Power Grid Corporation Of India Ltd. v. Karnataka Power Transmission Corporation Ltd. And Others, Central Electricity Regulatory Commission, Judgment, Law, casemine.com

Precedent	Rule or Principle Cited For	Application by the Court
APTEL judgement dated 27.4.2011 in Appeal No. 72/2010	Principles for apportioning cost of time over-run: (i) delays attributable to developer (developer bears cost; LD and insurance can be retained by developer); (ii) delays beyond developer's control (benefit of additional cost can be given; consumers should get full benefit of LD/insurance to reduce capital cost); (iii) intermediate cases (sharing possible).	The Commission applied these principles to conclude that where time over-run was not condoned (Assets-2 & 4), IDC and IEDC for the period of time over-run disallowed earlier are not capitalised and LD recovered can be retained by the Petitioner; ACE and capital cost were adjusted accordingly.
Commission order dated 27.4.2020 in Petition No. 274/TT/2019	Effective tax rate (MAT) for grossing up RoE for entities under MAT regime: notified MAT rate for the respective financial year to be considered as the effective tax rate for grossing up RoE.	The Commission applied this approach and used notified MAT rates (inclusive of surcharge & cess) to compute grossed-up RoE for truing-up of 2014-19 and for determination in 2019-24 (with truing-up of actual tax at year-end).
Commission order dated 29.7.2016 in Petition No. 201/TT/2015	Earlier determination of capital cost, tariff and treatment (including disallowance of time over-run for Asset-1; capital cost and IDC admitted earlier for Asset-1).	The Commission used that order's admitted capital cost, IDC allowances and time-overrun decisions when truing-up Asset-1 and reconciled claimed amounts against previously admitted figures.
Commission order dated 9.7.2018 in Petition No. 215/TT/2016	Earlier determination of capital cost, tariff and disallowance of time over-run for Assets-2, 3 and 4 and corresponding IDC/IEDC adjustments.	The Commission relied on that order's admitted capital cost and time-overrun conclusions for Assets-2, 3 and 4, adjusted capital cost and disallowed IDC/IEDC as appropriate, and used those figures as the starting point for truing-up.
Commission order dated 9.5.2020 in Petition No. 19/TT/2020	Principle that the scope of truing-up is limited to truing up of capital expenditure already admitted; apportionment or re-apportionment of capital expenditure (e.g., apportionment to IT equipment for first time at truing-up) cannot be allowed.	The Commission applied that principle to deny the Petitioner's post-facto apportionment of capital cost to IT equipment for 2014-19 and retained the earlier depreciation treatment (IT equipment as part of sub-station with lower rate) for truing-up; IT equipment treated separately only for 2019-24.
Commission order dated 24.1.2021 in Petition No. 126/TT/2020 (referenced)	Finding that PLCC (power line carrier communication) equipment, though a communication system, has been treated as part of sub-station in the tariff norms and therefore separate O&M @2% under communication-system norms should not be allowed.	The Commission applied the same reasoning to disallow the Petitioner's claim for separate O&M for PLCC @2% of capital cost, directing that PLCC O&M be considered under sub-station norms and the decision be communicated to affected petitions.

The instant petition has been filed by Power Grid Corporation of India Ltd., (hereinafter referred to as the Petitioner), a deemed transmission licensee, for truing up of transmission tariff of 2014-19 tariff period under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred to as the 2014 Tariff Regulations) and for determination of tariff for the 2019-24 tariff period 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 Sub-Station extension works associated with transmission system required for evacuation of power from Kudgi TPS (3X800 MW in Phase-I) of NTPC Limited in Southern Region (hereinafter referred to as the Transmission Project): Asset-1: 4 Nos. 400 kV Line Bays at Narendra (New) for Kudgi TPS-Narendra (New) 400 kV 2 X D/C Quad Lines; Asset-2: 2 Nos. 400 kV line bays at Narendra (New), 2 Nos. 400 kV line bays at Madhugiri (Tumkur), 2X63 MVAR (fixed) line reactors (with 600 ohm NGRs) at Page 4 of 70 Order in Petition No. 36/TT/2020 Narendra (New) & 2X63 MVAR (fixed) line reactors (with 600 ohm NGRs) at Madhugiri (Tumkur) for Narendra (New)-Madhugiri (Tumkur) 765 kV D/C line (initially charged at 400 kV); Asset-3: 2 Nos. 400 kV line bays at Madhhugiri (Tumkur) for Madhugiri (Tumkur)-Bidadi 400 kV D/C (Quad) line; and Asset-4: 2 Nos. 400 kV line bays at Bidadi for Madhugiri (Tumkur)-Bidadi 400 kV D/C (Quad) line.

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

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

2) Approve the Completion cost and additional capitalization incurred during 2014-19 and approve projected additional capitalization during 2019-24.

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

4) Approve the reimbursement of expenditure by the beneficiaries towards petition filing fee, and expenditure on publishing of notices in newspapers in terms of Regulation

70 (1) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019, and other expenditure ( if any) in relation to the filing of petition.

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

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

7) Allow the petitioner to file a separate petition before Honble Commission for claiming the overall security expenses and consequential IOWC on that security expenses as mentioned at para 11.6 above.

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

9) 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 Page 5 of 70 Order in Petition No. 36/TT/2020 beneficiaries. and pass such other relief as Honble Commission deems fit and appropriate under the circumstances of the case and in the interest of justice. Background

3. The Investment Approval (IA) for implementation of the Transmission Project was accorded by the Board of Directors of the Petitioner in the 298th meeting held on 5.2.2014 at an estimated cost of 16740 lakh including an IDC of 806 lakh based on December, 2013 price level (communicated vide Memorandum No. C/CP/Kudgi dated 17.2.2016). The Petitioner vide Affidavit dated 31.3.2017 has submitted the Revised Cost Estimate (RCE) of the project as 15727 lakh including IDC of 751 lakh based on October, 2016 price level.

4. The scope of work covered under the Transmission Project is as under:

I. Sub-station: (1) Extension of Narendra (New) substation (GIS) at Kudgi This sub-station is under construction by PGCIL and shall be extended to accommodate the following under this project:

(i) 4 Nos. 400 kV line bays at Narendra (New) for Kudgi TPS- Narendra (New) 400 kV 2XD/C Quad lines.

(ii) 2 Nos. 400 kV line bays at Narendra (New) for Narendra (New)- Madhugiri 765 kV D/C line initially charged at 400 kV. (2) Extension of Madhugiri Sub-station (AIS) This sub-station is under construction by PGCIL and shall be extended to accommodate following under this project:

(i) 2 Nos. 400 kV line bays at Madhugiri for Narendra (New)- Madhugiri 765 kV D/Cline initially charged at 400 kV.

(ii) 2 Nos. 400 kV line bays at Madhugiri for Madhugiri- Bidadi 400 kV D/C (Quad) line. Page 6 of 70 Order in Petition No. 36/TT/2020 (3) Extension of Bidadi Sub-station (GIS) This sub-station is under operation by PGCIL and shall be extended to accommodate the following under this project:

(i) 2 Nos. 400 kV line bays at Bidadi for Madhugiri- Bidadi 400 kV D/C (Quad) line.

II. Reactive Compensation: (1) Line Reactor

(i) 2X63 MVAR (fixed) line reactors (with 600 ohm NGRs) at Narendra (New) for Narendra (New)- Madhugiri 765 kV D/C line initially charged at 400 kV.

(ii) 2X63 MVAR (fixed) line reactors (with 600 ohm NGRs) at Madhugiri for Narendra (New)Madhugiri 765 kV D/C line initially charged at 400 kV.

5. As per the IA dated 5.2.2014, the Transmission Project was scheduled to be put into commercial operation within 22 months of the IA, i.e. by 4.12.2015. The details of commercial operation of the transmission assets covered under the instant petition are as under: Asset COD Remark Asset-1 11.12.2015 Earlier covered in Petition No. 201/TT/2015 Asset-2 24.9.2016 Earlier covered in Petition No. 215/TT/2016 Asset-3 25.8.2016 Asset-4 3.4.2017

6. The transmission tariff in respect of Asset-1 from its COD to 31.3.2019 was allowed vide order dated 29.7.2016 in Petition No. 201/TT/2015 as per the 2014 Tariff Regulations. The transmission tariff in respect of Assets-2, 3 and 4 from COD to 31.3.2019 was determined vide order dated 9.7.2018 in Petition No. 215/TT/2016 under the 2014 Tariff Regulations. Page 7 of 70 Order in Petition No. 36/TT/2020

7. The Respondents are the transmission and distribution licensees, who are procuring transmission services from the Petitioner, mainly beneficiaries of the Southern Region.

8. The Petitioner has served the petition on the Respondents and notice of this petition has also been published in the 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 by the Petitioner. General Notice dated 12.3.2020 directing the beneficiaries/Respondents to file reply in the matter was also posted on the Commissions website. However, none of the Respondents have filed their reply in the matter.

9. This order is issued considering the submissions made in the Petitioners affidavits dated 21.12.2019, 12.3.2020 and 16.7.2020. In the course of hearing of the matter on 24.6.2020, Tamil Nadu Generation and Distribution Corporation Ltd. (TANGEDCO), Respondent No. 4 sought time to file reply but no reply was filed on its behalf. TANGEDCO had raised the issues of recovery of transmission charges from NTPC, security expenses and capital spares during the hearing.

10. The hearing in this matter was held on 24.6.2020 through video conference and the order was reserved.

11. Having heard the representatives of the Petitioner, advocate of the TANGEDCO and perused the material on record, we proceed to dispose of the petition. Truing Up of Annual Fixed Charges for 2014-19 Tariff Period

12. The details of the trued up transmission charges claimed by the Petitioner for the transmission asset for the 2014-19 tariff period are as under: Page 8 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Depreciation 69.92 246.91 260.34 260.34 Interest on Loan 75.38 252.91 246.19 224.84 Return on Equity 78.22 276.16 291.26 292.04 Interest on working capital 8.75 30.02 30.92 30.87 O & M Expenses 65.18 220.08 227.36 234.92 Total 297.45 1026.08 1056.07 1043.01 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 149.28 294.25 303.59 Interest on Loan 157.24 288.96 273.99 Return on Equity 165.23 325.76 337.12 Interest on working capital 16.75 32.72 33.27 O & M Expenses 123.64 246.70 254.88 Total 612.14 1188.39 1202.85 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 11.26 24.07 29.37 Interest on Loan 11.75 23.25 26.26 Return on Equity 12.47 26.72 32.74 Interest on working capital 4.81 8.57 9.11 O & M Expenses 77.24 133.02 137.42 Total 117.53 215.63 234.90 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 Depreciation 107.53 118.26 Interest on Loan 110.92 111.41 Return on Equity 118.85 131.20 Interest on working capital 13.06 13.79 O & M Expenses 113.06 117.46 Total 463.42 492.12

13. The details of the trued-up Interest on Working Capital (IWC) claimed by the Petitioner for the transmission asset for the 2014-19 tariff period are as under: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Page 9 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 19.90 20.56 21.24 Maintenance Spares 35.82 37.01 38.23 Receivables 197.03 198.07 200.48 Total 252.75 255.64 259.95 Rate of Interest (%) 12.80 12.80 12.80 Interest on Working Capital 16.75 32.72 33.27 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 10.73 11.09 11.45 Maintenance Spares 19.31 19.95 20.61 Receivables 32.65 35.94 39.15 Total 62.69 66.98 71.21 Rate of Interest (%) 12.80 12.80 12.80 Interest on Working Capital 4.81 8.57 9.11 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 O & M Expenses 9.47 9.79 Maintenance Spares 17.05 17.62 Receivables 77.66 82.02 Total 104.18 109.43 Rate of Interest (%) 12.60 12.60 Interest on Working Capital 13.06 13.79 Capital Cost

14. The Commission vide order dated 29.7.2016 in Petition No. 201/TT/2015 allowed capital cost of 4227.61 lakh as on COD and Additional Capital Expenditure (ACE) of 506.22 lakh from COD to 31.3.2019 in respect of Asset-1. Further, the Commission vide order dated 9.7.2018 in Petition No. 215/TT/2016 allowed capital O & M Expenses 17.75 18.34 18.95 19.58 Maintenance Spares 31.95 33.01 34.10 35.24 Receivables 162.00 171.01 176.01 173.84 Total 211.70 222.36 229.06 228.66 Rate of Interest (%) 13.50 13.50 13.50 13.50 Interest on Working Capital 8.75 30.02 30.92 30.87 Page 10 of 70 Order in Petition No. 36/TT/2020 cost of 5305.37 lakh as on COD and ACE of 1070.29 lakh from COD to 31.3.2019 for Asset-2, capital cost of 351.69 lakh as on COD and ACE of 372.42 lakh from COD to 31.3.2019 for Asset-3 and capital cost of 1891.43 lakh as on COD and ACE of 390.41 lakh from COD to 31.3.2019 for Asset-4.

