Citation Codes

Equivalent Citations

citation codes

Case Number

275/TT/2022

Disposition

in part

Judges

I.S. Jha
Arun Goyal
P.K. Singh, Members

Acts

SECTION 64 ELECTRICITY ACT 2003
INCOME TAX ACT 1961
sub-clause (ii) of clause (2) of Regulation 72

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Smart Summary

Commission Order — Concise Analytical Summary (Petition No. 275/TT/2022)

Factual and Procedural Background

The petition was filed by Power Grid Corporation of India Limited (the Petitioner), a deemed transmission licensee, seeking truing-up of transmission tariff for the 2014–2019 tariff period under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 ("2014 Tariff Regulations"), and determination of tariff under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 ("2019 Tariff Regulations") for the 2019–2024 tariff period. The petition concerns replacement of existing 4 x 105 MVA, 400/220 kV, single-phase ICTs with 1 x 500 MVA, 400/220 kV, three-phase ICT at Misa Sub-station as part of the North Eastern Region Strengthening Scheme-IV (NERSS‑IV).

Investment approval and revised cost estimates for the transmission project were recorded by the Petitioner’s Board (initial IA communicated 16.6.2016 at an estimated cost of Rs. 36,460 lakh on Dec-2015 price level; IA amended to Rs. 40,919 lakh on Nov-2016; Revised Cost Estimate (RCE) accorded 15.1.2020 at Rs. 39,825 lakh on Sep-2019 price level). Various assets and their CODs are listed in the petition. The transmission tariff for the 2014–2019 period for the transmission asset had previously been allowed by an order dated 2.3.2022 in Petition No. 68/TT/2021 (as referenced within the opinion).

Respondents are distribution licensees and Power Departments in the North‑Eastern Region. The Petitioner served the respondents, published notice under Section 64 of the Electricity Act, 2003, and no public comments were received. None of the respondents filed a reply. The hearing took place on 20.12.2022; the Petitioner filed affidavits dated 23.5.2022 and 21.9.2022. The Commission reserved and afterwards issued the order disposing of Petition No. 275/TT/2022.

Legal Issues Presented

Whether the Commission should approve the trued-up Annual Fixed Charges (AFC) for the 2014–2019 tariff block for the transmission asset.
Whether the Commission should admit the capital cost claimed and allow additional capitalization (ACE) incurred during 2014–2019 and projected for 2019–2024.
Whether the Petitioner may recover shortfall or refund excess AFC on account of Return on Equity (RoE) changes due to change in applicable Minimum Alternate Tax/Corporate Income Tax rates without separate application, as provided in the Tariff Regulations.
Whether the Petitioner is entitled to reimbursement of petition filing fee and publication expenses under Regulation 70(1) of the 2019 Tariff Regulations.
Whether the Petitioner may bill and recover licence fee and RLDC fees and charges separately from respondents under Regulation 70(3) and (4) of the 2019 Tariff Regulations.
Whether impact on Interest on Loan arising from floating interest rates during 2019–2024 may be adjusted/recovered.
Whether the Petitioner may claim security expenses and consequential interest on working capital (IOWC) separately and capital spares at end of tariff block.
Whether the Petitioner may bill and recover GST on transmission charges separately from beneficiaries if GST is levied in future and whether additional taxes/duties imposed later can be recovered.

Arguments of the Parties

Petitioner's Arguments and Submissions

The Petitioner sought approval of trued-up AFC for 2014–2019 and tariff for 2019–2024 for the assets covered.
The Petitioner claimed capital cost as previously approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 and stated estimated completion cost was within the RCE (no cost over‑run).
The Petitioner claimed Interest During Construction (IDC) supported by Auditor’s Certificate and provided a revised computation of IDC and year‑wise IDC discharged; requested allowance of IDC on revised basis (claimed IDC figures provided in the petition).
The Petitioner claimed Incidental Expenditure During Construction (IEDC) with Auditor’s Certificate and noted that an IEDC amount had earlier been disallowed by the Commission in the order dated 2.3.2022 in Petition No. 68/TT/2021.
The Petitioner asserted that Initial Spares were incurred as per auditor certificate and submitted calculations showing initial spares within the ceiling norms (GIS sub‑station 5.00%).
The Petitioner stated it pays tax under Minimum Alternate Tax (MAT) and provided claimed effective tax rates for 2014–2019, requesting grossing up of RoE accordingly; similarly, for 2019–2024, requested RoE on the basis of MAT rate to be trued‑up with actual tax later.
The Petitioner claimed Additional Capital Expenditure (ACE) for 2019–2024 on account of undischarged liabilities/works deferred (package and vendor details provided), seeking admission under Regulation 24 of the 2019 Tariff Regulations.
The Petitioner provided O&M claims for 2019–2024 based on the normative rates per MVA in Regulation 35 and computed Interest on Working Capital (IWC) using SBI MCLR + 350 bps (rates and working capital components provided).
The Petitioner sought reimbursement of filing fee and publication expenses and recovery of licence fee and RLDC fee and charges; sought permission to bill GST separately if levied in future; indicated security expenses would be claimed (or filed in separate petition) and capital spares claimed at end of tariff block.

