Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
  • RKV&RKG
Acts
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
  • RKV&RKG
Acts
See more information ...
Smart Summary

Tribunal Opinion Summary — Appeal Nos. 445 of 2019, 188 of 2020 & 224 of 2021

Factual and Procedural Background

Powergrid Corporation of India Limited (PGCIL) filed three appeals (Appeal No. 445 of 2019, Appeal No. 188 of 2020 and Appeal No. 224 of 2021) under Section 111(1) of the Electricity Act, 2003 against orders passed by the Central Electricity Regulatory Commission (CERC). The impugned CERC orders were dated 01.10.2019, 25.06.2019 and 01.11.2019 in Petition Nos. 268/TT/2018, 242/TT/2018 and 367/TT/2018 respectively.

The core dispute concerns compliance with the CERC Tariff Regulations, 2014 regarding payment of Incidental Expenditure During Construction (IEDC) attributable to time over-run. Although the Central Commission allowed time over-run in the matters, it restricted payment of IEDC to fixed percentages of the hard cost (RCE): 10.75%, 5% and 2.95% respectively in the three cases. The Appellant challenges this cap and seeks payment of actual IEDC after prudence check in accordance with Regulation 11(b)(2) of the 2014 Tariff Regulations.

Legal Issues Presented

  1. Whether, when the Central Commission has condoned time over-run and has found the delay not attributable to the transmission licensee (PGCIL), IEDC must be allowed on actuals after due prudence check in terms of Regulation 11(b)(2) of the CERC Tariff Regulations, 2014.
  2. Whether the Central Commission erred in restricting IEDC to normative percentages of hard cost (10.75% / 5% / 2.95%) instead of computing it on actuals after prudence check.
  3. Whether the Appellant had satisfied the procedural requirement under Regulation 11(b)(2) (i.e., furnishing detailed justification and supporting documents, including Form 12-A) to enable the CERC to consider actual IEDC.

Arguments of the Parties

Appellant's Arguments

  • The Tariff Regulations, 2014 (Regulation 11(b)(2)) expressly provide that if delay is not attributable to the transmission licensee and is due to uncontrollable factors (as per Regulation 12), IEDC may be allowed after due prudence check; therefore actual IEDC should have been allowed after prudence check.
  • PGCIL submitted detailed justification element-wise regarding IEDC during the time over-run in the prescribed format (Form 12-A) along with the relevant petitions; the Central Commission did not meaningfully consider these submissions and simply applied an across-the-board percentage cap.
  • There are prior Tribunal decisions (including Appeal Nos. 95 & 140 of 2018 dated 02.12.2019 and other subsequent decisions) that state that when delay is condoned and not attributable to the licensee, IEDC should be computed on actuals after prudence check — these authorities support allowing actual IEDC in these appeals.
  • The Tribunal's earlier judgment dated 02.12.2019 has already been implemented by the Central Commission in an order dated 04.02.2020 in Petition No. 1/TT/2019, demonstrating applicability of that legal position.