15. The Petitioner vide Auditors Certificate dated 30.7.2019 has submitted the capital cost incurred upto COD, ACE from COD to 31.3.2019 and estimated ACE during the period from 1.4.2019 to 31.3.2020. The details of approved apportioned capital cost, capital cost as on COD and ACE incurred upto 31.3.2019 as claimed by the Petitioner for the transmission assets are as under: ( in lakh) Asset Name Apportioned approved capital cost as per RCE Capital cost as on COD (on cash basis) Additional Capital Expenditure Total capital cost as on 31.3.2019 2015- 2016- 2017- 2018- Asset-1 5174.75 4227.61 188.52 510.90 0.00 0.00 4927.03 Asset-2 7161.28 5305.37 0.00 184.94 40.65 313.20 5844.16 Asset-3 895.43 351.69 0.00 0.00 200.75 0.00 552.44 Asset-4 2495.54 1891.43 0.00 0.00 260.03 124.00 2275.46

16. We have considered the submissions of the Petitioner. It is observed that the estimated completion cost of the transmission assets as on 31.3.2019 including ACE is within the RCE approved apportioned capital cost. Therefore, there is no cost over- run in case of the transmission assets. Time Over-run

17. As per the Investment Approval dated 5.2.2014, the scheduled date of commercial operation (SCOD) of the assets under the instant petition is 4.12.2015. Against SCOD, the actual COD of the transmission assets is as under: Assets SCOD COD Time over-run Asset-1 4.12.2015 11.12.2015 7 days Asset-2 24.9.2016 9 months and 21 days Page 11 of 70 Order in Petition No. 36/TT/2020 Asset-3 25.8.2016 8 months and 22 days Asset-4 3.4.2017 16 months

18. The Commission vide order dated 29.7.2016 in Petition No. 201/TT/2015 did not condone the time over-run of 7 days in the in case of Asset-1. Similarly, the time over- run in respect of Assets-2, 3 and 4 was also disallowed by the Commission vide order dated 9.7.2018 in Petition No. 215/TT/2016. Interest During Construction (IDC)

19. The Petitioner has claimed IDC of 206.67 lakh, 247.26 lakh, 10.78 lakh and 205.88 lakh for Assets-1, 2, 3 and 4 respectively and has also submitted the Auditors certificate in support of the same. The Petitioner has submitted computation of IDC along with the year-wise details of the discharged IDC.

20. The allowable IDC has been worked out considering the information submitted by the Petitioner for the transmission assets on cash basis. The loan details submitted in Form-9C for the 2014-19 tariff period and the IDC computation sheet have been considered for the purpose of computation of IDC on cash basis and on accrued basis. The un-discharged IDC as on COD has been considered as ACE during the year in which it has been discharged. The IDC is being allowed till SCOD only for the transmission assets as the time over-run in case of the transmission assets was disallowed by the Commission vide orders dated 29.7.2016 in Petition No. 201/TT/2015 and vide order dated 9.7.2018 in Petition No. 215/TT/2016.

21. Accordingly, based on the information furnished by the Petitioner, the IDC considered is summarized as under: Page 12 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Asset Name IDC approved in order dated 29.7.2016 in Petition No. 201/TT/2015 and order dated 9.7.2018 in Petition No. 215/TT/2016 IDC claimed Petitioner (as per Auditor Certificate) Entitled IDC up SCOD disallowed as on SCOD due computation difference Un-discharged portion of entitled IDC as on SCOD allowed on cash basis as on SCOD A B C= A-B D E=B-D Asset-1 199.81 206.67 195.87 10.80 195.87 0.00 Asset-2 81.49 247.26 81.46 165.80 0.00 81.46 Asset-3 2.90 10.78 3.48 7.30 0.58 2.90 Asset-4 53.94 205.88 53.94 151.94 0.00 53.94

22. The un-discharged portion of IDC is being allowed as ACE during the respective year of discharge and the same is summarized as under: ( in lakh) Assets Un-discharged portion of entitled IDC as on SCOD IDC being discharged as ACE 2015-16 2016-17 Asset-1 195.87 173.66 22.22 Asset-3 0.58 0.00 0.58 Incidental Expenditure During Construction (IEDC)

23. The Petitioner has claimed IEDC of 63.77 lakh, 150.26 lakh, 7.28 lakh and 86.77 lakh for Assets-1, 2, 3 and 4 respectively and has submitted Auditors certificate in support of the same. The Petitioner has also submitted that the entire IEDC has been discharged as on COD in respect of the transmission assets. The allowable IEDC for the transmission assets considering the time over-run disallowed, is as under: ( in lakh) Asset Name IEDC approved in order dated 29.7.2016 in Petition No. 201/TT/2015 and order dated 9.7.2018 in Petition No. 215/TT/2016 IEDC claimed by Petitioner (as per Auditor Certificate) Entitled IEDC up to SCOD IEDC disallowed as on SCOD due to computation difference IEDC allowed on cash basis as on SCOD A B C= A-B D = A-C Page 13 of 70 Order in Petition No. 36/TT/2020 Asset-1 63.77 63.77 62.37 1.40 62.37 Asset-2 104.18 150.26 104.18 46.08 104.18 Asset-3 5.21 7.28 5.21 2.07 5.21 Asset-4 50.20 86.77 50.20 36.57 50.20 Initial Spares

24. Regulation 13(d) of the 2014 Tariff Regulations provides that Initial Spares shall be capitalized as a percentage of plant and machinery cost up to cut-off date, subject to following ceiling norms: (d) Transmission System Transmission line: 1.00% Transmission sub-station (Green Field): 4.00% Transmission sub-station (Brown Field): 6.00% GIS Sub-station: 5.00%

25. The Petitioner has claimed the following Initial Spares for the transmission assets and prayed to allow the Initial Spares as per the actuals: Asset Name Particulars Estimated Completion Cost (A) ( in lakh) Initial Spares Claimed ( in lakh) Ceiling Limit (%) Initial Spares Worked out by Petitioner D = [(A-B) * C/ (100-C)] Asset-1 Sub-Station (GIS) 4573.20 23.11 5.0 239.48 Asset-2 Sub-Station (AIS) 5510.26 33.74 6.0 349.57 Asset-3 Sub-Station (AIS) 544.43 0.00 6.0 34.74 Asset-4 Sub-Station (GIS) 2329.78 17.11 6.0 121.72

26. We have considered the submissions of the Petitioner. The details of commercial operation of the transmission assets covered under the instant petition and their cut-off dates are as under: Assets COD Cut-off Date Asset-1 11.12.2015 31.3.2018 Asset-2 24.9.2016 31.3.2019 Asset-3 25.8.2016 31.3.2019 Asset-4 3.4.2017 31.3.2020

27. The capital cost up to the cut-off date has been considered for computation of Initial Spares. The Petitioners claim of Initial Spares for the transmission assets is Page 14 of 70 Order in Petition No. 36/TT/2020 within the norms specified in Regulation 13(d) of the 2014 Tariff Regulations and is accordingly allowed as under: Asset Name Plant & machinery cost up to cut-off date (excluding IDC and IEDC as per Auditor certificate) (A) ( in lakh) Initial Spares claimed ( in lakh) Ceiling Limit (%) (C) Allowable Initial Spares worked out Excess Initial Spares ( in lakh) Initial Spares allowed ( in lakh) D = [(A-B)*C /(100-C)] Asset-1 4573.20 23.11 5.0 239.48 Nil 23.11 Asset-2 5510.26 33.74 6.0 349.57 Nil 33.74 Asset-3 544.43 0.00 6.0 34.75 Nil 0.00 Asset-4 2329.78 17.11 6.0 121.72 Nil 17.11 Capital cost as on COD

28. Accordingly, the capital cost allowed as on COD is summarized as under: ( in lakh) Asset Name Capital cost as on COD as per Auditor Certificate Less: IDC as on COD due to Less: IEDC disallowed as on COD Capital cost considered as on COD (on cash basis) Computation difference Un-discharged Asset-1 4434.27 10.80 195.87 1.40 4226.20 Asset-2 5517.22 165.80 0.00 46.08 5305.34 Asset-3 361.64 7.30 0.58 2.07 351.69 Asset-4 2079.95 151.94 0.00 36.57 1891.44 Additional Capital Expenditure (ACE)

29. The admissibility of ACE after the date of commercial operation is to be dealt in accordance with the provisions of Regulation 14(1) of the 2014 Tariff Regulations. The Petitioner has claimed ACE of 699.42 lakh with respect to Asset-1 during 2014-

19 tariff period, including accrued IDC of 177.03 lakh discharged during the year 2015-16 and 22.78 lakh during the year 2017-18 wherein the Petitioner has reduced IDC of 6.86 lakh which was previously disallowed vide order dated 29.7.2016 in Petition No. 201/TT/2015 from 29.64 lakh accrued IDC discharged during the year 2017-18. Therefore, against the entire un-discharged IDC of 206.67 lakh with respect to Asset-1, the Petitioner has effectively claimed un-discharged IDC as ACE Page 15 of 70 Order in Petition No. 36/TT/2020 of 199.81 lakh. With regard to Asset-2, the Petitioner has claimed ACE of 538.79 lakh during 2014-19 tariff period including accrued IDC of 44.51 lakh discharged during the year 2017-18 and 36.17 lakh during the year 2018-19. The Petitioner has claimed ACE of 200.75 lakh and 384.03 lakh with respect to Assets-3 and 4 respectively during 2014-19 tariff period. The Petitioner, vide affidavit dated 21.12.2019, has submitted that the ACE is mainly on account of un-discharged liability towards the final payment/ withheld payment due to contractual exigencies of works executed within the cut-off date and the works deferred for execution. The ACE in case of the transmission assets during the 2014-19 tariff period has been claimed under Regulation 14(1)(i) and (ii) of the 2014 Tariff Regulations and is within the cut- off date.

30. The Petitioner has further submitted that ACE upto 31.3.2019 has been considered in the Auditors certificate as per actuals whereas the ACE claimed for the period from 1.4.2019 to 31.3.2020 is on estimated basis and may vary due to final claim/ reconciliation at the time of contract closing. The contract-wise details of works deferred for execution are as under: ( in lakh) Assets Party Package Financial Year 2015-16 2016-17 2017-18 2018-19 Asset-1 Larsen & Turbo Ltd. Building & Civil Work, Sub-station Work & Communica- tion System 11.49 223.86 0.00 0.00 Hyosung Corporation Sub-station Work 0.00 264.26 0.00 0.00 Total 11.49 488.12 0.00 0.00 Asset-2 Mcnally Bharat Engineering Co. Ltd. Sub-station Work 0.00 184.94 40.65 161.29 Mcnally Bharat Engineering Co. Ltd. LD recovered during the year 0.00 0.00 0.00 121.91 Total 0.00 184.94 40.65 283.20 Page 16 of 70 Order in Petition No. 36/TT/2020 Assets Party Package Financial Year 2015-16 2016-17 2017-18 2018-19 Asset-3 Mcnally Bharat Engineering Co. Ltd. Sub-station Work 0.00 0.00 200.75 0.00 Total 0.00 0.00 200.75 0.00 Asset-4 Hyosung Corporation Sub-station Work 0.00 0.00 69.31 0.00 Mcnally Bharat Engineering Co. Ltd. Sub-station Work 0.00 0.00 190.72 0.00 Mcnally Bharat Engineering Co. Ltd. LD recovered during the year 0.00 0.00 0.00 124.00 Total 0.00 0.00 260.03 124.00

31. The contract-wise details for balance and retention payments are as under: ( in lakh) Asset Party Package Financial Year 2018-19 Asset-4 Mcnally Bharat Engineering Co. Ltd. Sub-station Work 30.00 Total 30.00

32. The Commission vide RoP of hearing dated 24.6.2020 sought year-wise reconciliation statement of ACE, additional capitalization reflecting the gross additional capitalization, liquidated damages (LD) adjustment amount and net ACE after adjustment of LD for Asset-2 and Asset-4 during the 2014-19 tariff period. The Petitioner vide affidavit dated 16.7.2020 has submitted the details of LD adjustment as under: ( in lakh) Asset-2 Year Gross ACE Adjustment Amount Net ACE after LD adjustment 2016-17 184.94 0.00 184.94 2017-18 40.65 0.00 40.65 2018-19 313.20 121.91 191.29 ( in lakh) Page 17 of 70 Order in Petition No. 36/TT/2020 Asset-4 Year Gross ACE Adjustment Amount Net ACE after LD adjustment 2017-18 260.03 0.00 260.03 2018-19 124.00 124.00 0.00

33. The Petitioner has further submitted that the Commission vide order dated 9.7.2018 in Petition No. 215/TT/2016 disallowed IDC and IEDC of 211.85 lakh for Asset-2 and 188.51 lakh for Asset-4 on account of time over-run and reduced it from the capital cost as on the date of commercial operation. Subsequently, an amount of 121.91 lakh for Asset-2 and 124.00 lakh for Asset-4 was recovered as LD from the executing agency(ies) during the year 2018-19The Petitioner has submitted that LD recovered to the extent of disallowed IDC and IEDC is added back as ACE as mentioned in footnote of the Auditors Certificate submitted by the Petitioner.