Respondents' Position

The opinion records that none of the Respondents filed a reply in the matter. Therefore, the record does not contain detailed respondent arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Order dated 2.3.2022 in Petition No. 68/TT/2021	Previous allowance of capital cost as on COD; treatment of time‑overrun and disallowance of certain IDC/IEDC amounts.	The Commission relied on the capital cost allowed by that order as the starting point; acknowledged that IDC of Rs. 85.51 lakh had been disallowed earlier and that time overrun had been condoned partially. The current order allows IDC on cash basis and treats certain IDC/IEDC as disallowed per the earlier decision.
Order dated 27.4.2020 in Petition No. 274/TT/2019	Determination of effective MAT rates for the Petitioner for grossing up RoE.	The Commission used the MAT rates considered in that order to gross up the base RoE for the 2014–2019 truing up and for guidance on tax rates to be used. The order's notified MAT rates were applied for computing grossed-up RoE.
Order dated 3.8.2021 in Petition No. 260/MP/2020	Approval of security expenses for period 1.4.2019 to 31.3.2024.	The Commission noted that security expenses for the Petitioner had already been approved in that order; consequently, security expenses will be shared in accordance with that order and the petitioner's prayer to file a separate petition for security expenses became infructuous.
Petition No. 130/TT/2020	Reference to assets covered under that true‑up petition (asset COD and coverage).	The Commission referenced that certain assets (e.g., Asset‑1) were covered under the true‑up in Petition No.130/TT/2020. This served to identify which elements had been trued up previously.
Petition No. 660/TT/2020	Reference to coverage of a related asset (1x500 MVA ICT at Misa Sub‑station with GIS bays).	The Commission noted that the 1x500 MVA ICT at Misa Sub‑station with GIS bays was covered under Petition No.660/TT/2020 (identification of asset and recordkeeping).
Central Electricity Regulatory Commission (Sharing of Transmission Charges and Losses) Regulations, 2020	Governs DIC-wise computation and recovery of liabilities for transmission charges determined after 1.11.2020.	The Commission applied the 2020 Sharing Regulations to determine that liabilities of DICs for arrears will be computed DIC‑wise and recovered in accordance with Regulation 15(2)(b) of the 2020 Sharing Regulations and Regulation 57 of the 2019 Tariff Regulations.

Court's Reasoning and Analysis

The Commission proceeded by reference to the applicable tariff regulations (2014 Tariff Regulations for truing‑up of 2014–2019 period and 2019 Tariff Regulations for the 2019–2024 period) and the material on record (petitioner affidavits, auditor certificates, Form‑9C loan details, hearing submissions). The analysis follows regulatory prescriptions item‑by‑item:

