 (3) and (4) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019. Order in Petition No.4/TT/2020 Page 4
Central Order in Petition No.4/TT/2020 Page 3 Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred
31.3.2024 2019-24 37250.01 Nil 37250.01 Order in Petition No.4/TT/2020 Page 29 Debt-Equity ratio 44. Regulation 18 of the 2019 Tariff Regulations
Regulation 9 of the 2014 Tariff Regulations. Order in Petition No.4/TT/2020 Page 9 Additional Capital Expenditure (ACE)
2019 Order in Petition No.4/TT/2020 Page 35 Tariff Regulations
INCOME TAX ACT 1961
sub-clause (ii) of clause (2) of Regulation 72
SECTION 64 ELECTRICITY ACT 2003
COMPANIES ACT 2013

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Smart Summary

Structured Summary of the Commission's Order in Petition No. 4/TT/2020

Factual and Procedural Background

This petition was filed by Power Grid Corporation of India Limited (the Petitioner), a deemed transmission licensee, seeking:

truing-up of tariff for the period 1.4.2014 to 31.3.2019 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 ("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 ("2019 Tariff Regulations"),

in relation to three transmission assets (referred to as Asset-A, Asset-B and Asset-C), forming the start-up power to DVC and Maithon Right Bank Generation Projects in the Eastern Region. The petition lists the assets and their elements (lines, bays, PLCC equipment). Investment Approval (IA) was originally accorded on 29.4.2008 and Revised Cost Estimate (RCE) on 23.1.2012. Scheduled commercial operation date (SCOD) was 1.5.2010; actual CODs were: Asset-A 1.2.2010, Asset-B 1.6.2011, Asset-C 1.10.2010, with time overruns condoned in part by earlier Commission orders for Asset-B and Asset-C.

Relevant procedural history included:

Prior Commission orders approved tariffs for periods up to 31.3.2014 and approved the 2014-19 tariff period (order dated 24.2.2016 in Petition No. 297/TT/2015).
The present petition was served on respondents and public notice given; no responses or objections were received from respondents or the public.
The Commission considered affidavits filed by the Petitioner (18.10.2019, 28.5.2020 and 14.9.2020), heard the Petitioner by video conference on 24.8.2020, reserved order and issued the present disposal.

Legal Issues Presented

Whether the trued-up Annual Fixed Charges (AFC) for the 2014-19 tariff block for Assets A, B and C should be approved as claimed by the Petitioner (i.e., whether the Petitioner's claimed depreciation, Interest on Loan (IoL), Return on Equity (RoE), Interest on Working Capital (IWC) and O&M expenses are to be allowed).
Whether the tariff for the 2019-24 tariff block for the Combined Asset (combining Assets A, B and C into a single asset and a single tariff under Regulation 8(1) proviso) should be determined as claimed.
Whether the capital cost as on 1.4.2019 (admitted/trued-up capital cost as on 31.3.2019) should be accepted as the opening capital cost for 2019-24.
Whether the debt-equity ratio, computation of IoL (including weighted average interest rates), computation and grossing-up of RoE (including consideration of MAT rates) and application of depreciation and O&M norms under the respective regulations should be applied as submitted.
Whether the Petitioner is entitled to recover (a) filing fee and publication expenses, (b) licence fee and RLDC fees & charges, (c) security expenses and capital spares (and the procedure/timing for the same), and (d) GST or future taxes, and the appropriate procedural disposition for these claims.

Arguments of the Parties

Petitioner's Submissions

Petitioner sought approval of trued-up AFC for 2014-19 and determination of AFC for 2019-24 for the identified assets (listed as assets A, B and C).
Petitioner provided capital cost history: IA dated 29.4.2008 (estimated cost 29,049.00 lakh including IDC 1,633.00 lakh) and RCE dated 23.1.2012 (estimated cost 39,160.00 lakh including IDC 2,617.00 lakh). Petitioner relied on admitted capital costs as per the Commission's 24.2.2016 order for opening capital cost on 1.4.2014.
Petitioner claimed specific components for AFC in 2014-19: depreciation, IoL (based on actual loan portfolio and rates), RoE (grossed up for MAT), IWC (components: 1 month O&M, maintenance spares @15% of O&M, receivables = 2 months of AFC) and O&M (applying norms in Regulation 29(3) of 2014 Regulations).
For 2019-24, Petitioner proposed to combine the assets into a single Combined Asset and claimed tariff forms for the Combined Asset; provided E-COD calculation (weighted) and computed Weighted Average Life (WAL) and remaining useful life for depreciation; claimed IoL based on weighted average rate as of 1.4.2019 and IWC using SBI MCLR + 350 bps (bank rate methodology) as on relevant dates.
Petitioner requested permission to recover (i) shortfall/refund on RoE due to change in applicable tax rates directly without separate application, (ii) filing and publication expenses, (iii) licensee fee & RLDC charges separately, (iv) adjustment of IoL if floating rates change during 2019-24, (v) to file separate petition(s) for security expenses and to claim capital spares at end of tariff block, and (vi) recovery of GST/taxes if levied in future.

Respondents' Position

No respondent filed a reply to the petition. The Commission's record notes that notices were published and no public comments/objections were received.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Order dated 24.2.2016 in Petition No. 297/TT/2015	Approval of transmission tariff for the instant assets for the 2014-19 tariff period; admitted capital costs as on 31.3.2014 used as opening capital cost for truing-up under 2014 Regulations.	The Commission relied on the admitted capital cost figures and prior approvals from this order as the opening capital cost on 1.4.2014 and compared claimed amounts against the amounts approved earlier. The order's admitted capital cost numbers were used throughout the truing-up calculations.
Order dated 13.5.2015 in Petition No. 106/TT/2013	Allowed tariff for the period COD up to 31.3.2014 after approval of Revised Cost Estimates in accordance with 2009 Tariff Regulations.	The Commission noted that tariff from COD up to 31.3.2014 for the assets had been allowed by this order after RCE approval; it formed part of the factual history relied upon in the present truing-up.
Order dated 27.09.2011 in Petition No. 100/2011	Condonation of 13 months time over-run for Asset-B.	The Commission recorded that the 13 months time over-run in respect of Asset-B had been condoned by this earlier order and treated accordingly in the project timeline and tariff history.
Order dated 29.11.2011 in Petition No. 317/2010	Decision not to condone 4 months out of a 5-month time over-run for Asset-C.	The Commission recorded that the 4 months (out of 5) time over-run for Asset-C was not condoned by that order; this determination formed part of the factual background.
Order dated 27.4.2020 in Petition No. 274/TT/2019	Determination that for entities covered under the MAT regime the notified MAT rate for the respective financial year shall be considered as the effective tax rate for grossing up RoE for truing-up under 2014 Regulations.	The Commission applied this principle to compute effective tax rates (MAT-inclusive figures) for grossing up RoE for the 2014-19 truing-up. The MAT rates notified in that order were adopted for the present calculations.
Petition No. 260/MP/2020 (filed by the Petitioner)	Provisionally cited in relation to consolidated security expenses for 2019-24 (projected based on 2018-19 actuals).	The Commission observed that security expenses would be dealt with in Petition No.260/MP/2020 and directed that security expenses for the assets be claimed in a consolidated petition (Petition No.260/MP/2020).

Court's Reasoning and Analysis

The Commission's analysis proceeded in two main phases: (A) truing-up of Annual Fixed Charges (AFC) for the 2014-19 tariff period under the 2014 Tariff Regulations; and (B) determination of AFC for the 2019-24 tariff period under the 2019 Tariff Regulations for a Combined Asset formed by aggregating Assets A, B and C.

A. Truing-up for 2014-19 (2014 Tariff Regulations)

Opening capital cost: The Commission accepted the admitted capital cost figures as on 31.3.2014 (from order dated 24.2.2016 in Petition No.297/TT/2015) as the opening capital cost on 1.4.2014 for Assets A, B and C (6421.30 lakh, 24990.88 lakh and 5837.83 lakh respectively).
Additional Capital Expenditure (ACE): Although ACE had previously been approved in the 24.2.2016 order for the 2014-19 period (specific small amounts mentioned), the Petitioner did not claim any ACE in the present petition for 2014-19 and the Commission accepted that no ACE was claimed; therefore, the capital cost remained unchanged for the block.
Debt-equity ratio: The Commission used the debt-equity ratio of 70:30 as on 1.4.2014 as already approved in the 24.2.2016 order and treated it as the opening normative debt-equity for truing-up.
Interest on Loan (IoL): IoL was computed on the normative loan using the weighted average rate of interest calculated from the Petitioner's actual loan portfolio and rates, applying Regulation 26 of the 2014 Regulations. The Commission accepted the Petitioner's weighted average rates and IoL calculations, arriving at trued-up IoL figures for each year and asset.
Return on Equity (RoE): The Petitioner claimed RoE grossed up for MAT effective tax rates. The Commission referred to its earlier order dated 27.4.2020 (Petition No.274/TT/2019) which determined that the notified MAT rates shall be considered as the effective tax rate for grossing up RoE for entities paying MAT. Applying those notified MAT rates for the years in question, the Commission computed the grossed-up RoE (base rate 15.50% grossed to pre-tax rate via Base/(1-t)) and adopted the trued-up RoE figures accordingly.
Depreciation: The Commission computed depreciation using a Weighted Average Rate of Depreciation (WAROD) based on depreciation rates prescribed in the 2014 Tariff Regulations and the asset composition; it accepted the Petitioner's annual depreciation calculations (subject to small rounding differences) and applied the WAROD to the opening gross block and remaining life to compute annual depreciation for each asset.
Operation & Maintenance (O&M) expenses: O&M was allowed in accordance with the normative provisions of Regulation 29(3) of the 2014 Tariff Regulations. The Commission accepted O&M claimed by the Petitioner as per those norms.
Interest on Working Capital (IWC): The Commission applied Regulation 28 of the 2014 Tariff Regulations. Components were: one month O&M; maintenance spares at 15% of O&M; receivables equal to two months of annual transmission charges. The rate of interest for IWC was applied on a normative basis (the rate claimed by the Petitioner) and the Commission allowed the trued-up IWC as computed.
Comparison with earlier approved values: For each AFC component the Commission compared approved figures in the 24.2.2016 order, the Petitioner's claimed numbers in the instant petition and the Commission's allowed (trued-up) figures; in most cases the trued-up figures closely matched the Petitioner's claims and were allowed.