34. It has been observed that the Petitioner has adopted a similar approach of capitalizing LD recovered from the contractor as ACE as carried out in few other Petitions wherein LD towards time over-run, imposed on contractor(s) has been reduced from the ACE [amount payable to contractor(s)] as the LD imposed on the contractor reduces the amount payable to the contractor(s) and the gross block in the books of accounts. Further, the Petitioner has submitted that LD is added back to the extent of IDC and IEDC disallowed or LD recovered whichever is lower, because the recovered LD have already been reduced from the capital expenditure of respective financial year and disallowed IDC and IEDC has already been reduced from COD cost and admitted cost as on COD. Accordingly, LD recovered of 121.91 lakh in 2018-19 for Asset-2 and 124.00 lakh in 2018-19 for Asset-4 is added back to the capital cost in respective year as mentioned in footnote of the Auditors Certificate Page 18 of 70 Order in Petition No. 36/TT/2020 submitted by the Petitioner. The Petitioner has prayed to allow the adjustment of recovered LD in the capital expenditure in the respective Financial Year.

35. We have considered the submissions made by the Petitioner. APTEL in its judgement dated 27.4.2011 in Appeal No. 72/2010 has laid down the following principles for dealing with the issue of time over-run in execution of projects. 7.4. The delay in execution of a generating project could occur due to following reasons:

i) due to factors entirely attributable to the generating company, e.g., imprudence in selecting the contractors/suppliers and in executing contractual agreements including terms and conditions of the contracts, delay in award of contracts, delay in providing inputs like making land available to the contractors, delay in payments to contractors/suppliers as per the terms of contract, mismanagement of finances, slackness in project management like improper co-ordination between the various contractors, etc. ii) due to factors beyond the control of the generating company e.g. delay caused due to force majeure like natural calamity or any other reasons which clearly establish, beyond any doubt, that there has been no imprudence on the part of the generating company in executing the project. iii) situation not covered by (i) & (ii) above. In our opinion in the first case the entire cost due to time over run has to be borne by the generating company. However, the Liquidated Damages (LDs) and insurance proceeds on account of delay, if any, received by the generating company could be retained by the generating company. In the second case the generating company could be given benefit of the additional cost incurred due to time over-run. However, the consumers should get full benefit of the LDs recovered from the contractors/suppliers of the generating company and the insurance proceeds, if any, to reduce the capital cost. In the third case the additional cost due to time overrun including the LDs and insurance proceeds could be shared between the generating company and the consumer. It would also be prudent to consider the delay with respect to some benchmarks rather than depending on the provisions of the contract between the generating company and its contractors/suppliers. If the time schedule is taken as per the terms of the contract, this may result in imprudent time schedule not in accordance with good industry practices.

36. As per the above directions of APTEL, when the time over-run is attributable to the project developer, the cost of the time over-run, i.e. IDC and IEDC have to be borne by the project developer and LD, if any, recovered can be retained by the Petitioner. In the instant case, the time over-run in case of Assets-2 and 4 was not condoned by the Commission. Accordingly, the IDC and IEDC for the period of time Page 19 of 70 Order in Petition No. 36/TT/2020 over-run that was not condoned in case of Assets-2 and 4 were not capitalised and the LD recovered by the Petitioner can be retained by the Petitioner. The capital cost of the said two assets is allowed in accordance with the observations of APTELs judgement dated 27.4.2011. The IDC and IEDC disallowed in case of the said assets is deducted from the capital cost as on their respective dates of commercial operation and the additional capital expenditure incurred by the Petitioner after the COD is added to the capital cost. Therefore, the Petitioner is allowed to retain the LD to the extent of IDC and IEDC disallowed and allowed to adjust ACE on this account.

37. ACE claimed by the Petitioner for Assets-1, 2, 3 and 4 is on account of works deferred for execution, balance and retention payment and accrued IDC discharged during 2015-16 and 2016-17. ACE claimed by the Petitioner during 2014-19 tariff period for the transmission assets is within the cut-off date. The same has been considered for computation of total capital cost as on 31.3.2019. Further, ACE during 2014-15 to 2018-19 is allowed under Regulation 14(1)(i) and (ii) of the 2014 Tariff Regulations.

38. The details of ACE allowed is as follows: ( in lakh) Asset-1 Additional Capital Expenditure 2015-16 2016-17 ACE to the extent of Balance & Retention Payments and work deferred for execution 11.49 488.12 Add: IDC Discharged 173.66 22.22 Total ACE allowed 185.15 510.34 ( in lakh) Asset-2 Additional Capital Expenditure 2016-17 2017-18 2018-19 ACE to the extent of Balance & Retention Payments and work deferred for execution 140.43 4.48 313.20 Add: IDC Discharged 0.00 0.00 0.00 Total ACE allowed 140.43 4.48 313.20 ( in lakh) Page 20 of 70 Order in Petition No. 36/TT/2020 Asset-3 Additional Capital Expenditure 2016-17 2017-18 2018-19 ACE to the extent of Balance & Retention Payments and work deferred for execution 0.00 200.75 0.00 Add: IDC Discharged 0.58 0.00 0.00 Total ACE allowed 0.58 200.75 0.00 ( in lakh) Asset-4 Additional Capital Expenditure 2017-18 2018-19 ACE to the extent of Balance & Retention Payments and work deferred for execution 260.03 124.00 Add: IDC Discharged 0.00 0.00 Total ACE allowed 260.03 124.00 Capital Cost summary from 1.4.2014 to 31.3.2019

39. Accordingly, the capital cost considered for computation of tariff is as under: ( in lakh) Asset Name Capital cost as on COD Additional Capital Expenditure Total capital cost including additional capitalization as on 31.3.2019 2015-16 2016-17 2017-18 2018-19 Asset-1 4226.20 185.15 510.34 0.00 0.00 4921.68 Asset-2 5305.34 0.00 140.43 4.48 313.20 5763.45 Asset-3 351.69 0.00 0.58 200.75 0.00 553.02 Asset-4 1891.44 0.00 0.00 260.03 124.00 2275.47 ( in lakh) Asset-1 Capital cost as on Additional Capital Expenditure Total capital cost including additional capitalization as on 31.3.2019 2015- 2016- 2017- 2018- Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 4227.61 354.36 101.24 50.62 0.00 4733.83 Claimed by the Petitioner in the instant petition 4227.60 188.52 510.90 0.00 0.00 4927.02 Allowed after true-up in this order 4226.20 185.15 510.34 0.00 0.00 4921.68 ( in lakh) Asset-2 Capital cost as on COD Additional Capital Expenditure Total capital cost including additional capitalization as on 31.3.2019 2016-17 2017-18 2018-19 Page 21 of 70 Order in Petition No. 36/TT/2020 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 5305.37 571.64 398.80 99.85 6375.66 Claimed by the Petitioner in the instant petition 5305.37 184.94 40.65 313.20 5844.16 Allowed after true-up in this order 5305.34 140.43 4.48 313.20 5763.45 ( in lakh) Asset-3 Capital cost as on COD Additional Capital Expenditure Total capital cost including additional capitalization as on 31.3.2019 2016-17 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 351.69 148.97 130.35 93.10 724.11 Claimed by the Petitioner in the instant petition 351.69 0.00 200.75 0.00 552.44 Allowed after true-up in this order 351.69 0.58 200.75 0.00 553.02 ( in lakh) Asset-4 Capital cost as on COD Additional Capital Expenditure Total capital cost including additional capitalization as on 31.3.2019 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 1891.43 273.29 117.12 2281.84 Claimed by the Petitioner in the instant petition 1891.44 260.03 124.00 2275.47 Allowed after true-up in this order 1891.44 260.03 124.00 2275.47 Debt-Equity Ratio

40. The Petitioner has considered debt-equity ratio as 70:30 as on COD and for additional capitalization post COD. The debt-equity ratio of 70:30 has been considered for capital cost as on COD and for additional capitalization during 2015- 16, 2016-17, 2017-18 and 2018-19 as provided under Regulation 19 of the 2014 Tariff Regulations. The details of the debt-equity ratio as on the date of COD and as on 31.3.2019 considered for the purpose of tariff computation for the 2014-19 tariff period is as follows: Page 22 of 70 Order in Petition No. 36/TT/2020 Asset-1 As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 2958.34 70.00 3445.18 70.00 Equity 1267.86 30.00 1476.50 30.00 Total 4226.20 100.00 4921.68 100.00 Asset-2 As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 3713.74 70.00 4034.42 70.00 Equity 1591.60 30.00 1729.03 30.00 Total 5305.34 100.00 5763.45 100.00 Asset-3 As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 246.19 70.00 387.12 70.00 Equity 105.51 30.00 165.90 30.00 Total 351.69 100.00 553.02 100.00 Asset-4 As on COD As on 31.3.2019 Amount ( in lakh) Amount ( in lakh) Debt 1324.01 70.00 1592.85 70.00 Equity 567.43 30.00 682.62 30.00 Total 1891.44 100.00 2275.47 100.00 Interest on Loan (IoL)

41. IoL has been worked out in accordance with Regulation 26 of the 2014 Tariff Regulations. The Petitioner has claimed IoL based on actual interest rates for each year during the 2014-19 period. The Petitioner has considered the weighted average rate of IoL on the basis of prevailing rates as on 1.4.2014 for respective loans and has prayed to consider the floating rate of interest applicable during 2014-19 period, if any, during the truing-up of tariff.

42. We have considered the submissions of the Petitioner. It is observed that the loans from SBI and ICICI with respect to transmission assets in the instant petition have been deployed with floating rates of interest. Accordingly, factoring in the impact Page 23 of 70 Order in Petition No. 36/TT/2020 of floating rate of interest, IoL has been worked out based on the actual interest rate, in accordance with Regulation 26 of the 2014 Tariff Regulations.