Capital cost and opening base: The Commission adopted the capital cost as admitted earlier (order dated 2.3.2022) and reconciled accrual‑basis claims to cash‑basis allowed capital cost on COD, subtracting disallowed IDC/IEDC amounts, producing an admitted capital cost on COD and on 31.3.2019 (Rs. 1,889.83 lakh as on COD and as on 31.3.2019 for 2014–2019).
Interest During Construction (IDC) and IEDC: The Commission considered the Auditor’s Certificate and loan details. Because the Commission had only partially condoned time overrun (per the earlier order), it allowed IDC based on cash disbursements and treated any un‑discharged IDC on COD as ACE when discharged subsequently. For IEDC, because a time over‑run of 281 days was not condoned, the claimed portion of IEDC disallowed remained disallowed (IEDC allowed and disallowed figures are recorded).
Initial spares: Regulation 13(d) of the 2014 Regulations sets ceiling norms. The Commission verified that initial spares claimed for the GIS sub‑station fell within the 5% ceiling and allowed them accordingly.
Debt‑equity treatment and RoE for 2014–2019: Debt‑equity ratio was applied in accordance with Regulation 19(3) of the 2014 Regulations (70:30 normative split). For RoE grossing up, the Commission used MAT rates previously determined in Petition No. 274/TT/2019 to compute grossed‑up RoE for the period and allowed RoE accordingly.
Depreciation, IoL and IWC for 2014–2019: Depreciation was calculated using Weighted Average Rate of Depreciation (WAROD) per 2014 Regulations; IoL was computed based on the weighted average actual loan rate and loan schedule (Regulation 26, 2014 Regulations); IWC was computed per Regulation 28 methodology.
For the 2019–2024 block, the Commission followed the 2019 Tariff Regulations: opening capital cost was taken as the admitted cost on 31.3.2019; ACE was considered under Regulation 24 where supported by auditor certification and shown to be undischarged liabilities/works deferred within original scope; the admitted ACE amounts were added to derive capital cost on 31.3.2024.
Debt‑equity for 2019–2024: Applied Regulation 18(3) of the 2019 Regulations (retained debt–equity ratio as per that regulation) and allocated ACE additions proportionately as debt and equity (70:30).
Depreciation and IoL for 2019–2024: Depreciation computed on straight‑line method using WAROD as per Regulation 33 and Appendix‑I rates; IoL computed under Regulation 32 using normative loan, repayment equal to depreciation, and weighted average rate of interest on actual loan portfolio (with floating rate adjustments to be considered at true‑up).
RoE for 2019–2024: Commission applied base RoE of 15.50% and grossed up RoE using the MAT rate applicable to the Petitioner (MAT rate used for 2019‑20 as indicated), with truing‑up of grossed up RoE at the end of each financial year under Regulation 31(3).
O&M and IWC for 2019–2024: O&M was allowed on the basis of normative per‑MVA rates in Regulation 35(3)(a) for transformers (with GIS bay adjustment as provided by the regulation). IWC was computed per Regulation 34: components (one month O&M, 15% maintenance spares, receivables equivalent to 45 days AFC) and normative bank rate (SBI MCLR + 350 bps) per the regulation; the specific RoI values used for each year were recorded (12.05%, 11.25%, 10.50%).
Filing fees/publication/licence & RLDC fees/GST/security expenses/capital spares/sharing: The Commission allowed reimbursement of filing and publication expenses to be recovered on pro‑rata basis (Regulation 70(1)); allowed recovery of licence fee and RLDC charges per Regulations 70(3) and (4); held that GST prayer was premature since GST is not levied on transmission at present; noted that security expenses had already been approved in Petition No. 260/MP/2020 (3.8.2021) and so separate petition claim became infructuous; capital spares to be dealt with under 2019 Tariff Regulations; sharing of charges was to be computed under the 2020 Sharing Regulations.

Holding and Implications

The Commission issued a comprehensive order disposing Petition No. 275/TT/2022. The operative determinations (direct effects on the parties) stated in the order are:

Trued‑up Annual Fixed Charges for 2014–2019 (Pro‑rata 3 days): The trued‑up AFC approved for the transmission asset for 2018–2019 (pro‑rata 3 days) is Rs. 2.69 lakh (Breakdown: Depreciation 0.82; Interest on Loan 0.90; RoE 0.92; IWC 0.05; O&M 0.00).
AFC Allowed for 2019–2024 tariff period: The annual transmission charges (AFC) allowed for the transmission asset for each year of the tariff block are (Rs. in lakh):
2019‑20: 520.31; 2020‑21: 536.46; 2021‑22: 534.53; 2022‑23: 532.75; 2023‑24: 530.39.
Capital cost and ACE: Capital cost on COD and as on 31.3.2019 was reconciled and admitted as detailed in the order (capital cost on COD/cash basis: Rs. 1,889.83 lakh). ACE for specified years (2019‑20, 2020‑21, 2022‑23) was admitted in specified amounts (total ACE recorded and capital cost on 31.3.2024: Rs. 2,124.85 lakh).
IDC/IEDC and initial spares: IDC allowed on cash basis consistent with prior condonation; IEDC partly disallowed where time over‑run not condoned; initial spares within ceiling allowed as per regulations.
RoE and tax treatment: RoE allowed after grossing up using the MAT rates applied in earlier Commission practice; RoE for 2019–2024 treated with MAT rate for the year and to be trued‑up annually for actual tax paid per Regulation 31(3).
Filing fees and publication expenses: Reimbursement of filing fees and publication expenses allowed to be recovered from beneficiaries on pro‑rata basis (Regulation 70(1)).
Licence fee and RLDC charges: Recovery allowed per Regulations 70(3) and 70(4) for 2019–2024.
GST: Prayer to bill GST separately held premature as GST was not levied on transmission services at present.
Security expenses: As security expenses were already approved in Petition No. 260/MP/2020, security expenses will be shared as per that order; separate claim in this petition rendered infructuous.
Sharing of transmission charges: Liabilities of DICs for arrears and billing/collection/disbursement for subsequent periods to be handled as per the 2020 Sharing Regulations and Regulation 57 of the 2019 Tariff Regulations.