Respondents' Arguments

  • UPPTCL (Respondent No.19) and BRPL (Respondent No.13) argued that the Tribunal's earlier decisions relied upon by the Appellant pertain to the 2009 Regulations (control period 2009–14), and that the 2014 Regulations differ because they include an express provision requiring detailed justification for IEDC due to time over-run. Consequently, those earlier decisions are claimed to be inapplicable or distinguishable for the 2014 Regulations.
  • Respondents contended that the Appellant did not specifically claim IEDC due to time over-run in its petitions before the Central Commission (Petition No. 268/TT/2018 etc.) and therefore the Appellant cannot now seek relief for a claim not made before the Commission.
  • Respondent No.5 (TANGEDCO) submitted that because the Appellant did not furnish the detailed justification required by Regulation 11(b)(2), CERC properly capped IEDC at 2.5% (noting the text references a cap), and thus the Tribunal should not entertain the appeal where statutory documentary prerequisites were allegedly not met.
  • More generally, respondents asked the Tribunal to refuse the appeal on grounds that the procedural and regulatory pre-conditions for claiming IEDC for time over-run were not satisfied by the Appellant in the proceedings before CERC.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Judgment dated 02.12.2019 — Appeal Nos. 95 & 140 of 2018 (this Tribunal) Held that Central Commission must apply its own regulations; IEDC should be computed on actual basis after due prudence check and cannot be restricted to a fixed percentage of original estimated hard cost when not mandated by regulations. The Tribunal relied on this decision to conclude that IEDC should be allowed on actuals after prudence check; the Court observed that CERC had previously implemented this judgment in an order (see row for CERC order dated 04.02.2020).
Judgment dated 09.03.2021 — Appeal No. 63 of 2020 (this Tribunal) Confirmed that limiting IEDC to a fixed percentage (e.g., 5%) is not in accordance with the Regulations; where the entire delay has not been condoned, the CERC may adjudicate proportional payment corresponding to the part of delay condoned. The Court applied this principle to observe that restriction to fixed percentages was unjustified in comparable contexts; it reinforced the need for CERC to perform prudence checks and adopt actual computation in appropriate cases.
Judgment dated 22.04.2021 — Appeal No. 55 of 2020 (this Tribunal) Held that where delay is condoned and is not attributable to the licensee, there is no basis to restrict IEDC to specified percentages; direction given to CERC to pass consequential fresh order subject to prudence check. The Tribunal relied on this decision as part of a body of precedent establishing that condoned delay should lead to actual IEDC allowance after prudence check; the present Court treated these prior rulings as applicable mutatis mutandis.
Order dated 14.07.2021 — Appeal No. 401 of 2021 (this Tribunal) Reiterated that once delay is condoned, restriction of IEDC as a percentage of hard cost is impermissible; applied prior judgments to allow remand to CERC for re-determination. The Court treated this order as further confirmation of the Tribunal's consistent approach: it reinforced that the three prior Tribunal decisions apply to similar transmission cases and supported remand for fresh consideration by CERC.
CERC order dated 04.02.2020 in Petition No. 1/TT/2019 (referenced) Described in the opinion as an instance where the Central Commission implemented the Tribunal's judgment of 02.12.2019. The Tribunal noted that CERC had implemented that earlier Tribunal judgment in this order, and relied on that fact to find that PGCIL had provided IEDC details (Form 12-A) and that respondents' contentions about lack of details were to be rejected.

Court's Reasoning and Analysis

The Tribunal framed its analysis around the text of Regulation 11(b)(2) of the CERC Tariff Regulations, 2014 and the factual circumstances of the appeals. The reasoning proceeded in the following steps, reflected in the opinion:

  1. Regulatory framework: The Tribunal reproduced Regulation 11(b)(2), noting it requires a generating company or transmission licensee to furnish detailed justification with supporting documents for additional IEDC on account of delay in achieving Scheduled Commercial Operation Date (SCOD). The regulation further provides that if the delay is not attributable to the licensee and is due to uncontrollable factors (as specified in regulation 12), IEDC may be allowed after due prudence check.
  2. Factual finding on time over-run: The Tribunal observed that the Central Commission had already allowed/condoned the time over-run in the appeals and had characterized the delay as not attributable to the Appellant (i.e., due to uncontrollable factors).
  3. Assessment of submissions: The Appellant claimed to have furnished detailed element-wise justification and the prescribed Form 12-A along with its petitions; the Tribunal accepted that these details were provided (noting that CERC had earlier implemented related Tribunal directions in an order dated 04.02.2020), and therefore rejected respondents' assertions that the Appellant had not supplied necessary particulars.
  4. Precedent consistency: The Tribunal relied on its earlier decisions (02.12.2019; 09.03.2021; 22.04.2021 and 14.07.2021) holding that when delay is condoned and not attributable to the licensee, the IEDC should be computed on actuals after prudence check and that there was no regulatory basis to limit recovery to a normative percentage of hard cost. The Tribunal treated these decisions as directly applicable to the present appeals.
  5. Regulatory application and error identification: Applying the text of Regulation 11(b)(2), the factual finding of condoned delay, and the line of Tribunal authorities, the Court concluded that CERC should have examined the Appellant's detailed submissions and performed a prudence check to arrive at the appropriate IEDC amount. Instead, CERC applied fixed percentage caps (10.75% / 5% / 2.95%), which the Tribunal found to be inconsistent with the correct application of the 2014 Regulations in the circumstances where delay was condoned as uncontrollable.
  6. Remedy determined: The Tribunal held that the impugned portions of the CERC orders that capped IEDC at the stated percentages were unsustainable and set them aside to that extent. The matter was remitted to CERC to re-assess and pass fresh orders in line with the Tribunal's opinion and after performing the requisite prudence checks on details furnished by the Appellant.