43. The details of the trued up IoL allowed for Assets-1, 2, 3 and 4 are as follows: ( in lakh) Asset-1 Particular 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Gross Normative Loan 2958.34 3087.94 3445.18 3445.18 Cumulative Repayments up to Previous Year 0.00 69.87 316.50 576.55 Net Loan-Opening 2958.34 3018.07 3128.67 2868.62 Additions due to Additional Capitalization 129.60 357.23 0.00 0.00 Repayment during the year 69.87 246.63 260.05 260.05 Net Loan-Closing 3018.07 3128.67 2868.62 2608.57 Average Loan 2988.21 3073.37 2998.65 2738.60 Weighted Average Rate of Interest on Loan (%) 8.24 8.22 8.20 8.20 Interest on Loan 75.33 252.63 245.92 224.59 ( in lakh) Asset-2 Particular 2016-17 (Pro-rata) 2017-18 2018-19 Gross Normative Loan 3713.74 3812.04 3815.18 Cumulative Repayments up to Previous Year 0.00 147.45 436.03 Net Loan-Opening 3713.74 3664.60 3379.15 Additions due to Additional Capitalization 98.30 3.14 219.24 Repayment during the year 147.45 288.58 296.97 Net Loan-Closing 3664.60 3379.15 3301.43 Average Loan 3689.17 3521.88 3340.29 Weighted Average Rate of Interest on Loan (%) 8.20 8.11 8.09 Interest on Loan 156.62 285.78 270.29 ( in lakh) Asset-3 Particular 2016-17 (Pro-rata) 2017-18 2018-19 Gross Normative Loan 246.19 246.59 387.12 Cumulative Repayments up to Previous Year 0.00 11.27 35.38 Net Loan-Opening 246.19 235.32 351.74 Additions due to Additional Capitalization 0.41 140.53 0.00 Repayment during the year 11.27 24.11 29.41 Page 24 of 70 Order in Petition No. 36/TT/2020 Net Loan-Closing 235.32 351.74 322.34 Average Loan 240.75 293.53 337.04 Weighted Average Rate of Interest on Loan (%) 8.14 7.93 7.80 Interest on Loan 11.76 23.28 26.28 ( in lakh) Asset-4 Particular 2017-18 (Pro-rata) 2018-19 Gross Normative Loan 1324.01 1506.05 Cumulative Repayments up to Previous Year 0.00 106.15 Net Loan-Opening 1324.01 1399.90 Additions due to Additional Capitalization 182.04 86.80 Repayment during the year 106.15 116.87 Net Loan-Closing 1399.90 1369.83 Average Loan 1361.95 1384.87 Weighted Average Rate of Interest on Loan (%) 8.19 8.06 Interest on Loan 110.98 111.57

44. IoL approved vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and trued-up IoL allowed in the instant order of the 2014-19 period with respect to Asset-1 are as under: ( in lakh) Particulars 2015-16 (Pro- rata) 2016- 2017- 2018- Approved vide order dated 29.7.2016 in Petition No. 201/TT/2015 77.00 251.06 235.11 216.03 Claimed by the Petitioner in the instant petition 75.38 252.91 246.19 224.84 Allowed after true-up in this order 75.33 252.63 245.92 224.59

45. Accordingly, IoL approved vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and trued-up IoL allowed in the instant order of the 2014-19 period with respect to Asset-2, 3 and 4 are as under: ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Page 25 of 70 Order in Petition No. 36/TT/2020 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 163.78 324.71 312.02 Claimed by the Petitioner in the instant petition 157.24 288.96 273.99 Allowed after true-up in this order 156.62 285.78 270.29 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 14.23 29.89 33.56 As claimed by the Petitioner in the instant petition 11.75 23.25 26.26 Allowed after true-up in this order 11.76 23.28 26.28 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 114.69 117.36 As claimed by the Petitioner 110.92 111.41 Allowed after truing-up 110.98 111.57 Return on Equity (RoE)

46. The Petitioner has claimed RoE for the transmission assets in terms of Regulations 24 and 25 of the 2014 Tariff Regulations. The Petitioner has submitted that they are liable to pay income tax at MAT rates and has claimed following effective tax rates for the 2014-19 tariff period: Year Claimed effective tax (%) Grossed up RoE [Base Rate/(1-t)] 2014-15 21.018 19.624 2015-16 21.382 19.715 2016-17 21.338 19.704 2017-18 21.337 19.704 2018-19 21.549 19.757

47. The Commission in order dated 27.4.2020 in Petition No. 274/TT/2019 has arrived at the effective tax rate for the Petitioner based on the notified MAT rates. The relevant portion of the order dated 27.4.2020 is as under: Page 26 of 70 Order in Petition No. 36/TT/2020

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

48. The MAT rates considered in the above order are considered for the purpose of grossing up the rate of RoE for truing up of the tariff of the 2014-19 period in terms of the provisions of the 2014 Tariff Regulations. The same are as under: Year Notified MAT rates (inclusive of surcharge & cess) (in %) Base rate of RoE (in %) Grossed up RoE (Base Rate/1-t) (in %) 2014-15 20.961 15.50 19.610 2015-16 21.342 15.50 19.705 2016-17 21.342 15.50 19.705 2017-18 21.342 15.50 19.705 2018-19 21.549 15.50 19.758

49. The trued-up RoE allowed for Assets-1, 2, 3 and 4 are as follows: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Opening Equity 1267.86 1323.40 1476.50 1476.50 Addition due to Additional Capitalization 55.54 153.10 0.00 0.00 Page 27 of 70 Order in Petition No. 36/TT/2020 Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Closing Equity 1323.40 1476.50 1476.50 1476.50 Average Equity 1295.63 1399.95 1476.50 1476.50 Return on Equity (Base Rate) (%) 15.50 15.50 15.50 15.50 Tax Rate applicable (%) 21.342 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.705 19.705 19.758 Return on Equity (Pre-tax) 78.13 275.86 290.95 291.73 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Equity 1591.60 1633.73 1635.07 Addition due to Additional Capitalization 42.13 1.34 93.96 Closing Equity 1633.73 1635.07 1729.03 Average Equity 1612.67 1634.40 1682.05 Return on Equity (Base Rate) (%) 15.50 15.50 15.50 Tax Rate applicable (%) 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.705 19.758 Return on Equity (Pre-tax) 164.55 322.06 332.34 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Equity 105.51 105.68 165.90 Addition due to Additional Capitalization 0.17 60.22 0.00 Closing Equity 105.68 165.90 165.90 Average Equity 105.60 135.79 165.90 Return on Equity (Base Rate) (%) 15.50 15.50 15.50 Tax Rate applicable (%) 21.342 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.705 19.758 Return on Equity (Pre-tax) 12.48 26.76 32.78 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 Opening Equity 567.43 645.42 Addition due to Additional Capitalization 77.99 37.20 Closing Equity 645.42 682.62 Average Equity 606.42 664.02 Return on Equity (Base Rate) (%) 15.50 15.50 Tax Rate applicable (%) 21.342 21.549 Rate of Return on Equity (Pre-tax) 19.705 19.758 Return on Equity (Pre-tax) 118.84 131.20 Page 28 of 70 Order in Petition No. 36/TT/2020

50. RoE approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and trued-up RoE allowed in this order for the 2014-19 period with respect to Asset-1 are as under: ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 79.51 272.53 277.00 278.49 As claimed by the Petitioner 78.22 276.16 291.26 292.04 Allowed after truing-up 78.13 275.86 290.95 291.73

51. RoE approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and trued-up RoE allowed in this order for the 2014-19 period with respect to Assets-2, 3 and 4 are as under: ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 170.32 357.48 372.14 As claimed by the Petitioner 165.23 325.76 337.12 Allowed after truing-up 164.55 322.06 332.34 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 15.04 33.29 39.86 Claimed by the Petitioner in the instant petition 12.47 26.72 32.74 Allowed after true-up in this order 12.48 26.76 32.78 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 118.66 130.80 As claimed by the Petitioner 118.85 131.20 Allowed after truing-up 118.84 131.20 Page 29 of 70 Order in Petition No. 36/TT/2020 Depreciation

52. The Petitioner has claimed depreciation considering capital expenditure as on COD and ACE during 2014-19 (including IDC discharged during 2015-16, 2016-17 and 2017-18) for the transmission assets as under: ( in lakh) Asset Name Apportioned approved capital cost as per RCE Capital cost as on COD Additional capital Expenditure (Claimed) 2015-16 2016-17 2017-18 2018-19 Asset-1 5174.75 4227.61 188.52* 510.90* 0.00 0.00 Asset-2 7161.28 5305.37 0.00 184.94* 40.65* 313.20 Asset-3 895.43 351.69 0.00 0.00 200.75 0.00 Asset-4 2495.54 1891.43 0.00 0.00 260.03 124.00 TOTAL 15727.00 11776.10 188.52 695.84 501.43 437.20 (* includes un-discharged IDC)

53. It is observed that earlier in Petition No. 215/TT/2016 wherein tariff was determined for Assets-2, 3 and 4 for the 2014-19 tariff period, the Petitioner had submitted the capital cost of IT equipment in sub-station cost and as such the depreciation for IT equipment was allowed @5.28% of the corresponding capital cost. The Petitioner now at the time of truing up of tariff of the 2014-19 period has segregated the IT equipment cost from sub-station cost and has considered depreciation rate for IT Equipment @15% and the salvage value for IT Equipment as NIL as per the 2014 Tariff Regulations. It is observed that the Petitioner has for the first time apportioned a part of the capital expenditure towards IT Equipment and has claimed depreciation under the head IT Equipment @15% at the time of truing up of the tariff of the 2014-19 period. In a similar case, the Commission in order dated 9.5.2020 in Petition No. 19/TT/2020 held as under:

31. We have considered the submissions of the Petitioner. The instant assets were put into commercial operation during the 2009-14 period and the tariff from the respective CODs to 31.3.2014 was allowed vide orders dated 30.8.2012and 9.5.2013in Petition No.343/2010 and Petition No. 147/TT/2011 respectively. Further, the tariff of the 2009-

14 period was trued up and tariff for the 2014-19 period was allowed vide order dated 25.2.2016 in Petition No.10/TT/2015. The Petitioner did not claim any capital Page 30 of 70 Order in Petition No. 36/TT/2020 expenditure towards IT Equipment in the above said three petitions where tariff for the instant assets for the 2009-14 period was allowed, tariff of the 2009-14 period was trued up and tariff for 2014- 19 period was allowed even though there was a clear provision in the 2009 Tariff Regulations and 2014 Tariff Regulations providing depreciation @15% for IT Equipment. Having failed to make a claim as per the 2009 Tariff Regulations(the period during which COD of assets was achieved), the Petitioner has now, at the time of truing up of the tariff allowed for the 2014-19 period has apportioned a part of the capital expenditure to IT Equipment. The Petitioner has adopted similar methodology not only in this but in some of the other petitions listed along with the instant petition on 26.2.2020. It is observed that the Petitioner has for the first time apportioned a part of the capital expenditure towards IT Equipment and has claimed depreciation under the head IT Equipment @15% at the time of truing up of the tariff of 2014-19 period. Regulation 8(1) of the 2014 Tariff Regulations provides for truing up of the capital expenditure including the additional capital expenditure, incurred upto 31.3.2019, admitted by the Commission after prudence check. We are of the view that scope of truing up exercise is restricted to truing up of the capital expenditure already admitted and apportionment or reapportionment of the capital expenditure cannot be allowed at the time of truing up. Therefore, we are not inclined to consider the Petitioners prayer for apportionment of capital expenditure towards IT Equipment and allowing depreciation @ 15% from 1.4.2014 onwards. Accordingly, the depreciation @ 5.28% has been considered for IT Equipment as part of the substation upto 31.3.2019 while truing up the capital expenditure for the 2014-19 period. During the 2019-24 tariff period, the IT Equipment has been considered separately and depreciation has been allowed @ 15% for the balance depreciable value of IT Equipment in accordance with Regulation 33 read with Sr. No. (p) of the Appendix-I (Depreciation Schedule) of the 2019 Tariff Regulations.

54. Accordingly, depreciation has been considered @5.28% for IT Equipment as part of the sub-station upto 31.3.2019 while truing up the capital expenditure for the 2014-19 period. During the 2019-24 tariff period, the IT Equipment has been considered separately and depreciation has been allowed @15% for the balance depreciable value of IT Equipment in accordance with Regulation 33 read with Sr. No. (p) of the Appendix-I (Depreciation Schedule) of the 2019 Tariff Regulations.