Final procedural disposition: THIS ORDER DISPOSES OF PETITION NO. 275/TT/2022 in terms of the findings and figures recorded in the order (see paragraph 76 of the opinion). The order implements regulatory provisions and prior Commission determinations to calculate and allow specific components of the tariff; it does not purport to create new principles beyond application of the cited tariff regulations and the earlier Commission orders it references.

Annexures and Numerical Tables (as recorded in the order)

The opinion includes Annexure‑I and Annexure‑II giving the WAROD computations, admitted capital costs, ACE schedules, and year‑wise depreciation figures. The Commission’s numeric determinations referred to in this summary are drawn directly from those annexures and the body of the order.

Note: This summary is strictly confined to the information contained in the provided opinion. No external facts or interpretations have been added.

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Power Grid Corporation of India Limited

1. The instant petition has been filed by Power Grid Corporation of India Limited, a deemed transmission licensee, for truing up of transmission tariff of 2014-2019 tariff period under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 (hereinafter referred to as “the 2014 Tariff Regulations”) and determination of tariff under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019 (hereinafter referred to as “the 2019 Tariff Regulations”) for 2019-2024 tariff period in respect of the Replacement of existing 4 x 105 MVA, 400/220 kV, 1-Ph ICTs with 1x500 MVA, 400/220 kV, 3Ph ICT at Misa Sub-station (hereinafter referred to as the “transmission asset”) under “North Eastern Region Strengthening Scheme-IV (NERSS-IV)” (hereinafter referred to as the “transmission project”) in the North-Eastern Region:

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

1) “Approve the trued up Transmission Tariff for 2014-2019 block and transmission tariff for 2019-2024 block for the assets covered under this petition, as per para 12.2 and 13.0 above.

2) Admit the capital cost claimed and additional capitalization incurred during 2014-2019 and also allow the projected additional capitalization during 2019-2024.

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 12.2 and 13.0 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 respondents in terms of Regulation 70 (3) and (4) Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019.

6) Allow the petitioner to bill and adjust impact on Interest on Loan due to change in Interest rate on account of floating rate of interest applicable during 2019-2024 period, if any, from the respondents.

7) Allow the Petitioner to claim the overall security expenses and consequential IOWC on that security expenses separately.

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 beneficiaries.

and pass such other relief as Hon'ble Commission deems fit and appropriate under the circumstances of the case and in the interest of justice.”

Background

3. The brief facts of the case are as follows:

a. The Investment Approval (IA) of the transmission project was accorded by the Board of Directors of the Petitioner's Company in its 329 meeting held on 26.5.2016 and communicated vide Memorandum No. C/CP/NERSS-IV dated 16.6.2016 at an estimated cost of Rs. 36460 lakh including IDC of Rs. 2055 lakh on December, 2015 price level basis. Subsequently, IA was amended vide Memorandum No. C/CP/PA1617-11-0R-IA016/AMEND-I dated 30.11.2016 in its 334 meeting held on 22.10.2022 at an estimated cost of Rs. 40919 lakh including IDC of Rs. 2307 lakh based on December, 2015 price level basis. The Revised Cost Estimate (RCE) of the transmission project was accorded by the Board of Directors of the Petitioner's Company vide Memorandum No. C/CP/PA1920-10-0U-RCE005 dated 15.1.2020 at an estimated cost of Rs. 39825 lakh including IDC of Rs. 1529 lakh on September, 2019 price level.

b. The scope of work covered under the transmission project broadly includes:

Augmentation of transformers and Reactors

i. Dismantling/Removal of 4x105 MVA, 400/220 kV ICT# at Misa Substation of Power Grid and addition of 2x500 MVA, 400/220 kV ICT at Misa Sub-station with GIS bays utilizing the space vacated after removal of 4x105 MVA, 400/220 kV ICT.