B. Determination for 2019-24 (2019 Tariff Regulations) — Combined Asset

Single tariff for Combined Asset: The Petitioner proposed a single tariff for the combined asset. The Commission approved a single tariff under proviso (i) of Regulation 8(1) of the 2019 Tariff Regulations and proceeded to determine AFC for the Combined Asset for 2019-24.
Capital cost as on 1.4.2019: The combined admitted/trued-up capital cost as on 31.3.2019 (37250.01 lakh) was considered as the capital cost on 1.4.2019 for 2019-24 purposes. The Petitioner had not claimed any ACE for 2019-24 and confirmed no previously un-discharged liabilities beyond those claimed; the Commission accepted this position.
Effective COD and WAL: The Petitioner computed an Effective COD (E-COD) for the project as 30.1.2011 by weighting asset costs and COD dates. WAL (Weighted Average Life) for the Combined Asset was computed as approximately 34 years (rounded), using admitted capital cost and useful lives as per 2019 Regulations. Using WAL and elapsed life (8 years as on 1.4.2019), the remaining useful life as on 31.3.2019 was determined to be 26 years for depreciation spread purposes.
Debt-equity ratio for existing project: In accordance with Regulation 18(3) of the 2019 Regulations, the Commission applied the debt-equity ratio that had been allowed for determination of tariff for the period ending 31.3.2019 (70:30) for the Combined Asset for 2019-24.
Return on Equity (RoE): The Commission applied Regulation 31 of the 2019 Regulations. The Petitioner stated MAT applicability; the Commission used the MAT rate for 2019-20 (and the notation that RoE shall be trued up based on actual tax paid under Regulation 31(3)). The Commission grossed-up the base RoE (15.50%) using the MAT-inclusive effective tax rate (17.472% as applied for the period) to arrive at the pre-tax RoE percentage and allowed RoE figures accordingly for each year of 2019-24 (subject to truing-up with actual tax paid later).
Interest on Loan (IoL): The Commission computed IoL in terms of Regulation 32 of the 2019 Regulations: normative gross loan equal to 70% of the capital cost; normative cumulative repayments up to previous year were deducted to obtain net opening loan; repayment for each year was deemed equal to depreciation allowed for that year; weighted average rate of interest on loan was considered on the basis of rates prevailing as on 1.4.2019. The Commission allowed IoL as calculated and noted any floating-rate changes would be addressed at the time of truing-up.
Depreciation: Depreciation was computed per Regulation 33 (Straight Line Method) using the WAROD derived from 2019 Regulations and spreading remaining depreciable value across remaining useful life; the Commission applied the calculated depreciation schedule (with an adjustment noted when the asset completed 12 years of life and balance depreciable value was re-spread across balance life per Regulation 33(5)).
O&M Expenses: The Commission applied the O&M norms provided in Regulation 35 of the 2019 Regulations and allowed O&M for the Combined Asset as computed using the number of bays, line km norms and applicable per-bay/per-km/per-MVA norms specified in the regulations.
IWC for 2019-24: In line with Regulation 34, IWC components were allowed as: receivables equivalent to 45 days of AFC; maintenance spares @15% of O&M; and one month O&M. The rate of interest for IWC was calculated using the Bank Rate methodology (SBI 1-year MCLR plus 350 basis points) as on 1.4.2019 for the year of commercial operation and then as on 1st April of the relevant years; the Commission accepted the Petitioner's rate application and allowed IWC accordingly, noting that for 2019-20 the rate used was 12.05% (SBI 1-year MCLR 8.55% + 350 bps) and for later years a lower rate was used as per SBI MCLR movements.
Other claims and procedural matters: The Commission allowed reimbursement of filing and publication fees to be recovered from beneficiaries on pro-rata basis (per Regulation 70(1) of 2019 Regulations); allowed recovery of licence fee and RLDC fees & charges per Regulations 70(3) & (4); declined to allow any present recovery for GST as it is not presently levied on transmission (characterized the petitioner's GST prayer as premature); directed security expenses claims to be pursued in consolidated Petition No.260/MP/2020 (Petitioner had filed that petition) and noted the Petitioner's intention to file separate petitions for security expenses/capital spares as appropriate under the Regulations; and stated that any adjustment for RoE taxation differences due to changes in tax rates would be subject to truing-up mechanisms in the applicable Tariff Regulations.

Holding and Implications

Holding (core disposition):

DISPOSED OF. The Commission disposed of Petition No. 4/TT/2020 by allowing the trued-up Annual Fixed Charges (AFC) for the 2014-19 tariff period for Assets A, B and C and by determining the Annual Fixed Charges for the Combined Asset for the 2019-24 tariff period as set out in the order.

Direct effects on the parties (specific figures recorded in the order)

The Commission allowed the following trued-up AFC for the 2014-19 tariff period (values in lakh):

Asset-A: 2014-15 to 2018-19 — 1,056.04; 1,027.82; 997.66; 967.42; 938.56 respectively.
Asset-B: 2014-15 to 2018-19 — 4,316.83; 4,210.95; 4,097.97; 3,985.35; 3,876.97 respectively.
Asset-C: 2014-15 to 2018-19 — 1,090.11; 1,068.05; 1,044.38; 1,020.75; 998.44 respectively.

The Commission allowed the following Annual Fixed Charges for the Combined Asset for the 2019-24 tariff period (values in lakh):

Combined Asset: 2019-20 to 2023-24 — 5,330.56; 5,157.61; 4,990.92; 4,824.80; 3,180.61 respectively.

Other specific directives / consequences

The Petitioner is entitled to recover filing fee and publication expenses in connection with this petition from beneficiaries on a pro-rata basis under Regulation 70(1) of the 2019 Regulations.
The Petitioner shall be entitled to recover licence fee (Regulation 70(4)) and RLDC fees & charges (Regulation 70(3)) for the 2019-24 period from respondents as provided in the regulations.
The Commission treated the petitioner's request regarding GST as premature because GST is not levied on transmission services at present.
Security expenses were not allowed in this petition; the Commission directed that security expenses be claimed in a consolidated petition (Petition No.260/MP/2020) and would be dealt with under the 2019 Tariff Regulations in that separate proceeding.
Any claim for capital spares or security expenses, or any change arising from changes in tax or interest rates, would be addressed through the truing-up or separate petitions as per the relevant regulatory provisions; RoE grossing-up was to be trued-up on actual tax paid in the 2019-24 block as required by Regulation 31(3).

Implication regarding precedent

The order applies and follows the relevant provisions of the 2014 and 2019 Tariff Regulations and relies on the Commission's earlier orders (as recorded in the table of precedents). The order does not state that it establishes any newly articulated legal precedent beyond applying the cited regulations and prior Commission determinations to the facts of the petition. Its immediate legal consequence is the allowance of the specific trued-up and determined AFC figures and the procedural directions summarized above.

Administrative/Concluding Note

The present order formally disposes of Petition No. 4/TT/2020. It records the signatures of the Commission Members/Chairperson and contains annexures with detailed yearwise computations of capital cost components, depreciation schedules and WAROD calculations which the Commission used to arrive at the trued-up and prospective AFC figures summarized above.

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

The instant petition has been filed by Power Grid Corporation of India Limited (hereinafter referred to as the Petitioner), a deemed transmission licensee, for truing up of the tariff of the period from 1.4.2014 to 31.3.2019 under Central Order in Petition No.4/TT/2020 Page 3 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 31.3.2024 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (hereinafter referred to as the 2019 Tariff Regulations) in respect of the following assets under the start-up power to DVC and Maithon Right Bank Generation Projects in the Eastern Region (hereinafter referred to as the transmission project). Asset-A: LILO of one circuit (Ckt-I) of 400 kV D/C Maithon-Jamshedpur line at Mejia B TPS including PLCC Equipment (excluding wave trap) for the transmission line; Asset-B: 400 kV D/C Koderma TPS-Biharsharif transmission line and 02 nos. associated line bays at Biharsharif Sub-station; and Asset-C: 400 kV D/C Maithon RB-Maithon (PG) transmission line and associated Bay Extension at Maithon Sub-station.

2. The Petitioner has made the following prayers:

i. 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 9.1 and 10.0 above.

ii. Approve the Completion cost and additional capitalization incurred during 2014- 19.

iii. 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 9.1 and 10.0 above for respective block.

iv. 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.

v. 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. Order in Petition No.4/TT/2020 Page 4

vi. 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.

vii. 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 10.6 above.

viii. Allow the petitioner to claim the capital spares at the end of tariff block as per actual.

ix. 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 Commission deems fit and appropriate under the circumstances of the case and in the interest of justice. Background

3. The brief facts of the case are as under: a. The Investment Approval (IA) for the transmission project was accorded by the Board of Directors of the Petitioner vide letter dated 29.4.2008 at an estimated cost of 29049.00 lakh, which included Interest During Construction (IDC) of 1633.00 lakh. Subsequently, approval of the Revised Cost Estimate (RCE) was accorded by the Board of Directors on 23.1.2012 at an estimated cost of 39160.00 lakh, which included IDC of 2617.00 lakh. b. The entire scope of the work covered under the transmission project has been covered in the instant petition. The assets are as under: For Mejia-B

a) LILO of one circuit of 400 kV D/C Maithon-Jamshedpur line at Mejia

b) 2 nos. of 400 kV bays at Mejia*

c) PLCC Equipment (Excl. Wave Trap) for LILO of one circuit of 400 kV D/C Maithon-Jamshedpur line at Mejia-B TPS For Koderma

a) Koderma-Biharshariff 400 kV D/C (Quad) line

b) 2 nos. of 400 kV bays at Biharshariff

c) 2 nos. of 400 kV bays at Koderma* Order in Petition No.4/TT/2020 Page 5 For Maithon-RB

a) Maithon-RB-Maithon 400 kV D/C line

b) 2 nos. of 400 kV bays at Maithon

c) 2 nos. of 400 kV bays at Maithon-RB* *These 400 kV bays at generation switchyard would be under the scope of DVC. c. As per investment approval, the instant transmission assets (Assets-A, B and