55. Depreciation has been computed considering capital expenditure as on COD and approved ACE during the 2014-19 tariff period. The Gross Block during the tariff period 2014-19 with regard to Assets-1, 2, 3 and 4 has been depreciated at weighted average rate of depreciation (WAROD) and working of WAROD is attached as Annexures-1, 2, 3 and 4 respectively. WAROD has been worked out after taking into account the depreciation rates of assets as prescribed in the 2014 Tariff Regulations. Page 31 of 70 Order in Petition No. 36/TT/2020

56. Depreciation allowed during the 2014-19 tariff period for Assets-1, 2, 3 and 4 are as under: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Opening Gross Block 4226.20 4411.35 4921.68 4921.68 Additional Capitalisation 185.15 510.34 0.00 0.00 Closing Gross Block 4411.35 4921.68 4921.68 4921.68 Average Gross Block 4318.77 4666.52 4921.68 4921.68 Weighted average rate of Depreciation (WAROD) (%) 5.29 5.29 5.28 5.28 Balance useful life of the asset at the beginning of the year 25.00 25.00 24.00 23.00 Aggregated Depreciable Value 3886.90 4199.86 4429.51 4429.51 Remaining Depreciable value at the end of the year 3817.03 3883.36 3852.96 3592.91 Combined Depreciation during the year 69.87 246.63 260.05 260.05 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Gross Block 5305.34 5445.77 5450.25 Additional Capitalisation 140.43 4.48 313.20 Closing Gross Block 5445.77 5450.25 5763.45 Average Gross Block 5375.56 5448.01 5606.85 Weighted average rate of Depreciation (WAROD) (%) 5.30 5.30 5.30 Balance useful life of the asset at the beginning of the year 25.00 25.00 24.00 Aggregated Depreciable Value 4838.00 4903.21 5046.17 Remaining Depreciable value at the end of the year 4690.56 4467.19 4313.18 Combined Depreciation during the year 147.45 288.58 296.97 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Opening Gross Block 351.69 352.27 553.02 Additional Capitalisation 0.58 200.75 0.00 Closing Gross Block 352.27 553.02 553.02 Average Gross Block 351.98 452.65 553.02 Weighted average rate of Depreciation (WAROD) (%) 5.34 5.33 5.32 Page 32 of 70 Order in Petition No. 36/TT/2020 Balance useful life of the asset at the beginning of the year 24.00 24.00 23.00 Aggregated Depreciable Value 316.79 407.38 497.72 Remaining Depreciable value at the end of the year 305.51 372.00 432.94 Combined Depreciation during the year 11.27 24.11 29.41 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 Opening Gross Block 1891.44 2151.47 Additional Capitalisation 260.03 124.00 Closing Gross Block 2151.47 2275.47 Average Gross Block 2021.45 2213.47 Weighted average rate of Depreciation (WAROD) (%) 5.28 5.28 Balance useful life of the asset at the beginning of the year 25.00 25.00 Aggregated Depreciable Value 1819.31 1992.12 Remaining Depreciable value at the end of the year 1713.16 1769.10 Combined Depreciation during the year 106.15 116.87

57. Depreciation approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up depreciation allowed with respect to Asset-1 in this order is shown in the table below: ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 71.44 244.80 248.79 250.12 Claimed by the Petitioner in the instant petition 69.92 246.91 260.34 260.34 Allowed after true-up in this order 69.87 246.63 260.05 260.05

58. Depreciation approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up depreciation allowed with respect to Assets-2, 3 and 4 in this order is shown below: Page 33 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 153.36 321.82 335.01 Claimed by the Petitioner in the instant petition 149.28 294.25 303.59 Allowed after true-up in this order 147.45 288.58 296.97 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 13.63 30.11 36.02 Claimed by the Petitioner in the instant petition 11.26 24.07 29.37 Allowed after true-up in this order 11.27 24.11 29.41 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 106.50 117.39 Claimed by the Petitioner in the instant petition 107.53 118.26 Allowed after true-up in this order 106.15 116.87 Operation & Maintenance Expenses (O&M Expenses)

59. The O&M Expenses claimed by the Petitioner and allowed as per Regulation 29(4)(a) of the 2014 Tariff Regulations for the purpose of computation of tariff for Assets-1, 2, 3 and 4 are the same and are as under: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Norm ( lakh/bay)

400 kV Bay (GIS) 53.25 55.02 56.84 58.73 Number of bays

400 kV Bay (GIS) 4.00 4.00 4.00 4.00 Total O&M Expense (Claimed) 65.18 220.08 227.36 234.92 Total O&M Expense (Approved) 65.18 220.08 227.36 234.92 Page 34 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Norm ( lakh/bay)

400 kV Bay (AIS) 64.37 66.51 68.71

400 kV Bay (GIS) 55.02 56.84 58.73 Number of bays

400 kV Bay (AIS) 2 2 2

400 kV Bay (GIS) 2 2 2 Total O&M Expense (Claimed) 123.64 246.70 254.88 Total O&M Expense (Approved) 123.64 246.70 254.88 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Norm ( lakh/bay)

400 kV Bay (AIS) 64.37 66.51 68.71 Number of bays

400 kV Bay (AIS) 2 2 2 Total O&M Expense (Claimed) 77.24 133.02 137.42 Total O&M Expense (Approved) 77.24 133.02 137.42 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 Norm ( lakh/bay)

400 kV Bay (GIS) 56.84 58.73 Number of bays

400 kV Bay (GIS) 2 2 Total O&M Expenses (Claimed) 113.06 117.46 Total O&M Expenses (Approved) 113.06 117.46

60. O&M Expenses approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up O&M Expenses allowed with respect to Asset-1 in this order is shown in the table below: Page 35 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 76.26 257.48 266.04 274.84 Claimed by the Petitioner in the instant petition 65.18 220.08 227.36 234.92 Allowed after true-up in this order 65.18 220.08 227.36 234.92

61. O&M Expenses approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up O&M Expenses allowed with respect to Assets-2, 3 and 4 in this order is shown below: ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 123.64 246.70 254.88 Claimed by the Petitioner in the instant petition 123.64 246.70 254.88 Allowed after true-up in this order 123.64 246.70 254.88 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 77.24 133.02 137.42 Claimed by the Petitioner in the instant petition 77.24 133.02 137.42 Allowed after true-up in this order 77.24 133.02 137.42 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 113.05 117.46 Claimed by the Petitioner in the instant petition 113.06 117.46 Allowed after true-up in this order 113.06 117.46 Page 36 of 70 Order in Petition No. 36/TT/2020 Interest on Working Capital (IWC)

62. The Petitioner is entitled to claim IWC as per Regulation 28(1)(c) of the 2014 Tariff Regulations as under. 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 Operation and Maintenance Expenses specified in Regulation 28.

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

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

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

63. The trued up IWC has been worked out for the Assets-1, 2, 3 and 4 as per the methodology provided in Regulation 28 of the 2014 Tariff Regulations and is allowed as under: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 O & M Expenses 17.75 18.34 18.95 19.58 Maintenance Spares 31.95 33.01 34.10 35.24 Receivables 161.89 170.87 175.86 173.69 Total Working Capital 211.59 222.22 228.91 228.50 Rate of Interest (%) 13.50 13.50 13.50 13.50 Interest of working capital 8.74 30.00 30.90 30.85 Page 37 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 19.90 20.56 21.24 Maintenance Spares 35.82 37.01 38.23 Receivables 196.00 195.93 197.90 Total Working Capital 251.71 253.49 257.38 Rate of Interest (%) 12.80 12.80 12.80 Interest of working capital 16.68 32.45 32.94 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 O & M Expenses 10.73 11.09 11.45 Maintenance Spares 19.31 19.95 20.61 Receivables 32.66 35.96 39.17 Total Working Capital 62.70 66.99 71.23 Rate of Interest (%) 12.80 12.80 12.80 Interest of working capital 4.82 8.58 9.12 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 O & M Expenses 9.47 9.79 Maintenance Spares 17.05 17.62 Receivables 77.43 81.81 Total Working Capital 103.96 109.22 Rate of Interest (%) 12.60 12.60 Interest of working capital 13.03 13.76

64. Accordingly, IWC approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up IWC allowed with respect to Asset-1 are as under: ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 9.46 31.91 32.21 32.32 Claimed by the Petitioner in the instant petition 8.75 30.02 30.92 30.87 Allowed after true-up in this order 8.74 30.00 30.90 30.85 Page 38 of 70 Order in Petition No. 36/TT/2020

65. Accordingly, IWC approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and trued up IWC allowed respect to Assets-2, 3 and 4 are as under: ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 17.11 34.79 35.55 Claimed by the Petitioner in the instant petition 16.75 32.72 33.27 Allowed after true-up in this order 16.68 32.45 32.94 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 4.98 8.99 9.57 As claimed by the Petitioner in the instant petition 4.81 8.57 9.11 Allowed after true-up in this order 4.82 8.58 9.12 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 13.11 13.89 As claimed by the Petitioner in the instant petition 13.06 13.79 Allowed after true-up in this order 13.03 13.76 Approved Annual Fixed Charges for the 2014-19 Tariff Period

66. The trued up annual transmission charges allowed for Assets-1, 2, 3 and 4 for the 2014-19 tariff period are as under: ( in lakh) Asset-1 Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Depreciation 69.87 246.63 260.05 260.05 Interest on Loan 75.33 252.63 245.92 224.59 Return on Equity 78.13 275.86 290.95 291.73 Int. on Working Capital 8.74 30.00 30.90 30.85 Op. and Maintenance 65.18 220.08 227.36 234.92 Page 39 of 70 Order in Petition No. 36/TT/2020 Total 297.25 1025.21 1055.18 1042.14 ( in lakh) Asset-2 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 147.45 288.58 296.97 Interest on Loan 156.62 285.78 270.29 Return on Equity 164.55 322.06 332.34 Int. on Working Capital 16.68 32.45 32.94 Op. and Maintenance 123.64 246.70 254.88 Total 608.94 1175.56 1187.43 ( in lakh) Asset-3 Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Depreciation 11.27 24.11 29.41 Interest on Loan 11.76 23.28 26.28 Return on Equity 12.48 26.76 32.78 Int. on Working Capital 4.82 8.58 9.12 Op. and Maintenance 77.24 133.02 137.42 Total 117.58 215.74 235.00 ( in lakh) Asset-4 Particulars 2017-18 (Pro-rata) 2018-19 Depreciation 106.15 116.87 Interest on Loan 110.98 111.57 Return on Equity 118.84 131.20 Int. on Working Capital 13.03 13.76 Op. and Maintenance 113.06 117.46 Total 462.05 490.86

67. The Annual Transmission Charges allowed vide order dated 29.7.2016 in Petition No. 201/TT/2015, claimed by the Petitioner in the instant petition for the 2014-19 period and allowed after true up of the 2014-19 period in this order with respect to Asset-1 are as under: ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Approved earlier vide order dated 29.7.2016 in Petition No. 201/TT/2015 313.67 1057.78 1059.15 1051.80 As claimed by the Petitioner 297.45 1026.08 1056.07 1043.01 Allowed after truing-up 297.25 1025.21 1055.18 1042.14 Page 40 of 70 Order in Petition No. 36/TT/2020

68. The Annual Transmission Charges allowed vide order dated 9.7.2018 in Petition No. 215/TT/2016, claimed by the Petitioner in the instant petition for the 2014-19 period and allowed after true up of the 2014-19 period in this order with respect to Assets-2, 3 and 4 are as under: ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 628.21 1285.50 1309.60 As claimed by the Petitioner in the instant petition 612.14 1188.39 1202.85 Allowed after true-up in this order 608.94 1175.56 1187.43 ( in lakh) Particulars 2016-17 (Pro-rata) 2017-18 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 125.12 235.30 256.43 As claimed by the Petitioner in the instant petition 117.53 215.63 234.90 Allowed after true-up in this order 117.58 215.74 235.00 ( in lakh) Particulars 2017-18 (Pro-rata) 2018-19 Approved earlier vide order dated 9.7.2018 in Petition No. 215/TT/2016 466.01 496.90 As claimed by the Petitioner 463.42 492.12 Allowed after truing-up 462.05 490.86 Determination of Annual Fixed Charges for the 2019-24 Tariff Period

69. The Petitioner has combined all the assets in the instant petition and the transmission tariff claimed by the Petitioner for the Combined Asset for the 2019-24 tariff period is as follows: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 728.34 733.59 733.59 733.59 733.59 Interest on Loan 595.33 538.69 480.28 422.01 361.75 Return on Equity 769.65 773.04 773.04 773.04 773.04 Interest on Working Capital 45.24 45.09 44.70 44.32 43.84 Page 41 of 70 Order in Petition No. 36/TT/2020 Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O & M Expenses 315.66 326.50 337.74 349.35 361.35 Total 2454.22 2416.91 2369.35 2322.31 2273.57

70. The Petitioner has claimed the following 'Interest on Working Capital' for the Combined Asset for the 2019-24 tariff period: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expenses 26.31 27.21 28.15 29.11 30.11 Maintenance Spares 47.35 48.98 50.66 52.40 54.20 Receivables 301.75 297.98 292.11 286.31 279.54 Total 375.41 374.17 370.92 367.82 363.85 Rate of Interest (%) 12.05 12.05 12.05 12.05 12.05 Interest on Working Capital 45.24 45.09 44.70 44.32 43.84 Effective Date of Commercial Operation (E-COD)

71. The Petitioner has claimed E-COD of the Combined Asset as 12.7.2016. Based on the trued-up admitted capital cost and actual COD of all the assets, E-COD is worked out as follows: Computation of Effective COD Asset Actual Admitted Capital Cost as on 31.3.2019 ( in lakh) Weight of the cost (%) No. of Days from last Weighted Days Effective COD (Latest COD Total weighted Days) Asset-1 11.12.2015 4921.68 36.42 479.00 174.45 12.7.2016 Asset-2 24.9.2016 5763.45 42.65 191.00 81.46 Asset-3 25.8.2016 553.02 4.09 221.00 9.04 Asset-4 3.4.2017 2275.47 16.84 0.00 0.00 Total 13513.63 100.00 264.96