# Note: 4x105 MVA, 400/220 kV ICT thus released shall be kept as Regional Spare

ii. 1x125 MVAR 420 kV bus Reactor at Balipara (Power Grid) Sub-station.

iii. 1x125 MVAR 420 kV bus Reactor at Bongaigaon (Power Grid) Substation.

Operation of Silchar-Imphal 400 kV D/C line at rated voltage (400 kV) (presently operated at 132 kV)

i. Up-gradation of existing 2x50 MVA, 132/33 kV Imphal (Power Grid) Sub-station to 400 kV with following scope:

a. Installation of 400/132 kV, 2x315 MVA (7x105 MVA, 1-Ph) ICTs,

b. 2 Numbers 400 kV line bays for termination of Silchar - Imphal 400 kV D/C line

c. 80 MVAR, 420 kV Bus Reactor

ii. Extension of existing 400/132 kV Silchar (Power Grid) Substation

a. 2 Numbers of 400 kV GIS line bays for termination of Silchar - Imphal 400 kV D/C line

b. Installation of 1x125 MVAR, 420 kV Bus Reactor with GIS bays

Reconductoring of Agartala GBPP-Agartala (State) 132 kV D/C

i. Reconductoring of Agartala GBPP - Agartala (State) 132 kV D/C line with High Capacity HTLS conductor along with necessary upgradation/modification in bay equipment at both ends.

c. The transmission tariff for 2014-2019 tariff period in respect of the transmission asset was allowed vide order dated 2.3.2022 in Petition No. 68/TT/021.

d. The details of the transmission assets covered under the transmission project are as follows:

Name of Assets COD Remarks (a) Up gradation of existing 2X50 MVA, 132/33 kV Imphal (PowerGrid) Sub-station to 400 kV by installation of 400/132 kV, 2X315 MVA (7X105 MVA, 1-Ph) ICTs, 2 Numbers 400 kV line bays for termination of 400 kV D/C Silchar-Imphal line and 80 MVAR, 420 kV Bus Reactor along with associated bays at Imphal Sub-station (b) Extension of existing 400/132 kV Silchar (PowerGrid) Sub-station with 2 Numbers. of 400 kV GIS line bays for termination of Silchar-Imphal 400 kV D/C line (Asset-1) 29.1.2019 Covered under True-up Petition No: 130/TT/2020 (c) Installation of 1X125 MVAR, 420 kV Bus Reactor along with GIS bays at Silchar Sub-station (Asset-2) 20.12.2018 1x125 MVAR, 420 kV Bus Reactor along with associated bay at Balipara (PowerGrid) Sub-station (Asset-3) 3.8.2018 1x125 MVAR, 420 kV Bus Reactor along with associated bay at Bongaigaon (PowerGrid) Sub-station (Asset-4) 22.7.2018 Reconductoring of Agartala GBPP - Agartala (State) 132 kV D/C line with High Capacity HTLS conductor along with necessary up gradation/modification in bay equipment at both ends (Asset-5) 8.2.2018 Replacement of existing 4 x 105 MVA, 400/220 kV, 1-Ph ICTs with 1x500 MVA, 400/220 kV, 3Ph ICT at Misa Substation. 29.3.2019 Covered under instant petition 1X500 MVA, 400/220 kV ICT at Misa Sub-station with GIS bays. 29.8.2019 Covered under Petition No. 660/TT/2020

4. The Respondents are distribution licensees and Power Departments, which are procuring transmission service from the Petitioner, mainly beneficiaries of the North-Eastern Region.

5. The Petitioner has served the petition on the Respondents and notice regarding filing of this petition has been published in the newspaper in accordance with Section 64 of the Electricity Act, 2003. No comments or suggestions have been received from the general public in response to the aforesaid notice published in the newspaper by the Petitioner. None of the Respondent(s) have filed reply in the matter.

6. The hearing in this matter was held on 20.12.2022 and the order was reserved in the matter.

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

8. This order is issued considering the submissions made by the Petitioner in the petition vide affidavit dated 23.5.2022 and affidavit dated 21.9.2022.