Holding and Implications

Holding: The Tribunal set aside the impugned orders dated 01.10.2019, 25.06.2019 and 01.11.2019 passed by the Central Electricity Regulatory Commission in Petition Nos. 268/TT/2018, 242/TT/2018 and 367/TT/2018 respectively, to the extent those orders granted IEDC at fixed rates of 10.75% / 5% / 2.95% of hard cost (RCE). The Tribunal directed the Central Commission to pass fresh orders in line with the opinion expressed in this judgment. The appeals and pending applications (if any) were disposed of in those terms. No order as to costs was made.

Implications

  • The direct effect is that the Central Commission must re-consider the IEDC claims in the three petitions and determine IEDC on the basis of actuals after conducting due prudence checks under Regulation 11(b)(2) of the Tariff Regulations, 2014, rather than applying a blanket percentage cap where the delay has been condoned as not attributable to the licensee.
  • The Tribunal clarified that Regulation 11 of the 2014 Tariff Regulations provides that where delay is not attributable to the transmission/generating company and arises from uncontrollable factors (per Regulation 12), IEDC is to be allowed as per actuals post-prudence check. Consequently, CERC should examine the justifications submitted by the transmission/generating company and should not cap IEDC at normative percentages solely on that basis.
  • The Tribunal remitted the matters back to CERC for fresh adjudication consistent with the Tribunal's reasoning and its earlier decisions referenced in the opinion.
  • The Court made no award of costs and disposed of the appeals in the terms stated above.

Pronounced in virtual court on 13 September 2021. (Justice R.K. Gauba — Judicial Member; Ravindra Kumar Verma — Technical Member)

Show full summary ...
To access the original judgment, please Sign In or Subscribe.

    Power Grid Corporation of India Limited. v. Central Electricity Regulatory Commission & Ors.

    PER MR.RAVINDRA KUMAR VERMA, TECHNICAL MEMBER

    1. The Appeal No. 445 of 2019, Appeal No. 188 of 2020 and Appeal No. 224 of 2021 has been filed under Section 111(1) of the Electricity Act, 2003 by Powergrid Corporation of India Limited (hereinafter referred as the Appellant) against the impugned order dated 01.10.2019, 25.06.2019 and 01.11.2019 respectively passed by the Central Electricity Regulatory Commission (hereinafter referred as the Central Commission/Respondent No.1), in Petition No. 268/TT/2018, in Petition No. 242/TT/2018 and in Petition No. 367/TT/2018.