C) were scheduled to be put into commercial operation within 24 months from the date of investment approval. The investment approval was accorded on 29.4.2008 and hence the scheduled date of commercial operation was 1.5.2010. However, Assets-A, B and C were put into commercial operation on 1.2.2010, 1.6.2011 and 1.10.2010 respectively. There was no time over-run in case of Asset-A. However, there was a time over-run of 13 months (395 days) and 5 months in case of Asset-B and Asset-C respectively. The time over-run of 13 months in the case of Asset-B was condoned by the Commission vide order dated 27.09.2011 in Petition No. 100/2011. The time over-run of 4 months out of total time over-run of 5 months in the case of Asset-C was not condoned by the Commission vide order dated 29.11.2011 in Petition No. 317/2010. d. The dates of commercial operation of the assets along with the time over-run are as under: Asset SCOD COD Time over-run Time over-run condoned Asset-A 1.5.2010 1.2.2010 Nil - Asset-B 1.5.2010 1.6.2011 13 months 13 months Asset-C 1.5.2010 1.10.2010 5 months 4 months e. The annual transmission charges for Assets-A, B and C for the period from COD up to 31.3.2014 were approved by the Commission in Petition No. 232/2010, Petition No. 100/2011 and Petition No. 317/2010 respectively subject to the Petitioner filing revised petition after obtaining approval of Revised Cost Estimates (RCE). Order in Petition No.4/TT/2020 Page 6 f. The tariff from 1.2.2010 to 31.3.2014 for Asset-A, from 1.6.2011 to 31.3.2014 for Asset-B and from 1.10.2010 to 31.3.2014 for Asset-C was allowed after approval of RCE vide order dated 13.5.2015 in Petition No. 106/TT/2013 in accordance with the 2009 Tariff Regulations. g. Further, the transmission tariff for the instant assets for the 2014-19 period was allowed vide order dated 24.2.2016 in Petition No. 297/TT/2015 and details of the same is as under: ( in lakh) Asset Particulars 2014-15 2015-16 2016-17 2017-18 2018-19 Asset-A Annual Fixed Charges (AFC) approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1061.89 1037.62 1007.31 977.02 946.78 Asset-B 4322.23 4214.25 4100.92 3987.99 3875.31 Asset-C 1094.40 1075.35 1051.61 1028.01 1004.56

4. The Respondents are distribution licensees and power departments, who are procuring transmission services from the Petitioner and are mainly beneficiaries of the Eastern Region.

5. The Petitioner has served the petition on the Respondents and notice of this petition has been published in newspapers in accordance with Section 64 of the Electricity Act, 2003. No comments/ objections have been received from the general public in response to the aforesaid notice published in the newspapers. A Notice dated 14.1.2020 directing the beneficiaries/ Respondents to file reply in the matter was also posted on the Commissions website. None of the Respondents have filed reply to the petition.

6. This order is issued considering the submissions made by the Petitioner vide affidavits dated 18.10.2019, 28.5.2020 and 14.9.202. Order in Petition No.4/TT/2020 Page 7

7. The hearing in this matter was held on 24.8.2020 through video conference and the order was reserved.

8. Having heard the representatives of the Petitioner and perused the material on record, we proceed to dispose of the petition. TRUING-UP OF ANNUAL FIXED CHARGES FOR THE 2014-19 TARIFF PERIOD

9. The details of the trued-up transmission charges claimed by the Petitioner in respect of the transmission assets are as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation 339.81 339.81 339.81 339.81 339.81 Interest on Loan 266.32 235.62 204.91 174.07 143.49 Return on Equity 390.25 392.04 391.85 391.85 392.89 Interest on Working Capital 24.87 24.27 23.63 22.99 22.38 O&M Expenses 35.09 36.27 37.47 38.71 40.00 Total 1056.34 1028.01 997.67 967.43 938.57 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation 1320.83 1320.83 1320.83 1320.83 1320.83 Interest on Loan 1182.97 1064.22 945.42 826.57 707.74 Return on Equity 1471.34 1478.08 1477.34 1477.34 1481.31 Interest on Working Capital 104.66 102.51 100.21 97.94 95.78 O&M Expenses 238.15 246.03 254.15 262.64 271.35 Total 4317.95 4211.67 4097.95 3985.32 3877.01 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation 308.97 308.97 308.97 308.97 308.97 Interest on Loan 265.82 237.68 209.49 181.16 153.06 Return on Equity 343.70 345.28 345.10 345.10 346.03 Interest on Working Capital 29.03 28.68 28.30 27.93 27.59 O&M Expenses 142.87 147.63 152.52 157.59 162.81 Total 1090.39 1068.24 1044.38 1020.75 998.46

10. The details of the trued-up Interest on Working Capital (IWC) claimed by the Petitioner in respect of the transmission assets are as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses 2.92 3.02 3.12 3.23 3.33 Order in Petition No.4/TT/2020 Page 8 Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Maintenance spares 5.26 5.44 5.62 5.81 6.00 Receivables 176.06 171.34 166.28 161.24 156.43 Total working capital 184.24 179.80 175.02 170.28 165.76 Rate of interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 24.87 24.27 23.63 22.99 22.38 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses 19.85 20.50 21.18 21.89 22.61 Maintenance spares 35.72 36.90 38.12 39.40 40.70 Receivables 719.66 701.95 682.99 664.22 646.17 Total working capital 775.23 759.35 742.29 725.51 709.48 Rate of interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 104.66 102.51 100.21 97.94 95.78 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses 11.91 12.30 12.71 13.13 13.57 Maintenance spares 21.43 22.14 22.88 23.64 24.42 Receivables 181.73 178.04 174.06 170.13 166.41 Total working capital 215.07 212.48 209.65 206.90 204.40 Rate of interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 29.03 28.68 28.30 27.93 27.59 Capital Cost

11. The Commission vide order dated 24.2.2016 in Petition No. 297/TT/2015 approved the transmission tariff for the instant assets for the 2014-19 tariff period based on admitted capital cost of 6421.30 lakh, 24990.88 lakh and 5837.83 lakh as on 31.3.2014 for Asset-A, Asset-B and Asset-C respectively. The Petitioner has submitted that the tariff for 2014-19 tariff period is worked out based on the admitted capital cost as allowed by the Commission vide order dated 24.2.2016 in Petition No. 297/TT/2015 and the same has been considered as opening capital cost as on 1.4.2014 for determination of tariff in accordance with the Regulation 9 of the 2014 Tariff Regulations. Order in Petition No.4/TT/2020 Page 9 Additional Capital Expenditure (ACE)

12. The Commission vide order dated 24.2.2016 in Petition No. 297/TT/2015 approved ACE of 65.74 lakh, 60.00 lakh and 52.40 lakh for Asset-A, Asset-B and Asset-C respectively for the 2014-19 tariff period towards balance and retention payments under Regulation 14(3)(v) of the 2014 Tariff Regulations.

13. However, in the instant petition the Petitioner has not claimed any ACE in the 2014-19 tariff period. We have considered the submission of the Petitioner. The capital cost for the 2014-19 period is admitted as under: ( in lakh) Asset Capital Cost as on 1.4.2014 ( in lakh) Capital Cost as on 31.3.2019 ( in lakh) Asset-A 6421.30 6421.30 Asset-B 24990.88 24990.88 Asset-C 5837.83 5837.83 Debt-Equity ratio

14. The Petitioner has claimed the debt-equity ratio of 70:30 as on 31.3.2014 as approved by the Commission vide order dated 24.2.2016 in Petition No. 297/TT/2015 without ACE. The same has been considered as opening debt-equity ratio as on 1.4.2014. The details of the debt-equity ratio considered by the Commission are as under: Asset Particulars Amount (in lakh) (%) Asset-A Debt 4494.91 70.00 Equity 1926.39 30.00 Total 6421.30 100.00 Asset Particulars Amount (in lakh) (%) Asset-B Debt 17493.63 70.00 Equity 7497.26 30.00 Total 24990.88 100.00 Asset Particulars Amount (in lakh) (%) Asset-C Debt 4086.49 70:00 Order in Petition No.4/TT/2020 Page 10 Asset Particulars Amount (in lakh) (%) Equity 1751.34 30.00 Total 5837.83 100.00

15. The details of the debt-equity as on 1.4.2014 and 31.3.2019 for the instant assets considered for the purpose of tariff for the 2014-19 tariff period is as follows: ( in lakh) Asset Funding Capital cost as on 1.4.2014 during 2014-19 Total cost as 31.3.2019 Asset-A Debt 4494.91 70.00 0.00 70.00 4494.91 70.00 Equity 1926.39 30.00 0.00 30.00 1926.39 30.00 Total 6421.30 100.00 0.00 100.00 6421.30 100.00 ( in lakh) Asset Funding Capital cost as on 1.4.2014 during 2014-19 Total cost as 31.3.2019 Asset-B Debt 17493.63 70.00 0.00 70.00 17493.63 70.00 Equity 7497.26 30.00 0.00 30.00 7497.26 30.00 Total 24990.88 100.00 0.00 100.00 24990.88 100.00 ( in lakh) Asset Funding Capital cost as on 1.4.2014 during 2014-19 Total cost as 31.3.2019 Asset-C Debt 4086.49 70.00 0.00 70.00 4086.49 70.00 Equity 1751.34 30.00 0.00 30.00 1751.34 30.00 Total 5837.83 100.00 0.00 100.00 5837.83 100.00 Interest on Loan (IoL)