72. E-COD is used to determine the lapsed life of the Project as a whole, which works out as 2 (two) years as on 1.4.2019 (i.e. the number of completed years as on 1.4.2019 from E-COD). Page 42 of 70 Order in Petition No. 36/TT/2020 Weighted Average Life (WAL)

73. WAL has been determined based on the admitted capital cost of individual elements as on 31.3.2019 and their respective life as stipulated in the 2019 Tariff Regulations. The element-wise life as defined in the 2014 Tariff Regulations prevailing at the time of actual COD of individual assets has been ignored for this purpose. The life as defined in the 2019 Tariff Regulations has been considered for determination of WAL. Accordingly, WAL of the Combined Asset has been worked out as 25 years as shown below: Admitted Capital Cost as on 31.03.2019 Particulars Combined Asset ( in lakh) Life in Years Weighted Cost ( in lakh) (4) = (2)x(3) Weighted Avg. Life of Asset (in years) (5) = (4)/ (2) Building & Other Civil Works 122.07 25 3051.78 Transmission Line 66.03 35 2311.02 Sub-Station Equipment 12936.13 25 323403.37 PLCC 350.83 15 5262.47 IT Equipment & Software 38.56 6.67 257.09 Total 13513.63 334285.74 24.74 years, rounded off to

25 years Capital Cost

74. Regulation 19 of the 2019 Tariff Regulation provides as follows:

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; Page 43 of 70 Order in Petition No. 36/TT/2020 (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; (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. Additional Capitalization (3) The Capital cost of an existing project shall include the following: (a) Capital cost admitted by the Commission prior to 1.4.2019 duly trued up by excluding liability, if any, as on 1.4.2019; (b) Additional Capitalization and de-capitalization for the respective year of tariff as determined in accordance with these regulations; (c) Capital expenditure on account of renovation and modernisation as admitted by this Commission in accordance with these regulations; (d) Capital expenditure on account of ash disposal and utilization including handling and transportation facility; (e) Capital expenditure incurred towards railway infrastructure and its augmentation for transportation of coal upto the receiving end of generating station but does not include the transportation cost and any other appurtenant cost paid to the railway; and (f) Capital cost incurred or projected to be incurred by a thermal generating station, on account of implementation of the norms under Perform, Achieve and Trade (PAT) scheme of Government of India shall be considered by the Commission subject to sharing of benefits accrued under the PAT scheme with the beneficiaries. (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. Page 44 of 70 Order in Petition No. 36/TT/2020 (5) The following shall be excluded from the capital cost of the existing and new projects: (a) The assets forming part of the project, but not in use, as declared in the tariff petition; (b) De-capitalised Assets after the date of commercial operation on account of replacement or removal on account of obsolescence or shifting from one project to another project: Provided that in case replacement of transmission asset is recommended by Regional Power Committee, such asset shall be de-capitalised only after its redeployment; Provided further that unless shifting of an asset from one project to another is of permanent nature, there shall be no de-capitalization of the concerned assets. (c) In case of hydro generating stations, any expenditure incurred or committed to be incurred by a project developer for getting the project site allotted by the State Government by following a transparent process; (d) Proportionate cost of land of the existing project which is being used for generating power from generating station based on renewable energy; and (e) Any grant received from the Central or State Government or any statutory body or authority for the execution of the project which does not carry any liability of repayment.

75. The Petitioner has claimed the capital cost of Combined Asset as 13599.09 lakh as on 31.3.2019.

76. The admitted trued-up capital cost of 4921.68 lakh for Asset-1, 5763.45 lakh for Asset-2, 553.02 lakh for Asset-3 and 2275.47 lakh for Asset-4 as on 31.3.2019 has been considered as the opening capital cost as on 1.4.2019 for determination of tariff for 2019-24 tariff period in accordance with Regulation 19 of the 2019 Tariff Regulations. The element-wise capital cost (i.e. land, building, transmission line, sub- station and PLCC) as admitted by the Commission as on 31.3.2019 for transmission assets are clubbed together and the combined capital cost has been considered as capital cost for Combined Asset as on 1.4.2019, as per the following details: Page 45 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Element Asset-1 Asset-2 Asset- Asset-4 Capital Cost for Combined Asset as on 1.4.2019 E = (A+B+C+D) Building & Other Civil Works 95.30 26.77 0.00 0.00 122.07 Transmission Line 0.00 0.00 0.00 66.03 66.03 Sub-Station Equipment 4632.66 5574.80 533.41 2195.26 12936.13 PLCC 193.72 137.50 19.62 0.00 350.83 IT Equipment & Software 0.00 24.39 0.00 14.18 38.56 Total 4921.68 5763.45 553.02 2275.47 13513.63

77. The trued-up capital cost of 13513.63 lakh as on 31.3.2019 for Combined Asset has been considered as admitted capital cost as on 1.4.2019 for working out tariff for 2019-24 tariff period. Additional Capital Expenditure (ACE)

78. Regulations 24 and 25 of the 2019 Tariff Regulations provide as under:

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

25. Additional Capitalisation within the original scope and after the cut-off date: Page 46 of 70 Order in Petition No. 36/TT/2020 (1) The additional capital expenditure incurred or projected to be incurred in respect of an existing project or a new project on the following counts within the original scope of work and after the cut-off date may be admitted by the Commission, subject to prudence check: (a) Liabilities to meet award of arbitration or for compliance of the directions or order of any statutory authority, or order or decree of any court of law; (b) Change in law or compliance of any existing law; (c) Deferred works relating to ash pond or ash handling system in the original scope of work; (d) Liability for works executed prior to the cut-off date; (e) Force Majeure events; (f) Liability for works admitted by the Commission after the cut-off date to the extent of discharge of such liabilities by actual payments; and (g) Raising of ash dyke as a part of ash disposal system. (2) In case of replacement of assets deployed under the original scope of the existing project after cut-off date, the additional capitalization may be admitted by the Commission, after making necessary adjustments in the gross fixed assets and the cumulative depreciation, subject to prudence check on the following grounds: (a) The useful life of the assets is not commensurate with the useful life of the project and such assets have been fully depreciated in accordance with the provisions of these regulations; (b) The replacement of the asset or equipment is necessary on account of change in law or Force Majeure conditions; (c) The replacement of such asset or equipment is necessary on account of obsolescence of technology; and (d) The replacement of such asset or equipment has otherwise been allowed by the Commission.

79. The Petitioner has claimed projected ACE for 2019-24 period and submitted Auditors Certificates in support of the same. The details of projected ACE for 2019-

20 period as per Auditors Certificates is 120.47 lakh. ( in lakh) Asset Projected ACE 2019-24 2019-20 Asset-4 (under Combined Asset) 120.47

80. The Petitioner vide affidavit dated 21.12.2019 has submitted that ACE claimed for the period 1.4.2019 to 31.3.2020 is on account of un-discharged liability towards final payment/ withheld payment due to contractual exigencies for works executed upto the cut-off date and works to be executed upto cut-off date. The contract-wise details for balance and retention payments are as detailed below: Page 47 of 70 Order in Petition No. 36/TT/2020 ( in lakh) Party Package Financial Year 2019-20 Mcnally Bharat Engineering Co. Ltd. Sub-station Work 78.00 Total 78.00

81. The details of works deferred for execution are as under: ( in lakh) Asset Element Financial Year 2019-20 Asset-4 (under Combined Asset) IT Equipment & Software 42.47 Total 42.47

82. We have considered the submissions of the Petitioner. It is observed that the projected ACE falls within the cut-off date and is on account of balance and retention payment for works executed within the cut-off date and works deferred for execution. The same has been considered for computation of total capital cost as on 31.3.2024. ACE claimed during the period 2019-20 is allowed under Regulation 24(1)(a) and (b) of the 2019 Tariff Regulations which is subject to true up.

83. ACE allowed subject to true up is summarized below: ( in lakh) Particulars Regulation Combined Asset 2019-20 ACE to the extent of Balance & Retention Payments for works executed before the cut-off date and works deferred for execution Regulation 24(1)(a) and (b) of the 2019 Tariff Regulations 120.47 Capital cost for the 2019-24 tariff period

84. Accordingly, the capital cost of the Combined Asset, considered for the 2019-

24 tariff period, subject to truing up, is as follows: ( in lakh) Page 48 of 70 Order in Petition No. 36/TT/2020 Capital Cost allowed as on 1.4.2019 ACE allowed for the year 2019-20 Total Estimated Completion Cost up to 31.3.2024 13513.63 120.47 13634.10

85. Against the overall RCE approved capital cost of 15727.00 lakh, the estimated project cost of the Combined Asset including additional capital expenditure is 13634.10 lakh which is within the RCE cost. Therefore, there is no cost over-run as per the RCE cost. Debt-Equity Ratio

86. Regulation 18 of the 2019 Tariff Regulations provide 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 project including communication, project 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 project including communication project which has completed its useful life as on or after Page 49 of 70 Order in Petition No. 36/TT/2020 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 project including communication project declared under commercial operation prior to 1.4.2019, but where debt: equity ratio has not been determined by the Commission for determination of tariff for the period ending 31.3.2019, the Commission shall approve the debt: equity ratio in accordance with clause (1) of this Regulation. (5).Any expenditure incurred or projected to be incurred on or after 1.4.2019 as may be admitted by the Commission as Additional Capital Expenditure for determination of tariff, and renovation and modernisation expenditure for life extension shall be serviced in the manner specified in clause (1) of this Regulation.

87. The details of the debt-equity ratio considered for the purpose of computation of tariff for the Combined Asset for the 2019-24 tariff period is as follows: Particulars Capital Cost as on 1.4.2019 ( in lakh) Total Capital Cost as on 31.3.2024 ( in lakh) Debt 9459.57 70.00 9543.90 70.00 Equity 4054.06 30.00 4090.20 30.00 Total 13513.63 100.00 13634.10 100.00 Return on Equity (RoE)

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

30. Return on Equity: (1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with Regulation 18 of these regulations. (2) Return on equity shall be computed at the base rate of 15.50% for thermal generating station, transmission project including communication project and run-of- river hydro generating station, and at the base rate of 16.50% for the storage type hydro generating stations including pumped storage hydro generating stations and run-of-river generating station with pondage: Provided that return on equity in respect of Additional Capitalization after cut- off date beyond the original scope excluding Additional Capitalization due to Change in Law, shall be computed at the weighted average rate of interest on actual loan portfolio of the generating station or the transmission project; Provided further that: Page 50 of 70 Order in Petition No. 36/TT/2020

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 project 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 project up to load dispatch centre or protection project based on the report submitted by the respective RLDC;

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

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

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

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

31. Tax on Return on Equity: (1) The base rate of return on equity as allowed by the Commission under Regulation 30 of these regulations shall be grossed up with the effective tax rate of the respective financial year. For this purpose, the effective tax rate shall be considered on the basis of actual tax paid in respect of the financial year in line with the provisions of the relevant Finance Acts by the concerned generating 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% Page 51 of 70 Order in Petition No. 36/TT/2020

(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.

89. The Petitioner has submitted that MAT rate is applicable to the Petitioner company. Accordingly, the MAT rate applicable during the 2019-20 has been considered for the purpose of RoE, which shall be trued up with actual tax rate in accordance with Clause (3) of Regulation 31 of the 2019 Tariff Regulations. RoE allowed for the Combined Asset under Regulation 30 of the 2019 Tariff Regulations is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Opening Equity 4054.06 4090.20 4090.20 4090.20 4090.20 Addition due to Additional Capitalization 36.14 0.00 0.00 0.00 0.00 Closing Equity 4090.20 4090.20 4090.20 4090.20 4090.20 Average Equity 4072.13 4090.20 4090.20 4090.20 4090.20 Return on Equity (Base Rate) (%) 15.50 15.50 15.50 15.50 15.50 Tax Rate applicable (%) 17.472 17.472 17.472 17.472 17.472 Rate of Return on Equity (Pre-tax) 18.782 18.782 18.782 18.782 18.782 Return on Equity (Pre- tax) 764.83 768.22 768.22 768.22 768.22 Page 52 of 70 Order in Petition No. 36/TT/2020 Interest on Loan (IoL)

90. Regulation 32 of the 2019 Tariff Regulations provide as under:

32. Interest on loan capital: (1) The loans arrived at in the manner indicated in Regulation 18 of these regulations shall be considered as gross normative loan for calculation of interest on loan. (2) The normative loan outstanding as on 1.4.2019 shall be worked out by deducting the cumulative repayment as admitted by the Commission 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 ofde- 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 up to the date of de-capitalisation of such asset. (4) Notwithstanding any moratorium period availed by the generating company or the transmission licensee, as the case may be, the repayment of loan shall be considered from the first year of commercial operation of the project and shall be equal to the depreciation allowed for the year or part of the year. (5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio after providing appropriate accounting adjustment for interest capitalized: Provided that if there is no actual loan for a particular year but normative loan is still outstanding, the last available weighted average rate of interest shall be considered; Provided further that if the generating station or the transmission project, 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.