TRUING UP OF ANNUAL FIXED CHARGES FOR 2014-2019 TARIFF PERIOD

9. The details of the trued-up transmission charges claimed by the Petitioner in respect of the transmission asset for 2014-2019 tariff period are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Depreciation 0.82 Interest on Loan 0.90 Return on Equity 0.92 O&M Expenses 0.00 Interest on Working Capital 0.05 Total 2.69

10. The details of the trued-up Interest on Working Capital (IWC) claimed by the Petitioner in respect of the transmission assets for 2014-2019 tariff period are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) O&M Expenses 0.00 Maintenance Spares 0.00 Receivables 54.65 Total Working Capital 54.65 Rate of Interest (in %) 12.20 Interest on Working Capital 0.05

Capital Cost

11. The Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 has allowed the capital cost as on COD respect of the transmission asset and the same are as follows:

(Rs. in lakh)

Approved RCE Cost Capital Cost claimed as on COD Admitted Capital Cost as on COD 2259.69 2000.70 1891.53

12. The Petitioner in the instant true-up Petition has claimed the same capital cost as approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021.

13. The estimated completion cost in respect of the transmission asset is within the RCE cost, therefore, there is no cost over-run.

Interest During Construction (“IDC”)

14. The Petitioner has claimed IDC in respect of the transmission asset and has submitted the Auditor's Certificate in support of the same. The Petitioner has submitted that IDC of Rs. 85.51 lakh was disallowed due to time over-run in order dated 2.3.2022 in Petition No. 68/TT/2021. The Petitioner has submitted the revised computation of IDC along with the year-wise details of the IDC discharged and has requested to allow the same based on the revised IDC statement as submitted in the instant petition. The revised IDC computation is as follows:

(Rs. in lakh)

IDC as per Auditor's Certificate IDC Discharged up to COD IDC discharged during 2019-20 88.34 79.49 8.85

15. We have considered the submissions of the Petitioner. The time over run in execution of the transmission asset has been condoned partially vide order dated 2.3.2022 in Petition No. 68/TT/2021. Accordingly, IDC is being allowed considering the information submitted by the Petitioner for the transmission asset on cash basis. The loan details submitted in Form-9C for 2014-2019 tariff period and the IDC computation sheet have been considered for the purpose of IDC calculation on cash and accrued basis. The un-discharged IDC as on COD has been considered as ACE during the year in which it has been discharged. Accordingly, IDC allowed is as follows:

(Rs. in lakh)

IDC as per Auditor's Certificate IDC disallowed due to time overrun not condoned IDC Allowed Undischarged IDC IDC allowed on COD IDC discharged in 2019-20 88.34 85.57 2.77 1.64 1.12 1.64

Incidental Expenditure During Construction (“IEDC”)

16. The Petitioner has claimed IEDC and has submitted Auditor's Certificate in support of the same.

17. The Petitioner has submitted that IEDC of Rs. 23.66 lakh was disallowed by the Commission as on COD due to excess claim vide order dated 2.3.2022 in Petition No. 68/TT/2021.

18. We have considered the submissions of the Petitioner. The time over-run of 281 days in case of the transmission asset has not been condoned. Hence, the amount of IEDC as claimed has not been allowed and the same is as follows:

(Rs. in lakh)

IEDC claimed (as per Auditor's Certificate) IEDC disallowed due to time over-run not condoned IEDC allowed 87.31 23.66 63.65

Initial Spares

19. Regulation 13(d) of the 2014 Tariff Regulations provides that Initial Spares shall be capitalised as a percentage of plant and machinery cost up to cut-off date, subject to the following ceiling norms:

“(d) Transmission System

Transmission line: 1.00%

Transmission Sub-station (Green Field): 4.00%

Transmission Sub-station (Brown Field): 6.00%

Series Compensation devices and HVDC Station: 4.00%

Gas Insulated Sub-station:5.00%

Communication System: 3.5%”

20. Initial Spares claimed by the Petitioner are as follows:

(Rs. in lakh)

Plant and Machinery excluding IDC, IEDC, Land cost and cost of Civil works as on cut-off date (A) Initial Spares claimed by the Petitioner (B) Ceiling limit (in %) (C) Initial Spares worked out by the Petitioner D = [(A-B)*C/(100-C)] Sub-station (GIS) 2058.43 83.82 5.00 103.93

21. The Petitioner has submitted that the expenditure on Initial Spares is included in the Auditor's Certificate as per actual cash expenditure incurred.