16. The Petitioner has claimed the weighted average rate of IoL based on its actual loan portfolio and rate of interest.

17. Accordingly, IoL has been calculated based on actual interest rate in accordance with Regulation 26 of the 2014 Tariff Regulations. IoL allowed for the transmission assets is as under: ( in lakh) Order in Petition No.4/TT/2020 Page 11 Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Loan Gross Normative Loan 4494.91 4494.91 4494.91 4494.91 4494.91 Cumulative Repayments up to Previous Year 1362.51 1702.32 2042.13 2381.93 2721.74 Net Loan-Opening 3132.40 2792.59 2452.78 2112.98 1773.17 Additions 0.00 0.00 0.00 0.00 0.00 Repayment during the year 339.81 339.81 339.81 339.81 339.81 Net Loan-Closing 2792.59 2452.78 2112.98 1773.17 1433.36 Average Loan 2962.50 2622.69 2282.88 1943.07 1603.26 Weighted Average Rate of Interest on Loan (%) 8.9896 8.9837 8.9757 8.9585 8.9498 Interest on Loan 266.32 235.61 204.90 174.07 143.49 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Loan Gross Normative Loan 17493.62 17493.62 17493.62 17493.62 17493.62 Cumulative Repayments up to Previous Year 3681.10 5001.93 6322.76 7643.60 8964.43 Net Loan-Opening 13812.52 12491.68 11170.85 9850.02 8529.19 Additions 0.00 0.00 0.00 0.00 0.00 Repayment during the year 1320.83 1320.83 1320.83 1320.83 1320.83 Net Loan-Closing 12491.68 11170.85 9850.02 8529.19 7208.35 Average Loan 13152.10 11831.27 10510.44 9189.60 7868.77 Weighted Average Rate of Interest on Loan (%) 8.9945 8.9950 8.9950 8.9946 8.9942 Interest on Loan 1182.96 1064.23 945.41 826.57 707.73 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Loan Gross Normative Loan 4086.48 4086.48 4086.48 4086.48 4086.48 Cumulative Repayments up to Previous Year 1005.93 1314.88 1623.82 1932.77 2241.72 Net Loan-Opening 3080.55 2771.60 2462.66 2153.71 1844.76 Additions 0.00 0.00 0.00 0.00 0.00 Repayment during the year 308.95 308.95 308.95 308.95 308.95 Net Loan-Closing 2771.60 2462.66 2153.71 1844.76 1535.82 Average Loan 2926.08 2617.13 2308.18 1999.24 1690.29 Weighted Average Rate of Interest on Loan (%) 9.0845 9.0817 9.0762 9.0620 9.0556 Interest on Loan 265.82 237.68 209.49 181.17 153.07 Order in Petition No.4/TT/2020 Page 12

18. IoL approved vide order dated 24.2.2016 in Petition No. 297/TT/2015, claimed by the Petitioner in the instant petition and trued-up IoL allowed in respect of transmission assets is as under: ( in lakh) Asset-A 2014- 2015- 2016- 2017- 2018- Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 268.31 239.63 208.76 177.88 146.99 Claimed by the Petitioner in the instant petition 266.32 235.62 204.91 174.07 143.49 Allowed after true-up vide this order 266.32 235.61 204.90 174.07 143.49 ( in lakh) Asset-B 2014- 2015- 2016- 2017- 2018- Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1184.93 1067.91 948.75 829.61 710.48 Claimed by the Petitioner in the instant petition 1182.97 1064.22 945.42 826.57 707.74 Allowed after true-up vide this order 1182.96 1064.23 945.41 826.57 707.73 ( in lakh) Asset-C 2014- 2015- 2016- 2017- 2018- Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 267.11 240.65 212.39 184.10 155.79 Claimed by the Petitioner in the instant petition 265.82 237.68 209.49 181.16 153.06 Allowed after true-up vide this order 265.82 237.68 209.49 181.17 153.07 Return on Equity (RoE)

19. The Petitioner has claimed RoE for the instant transmission assets in terms of Regulations 24 and 25 of the 2014 Tariff Regulations. The Petitioner has claimed RoE for the 2014-19 tariff period after grossing up RoE of 15.50% with Effective Tax rates (based on MAT rates) for each year of the 2014-19 period as per 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: Order in Petition No.4/TT/2020 Page 13 For Asset-A For Asset-B and Asset-C Year Claimed effective tax rate (in %) Grossed up ROE (Base Rate/1-t) (in %) Claimed effective tax rate (in %) Grossed up ROE (Base Rate/1-t) (in %) 2014-15 21.018 20.258 21.018 19.625 2015-16 21.382 20.351 21.382 19.716 2016-17 21.338 20.341 21.338 19.705 2017-18 21.337 20.341 21.337 19.704 2018-19 21.549 20.395 21.549 19.758

20. We have considered the submissions of the Petitioner. 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. The relevant portion of the order dated 27.4.2020 is as under:

26. We are conscious that the entities covered under MAT regime are paying Income Tax as per MAT rate notified for respective financial year under IT Act, 1961, which is levied on the book profit of the entity computed as per the Section 115JB of the IT Act, 1961. The Section 115JB(2) defines book profit as net profit in the statement of Profit & Loss prepared in accordance with Schedule-III of the Companies Act, 2013, subject to some additions and deductions as mentioned in the IT Act, 1961. Since the Petitioner has been paying income tax on income computed under Section 115JB of the IT Act, 1961 as per the MAT rates of the respective financial year, the notified MAT rate for respective financial year shall be considered as effective tax rate for the purpose of grossing up of RoE for truing up of the tariff of the 2014-19 tariff period in terms of the provisions of the 2014 Tariff Regulations. Interest imposed on any additional income tax demand as per the Assessment Order of the Income Tax authorities shall be considered on actual payment. However, penalty (for default on the part of the Assessee) if any imposed shall not be taken into account for the purpose of grossing up of rate of return on equity. 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 transmission customers/ DICs as the case may be on year to year basis.

27. Accordingly, following effective tax rates based on notified MAT rates are considered for the purpose of grossing up of rate of return on equity: Year Notified MAT rates (inclusive of surcharge & cess) Effective tax (in %) 2014-15 20.961 20.961 2015-16 21.342 21.342 2016-17 21.342 21.342 2017-18 21.342 21.342 2018-19 21.549 21.549 Order in Petition No.4/TT/2020 Page 14

21. The same MAT rates as considered in order dated 27.4.2020 in Petition No. 274/TT/2019 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. The same is as under: Year Notified MAT rates (inclusive of surcharge & cess) (in %) Base rate of (in %) Grossed up (Base Rate/1-t) (in %) Base rate of including additional (in %) Grossed up (Base Rate including additional RoE/1-t) (in %) 2014-15 20.961 15.50 19.610 16.00 20.243 2015-16 21.342 15.50 19.705 16.00 20.341 2016-17 21.342 15.50 19.705 16.00 20.341 2017-18 21.342 15.50 19.705 16.00 20.341 2018-19 21.549 15.50 19.758 16.00 20.395

22. Accordingly, based on the RoE (Base Rate) already allowed vide order dated 24.2.2016 in Petition No. 297/TT/2015 as well as MAT rate applicable in the respective years, RoE as trued-up is shown in the table below: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Return on Equity Opening Equity 1926.39 1926.39 1926.39 1926.39 1926.39 Additions 0.00 0.00 0.00 0.00 0.00 Closing Equity 1926.39 1926.39 1926.39 1926.39 1926.39 Average Equity 1926.39 1926.39 1926.39 1926.39 1926.39 Return on Equity (Base Rate) (%) 16.000 16.000 16.000 16.000 16.000 MAT Rate for respective year (%) 20.961 21.342 21.342 21.342 21.549 Rate of Return on Equity (%) 20.243 20.341 20.341 20.341 20.395 Return on Equity 389.96 391.85 391.85 391.85 392.88 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Return on Equity Opening Equity 7497.26 7497.26 7497.26 7497.26 7497.26 Additions 0.00 0.00 0.00 0.00 0.00 Closing Equity 7497.26 7497.26 7497.26 7497.26 7497.26 Average Equity 7497.26 7497.26 7497.26 7497.26 7497.26 Return on Equity (Base Rate) (%) 15.500 15.500 15.500 15.500 15.500 Order in Petition No.4/TT/2020 Page 15 Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 MAT Rate for respective year (%) 20.961 21.342 21.342 21.342 21.549 Rate of Return on Equity (%) 19.610 19.705 19.705 19.705 19.758 Return on Equity 1470.25 1477.37 1477.37 1477.37 1481.27 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Return on Equity Opening Equity 1751.35 1751.35 1751.35 1751.35 1751.35 Additions 0.00 0.00 0.00 0.00 0.00 Closing Equity 1751.35 1751.35 1751.35 1751.35 1751.35 Average Equity 1751.35 1751.35 1751.35 1751.35 1751.35 Return on Equity (Base Rate) (%) 15.500 15.500 15.500 15.500 15.500 MAT Rate for respective year (%) 20.961 21.342 21.342 21.342 21.549 Rate of Return on Equity (%) 19.610 19.705 19.705 19.705 19.758 Return on Equity 343.45 345.11 345.11 345.11 346.02

23. Accordingly, the details of RoE allowed by the Commission vide order dated 24.2.2016 in Petition No. 297/TT/2015, claimed by the Petitioner in the instant petition and trued-up RoE allowed in respect of the instant transmission assets is shown in the table below: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 391.95 393.95 393.95 393.95 393.95 Claimed by the Petitioner in the instant petition 390.25 392.04 391.85 391.85 392.89 Allowed after true-up vide this Order 389.96 391.85 391.85 391.85 392.88 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1471.98 1473.74 1473.74 1473.74 1473.74 Claimed by the Petitioner in the instant petition 1471.34 1478.08 1477.34 1477.34 1481.31 Allowed after true-up vide this Order 1470.25 1477.37 1477.37 1477.37 1481.27 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 344.98 346.52 346.52 346.52 346.52 Order in Petition No.4/TT/2020 Page 16 Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 297/TT/2015 Claimed by the Petitioner in the instant petition 343.70 345.28 345.10 345.10 346.03 Allowed after true-up vide this Order 343.45 345.11 345.11 345.11 346.02 Depreciation