    2. The issue in these appeals is primarily pertaining to the compliance of the Tariff Regulations, 2014 notified by the Central Electricity Regulatory Commission (CERC/Central Commission) in relation to the payment of Incidental Expenses During Construction (IEDC) on account of time over-run allowed by Central Commission as being beyond the control of the transmission company which in this case is Power Grid Corporation of India Limited (PGIL). A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 12

    3. The Regulation 11 (b) (2) of the Tariff Regulations, 2014 reads as under:

    11. Interest during construction (IDC), Incidental Expenditure during Construction (IEDC) (A) Interest during Construction (IDC): ........... .............. (B) Incidental Expenditure during Construction (IEDC): (1) .. (2) In case of additional costs on account of IEDC due to delay in achieving the SCOD, the generating company or the transmission licensee as the case may be, shall be required to furnish detailed justification with supporting documents for such delay including the details of incidental expenditure during the period of delay and liquidated damages recovered or recoverable corresponding to the delay: Provided that if the delay is not attributable to the generating company or the transmission licensee, as the case may be, and is due to uncontrollable factors as specified in regulation 12, IEDC may be allowed after due prudence check: Provided further that where the delay is attributable to an agency or contractor or supplier engaged by the generating company or the transmission licensee, the liquidated damages recovered from such agency or contractor or supplier shall be taken into account for computation of capital cost.

    4. The Central Commission in its Impugned Orders has allowed the time over-run but have restricted the payment of IEDC on account of time over-run only to the extent of 10.75% / 5% / 2.95% of the hard cost (RCE) respectively.

    5. The grievance of the Appellant is that in view of the express provision given in the Regulation, 2014 notified by the Central A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 13 Commission to the extent that if the delay is not attributable to the generating company or the transmission licensee as the case may be, and is due to uncontrollable factors as specified in Regulation

    12 of these regulations, IDC may be allowed after due prudence check., the Appellant has submitted that the actual IEDC should have been allowed by the Central Commission as per the information furnished by the Appellant in the prescribed format submitted to the Central Commission along with the petition and also shown at Form 12-A.

    6. The Appellant also further submits that there is no perusal, no discussions regarding the submission made by the Appellant giving the detailed justification element-wise regarding the IEDC during time over-run and the Central Commission has simply recorded that IEDC be paid at the rate of 10.75%/5%/2.95% of the hard cost (RCE).

    7. The Appellant has also referred to the judgment passed by this Tribunal on this very subject of IEDC being paid as per actual due to time over-run in various cases. In these judgments the Tribunal has brought out a clarity on the aspect that the IEDC on account of time over-run having been allowed by the Central Commission shall be paid as per actual after due prudence check. The relevant portion of the judgments is as under: (a) Judgment dated 02/12/2019 passed by this Tribunal in Appeal Nos 95 & 140 of 2018; 7.16 In light of the above, we are of the considered opinion that Central Commission has not considered the IEDC for A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 14 the reference assets correctly in line with provisions of its own regulations which cannot be sustained in the eyes of law. In catena of judgments of Honble Supreme Court and this Tribunal, it has been held that the Regulations framed by the Commissions are binding for all stakeholders including the Commission itself. The Regulations framed under the Act, in no way, mandate the Central Commission to restrict the IEDC to 5% of the original estimated hard cost. 7.17 Accordingly, we hold that IEDC should be computed only on actual basis after due prudence check based on the data submitted by the Appellant in accordance with the Tariff Regulations. ORDER For the forgoing reasons, we are of the considered view that issues raised in the present appeals being Appeal Nos. 95 of 2018 & 140 of 2018 have merits and hence appeals are allowed. The impugned orders dated 29.07.2016 in Petition No. 46/TT/2014 and order dated 05.10.2017 in Petition No. 02/RP/2017 passed by Central Electricity Regulatory Commission are hereby set aside to the extent challenged in the Appeal. The matter is remitted back to the Central Electricity Regulatory Commission with a direction to allow IEDC in accordance with the Tariff Regulations. No order as to costs. (b) Judgment dated 22/04/2021 passed by this Tribunal in Appeal No. 55 of 2020;

    12. The prime argument of the appellant is that the entire time over-run having been condoned there was no justification whatsoever for the benefit of IEDC to be so restricted. It is the submission that the IDC and IEDC are required to be determined under the relevant Tariff Regulations, 2014 based on the prudence check, it being contingent on the decision taken on the aspect of time over- run. A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 15