22. We have considered the submissions of the Petitioner. Initial Spares claimed by the Petitioner are within ceiling limit of 5.00% of GIS Sub-station. Accordingly, the Initial Spares computed and allowed as per the 2014 Tariff Regulations are as follows:

(Rs. in lakh)

Asset Plant and Machinery excluding IDC, IEDC, Land cost and cost of Civil works as on cutoff date (A) Initial Spares claimed by the Petitioner (B) Ceiling limit (in %) (C) Initial Spares worked out Initial Spares Allowed (E) Excess Initial Spares Disallowed (F=B−E) D = [(A-B)*C/(100-C)] Sub-station (GIS) Transmission Asset 2055.02 83.82 5.00 103.75 83.82 Nil

23. Initial Spares claimed be the Petitioner are within the ceiling limit as per the 2014 Tariff Regulations. The details of the capital cost as on COD approved in the instant order are as follows:

(Rs. in lakh)

Capital cost claimed as on COD on accrual basis (A) Less: Undischarged IDC (B) Less: IDC disallowed due time overrun not condoned (C) Less: IEDC disallowed due time over-run not condoned (D) Capital Cost allowed as on COD on cash basis (E) = (A-B-C-D) 2000.70 1.64 85.57 23.66 1889.83

24. The Petitioner in the instant true-up petition has not claimed any ACE in respect for the transmission asset.

25. Accordingly, the capital cost considered for 2014-2019 tariff period is as follows:

(Rs. in lakh)

Admitted Capital Cost (As on COD) ACE allowed (2018-19) Total Capital Cost (As on 31.3.2019) 1889.83 0.00 1889.83

Debt-Equity Ratio

26. Debt-equity ratio has been allowed in accordance with Regulation 19(3) of the 2014 Tariff Regulations for determination of tariff for the period ending on as on COD for the transmission asset. The details of debt-equity ratio as on COD and 31.3.2019 are as follows:

Funding Capital Cost (as on COD) (Rs. in lakh) (in %) Capital Cost (as on 31.3.2019) (Rs. in lakh) (in %) Debt 1322.88 70.00 1322.88 70.00 Equity 566.95 30.00 566.95 30.00 Total 1889.83 100.00 1889.83 100.00

Depreciation

27. The Gross Block during 2014-2019 tariff period has been depreciated at Weighted Average Rate of Depreciation (WAROD). WAROD at Annexure-I has been worked out after considering the depreciation rates of the transmission assets as specified in the 2014 Tariff Regulations and depreciation allowed for the transmission asset during 2014-2019 tariff period is as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) A Opening Gross Block 1889.83 B ACE 0.00 C Closing Gross Block (A+B) 1889.83 D Average Gross Block (A+C)/2 1889.83 F Weighted Average Rate of Depreciation (in %) 5.28% G Balance useful life of the asset (Year) 1700.84 H Lapsed life at the beginning of the year (Year) 25.00 I Aggregate Depreciable Value 0.00 J Combined Depreciation during the year 0.82 K Aggregate Cumulative Depreciation 0.82 L Remaining Depreciable Value (I-K) 1700.02

28. The details of depreciation approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021, as claimed by the Petitioner in the instant petition and trued-up in the instant order are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 0.82 Claimed by the Petitioner in the instant petition 0.82 Approved after true-up in this order 0.82

Interest on Loan (“IoL”)

29. The Petitioner has claimed the weighted average rate of IoL based on its actual loan portfolio and rate of interest. We have considered the submissions of the Petitioner. IoL has been calculated based on actual interest rate submitted by the Petitioner in accordance with Regulation 26 of the 2014 Tariff Regulations. The trued-up IoL allowed in respect of the transmission asset is as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) A Gross Normative Loan 1322.88 B Cumulative Repayments up to Previous Year 0.00 C Net Loan-Opening 1322.88 D Additions due to ACE 0.00 E Repayment during the year 0.82 F Net Loan-Closing 1322.06 G Average Loan 1322.47 H Weighted Average Rate of Interest on Loan (in %) 8.2513 Interest on Loan (GxH) 0.90

30. The details of IoL approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021, as claimed by the Petitioner in the instant petition and trued-up in the instant order are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 0.90 Claimed by the Petitioner in the instant petition 0.90 Approved after true-up in this order 0.90

Return on Equity (“RoE”)

31. 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 it is liable to pay income tax at Minimum Alternate Tax (MAT) rates and has claimed the effective tax rates for 2014-2019 period as follows:

Year Claimed effective tax (in %) Grossed-up RoE (in %) [(Base Rate)/(1-t)] 2018-19 21.549 19.758

32. We have considered the submissions of the Petitioner. The Commission, vide order dated 27.4.2020 in Petition No. 274/TT/2019, had arrived at the effective tax rate for the Petitioner based on the notified MAT rates.