24. The Gross Block during the 2014-19 period has been depreciated at weighted average rate of depreciation (WAROD) (as placed in Annexure-I). WAROD has been worked out after taking into account the depreciation rates of the instant assets as specified in the 2014 Tariff Regulations and the depreciation allowed for the instant transmission asset during the 2014-19 tariff period is as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation Opening Gross Block 6421.30 6421.30 6421.30 6421.30 6421.30 Additional Capitalisation 0.00 0.00 0.00 0.00 0.00 Closing Gross Block 6421.30 6421.30 6421.30 6421.30 6421.30 Average Gross Block 6421.30 6421.30 6421.30 6421.30 6421.30 Weighted Average Rate of Depreciation (WAROD) (%) 5.29 5.29 5.29 5.29 5.29 Balance useful life of the asset 31 30 29 28 27 Elapsed life of the asset 4 5 6 7 8 Aggregate Depreciable value 5779.17 5779.17 5779.17 5779.17 5779.17 Depreciation during the year 339.81 339.81 339.81 339.81 339.81 Cumulative Depreciation 1702.32 2042.13 2381.93 2721.74 3061.55 Remaining Depreciable Value 4076.85 3737.04 3397.24 3057.43 2717.62 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation Opening Gross Block 24990.88 24990.88 24990.88 24990.88 24990.88 Additional Capitalisation 0.00 0.00 0.00 0.00 0.00 Closing Gross Block 24990.88 24990.88 24990.88 24990.88 24990.88 Average Gross Block 24990.88 24990.88 24990.88 24990.88 24990.88 Weighted Average Rate of Depreciation (WAROD) (%) 5.29 5.29 5.29 5.29 5.29 Balance useful life of the asset 32 31 30 29 28 Elapsed life of the asset 2 3 4 5 6 Depreciable value 22491.79 22491.79 22491.79 22491.79 22491.79 Order in Petition No.4/TT/2020 Page 17 Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation during the year 1320.83 1320.83 1320.83 1320.83 1320.83 Cumulative Depreciation 5001.93 6322.76 7643.60 8964.43 10285.26 Remaining Depreciable Value 17489.86 16169.03 14848.20 13527.36 12206.53 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Depreciation Opening Gross Block 5837.83 5837.83 5837.83 5837.83 5837.83 Additional Capitalisation 0.00 0.00 0.00 0.00 0.00 Closing Gross Block 5837.83 5837.83 5837.83 5837.83 5837.83 Average Gross Block 5837.83 5837.83 5837.83 5837.83 5837.83 Weighted Average Rate of Depreciation (WAROD) (%) 5.29 5.29 5.29 5.29 5.29 Balance useful life of the asset 31 30 29 28 27 Elapsed life of the asset 3 4 5 6 7 Aggregate Depreciable value 5254.05 5254.05 5254.05 5254.05 5254.05 Depreciation during the year 308.95 308.95 308.95 308.95 308.95 Cumulative Depreciation 1314.88 1623.82 1932.77 2241.72 2550.66 Remaining Depreciable Value 3939.17 3630.22 3321.28 3012.33 2703.38

25. The depreciation approved vide order dated 24.2.2016 in Petition No. 297/TT/2015, claimed by the Petitioner in the instant petition and depreciation allowed in respect of the transmission assets is given below: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 341.54 343.28 343.28 343.28 343.28 Claimed by the Petitioner in the instant petition 339.81 339.81 339.81 339.81 339.81 Allowed after true-up vide this order 339.81 339.81 339.81 339.81 339.81 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1322.41 1324.00 1324.00 1324.00 1324.00 Claimed by the Petitioner in the instant petition 1320.83 1320.83 1320.83 1320.83 1320.83 Allowed after true-up vide this order 1320.83 1320.83 1320.83 1320.83 1320.83 Order in Petition No.4/TT/2020 Page 18 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 310.32 311.71 311.71 311.71 311.71 Claimed by the Petitioner in the instant petition 308.96 308.96 308.96 308.96 308.96 Allowed after true-up vide this order 308.95 308.95 308.95 308.95 308.95 Operation & Maintenance Expenses (O&M Expenses)

26. The O&M Expenses claimed by the Petitioner for the transmission assets are as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses Transmission line S/C (Twin/Triple Conductor) 0.297 0.297 0.297 0.297 0.297 Norms ( lakh/Bay) 0.404 0.418 0.432 0.446 0.461 D/C Twin/Triple Conductor 49.46 49.46 49.46 49.46 49.46 Norms ( lakh/km) 0.707 0.731 0.755 0.78 0.806 Total O&M expense ( in lakh) 35.09 36.28 37.47 38.71 40.00 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

400 kV Biharsharif: Koderma-TPS-Biharsharif 1 1 1 1 1 Biharsharif: Koderma-TPS-Biharsharif 1 1 1 1 1 Norms ( lakh/Bay) 60.3 62.3 64.37 66.51 68.71 Transmission line D/C Bundled (4 or more sub-conductor) 110.69 110.69 110.69 110.69 110.69 Norms ( lakh/km) 1.062 1.097 1.133 1.171 1.21 Total O&M Expenses ( in lakh) 238.15 246.03 254.15 262.64 271.35 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

400 kV Maithon: Maithon RB I Bay 1 1 1 1 1 Maithon: Maithon RB II Bay 1 1 1 1 1 Norms ( lakh/Bay) 60.3 62.3 64.37 66.51 68.71 Transmission line Order in Petition No.4/TT/2020 Page 19 Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses D/C Twin/Triple Conductor 31.50 31.50 31.50 31.50 31.50 Norms ( lakh/km) 0.707 0.731 0.755 0.78 0.806 Total O&M Expenses ( in lakh) 142.87 147.63 152.52 157.59 162.81

27. Regulation 29(3) of the 2014 Tariff Regulations specifies the norms for O&M Expenses for the transmission system. Norms specified in respect of the transmission assets are as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses Transmission line S/C (Twin/Triple Conductor) 0.297 0.297 0.297 0.297 0.297 Norms ( lakh/Bay) 0.404 0.418 0.432 0.446 0.461 D/C Twin/Triple Conductor 49.46 49.46 49.46 49.46 49.46 Norms ( lakh/km) 0.707 0.731 0.755 0.78 0.806 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

400 kV No. of bays 2 2 2 2 2 Norms ( lakh/Bay) 60.3 62.3 64.37 66.51 68.71 Transmission line D/C Bundled (4 or more sub conductor) 110.69 110.69 110.69 110.69 110.69 Norms ( lakh/km) 1.062 1.097 1.133 1.171 1.21 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

400 kV No. of bays 2 2 2 2 2 Norms ( lakh/Bay) 60.3 62.3 64.37 66.51 68.71 Transmission line D/C Twin/Triple Conductor 31.50 31.50 31.50 31.50 31.50 Norms ( lakh/km) 0.707 0.731 0.755 0.78 0.806

28. We have considered the submission of the Petitioner. The O&M Expenses are allowed for the instant assets as per the norms specified in the 2014 Tariff Regulations and are as under: Order in Petition No.4/TT/2020 Page 20 ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses Transmission line S/C (Twin/Triple Conductor) 0.297 0.297 0.297 0.297 0.297 Norms ( lakh/Bay) 0.404 0.418 0.432 0.446 0.461 D/C Twin/Triple Conductor 49.46 49.46 49.46 49.46 49.46 Norms ( lakh/km) 0.707 0.731 0.755 0.78 0.806 Total O&M expense ( in lakh) 35.09 36.28 37.47 38.71 40.00 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

400 kV No. of bays 2 2 2 2 2 Norms ( lakh/Bay) 60.3 62.3 64.37 66.51 68.71 Transmission line D/C Bundled (4 or more sub Conductor) 110.69 110.69 110.69 110.69 110.69 Norms ( lakh/km) 1.062 1.097 1.133 1.171 1.21 Total O&M expense ( in lakh) 238.15 246.03 254.15 262.64 271.35 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 O&M Expenses

29. The details of the O&M Expenses approved earlier vide order dated 24.2.2016 in Petition No. 297/TT/2015, claimed by the Petitioner in the instant petition and trued-up O&M Expenses allowed in respect of the instant transmission assets is as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 35.09 36.28 37.47 38.71 40.00 Claimed by the Petitioner in the instant petition 35.09 36.27 37.47 38.71 40.00 Allowed after true-up vide this order 35.09 36.28 37.47 38.71 40.00 Order in Petition No.4/TT/2020 Page 21 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 238.15 246.03 254.15 262.64 271.35 Claimed by the Petitioner in the instant petition 238.15 246.03 254.15 262.64 271.35 Allowed after true-up vide this order 238.15 246.03 254.15 262.64 271.35 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 142.87 147.63 152.52 157.59 162.81 Claimed by the Petitioner in the instant petition 142.87 147.63 152.52 157.59 162.81 Allowed after true-up vide this order 142.87 147.63 152.52 157.59 162.81 Interest on Working Capital (IWC)

30. The Petitioner has claimed IWC as per Regulation 28(1)(c) of the 2014 Tariff Regulations. The components of the working capital and the Petitioners entitlement to interest thereon are discussed hereunder:

i. Maintenance Spares: Maintenance spares have been worked out based on 15% of O&M Expenses.

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

iii. Receivables: The receivables have been worked out on the basis of 2 months of annual transmission charges as worked out above.

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

31. The trued-up IWC has been allowed as per the methodology provided in the Regulation 28 of the 2014 Tariff Regulations and it is as under: Order in Petition No.4/TT/2020 Page 22 ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Working Capital O&M Expenses 2.92 3.02 3.12 3.23 3.33 Maintenance Spares 5.26 5.44 5.62 5.81 6.00 Receivables 176.01 171.30 166.28 161.24 156.43 Total Working Capital 184.19 179.77 175.02 170.27 165.76 Rate of Interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on Working Capital 24.87 24.27 23.63 22.99 22.38 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Working Capital O&M Expenses 19.85 20.50 21.18 21.89 22.61 Maintenance Spares 35.72 36.90 38.12 39.40 40.70 Receivables 719.47 701.83 683.00 664.23 646.16 Total Working Capital 775.04 759.23 742.30 725.51 709.48 Rate of Interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 104.63 102.50 100.21 97.94 95.78 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Interest on Working Capital O&M Expenses 11.91 12.30 12.71 13.13 13.57 Maintenance Spares 21.43 22.14 22.88 23.64 24.42 Receivables 181.68 178.01 174.06 170.12 166.40 Total Working Capital 215.02 212.45 209.65 206.89 204.39 Rate of Interest (%) 13.50 13.50 13.50 13.50 13.50 Interest on working capital 29.03 28.68 28.30 27.93 27.59