91. 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. In view of above, IoL has been worked out in accordance with Page 53 of 70 Order in Petition No. 36/TT/2020 Regulation 32 of the 2019 Tariff Regulations. IoL allowed for the Combined Asset is follows: ( in lakh) Particular 2019-20 2020-21 2021-22 2022-23 2023-24 Gross Normative Loan 9459.57 9543.90 9543.90 9543.90 9543.90 Cumulative Repayments up to Previous Year 1857.40 2581.23 3310.30 4039.38 4768.45 Net Loan-Opening 7602.17 6962.67 6233.60 5504.52 4775.45 Addition due to Additional Capitalization 84.33 0.00 0.00 0.00 0.00 Repayment during the year 723.83 729.07 729.07 729.07 729.07 Net Loan-Closing 6962.67 6233.60 5504.52 4775.45 4046.38 Average Loan 7282.42 6598.13 5869.06 5139.99 4410.92 Weighted Average Rate of Interest on Loan (%) 8.131 8.121 8.141 8.168 8.161 Interest on Loan 592.10 535.82 477.78 419.86 359.98 Depreciation

92. Regulation 33 of the 2019 Tariff Regulations provide as under:

33. Depreciation: (1) Depreciation shall be computed from the date of commercial operation of a generating station or unit thereof or a transmission system or element thereof including communication system. In case of the tariff of all the units of a generating station or all elements of a transmission system including communication system for which a single tariff needs to be determined, the depreciation shall be computed from the effective date of commercial operation of the generating station or the transmission system taking into consideration the depreciation of individual units: Provided that effective date of commercial operation shall be worked out by considering the actual date of commercial operation and installed capacity of all the units of the generating station or capital cost of all elements of the transmission system, for which single tariff needs to be determined. (2) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission. In case of multiple units of a generating station or multiple elements of a transmission system, weighted average life for the generating station of the transmission system shall be applied. Depreciation shall be chargeable from the first year of commercial operation. In case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis. (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: Page 54 of 70 Order in Petition No. 36/TT/2020 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. (6) In case of the existing projects, the balance depreciable value as on 1.4.2019 shall be worked out by deducting the cumulative depreciation as admitted by the Commission upto 31.3.2019 from the gross depreciable value of the assets. (7) The generating company or the transmission licensee, as the case may be, shall submit the details of proposed capital expenditure five years before the completion of useful life of the project along with justification and proposed life extension. The Commission based on prudence check of such submissions shall approve the depreciation on capital expenditure. (8) In case of de-capitalization of assets in respect of generating station or unit thereof or transmission system or element thereof, the cumulative depreciation shall be adjusted by taking into account the depreciation recovered in tariff by the de-capitalized asset during its useful services.

93. The IT equipment has been considered as a part of the Gross Block and depreciated using weighted average rate of depreciation (WAROD). WAROD has been worked out and placed as Annexure-5 after taking into account the depreciation rates of IT and non-IT assets as prescribed in the 2019 Tariff Regulations. The salvage value of IT equipment has been considered Nil, i.e. IT asset has been considered as 100 per cent depreciable. The depreciation has been worked out considering the admitted capital expenditure as on 31.3.2019 and accumulated Page 55 of 70 Order in Petition No. 36/TT/2020 depreciation up to 31.3.2019. The depreciation allowed for the Combined Asset is as follows: ( in lakh) Particular 2019-20 2020-21 2021-22 2022-23 2023-24 Opening Gross Block 13513.63 13634.10 13634.10 13634.10 13634.10 Addition during the year 2019-24 due to projected Additional Capitalisation 120.47 0.00 0.00 0.00 0.00 Closing Gross Block 13634.10 13634.10 13634.10 13634.10 13634.10 Average Gross Block 13573.87 13634.10 13634.10 13634.10 13634.10 Weighted average rate of Depreciation (WAROD)(%) 5.33 5.35 5.35 5.35 5.35 Balance useful life at the beginning of the year 23.00 22.00 21.00 20.00 19.00 Aggregated Depreciable Value 12222.46 12278.79 12278.79 12278.79 12278.79 Remaining Aggregate Depreciable Value at the end of the year 9641.23 8968.49 8239.42 7510.34 6781.27 Combined Depreciation during the year 723.83 729.07 729.07 729.07 729.07 Aggregate Cumulative Depreciation 2581.23 3310.30 4039.38 4768.45 5497.52 Operation & Maintenance Expenses (O&M Expenses)

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

35 (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 ( Lakh per bay)

765 kV 45.01 46.60 48.23 49.93 51.68

400 kV 32.15 33.28 34.45 35.66 36.91

220 kV 22.51 23.30 24.12 24.96 25.84

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

765 kV 0.491 0.508 0.526 0.545 0.564

400 kV 0.358 0.371 0.384 0.398 0.411

220 kV 0.245 0.254 0.263 0.272 0.282

132 kV and below 0.245 0.254 0.263 0.272 0.282 Norms for AC and HVDC lines ( Lakh per km) Single Circuit (Bundled Conductor with six or more sub-conductors) 0.881 0.912 0.944 0.977 1.011 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 Page 56 of 70 Order in Petition No. 36/TT/2020 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 Cir uit (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 HVDC Back-to-Back station ( Lakh per 500 MW) 1,666 1,725 1,785 1,848 1,913

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

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

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

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

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

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

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

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

v. the O&M expenses of 800 kV, Alipurduar-Agra HVDC bi-pole scheme (3000 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 Page 57 of 70 Order in Petition No. 36/TT/2020

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.

95. The Petitioner has claimed O&M Expenses for following transmission elements during the 2019-24 period:

I. Sub-stations (400 kV AIS): (1) Madhugiri (Tumkur):2 Nos. 400 kV line bays at Narendra (New) and 2 Nos. 400 kV line bays at Madhugiri (Tumkur) 2 Bays (2) Madhugiri (Tumkur) -Bidadi Bay I 1 Bay (3) Madhugiri (Tumkur) - Bidadi Bay II 1 Bay

II. Sub-stations (400 kV GIS): (1) Bijapur (Kudgi):Kudgi NTPC Bays-1,2,3&4 4 Bays (2) Bijapur (Kudgi):2 Nos. 400 kV Line Bays at Narendra (New) & 2 Nos.

400 kV Line Bays at Madhugiri (Tumkur) 2 Bays (3) Bidadi:2 Nos. 400 kV Line Bays at Bidadi for Madhugiri 2 Bays Page 58 of 70 Order in Petition No. 36/TT/2020

III. Communication System:

i. PLCC

96. The O&M Expenses claimed by the Petitioner for the Combined Asset are as follows: Sub-Station Bays ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M for Sub-station bays (as per norms)

400 kV AIS 128.60 133.12 137.80 142.64 147.64

400 kV GIS 180.04 186.36 192.92 199.69 206.69 Total O&M Expenses 308.64 319.48 330.72 342.33 354.33 PLCC ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M for PLCC (as per norms) PLCC 7.02 7.02 7.02 7.02 7.02 Total O&M Expenses 7.02 7.02 7.02 7.02 7.02 ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Total O&M Expenses Claimed 315.66 326.50 337.74 349.35 361.35

97. The Petitioner has claimed O&M Expenses separately for the PLCC under Regulation 35(4) of the 2019 Tariff Regulations @2% of its original project cost in the instant petition and the Petitioner has made similar claim in other petitions as well. Though PLCC is a communication system, it has been considered as part of the sub- station in the 2014 Tariff Regulations and 2019 Tariff Regulations and the norms for sub-station has been specified accordingly. Accordingly, the Commission vide order dated 24.1.2021 in Petition No.126/TT/2020 has already concluded that no separate O&M Expenses can be allowed for PLCC under Regulation 35(4) of the 2019 Tariff Regulations even though PLCC is a communication system. Therefore, the Petitioners claim for separate O&M Expenses for PLCC @2% is not allowed. The Page 59 of 70 Order in Petition No. 36/TT/2020 relevant portions of the order dated 24.1.2021 in Petition No.126/TT/2020 are extracted hereunder.

103. Thus, although PLCC equipment is a communication system, it has been considered as a part of sub-station, as it is used both for protection and communication. Therefore, we are of the considered view that rightly, it was not considered for separate O&M Expenses while framing norms of O&M for 2019-24 tariff period. While specifying norms for bays and transformers, O&M Expenses for PLCC have been included within norms for O&M Expenses for sub-station. Norms of O&M Expenses @2% of the capital cost in terms of Regulation 35(4) of the 2019 Tariff Regulations have been specified for communication system such as PMU, RMU, OPGW etc. and not for PLCC equipment.

105. In our view, granting of O&M Expenses for PLCC equipment @2% of its capital cost under Regulation 35(4) of the 2014 Tariff Regulations under the communication system head would tantamount to granting O&M Expenses twice for PLCC equipment as PLCC equipment has already been considered as part of the sub-station. Therefore, the Petitioners prayer for grant of O&M Expenses for the PLCC equipment @2% of its capital cost under Regulation 35(4) of the 2014 Tariff Regulations is rejected.

106. The principle adopted in this petition that PLCC is part of sub-station and accordingly no separate O&M Expenses is admissible for PLCC equipment in the 2019-24 tariff period under Regulation 35(4) of the 2019 Tariff Regulations shall be applicable in case of all petitions where similar claim is made by the Petitioner. As already mentioned, the Commission, however, on the basis of the claim made by the Petitioner has inadvertently allowed O&M Expenses for PLCC equipment @2% of its original project cost, which is applicable for other communication system, for 2019-

24 period in 31 petitions given in Annexure-3 of this order. Therefore, the decision in this order shall also be applicable to all the petitions given in Annexure-3. Therefore, PGCIL is directed to bring this decision to the notice of all the stakeholders in the 31 petitions given in Annexure-3 and also make revised claim of O&M Expenses for PLCC as part of the sub-station at the time of truing up of the tariff allowed for 2019-

24 period in respective petitions. Therefore, the Petitioners claim for separate O&M Expenses for PLCC @2% is not allowed.

98. The O&M Expenses allowed for the Combined Asset under Regulation 35(3) and (4) of the 2019 Tariff Regulations are as under: Sub-Station Bays ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Norm ( lakh/bay)

400 kV AIS 32.150 33.280 34.450 35.660 36.910

400 kV GIS 22.505 23.296 24.115 24.962 25.837 Number of bays

400 kV AIS 4 4 4 4 4

400 kV GIS 8 8 8 8 8 Page 60 of 70 Order in Petition No. 36/TT/2020 Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expense for 400 kV AIS 128.60 133.12 137.80 142.64 147.64 O&M Expense for 400 kV GIS 180.04 186.37 192.92 199.70 206.70 Total O&M Expenses 308.64 319.49 330.72 342.34 354.34 ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Total O&M Expenses Allowed 308.64 319.49 330.72 342.34 354.34 Interest on Working Capital (IWC)

99. Regulation 34(1)(c), 34(3), 34(4) and Regulation 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 Project:

(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 project including communication project 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. Definition- 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; Page 61 of 70 Order in Petition No. 36/TT/2020

100. The Petitioner has submitted that it has computed IWC for 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%.

101. IWC is worked out in accordance with Regulation 34 of the 2019 Tariff Regulations. The rate of IWC 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, Rate of Interest 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 is as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O & M Expenses 25.72 26.62 27.56 28.53 29.53 Maintenance Spares 46.30 47.92 49.61 51.35 53.15 Receivables 299.28 295.54 289.73 283.97 277.25 Total 371.30 370.09 366.89 363.85 359.93 Rate of Interest (%) 12.05 11.25 11.25 11.25 11.25 Interest of working capital 44.74 44.60 44.21 43.84 43.37 Annual Fixed Charges for the 2019-24 Tariff Period

102. The annual fixed charges for the Combined Asset for the tariff period 2019-24 are summarized below: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 723.83 729.07 729.07 729.07 729.07 Interest on Loan 592.10 535.82 477.78 419.86 359.98 Return on Equity 764.83 768.22 768.22 768.22 768.22 Interest on Working Capital 44.74 44.60 44.21 43.84 43.37 Operation and Maintenance 308.64 319.49 330.72 342.34 354.34 Total 2434.14 2397.20 2350.00 2303.33 2254.98 Filing Fee and Publication Expenses

103. 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 Page 62 of 70 Order in Petition No. 36/TT/2020 filing fees and publication expenses in connection with the present petition directly from the beneficiaries on pro-rata basis in accordance with Regulation 70(1) of the 2019 Tariff Regulations. Licence Fee and RLDC Fees and Charges

104. 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 and RLDC fees and charges in accordance with Regulation 70(3) and (4) of the 2019 Tariff Regulations. Goods and Services Tax

105. The Petitioner has sought to recover GST on transmission charges separately from the Respondents, if GST on transmission is withdrawn from negative list in future.