    19. For the above-mentioned reasons, we find no substance in the grounds of contest pleaded by the respondent to the appeal. We follow the previous decisions of this tribunal rendered on 02.12.2019 and 09.03.2021 in Appeal Nos. 95 and 140 of 2018 and Appeal No. 63 of 2020 respectively. There being no such limitation in the Regulation to the grant of entire benefit of IEDC, the period of delay in entirety having been condoned, the restriction to 10.75 % was wholly unjustified and improper. The impugned order to that extent is, thus, set aside. The Central Commission is directed to pass consequential fresh order on this subject within a period of four weeks hereof subject, of course, to prudence check.

    20. The Appeal is disposed of in above terms. No order as to costs. (c) Judgment dated 09.03.2021 passed by this Tribunal in Appeal No. 63 of 2020

    10. We are of the opinion that the observations made by the Central Commission wherein they have limited the payment of IEDC to 5% is not in accordance with the Regulations, is wrong and bad in law. However, since the entire delay period has not been condoned, therefore, there is a case where in the Central Commission can adjudicate on the proportional payment corresponding to the part delay condoned out of the total delay.

    11. Having regard to the facts and circumstances of the case as stated above, Appeal filed by the Appellant is allowed. The Impugned Order dated 20.11.2019 passed by the Central Electricity Regulatory Commission 337/TT/2018 is hereby set aside. We direct the Central Commission to consider the matter afresh in light of observations and bearing in mind the principles laid down in the judgment dated 02.12.2019 passed by this Tribunal in Appeal Nos. 95 of 2018 & 140 of 2018 and pass fresh consequential order in accordance with law. A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 16 The Appellant may approach the Central Commission at the time of truing up for implementation of this order.

    12. The appeal is disposed of in above terms. (d) Order dated 14.07.2021 passed by this Tribunal in Appeal No. 401 of 2021 Heard Ms.Swapna Seshadri, learned counsel arguing for the Appellant. The main issue in the case seems to be the restriction of the claim of IEDC as 5% of the hard cost even when time overrun has been condoned. The issue is no more resintergra. The fact remains that there are three judgments of this Tribunal on the very same issue pertaining to different transmission lines/systems. This Tribunal had an occasion to opine that once the delay in the execution of the transmission system is condoned, there cannot be restriction of IEDC as a percentage of hard cost. In that context, we opine that the decision of this Tribunal in the following judgments shall apply to this case mutatis mutandis:1. Judgment dated 02.12.2019 in Appeal Nos. 95 & 140 of 2018; 2. Judgment dated 09.03.2021 in Appeal No. 63 of 2020; 3. Judgment dated 22.04.2021 in Appeal No. 55 of 2020 Before this appeal is allowed in line with the above- mentioned judgments rendered by this Tribunal on the very same issue, it is noticed that the Respondents in spite of service of notice on three occasions have neither appeared nor filed any representations / reply. Therefore, we presume that being aware of the above earlier judgments of the Tribunal, the Respondents felt that they need not contest the matter. Accordingly, the Appeal is allowed and the matter is remanded back to the Central Commission for re-determination of IEDC. Appeal is disposed off.

    8. Therefore the submissions of the Appellant is that in view of the clarity on the subject that IEDC on account of time over-run having been allowed by the Central Commission has to be as per actual A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 17 and not limited to 10.75%/5%/2.95% of the hard cost (RCE), there was no reason for the Central Commission not to allow the same to the Petitioner in these cases.

    9. The Appellant further submits that the judgment dated 02.12.2019 has already been complied with by the Central Commission while passing order dated 04/02/2020 in Petition No. 1/TT/2019.