32. The details of IWC approved vide order dated 24.2.2016 in Petition No. 297/TT/2015, trued up IWC claimed by the Petitioner and trued up IWC allowed vide this order is shown in the table below: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 25.00 24.49 23.84 23.20 22.56 Claimed by the Petitioner in the instant petition 24.87 24.27 23.63 22.99 22.38 Allowed after true-up vide this order 24.87 24.27 23.63 22.99 22.38 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 104.75 102.57 100.28 98.00 95.74 Claimed by the Petitioner in the instant petition 104.66 102.51 100.21 97.94 95.78 Order in Petition No.4/TT/2020 Page 23 Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Allowed after true-up vide this order 104.63 102.50 100.21 97.94 95.78 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 29.12 28.85 28.47 28.09 27.73 Claimed by the Petitioner in the instant petition 29.03 28.68 28.30 27.93 27.59 Allowed after true-up vide this order 29.03 28.68 28.30 27.93 27.59 Approved Annual Fixed Charges for the 2014-19 Tariff Period

33. The trued up annual fixed charges allowed for the instant transmission assets for the 2014-19 tariff period are summarised hereunder: ( in lakh) Asset-A 2014-15 2015-16 2016-17 201718 2018-19 Depreciation 339.81 339.81 339.81 339.81 339.81 Interest on Loan 266.32 235.61 204.90 174.07 143.49 Return on Equity 389.96 391.85 391.85 391.85 392.88 Interest on Working Capital 24.87 24.27 23.63 22.99 22.38 O&M Expenses 35.09 36.28 37.47 38.71 40.00 Total 1056.04 1027.82 997.66 967.42 938.56 ( in lakh) Asset-B 2014-15 2015-16 2016-17 201718 2018-19 Depreciation 1320.83 1320.83 1320.83 1320.83 1320.83 Interest on Loan 1182.96 1064.23 945.41 826.57 707.73 Return on Equity 1470.25 1477.37 1477.37 1477.37 1481.27 Interest on Working Capital 104.63 102.50 100.21 97.94 95.78 O&M Expenses 238.15 246.03 254.15 262.64 271.35 Total 4316.83 4210.95 4097.97 3985.35 3876.97 ( in lakh) Asset-C 2014-15 2015-16 2016-17 201718 2018-19 Depreciation 308.95 308.95 308.95 308.95 308.95 Interest on Loan 265.82 237.68 209.49 181.17 153.07 Return on Equity 343.45 345.11 345.11 345.11 346.02 Interest on Working Capital 29.03 28.68 28.30 27.93 27.59 O&M Expenses 142.87 147.63 152.52 157.59 162.81 Total 1090.11 1068.05 1044.38 1020.75 998.44

34. The Annual Transmission Charges approved vide order dated 24.2.2016 in Petition No. 297/TT/2015, trued-up AFC claimed by the Petitioner in the instant Order in Petition No.4/TT/2020 Page 24 petition and trued-up AFC allowed in respect of instant transmission assets is as under: ( in lakh) Asset-A 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1061.89 1037.62 1007.31 977.02 946.78 Claimed by the Petitioner 1056.34 1028.01 997.67 967.43 938.57 Allowed after true-up vide this order 1056.04 1027.82 997.66 967.42 938.56 ( in lakh) Asset-B 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 4322.23 4214.25 4100.92 3987.99 3875.31 Claimed by the Petitioner 4317.95 4211.67 4097.95 3985.32 3877.01 Allowed after true-up vide this order 4316.83 4210.95 4097.97 3985.35 3876.97 ( in lakh) Asset-C 2014-15 2015-16 2016-17 2017-18 2018-19 Approved vide order dated 24.2.2016 in Petition No. 297/TT/2015 1094.40 1075.35 1051.61 1028.01 1004.56 Claimed by the Petitioner 1090.39 1068.24 1044.38 1020.75 998.46 Allowed after true-up vide this order 1090.11 1068.05 1044.38 1020.75 998.44 DETERMINATION OF ANNUAL FIXED CHARGES FOR THE 2019-24 TARIFF PERIOD

35. The Petitioner has claimed tariff combining the instant transmission assets into one single asset and has submitted the tariff forms. Accordingly, as per proviso (i) of Regulation 8(1) of the 2019 Tariff Regulations, single tariff for the Combined Asset is approved for the 2019-24 tariff period. 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 2021-22 2022-23 2023-24 Depreciation 1969.61 1969.61 1969.61 1969.61 423.86 Interest on Loan 827.01 649.70 472.40 295.19 187.48 Return on Equity 2098.89 2098.89 2098.89 2098.89 2098.89 Interest on Working Capital 88.72 86.79 84.67 82.56 58.08 O&M Expenses 346.40 358.52 371.13 384.18 397.58 Order in Petition No.4/TT/2020 Page 25 Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Total 5330.63 5163.51 4996.70 4830.43 3165.89

36. The details of IWC claimed by the Petitioner in respect of the Combined Asset for the 2019-24 tariff period are as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expenses 28.87 29.88 30.93 32.02 33.13 Maintenance Spares 51.96 53.78 55.67 57.63 59.64 Receivables 655.41 636.60 616.03 595.53 389.25 Total Working Capital 736.24 720.26 702.63 685.18 482.02 Rate of Interest (%) 12.05 12.05 12.05 12.05 12.05 Interest on Working Capital 88.72 86.79 84.67 82.56 58.08 Effective Date of Commercial Operation (E-COD)

37. The Petitioner has claimed E-COD based on the trued-up capital cost and actual COD of the individual assets. E-COD has been worked out as on 30.1.2011 as under: Asset Trued-up Capital Cost as on 31.3.2019 ( in lakh) Actual No. of days from COD of Asset from COD of Project Weight of cost Weighted days Effective COD (latest COD total weighted Days) Asset-A 6421.30 1.2.2010 485 17.24% 83.61 30.1.2011 Asset-B 24990.88 1.6.2011 0 67.09% 0.00 Asset-C 5837.83 1.10.2010 243 15.67% 38.08 Total 37250.01 121.69 Weighted Average Life (WAL) of the Combined Asset

38. WAL has been determined based on the admitted capital cost of individual elements as on 31.3.2019 and their respective useful life as specified in the 2019 Tariff Regulations. Accordingly, WAL of the Combined Asset has been worked out as

34 years as under: Particulars Combined Capital Cost as on 31.3.2019 ( in lakh) (1) Life (in years) Weighted Cost ( in lakh) (3) = (1) x (2) Weighted Avg. Life of Asset (in years) (4) = (3)/ (1) Order in Petition No.4/TT/2020 Page 26 Particulars Combined Capital Cost as on 31.3.2019 ( in lakh) (1) Life (in years) Weighted Cost ( in lakh) (3) = (1) x (2) Weighted Avg. Life of Asset (in years) (4) = (3)/ (1) Transmission Line 35516.72 35 1243085.30 Sub-station 1467.94 25 36698.62 PLCC 265.34 15 3980.13 IT Equipment (Incl. Software) 0.00 6 0.00 Total 37250.01 1283764.06 34.4635 (rounded off to 34 years)

39. WAL as on 1.4.2019 as determined above is applicable prospectively (i.e. for 2019-24 tariff period onwards) and no retrospective adjustment of depreciation in previous tariff period is required to be done. As discussed above, the Effective COD of the assets is 30.1.2011 and the lapsed life of the project as a whole works out as 8 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 26 years. Capital Cost as on 1.4.2019

40. Regulation 19 of the 2019 Tariff Regulations provides as under:

19. Capital Cost: (1) The Capital cost of the generating station or the transmission system, as the case may be, as determined by the Commission after prudence check in accordance with these regulations shall form the basis for determination of tariff for existing and new projects. (2) The Capital Cost of a new project shall include the following: (a) The expenditure incurred or projected to be incurred up to the date of commercial operation of the project; (b) Interest during construction and financing charges, on the loans (i) being equal to 70% of the funds deployed, in the event of the actual equity in excess of 30% of the funds deployed, by treating the excess equity as normative loan, or (ii) being equal to the actual amount of loan in the event of the actual equity less than 30% of the funds deployed; (c) Any gain or loss on account of foreign exchange risk variation pertaining to the loan amount availed during the construction period; (d) Interest during construction and incidental expenditure during construction as computed in accordance with these regulations; (e) Capitalised initial spares subject to the ceiling rates in accordance with these regulations; Order in Petition No.4/TT/2020 Page 27 (f) Expenditure on account of additional capitalization and de-capitalisation determined in accordance with these regulations; (g) Adjustment of revenue due to sale of infirm power in excess of fuel cost prior to the date of commercial operation as specified under Regulation 7 of these regulations; (h) Adjustment of revenue earned by the transmission licensee by using the assets before the date of commercial operation;

(i) Capital expenditure on account of ash disposal and utilization including handling and transportation facility; (j) Capital expenditure incurred towards railway infrastructure and its augmentation for transportation of coal upto the receiving end of the generating station but does not include the transportation cost and any other appurtenant cost paid to the railway; (k) Capital expenditure on account of biomass handling equipment and facilities, for co- firing;

(l) Capital expenditure on account of emission control system necessary to meet the revised emission standards and sewage treatment plant; (m) Expenditure on account of fulfilment of any conditions for obtaining environment clearance for the project; (n) Expenditure on account of change in law and force majeure events; and (o) 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. (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. (4) The capital cost in case of existing or new hydro generating station shall also include: (a) cost of approved rehabilitation and resettlement (R&R) plan of the project in conformity with National R&R Policy and R&R package as approved; and (b) cost of the developers 10% contribution towards Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) project in the affected area. (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 Order in Petition No.4/TT/2020 Page 28 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.

41. The combined admitted capital cost of 37250.01 lakh as on 31.3.2019 as trued up in above paragraphs is considered as the capital cost as on 1.4.2019 for the purpose of determination of tariff for the Combines Asset for the 2019-24 tariff period.

42. The Petitioner has not claimed/ projected any ACE during 2019-24 tariff period. The Petitioner was directed vide TV (technical validation) letter dated 19.5.2020 to confirm that no previously un-discharged liabilities are pending other than claimed in the petition as no ACE has been claimed during this period. In response, the Petitioner has submitted that no previously un-discharged liabilities are pending as of now other than that claimed in the petition.