106. We have considered the submission of the Petitioner. GST is not levied on transmission service at present and we are of the view that Petitioners prayer is pre- mature. Security Expenses

107. The Petitioner has submitted that security expenses for the instant assets are not claimed in the instant petition and it would file a separate petition for claiming the overall security expenses and the consequential Interest on Working Capital. The Petitioner has requested to consider the actual security expenses incurred during 2018-19 for claiming estimated security expenses for 2019-20 which shall be subject to true up at the end of the year based on the actuals. The Petitioner has submitted that similar petition for security expenses for 2020-21, 2021-22, 2022-23 and 2023-24 shall be filed on a yearly basis on the basis of the actual expenses of previous year subject to true up at the end of the year on actual expenses. The Petitioner has Page 63 of 70 Order in Petition No. 36/TT/2020 submitted that the difference, if any, between the estimated security expenses and actual security expenses as per the duly audited accounts may be allowed to be recovered from the beneficiaries on yearly basis.

108. During the proceedings held on 24.6.2020 in the instant Petition, the learned counsel of TANGEDCO submitted that the Petitioner is entitled to claim the security expenses and capital spares if the recovery of the same is allowed under the provisions of the Tariff Regulations and that specifically seeking the approval to file a separate petition to claim security expenses and capital spares is not required.

109. In response, the Petitioner vide affidavit dated 16.7.2020 submitted that with respect to security expenses Petition No. 260/MP/2020 has been filed claiming the overall security expenses and consequential IOWC on that security expenses vide.

110. We have considered the submissions of the Petitioner and TANGEDCO. 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

111. The Petitioner has sought reimbursement of capital spares at the end of tariff period. The Petitioners claim, if any, shallbe dealt with in accordance with the provisions of the 2019 Tariff Regulations. Page 64 of 70 Order in Petition No. 36/TT/2020 Sharing of Transmission Charges

112. During the proceedings held on 24.6.2020 in the instant Petition, the learned counsel of TANGEDCO submitted that the Petitioner has not placed on record the details of recovery of transmission charges from NTPC with respect to Asset-1 in the current Petition.

113. In response, the representative of the Petitioner submitted that as per the directions of the Commission at paragraph 74 in order dated 29.7.2016 in Petition No. 201/TT/2015, the transmission charges for Asset-1 which includes 4 nos. of 400 kV Line Bays at Narendra (New) for Kudgi TPS-Narendra (New) 400 kV 2XD/C Quad lines was to be borne by NTPC till the COD of its first unit or the date of start of LTA. He further submitted that the first unit of Kudgi TPS-Narendra (New) achieved its COD on 1.8.2017 and accordingly, the Petitioner has raised bilateral bills to NTPC from 11.12.2015 till 31.7.2017 complying with the directions of the Commission. The Petitioner has further clarified that NTPC has already paid all the transmission charges billed. Further, the Petitioner vide affidavit dated 16.7.2020 has submitted the details of transmission charges billed to NTPC till the COD of its first unit i.e. till 31.7.2017 with respect to Asset-1. Further, the COD certificate of Unit-1 of Kudgi TPS (3X800 MW in Phase-I) of NTPC has been submitted by the Petitioner.

114. We have considered the submissions of TANGEDCO and the Petitioner. We are satisfied with the documentary evidence produced by the Petitioner in support of its submissions regarding the recovery of transmission charges from NTPC with respect to Asset-1.

115. The billing, collection and disbursement of the transmission charges approved in this order in respect of Asset-1 w.e.f. 1.8.2017 (from COD to 31.7.2017, it is Page 65 of 70 Order in Petition No. 36/TT/2020 payable by NTPC) and in respect of Assets-2, 3 and 4 w.e.f. COD shall be governed by the provisions of Central Electricity Regulatory Commission (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.

116. To summarise, the trued-up Annual Fixed Charges allowed for the instant assets for the 2014-19 tariff period are as under: ( in lakh) Particulars 2015-16 (Pro-rata) 2016-17 2017-18 2018-19 Asset-1 297.25 1025.21 1055.18 1042.14 Asset-2 - 608.94 1175.56 1187.43 Asset-3 - 117.58 215.74 235.00 Asset-4 - - 462.05 490.86

117. The Annual Fixed Charges allowed for the Combined Asset for the 2019-24 tariff period in this order are as under: ( in lakh) Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Annual Fixed Charges 2434.14 2397.20 2350.00 2303.33 2254.98

118. This order disposes of Petition No. 36/TT/2020. (Arun Goyal) (I. S. Jha) (P. K. Pujari) Member Member Chairperson Page 66 of 70 Order in Petition No. 36/TT/2020 Petition No.: 36-TT-2020 Period 2014-19 True-up Annexure - 1 Asset-1 2014-19 Admitted Capital Cost as on COD ( in lakh) Additional Capital Expenditure ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations Capital Expenditure as on COD 2015-16 2016-17 2017-18 2015-16 ( in lakh) 2016-17 ( in lakh) 2017-18 ( in lakh) 2018-19 ( in lakh) Freehold Land 0.00 0.00 0.00 0.00 0.00 0.00% 0.00 0.00 0.00 0.00 Building 81.79 3.37 10.14 0.00 95.30 3.34% 2.79 3.01 3.18 3.18 Transmission Line 0.00 0.00 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 0.00 Sub Station 3965.87 174.43 492.36 0.00 4632.66 5.28% 214.00 231.61 244.60 244.60 PLCC 178.54 7.35 7.83 0.00 193.72 6.33% 11.53 12.01 12.26 12.26 Leasehold Land 0.00 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 IT Equipment and Software 0.00 0.00 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 0.00 TOTAL 4226.20 185.15 510.34 0.00 4921.68 228.33 246.63 260.05 260.05 Average Gross Block ( in lakh) 4318.77 4666.52 4921.68 4921.68 Weighted Average Rate of Depreciation ( in lakh) 5.29% 5.29% 5.28% 5.28% Page 67 of 70 Order in Petition No. 36/TT/2020 Petition No.: 36-TT-2020 Period 2014-19 True-up Annexure - 2 Asset-2 2014-19 Admitted Capital Cost as on COD ( in lakh) Additional Capital Expenditure ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations Capital Expenditure as on COD 2016-17 2017-18 2018-19 2016-17 ( in lakh) 2017-18 ( in lakh) 2018-19 ( in lakh) Freehold Land 0.00 0.00 0.00 0.00 0.00 0.00% 0.00 0.00 0.00 Building 26.77 0.00 0.00 0.00 26.77 3.34% 0.89 0.89 0.89 Transmission Line 0.00 0.00 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 Sub Station 5116.69 140.43 4.48 313.20 5574.80 5.28% 273.87 277.69 286.08 PLCC 137.50 0.00 0.00 0.00 137.50 6.33% 8.70 8.70 8.70 Leasehold Land 0.00 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 IT Equipment and Software 24.39 0.00 0.00 0.00 24.39 5.28% 1.29 1.29 1.29 TOTAL 5305.34 140.43 4.48 313.20 5763.45 284.75 288.58 296.97 Average Gross Block ( in lakh) 5375.56 5448.01 5606.85 Weighted Average Rate of Depreciation ( in lakh) 5.30% 5.30% 5.30% Page 68 of 70 Order in Petition No. 36/TT/2020 Petition No.: 36-TT-2020 Period 2014-19 True-up Annexure - 3 Asset-3 2014-19 Admitted Capital Cost as on COD ( in lakh) Additional Capital Expenditure ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations Capital Expenditure as on COD 2016-17 2017-18 2018-19 2016-17 ( in lakh) 2017-18 ( in lakh) 2018-19 ( in lakh) Freehold Land 0.00 0.00 0.00 0.00 0.00 0.00% 0.00 0.00 0.00 Building 0.00 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 Transmission Line 0.00 0.00 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 Sub Station 332.08 0.58 200.75 0.00 533.41 5.28% 17.55 22.86 28.16 PLCC 19.62 0.00 0.00 0.00 19.62 6.33% 1.24 1.24 1.24 Leasehold Land 0.00 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 IT Equipment and Software 0.00 0.00 0.00 0.00 0.00 5.28% 0.00 0.00 0.00 TOTAL 351.69 0.58 200.75 0.00 553.02 18.79 24.11 29.41 Average Gross Block ( in lakh) 351.98 452.65 553.02 Weighted Average Rate of Depreciation ( in lakh) 5.34% 5.33% 5.32% Page 69 of 70 Order in Petition No. 36/TT/2020 Petition No.: 36-TT-2020 Period 2014-19 True-up Annexure - 4 Asset-4 2014-19 Admitted Capital Cost as on COD ( in lakh) Additional Capital Expenditure ( in lakh) Admitted Capital Cost as on 31.3.2019 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations Capital Expenditure as on COD 2017-18 2018-19 2017-18 ( in lakh) 2018-19 ( in lakh) Freehold Land 0.00 0.00 0.00 0.00 0.00% 0.00 0.00 Building 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 Transmission Line 66.03 0.00 0.00 66.03 5.28% 3.49 3.49 Sub Station 1811.23 260.03 124.00 2195.26 5.28% 102.50 112.64 PLCC 0.00 0.00 0.00 0.00 6.33% 0.00 0.00 Leasehold Land 0.00 0.00 0.00 0.00 3.34% 0.00 0.00 IT Equipment and Software 14.18 0.00 0.00 14.18 5.28% 0.75 0.75 TOTAL 1891.44 260.03 124.00 2275.47 106.73 116.87 Average Gross Block ( in lakh) 2021.45 2213.47 Weighted Average Rate of Depreciation ( in lakh) 5.28% 5.28% Page 70 of 70 Order in Petition No. 36/TT/2020 Petition No.: 36-TT-2020 Period 2019-24 Tariff Annexure - 5 2019-24 Combined Admitted Capital Cost as on 1.4.2019 ( in lakh) Additional Capital Expenditure ( in lakh) Admitted Capital Cost as on 31.3.2024 ( in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations Capital Expenditure as on 1.4.2019 2019-20 2019-20 ( in lakh) 2020-21 ( in lakh) 2021-22 ( in lakh) 2022-23 ( in lakh) 2023-24 ( in lakh) Freehold Land 0.00 0.00 0.00 0.00% 0.00 0.00 0.00 0.00 0.00 Building 122.07 0.00 122.07 3.34% 4.08 4.08 4.08 4.08 4.08 Transmission Line 66.03 0.00 66.03 5.28% 3.49 3.49 3.49 3.49 3.49 Sub Station 12936.13 78.00 13014.13 5.28% 685.09 687.15 687.15 687.15 687.15 PLCC 350.83 0.00 350.83 6.33% 22.21 22.21 22.21 22.21 22.21 Leasehold Land 0.00 0.00 0.00 3.34% 0.00 0.00 0.00 0.00 0.00 IT Equipment and Software 38.56 42.47 81.03 15.00% 8.97 12.15 12.15 12.15 12.15 TOTAL 13513.63 120.47 13634.10 723.83 729.07 729.07 729.07 729.07 Average Gross Block ( in lakh) 13573.87 13634.10 13634.10 13634.10 13634.10 Weighted Average Rate of Depreciation ( in lakh) 5.33% 5.35% 5.35% 5.35% 5.35%

Petition No. 3/TT/2020

Power Grid Corporation Of India Ltd. v. Karnataka Power Transmission Corporation Ltd. And Others

Summary of Order – Petition No. 36/TT/2020 (Power Grid Corporation of India Ltd.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Submissions

Respondents' / TANGEDCO's Submissions

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Power Grid Corporation Of India Ltd. v. Karnataka Power Transmission Corporation Ltd. And Others

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