    10. Per contra, the learned counsel representing UPPTCL/Respondent No. 19 and BRPL/Respondent No.13 in Appeal No. 445 of 2019 and Appeal No. 188 of 2020 submitted that the appeal should not be entertained by this Tribunal on account of following:

    11. The control period in which the judgments were passed by this Tribunal quoted by the Appellant in their submissions was for the control period 2009-14 for which the Regulation 2009 notified by the Central Commission was applicable. He further submits that there is a difference between Regulation 2009 and 2014 to the extent that whereas the Regulation 2009 notified by CERC does not have express provision in regard to payment of IEDC due to time over- run but in case of 2014 Regulations there is a express provision regarding the payment of IEDC on account of time over-run. Therefore, the applicability of the judgment dated 02.12.2019, passed by this Tribunal, in these cases is not correct and have been wrongly referred to by the Appellant. The relevant extract of the 2009 and 2014 Regulations reads as under:-

    9. Capital Cost: (1) The Capital cost as determined by the Commission after prudence check in accordance with this A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 18 regulation shall form the basis of 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; (bi) Any gain or loss on account of foreign exchange risk variation pertaining to the loan amount availed during the construction period shall form part of the capital cost (c) Increase in cost in contract packages as approved by the Commission; (d) Interest during construction and incidental expenditure during construction as computed in accordance with Regulation 11 of these regulations; (e) capitalised Initial spares subject to the ceiling rates specified in these regulations; (f) expenditure on account of additional capitalization and de- capitalisation determined in accordance with Regulation 14 of these regulations; (g) adjustment of revenue due to sale of infirm power in excess of fuel cost prior to the COD as specified under Regulation 18 of these regulations; and (h) adjustment of any revenue earned by the transmission licensee by using the assets before COD.

    12. The learned counsel representing the UPPTCL/Respondent No.

    19 and BRPL/Respondent No.13 in Appeal No. 445 of 2019 A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 19 submits that the Appellant in their petition filed before the Central Commission has not specifically claimed IEDC due to time over- run.

    13. The Respondent UPPTCL/Respondent No.19 further submitted that the Appellant has also not made any specific prayer in its Petition No. 268lTTl2018 regarding claim of IEDC on account of time over-run. In view of this fact, the learned counsel submitted that the appeal need not to be considered by this Tribunal and should be rejected.

    14. The learned counsel submitted that the Appellant has filed this appeal under Section 111 of the Electricity Act, 2003 which reads as under:- Section 111. (Appeal to Appellate Tribunal): --- (1) Any person aggrieved by an order made by an adjudicating officer under this Act (except under section 127) or an order made by the Appropriate Commission under this Act may prefer an appeal to the Appellate Tribunal for Electricity: Provided that any person appealing against the order of the adjudicating officer levying any penalty shall, while filing the appeal , deposit the amount of such penalty: Provided further that wherein any particular case, the Appellate Tribunal is of the opinion that the deposit of such penalty would cause undue hardship to such person, it may dispense with such deposit subject to such conditions as it may deem fit to impose so as to safeguard the realisation of penalty. (2) Every appeal under sub-section (1) shall be filed within a period of forty five days from the date on which a copy of the order made by the adjudicating officer or the Appropriate Commission is received by the aggrieved person and it shall be A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 20 in such form, verified in such manner and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. (3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against. (4) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer or the Appropriate Commission, as the case may be. (5) The appeal filed before the Appellate Tribunal under sub- section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within one hundred and eighty days from the date of receipt of the appeal: Provided that where any appeal could not be disposed of within the said period of one hundred and eighty days, the Appellate Tribunal shall record its reasons in writing for not disposing of the appeal within the said period. (6) The Appellate Tribunal may, for the purpose of examining the legality, propriety or correctness of any order made by the adjudicating officer or the Appropriate Commission under this Act, as the case may be, in relation to any proceeding, on its own motion or otherwise, call for the records of such proceedings and make such order in the case as it thinks fit.