43. We have considered the submissions made by the Petitioner. Accordingly, the capital cost considered for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Capital Cost as on 1.4.2019 ACE claimed Total Capital Cost as on 31.3.2024 2019-24 37250.01 Nil 37250.01 Order in Petition No.4/TT/2020 Page 29 Debt-Equity ratio

44. Regulation 18 of the 2019 Tariff Regulations provides as under:

18. Debt-Equity Ratio: (1) For new projects, the debt-equity ratio of 70:30 as on date of commercial operation shall be considered. If the equity actually deployed is more than 30% of the capital cost, equity in excess of 30% shall be treated as normative loan: Provided that:

i. where equity actually deployed is less than 30% of the capital cost, actual equity shall be considered for determination of tariff:

ii. the equity invested in foreign currency shall be designated in Indian rupees on the date of each investment:

iii. any grant obtained for the execution of the project shall not be considered as a part of capital structure for the purpose of debt: equity ratio. Explanation-The premium, if any, raised by the generating company or the transmission licensee, as the case may be, while issuing share capital and investment of internal resources created out of its free reserve, for the funding of the project, shall be reckoned as paid up capital for the purpose of computing return on equity, only if such premium amount and internal resources are actually utilised for meeting the capital expenditure of the generating station or the transmission system. (2) The generating company or the transmission licensee, as the case may be, shall submit the resolution of the Board of the company or approval of the competent authority in other cases regarding infusion of funds from internal resources in support of the utilization made or proposed to be made to meet the capital expenditure of the generating station or the transmission system including communication system, as the case may be. (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 Order in Petition No.4/TT/2020 Page 30 tariff, and renovation and modernisation expenditure for life extension shall be serviced in the manner specified in clause (1) of this Regulation.

45. The details of the debt-equity considered for the purpose of computation of tariff for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Particulars Capital Cost as on 1.4.2019 for 2019-24 Capital Cost as on 31.3.2024 Debt 26075.01 70.00 Nil 70.00 26075.01 70.00 Equity 11175.00 30.00 Nil 30.00 11175.00 30.00 Total 37250.01 100.00 Nil 100.00 37250.01 100.00 Return on Equity (RoE)

46. Regulations 30 and 31 of the 2019 Tariff Regulations provides 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 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 up to 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%: Order in Petition No.4/TT/2020 Page 31 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 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. income from business other than business of generation or transmission, as the case may be) 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. Illustration-

(i) In case of a generating company or a transmission licensee paying Minimum Alternate Tax (MAT) @ 21.55% including surcharge and cess: Rate of return on equity = 15.50/(1-0.2155) = 19.758%

(ii) In case of a generating company or a transmission licensee paying normal corporate tax including surcharge and cess: (a) Estimated Gross Income from generation or transmission business for FY 2019-20 is Rs 1,000 crore; (b) Estimated Advance Tax for the year on above is Rs 240 crore; (c) Effective Tax Rate for the year 2019-20 = Rs 240 Crore/Rs 1000 Crore = 24%; (d) Rate of return on equity = 15.50/ (1-0.24) = 20.395%. (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 2019-24 on 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. Order in Petition No.4/TT/2020 Page 32

47. The Petitioner has submitted that MAT rate is applicable to the Petitioner's company. Accordingly, the MAT rate applicable in 2019-20 has been considered for the purpose of RoE, which shall be trued-up with actual tax rate in accordance with Regulation 31(3) of the 2019 Tariff Regulations. RoE allowed for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Opening Equity 11175.00 11175.00 11175.00 11175.00 11175.00 Additions 0.00 0.00 0.00 0.00 0.00 Closing Equity 11175.00 11175.00 11175.00 11175.00 11175.00 Average Equity 11175.00 11175.00 11175.00 11175.00 11175.00 Return on Equity (Base Rate) (%) 15.50 15.50 15.50 15.50 15.50 MAT Rate for respective year (%) 17.472 17.472 17.472 17.472 17.472 Rate of Return on Equity (%) 18.782 18.782 18.782 18.782 18.782 Return on Equity 2098.83 2098.83 2098.83 2098.83 2098.83 Interest on Loan (IoL)

48. Regulation 32 of the 2019 Tariff Regulations provides that:

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 up to 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 Order in Petition No.4/TT/2020 Page 33 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.

49. We have considered the submissions of the Petitioner. 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 adjusted. Accordingly, the floating rate of interest, if any, shall be considered at the time of true-up. IoL has been allowed in accordance with Regulation 32 of the 2019 Tariff Regulations. The IoL allowed for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Gross Normative Loan 26075.01 26075.01 26075.01 26075.01 26075.01 Cumulative Repayments upto Previous Year 15897.47 17867.06 19836.65 21806.23 23775.82 Net Loan-Opening 10177.53 8207.95 6238.36 4268.77 2299.19 Additions 0.00 0.00 0.00 0.00 0.00 Repayment during the year 1969.59 1969.59 1969.59 1969.59 443.14 Net Loan-Closing 8207.95 6238.36 4268.77 2299.19 1856.04 Average Loan 9192.74 7223.15 5253.57 3283.98 2077.61 Weighted Average Rate of Interest on Loan (%) 8.9964 8.9948 8.9923 8.9892 8.9826 Interest on Loan 827.02 649.71 472.42 295.20 186.62 Depreciation

50. Regulation 33(1), (2) and (5) of the 2019 Tariff Regulations provides that:

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 Order in Petition No.4/TT/2020 Page 34 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. (3) 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: Provided that the salvage value for IT equipment and software shall be considered as NIL and 100% value of the assets shall be considered depreciable; Provided further that in case of hydro generating stations, the salvage value shall be as provided in the agreement, if any, signed by the developers with the State Government for development of the generating station: Provided also that the capital cost of the assets of the hydro generating station for the purpose of computation of depreciated value shall correspond to the percentage of sale of electricity under long-term power purchase agreement at regulated tariff: Provided also that any depreciation disallowed on account of lower availability of the generating station or unit or transmission system as the case may be, shall not be allowed to be recovered at a later stage during the useful life or the extended life. (4) 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. (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.

51. The Gross Block during the 2019-24 tariff period has been depreciated at WAROD (as placed in Annexure-II). WAROD has been worked out after taking into account the depreciation rates of IT and non-IT assets as prescribed in the 2019 Order in Petition No.4/TT/2020 Page 35 Tariff Regulations and depreciation allowed for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation Opening Gross Block 37250.01 37250.01 37250.01 37250.01 37250.01 Additional Capitalisation 0.00 0.00 0.00 0.00 0.00 Closing Gross Block 37250.01 37250.01 37250.01 37250.01 37250.01 Average Gross Block 37250.01 37250.01 37250.01 37250.01 37250.01 Rate of Depreciation (%) 5.29 5.29 5.29 5.29 Spreading Balance useful life of the asset 26 25 24 23 22 Elapsed life 8 9 10 11 12 Depreciable Value 33525.01 33525.01 33525.01 33525.01 33525.01 Depreciation during the year 1969.59 1969.59 1969.59 1969.59 443.14 Cumulative Depreciation 17867.06 19836.65 21806.23 23775.82 24218.96 Remaining Depreciable Value 15657.95 13688.36 11718.78 9749.19 9306.04 Operation & Maintenance Expenses (O&M Expenses)

52. The O&M Expenses claimed by the Petitioner for the Combined Asset for the 2019-24 period are as under: ( in lakh) O&M Expenses Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

400 kV No. of bays 4 4 4 4 4 Norms ( lakh/Bay) 32.15 33.28 34.45 35.66 36.91 Transmission line S/C (Twin/Triple Conductor) 0.297 0.297 0.297 0.297 0.297 Norms ( lakh/km) 0.503 0.521 0.539 0.558 0.578 D/C Bundled (4 or more sub conductors) 110.69 110.69 110.69 110.69 110.69 Norms ( lakh/km) 1.322 1.368 1.416 1.466 1.517 D/C Twin/Triple Conductor 80.956 80.956 80.956 80.956 80.956 Norms ( lakh/km) 0.881 0.912 0.944 0.977 1.011 O&M for PLCC No claim Total O&M Expenses ( in lakh) 346.40 358.52 371.13 384.18 397.58

53. Regulations 35(3)(a) and (4) of the 2019 Tariff Regulations provide as under:

35. Operation and Maintenance Expenses: Order in Petition No.4/TT/2020 Page 36 (3) Transmission system: (a) The following normative operation and maintenance expenses shall be admissible for the transmission system: Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Norms for sub-station Bays (Rs 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 (Rs 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 (Rs Lakh per km) Single Circuit (Bundled Conductor with six or more sub-conductors) 0.881 0.912 0.944 0.977 1.011 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 (Rs. 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 Order in Petition No.4/TT/2020 Page 37 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 (2500 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 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.

54. We have considered the submissions of the Petitioner. The O&M Expenses allowed for the Combined Asset for the 2019-24 tariff period is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expenses Order in Petition No.4/TT/2020 Page 38 Particulars 2019-20 2020-21 2021-22 2022-23 2023-24

400 kV Maithon: Maithon Rb I Bay 1 1 1 1 1 Maithon: Maithon RB II Bay 1 1 1 1 1 Biharsharif: Koderma-TPS-Biharsharif 1 1 1 1 1 Biharsharif: Koderma-TPS-Biharsharif 1 1 1 1 1 Norms ( lakh/Bay) 32.15 33.28 34.45 35.66 36.91 Transmission line S/C (Twin/Triple Conductor) 0.297 0.297 0.297 0.297 0.297 Norms ( lakh/km) 0.503 0.521 0.539 0.558 0.578 D/C Bundled (4 or more sub conductors) 110.69 110.69 110.69 110.69 110.69 Norms ( lakh/km) 1.322 1.368 1.416 1.466 1.517 D/C Twin/Triple Conductor 80.956 80.956 80.956 80.956 80.956 Norms ( lakh/km) 0.881 0.912 0.944 0.977 1.011 Total O&M Expenses ( in lakh) 346.40 358.53 371.12 384.17 397.57 Interest on Working Capital (IWC)

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

34. Interest on Working Capital: (1) The working capital shall cover: (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; Order in Petition No.4/TT/2020 Page 39