    15. It is the case of the Respondents that since the Appellant has neither made any specific claim for payment of IEDC as per actuals, on account of time over-run having been granted by the Central Commission nor any special prayer has been made on A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 21 this account in his petition filed before the Central Commission, the Appellant does not have a case for coming before this Tribunal with an appeal for a claim which has not been made in their petition when they went before the Central Commission.

    16. The learned counsel representing Respondent No.5/TANGEDCO in Appeal No. 224 of 2021submitted that as per the requirement of the provisions of the Tariff Regulation 2014 notified by CERC, the Appellant was to submit a detailed justification for making their claim on account of IEDC due to time over-run but the same has not been made by the Appellant in their petition before the Central Commission. This being the primary argument of the submissions that the Appellant was to submit detailed justification for making their claim on account of IEDC due to time over-run but the same has not been made by the Appellant in their petition before the Central Commission. In the absence of any detailed justification as per the provisions of the Regulation, 2014, the Central Commission has rightly decided in capping the IEDC due to time over-run 2.5% of the hard cost (RCE). Finding and analysis

    17. Having heard the Appellant, the learned counsel the learned counsel representing UPPTCL/Respondent No. 19 and BRPL/Respondent No.13 in Appeal No. 445 of 2019 and the learned counsel representing Respondent No.5/TANGEDCO in Appeal No. 224 of 2021 and having gone through their written submissions filed by them, materials/documents placed before us A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 22 and the appeal filed by the Appellant, our observations are as under:

    18. The issue in the appeal is pertaining to the provisions of the Regulation, 2014 notified by the Central Commission with regard to the payment of IEDC due to time over-run.

    19. We note the fact that the Central Commission has already allowed the time over-run in these cases.

    20. The Regulation 11 (b) (2) of the Tariff Regulation 2014 notified by the CERC reads as under:

    11. Interest during construction (IDC), Incidental Expenditure during Construction (IEDC) (A) Interest during Construction (IDC): ........... .............. (B) Incidental Expenditure during Construction (IEDC): (1) .. (2) In case of additional costs on account of IEDC due to delay in achieving the SCOD, the generating company or the transmission licensee as the case may be, shall be required to furnish detailed justification with supporting documents for such delay including the details of incidental expenditure during the period of delay and liquidated damages recovered or recoverable corresponding to the delay: Provided that if the delay is not attributable to the generating company or the transmission licensee, as the case may be, and is due to uncontrollable factors as A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 23 specified in regulation 12, IEDC may be allowed after due prudence check: Provided further that where the delay is attributable to an agency or contractor or supplier engaged by the generating company or the transmission licensee, the liquidated damages recovered from such agency or contractor or supplier shall be taken into account for computation of capital cost.

    21. We also note that the submissions made by the Appellant that the detailed narration as given in their petitions No. 1/TT/2019 covers the liability that has been created on PGCIL/the Appellant on account of time over-run and the details of the same have been given in the prescribed format along with the petition at Form 12-A.

    22. We also note that the Central Commission while passing the order dated 04.02.2019 in petition No.1/TT/2019 have implemented the judgment passed by this Tribunal in Appeal Nos. 95 and 140 of 2018, the operative part of this judgment reads as under:- 7.16 In light of the above, we are of the considered opinion that Central Commission has not considered the IEDC for the reference assets correctly in line with provisions of its own regulations which cannot be sustained in the eyes of law. In catena of judgments of Honble Supreme Court and this Tribunal, it has been held that the Regulations framed by the Commissions are binding for all stakeholders including the Commission itself. The Regulations framed under the Act, in no way, mandate the Central Commission to restrict the IEDC to 5% of the original estimated hard cost. 7.17 Accordingly, we hold that IEDC should be computed only on actual basis after due prudence check based on the data submitted by the Appellant in accordance with the Tariff Regulations. A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 24 ORDER For the forgoing reasons, we are of the considered view that issues raised in the present appeals being Appeal Nos. 95 of 2018 & 140 of 2018 have merits and hence appeals are allowed. The impugned orders dated 29.07.2016 in Petition No. 46/TT/2014 and order dated 05.10.2017 in Petition No. 02/RP/2017 passed by Central Electricity Regulatory Commission are hereby set aside to the extent challenged in the Appeal. The matter is remitted back to the Central Electricity Regulatory Commission with a direction to allow IEDC in accordance with the Tariff Regulations. No order as to costs.

    23. In view of the above, we are of the considered opinion that since the Central Commission has already decided that the time over-run is not attributable to the Appellant and the same is due to uncontrollable factors as specified in Regulation 12, IEDC should have been allowed as per actuals after due prudence check. The Central Commission should have examined the details furnished by the Appellant and done the prudence check in relation to the IEDC and only after doing the prudence check should have come out regarding the decision on the payment of IEDC due to time over- run. As regard to the contentions of the Respondent that these details were not furnished by the Appellant as made out by the UPPTCL/Respondent No. 19 and BRPL/Respondent No.13 in Appeal No. 445 of 2019 and submissions made by the Respondent No.5/TANGEDCO that no details/justification have been given by the Appellant in their petition, we will only say that the Central Commission being the regulator and being in the grip of the subject, specially the fact that while dispensing the order dated 04.02.2020 A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 25 having gone by the judgment dated 02.12.2019 passed by this Tribunal and also the fact that entire details in regard to IEDC due to time over-run were provided along with the petition at Form 12-A, the submissions made by the UPPTCL/Respondent No. 19 and BRPL/Respondent No.13 in Appeal No. 445 of 2019 and submissions made by the Respondent No.5/TANGEDCO need not to be considered and accordingly the same are rejected.

    24. In view of the above we are of the opinion that the matter need to be reconsidered by the Central Commission to examine the details furnished by the PGCIL/ the Appellant in regard to IEDC and then only pass the order regarding the payment of IEDC due to time over-run.

    25. We also clarify here by way of this judgment that the express provision given in this Regulation 11 of Tariff Regulation 2014 of the CERC, there is absolute clarity in regard to the fact that the payment of IEDC on account of time over-run having been granted by the Central Commission is to be done as per actuals after prudence check by the Central Commission. The Central Commission should therefore examine all these justifications given by the Transmission Company or generating company in regard to the IEDC on account of time over-run as per the tariffs of the Tariff Regulation 2014 and should not cap it at normative value of 10.75% / 5% / 2.95% of the hard cost (RCE). This we are saying in view of the fact that the cost implication, if any, arising on account of factors beyond the control of the Transmission company/generating company due to time over-run need to be A.Nos. 445 of 2019, 188 of 2020 & 224 of 2021 Page 26 reimbursed so as not to adversely affect the financial position of the Transmission/generating companies.

    26. Accordingly, the Impugned orders dated 01.10.2019, 25.06.2019 and 01.11.2019 passed by the Central Electricity Regulatory Commission in Petition No. 268/TT/2018, in Petition No. 242/TT/2018 and in Petition No. 367/TT/2018 respectively, are hereby set aside to the extent of granting IEDC at 10.75% / 5% / 2.95 % due to time over-run, with the directions to the Central Commission to pass fresh orders in line with the opinion expressed in this judgment.

    27. The Appeal No. 445 of 2019, Appeal No. 188 of 2020 and Appeal No. 224 of 2021 and pending applications, if any, stand disposed of in above terms. No order as to costs. PRONOUNCED IN THE VIRTUAL COURT THROUGH VIDEO CONFERENCING ON THIS 13th DAY OF SEPTEMBER, 2021. (Justice R.K. Gauba) (Ravindra Kumar Verma) Judicial Member Technical Member REPORTABLE/NON-REPORTABLE

    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    Power Grid Corporation of India Limited. v. Central Electricity Regulatory Commission & Ors.
    (Sep 13, 2021)