56. The Petitioner has submitted that it has computed IWC for the 2019-24 period considering the SBI Base Rate plus 350 basis points as on 1.4.2019. The Petitioner has considered the rate of interest on working capital as 12.05%. The IWC is worked out in accordance with Regulation 34 of the 2019 Tariff Regulations. ROI considered is 12.05% (SBI 1-year MCLR applicable as on 1.4.2019 of 8.55% plus 350- basis points) for 2019-20, whereas, ROI for 2020-21 onwards has been considered as 11.25% (SBI 1-year MCLR applicable as on 1.4.2020 of 7.75% plus 350 basis points). The components of the working capital and interest thereon allowed for the Combined Asset for the 2019-24 tariff period are as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expenses 28.87 29.88 30.93 32.01 33.13 Maintenance Spares 51.96 53.78 55.67 57.63 59.64 Receivables 655.40 635.87 615.32 594.84 391.06 Total Working Capital 736.22 719.53 701.91 684.48 483.83 Rate of Interest (%) 12.05 11.25 11.25 11.25 11.25 Interest on working capital 88.71 80.95 78.97 77.00 54.43 Annual Fixed Charges for the 2019-24 Tariff Period

57. The transmission charges allowed for the Combined Asset for the 2019-24 period are summarised under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 1969.59 1969.59 1969.59 1969.59 443.14 Interest on Loan 827.02 649.71 472.42 295.20 186.62 Return on Equity 2098.83 2098.83 2098.83 2098.83 2098.83 Interest on Working Capital 88.71 80.95 78.97 77.00 54.43 O&M Expenses 346.40 358.53 371.12 384.17 397.57 Total 5330.56 5157.61 4990.92 4824.80 3180.61 Filing Fee and the Publication Expenses

58. 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 Order in Petition No.4/TT/2020 Page 40 from the beneficiaries on pro-rata basis in accordance with Regulation 70(1) of the 2019 Tariff Regulations. Licence Fee & RLDC Fees and Charges

59. The Petitioner has requested to allow it to bill and recover license fee and RLDC fees and charges separately from the Respondents. The Petitioner shall be entitled for reimbursement of licence fee in accordance with Regulation 70(4) of the 2019 Tariff Regulations for 2019-24 period. The Petitioner shall also be entitled for recovery of RLDC fee and charges in accordance with Regulations 70(3) of the 2019 Tariff Regulations for the 2019-24 period. Goods and Services Tax

60. The Petitioner has submitted that, if GST is levied at any rate and at any point of time in future on Charges of Transmission of Electricity, the same shall be borne and additionally paid by the Respondent(s) to the Petitioner and the same shall be charged & billed separately by the Petitioner. Further additional taxes, if any, are to be paid by the Petitioner on account of demand from Govt. / Statutory authorities, the same may be allowed to be recovered from the beneficiaries.

61. We have considered the submissions of the Petitioner. GST is not levied on transmission service at present and we are of the view that Petitioners prayer is premature. Security Expenses

62. 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 IWC. The Petitioner has requested to consider the actual security expenses incurred during 2018-19 for claiming Order in Petition No.4/TT/2020 Page 41 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 will 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 the audited accounts may be allowed to be recovered from the beneficiaries on a yearly basis. Any application filed by the Petitioner in this regard will be dealt with in accordance with the appropriate provisions of the 2019 Tariff Regulations.

63. We have considered the submissions of the Petitioner. We are of the view that the Petitioner should claim security expenses for all the transmission assets in one petition. It is observed that the Petitioner has already filed the Petition No.260/MP/2020 claiming consolidated security expenses on projected basis for the 2019-24 tariff period on the basis of actual security expenses incurred in 2018-19. Therefore, security expenses will be dealt with in Petition No. 260/MP/2020 in accordance with the applicable provisions of the 2019 Tariff Regulations. Capital Spares

64. 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

65. The billing, collection and disbursement of the transmission charges approved shall be governed by the provisions of the Central Electricity Regulatory Commission Order in Petition No.4/TT/2020 Page 42 (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2010 or the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020, as applicable, as provided in Regulation 43 of the 2014 Tariff Regulations for the 2014-19 tariff period and Regulation 57 of the 2019 Tariff Regulations for the 2019-24 tariff period.

66. To summarise, the trued-up Annual Fixed Charges allowed for the instant assets for the 2014-19 tariff period are as under: ( in lakh) Annual Fixed Charges 2014-15 2015-16 2016-17 2017-18 2018-19 Asset-A 1056.04 1027.82 997.66 967.42 938.56 Asset-B 4316.83 4210.95 4097.97 3985.35 3876.97 Asset-C 1090.11 1068.05 1044.38 1020.75 998.44

67. The Annual Fixed Charges allowed for the Combined Asset for the 2019-24 tariff period are as under: ( in lakh) Annual Fixed Charges 2019-20 2020-21 2021-22 2022-23 2023-24 Combined Asset 5330.56 5157.61 4990.92 4824.80 3180.61

68. This order disposes of Petition No. 4/TT/2020. Sd/ Sd/ Sd/ (Arun Goyal) (I.S. Jha) (P.K. Pujari) Member Member Chairperson Order in Petition No.4/TT/2020 Page 43 Annexure-1 Asset- A Asset- B 2014-19 Capital Expenditure 2014-19 2014-15 2015-16 2016-17 2017-18 2018-19 Land - Freehold 0.00 0.00 0.00 - 0.00 0.00 0.00 0.00 0.00 Land - Leasehold 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Building Civil Works & Colony 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Transmission Line 6348.62 0.00 6348.62 5.28% 335.21 335.21 335.21 335.21 335.21 Sub Station 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 0.00 0.00 PLCC 72.68 0.00 72.68 6.33% 4.60 4.60 4.60 4.60 4.60 IT Equipment (Incl. Software) 0.00 0.00 0.00 15.00% 0.00 0.00 0.00 0.00 0.00 Total 6421.30 0.00 6421.30 Total 339.81 339.81 339.81 339.81 339.81 6421.30 6421.30 6421.30 6421.30 6421.30 5.29% 5.29% 5.29% 5.29% 5.29% Average Gross Block ( in lakh) Weighted Average Rate of Depreciation Admitted Capital Cost as on 1.4.2014 / COD ( in lakh) Additional Capitalization ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations ( in lakh) 2014-19 Capital Expenditure 2014-19 2014-15 2015-16 2016-17 2017-18 2018-19 Land - Freehold 0.00 0.00 0.00 - 0.00 0.00 0.00 0.00 0.00 Land - Leasehold 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Building Civil Works & Colony 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Transmission Line 23865.95 0.00 23865.95 5.28% 1260.12 1260.12 1260.12 1260.12 1260.12 Sub Station 999.80 0.00 999.80 5.28% 52.79 52.79 52.79 52.79 52.79 PLCC 125.13 0.00 125.13 6.33% 7.92 7.92 7.92 7.92 7.92 IT Equipment (Incl. Software) 0.00 0.00 0.00 15.00% 0.00 0.00 0.00 0.00 0.00 Total 24990.88 0.00 24990.88 Total 1320.83 1320.83 1320.83 1320.83 1320.83 24990.88 24990.88 24990.88 24990.88 24990.88 5.29% 5.29% 5.29% 5.29% 5.29% Average Gross Block ( in lakh) Weighted Average Rate of Depreciation Admitted Capital Cost as on 1.4.2014 / COD ( in lakh) Additional Capitalization ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations ( in lakh) Order in Petition No.4/TT/2020 Page 44 Asset- C 2014-19 Capital Expenditure 2014-15 2014-15 2015-16 2016-17 2017-18 2018-19 Land - Freehold 0.00 0.00 0.00 - 0.00 0.00 0.00 0.00 0.00 Land - Leasehold 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Building Civil Works & Colony 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 Transmission Line 5302.15 0.00 5302.15 5.28% 279.95 279.95 279.95 279.95 279.95 Sub Station 468.14 0.00 468.14 5.28% 24.72 24.72 24.72 24.72 24.72 PLCC 67.53 0.00 67.53 6.33% 4.27 4.27 4.27 4.27 4.27 IT Equipment (Incl. Software) 0.00 0.00 0.00 15.00% 0.00 0.00 0.00 0.00 0.00 Total 5837.83 0.00 5837.83 Total 308.95 308.95 308.95 308.95 308.95 5837.83 5837.83 5837.83 5837.83 5837.83 5.29% 5.29% 5.29% 5.29% 5.29% Average Gross Block ( in lakh) Weighted Average Rate of Depreciation Admitted Capital Cost as on 1.4.2014 / ( in lakh) Additional Capitalization ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciatio n as per Regulations Annual Depreciation as per Regulations ( in lakh) Order in Petition No.4/TT/2020 Page 45 Annexure-2 2019-24 Capital Expenditure 2019-24 2019-20 2020-21 2021-22 2022-23 Land - Freehold 0.00 0.00 0.00 - 0.00 0.00 0.00 0.00 Land - Leasehold 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 Building Civil Works & Colony 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 Transmission Line 35516.72 0.00 35516.72 5.28% 1875.28 1875.28 1875.28 1875.28 Sub Station 1467.94 0.00 1467.94 5.28% 77.51 77.51 77.51 77.51 PLCC 265.34 0.00 265.34 6.33% 16.80 16.80 16.80 16.80 IT Equipment (Incl. Software) 0.00 0.00 0.00 15.00% 0.00 0.00 0.00 0.00 Total 37250.01 0.00 37250.01 Total 1969.59 1969.59 1969.59 1969.59 37250.01 37250.01 37250.01 37250.01 5.29% 5.29% 5.29% 5.29% *Since the asset has completed 12 years of l ife as on 31.3.2023, the remaining depreciable value of 9749.19 lakh as on 31.3.2023 has been spread across the balance useful l ife of 22 years in accordance with Regulation 33(5) of the 2019 Tariff Regulations. The annual depreciation from 2022-23 onwards is 443.14 lakh. Average Gross Block ( in lakh) Weighted Average Rate of Depreciation Combined Admitted Capital Cost as on 1.4.2019 / COD ( in lakh) Additional Capitalizatio Admitted Capital Cost as on 31.3.2024 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations ( in lakh)

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

Structured Summary of the Commission's Order in Petition No. 4/TT/2020

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Submissions

Respondents' Position

Table of Precedents Cited

Court's Reasoning and Analysis

A. Truing-up for 2014-19 (2014 Tariff Regulations)

B. Determination for 2019-24 (2019 Tariff Regulations) — Combined Asset

Holding and Implications

Direct effects on the parties (specific figures recorded in the order)

Other specific directives / consequences

Implication regarding precedent

Administrative/Concluding Note

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

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