Year Notified MAT rates (inclusive of surcharge & cess) (in %) 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

33. MAT rates considered in order dated 27.4.2020 in Petition No. 274/TT/2019 are considered for the purpose of grossing up of rate of RoE for truing up of the tariff of the 2014-2019 tariff period in terms of the provisions of the 2014 Tariff Regulations as follows:

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

34. The trued-up RoE is allowed on the basis of MAT rate applicable for 2014-2019 tariff period is as follows:

(Rs. in lakh)

Particulars Asset-I 2018-2019 (Pro-rata 3 days) A Opening Equity 566.95 B Additions 0.00 C Closing Equity (A+B) 566.95 D Average Equity (A+C)/2 566.95 E Return on Equity (Base Rate) (in %) 15.500 F MAT Rate for respective year (in %) 21.549 G Rate of Return on Equity (in %) 19.758 Return on Equity 0.92

35. The details of RoE approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021, as claimed by the Petitioner in the instant petition and trued-up in the instant order are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 0.92 Claimed by the Petitioner in the instant petition 0.92 Approved after true-up in this order 0.92

Operation & Maintenance Expenses (“O&M Expenses”)

36. The Petitioner in the instant true-up Petition has not claimed any O&M Expenses for the transmission asset.

Interest on Working Capital (“IWC”)

37. IWC has been worked out and allowed as per the methodology provided in Regulation 28 of the 2014 Tariff Regulations and is allowed as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) O&M Expenses (O&M Expenses for one month) 0.00 Maintenance Spares (15% of O&M Expenses) 0.00 Receivables (Equivalent to two months of annual transmission charges) 54.60 Total Working Capital 54.60 Rate of Interest (in %) 12.20 Interest on Working Capital 0.05

38. The details of IWC approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021, as claimed by the Petitioner in the instant petition and trued-up in the instant order are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 0.05 Claimed by the Petitioner in the instant petition 0.05 Approved after true-up in this order 0.05

Approved Annual Fixed Charges for 2014-2019 Tariff Period

39. The trued-up Annual Fixed Charges (AFC) approved for the transmission assets for 2014-2019 tariff period are as follows:

(Rs. in lakh)

Particulars 2018-19 Depreciation 0.82 Interest on Loan 0.90 Return on Equity 0.92 O&M Expenses 0.00 Interest on Working Capital 0.05 Total 2.69

40. The details of AFC approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021, as claimed by the Petitioner in the instant petition and trued-up in the instant order are as follows:

(Rs. in lakh)

Particulars 2018-2019 (Pro-rata 3 days) Approved by the Commission vide order dated 2.3.2022 in Petition No. 68/TT/2021 2.70 Claimed by the Petitioner in the instant petition 2.69 Approved after true-up in this order 2.69

DETERMINATION OF ANNUAL FIXED CHARGES FOR 2019-2024 TARIFF PERIOD

41. The Petitioner has claimed the following transmission charges in respect of the transmission asset for 2019-2024 tariff period:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 105.49 111.56 112.03 112.11 112.20 Interest on Loan 110.65 108.04 99.34 90.23 81.09 Return on Equity 112.57 119.06 119.55 119.64 119.73 O&M Expenses 179.00 185.50 192.00 199.00 205.50 Interest on Working Capital 12.74 13.20 13.37 13.54 13.66 Total 520.45 537.36 536.29 534.52 532.18

42. The details of IWC claimed by the Petitioner in respect of the transmission asset for 2019-2024 tariff period are as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 O&M Expenses 14.92 15.46 16.00 16.58 17.13 Maintenance Spares 26.85 27.83 28.80 29.85 30.83 Receivables 63.99 66.25 66.12 65.90 65.43 Total Working Capital 105.76 109.54 110.92 112.33 113.39 Rate of Interest (in %) 12.05 12.05 12.05 12.05 12.05 Interest on Working Capital 12.74 13.20 13.37 13.54 13.65

Capital Cost

43. Regulation 19 of the 2019 Tariff Regulations 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;

(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.

(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 developer's 10% contribution towards Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) project in the affected area.

(5) The following shall be excluded from the capital cost of the existing and new projects:

(a) The assets forming part of the project, but not in use, as declared in the tariff petition;

(b) De-capitalised Assets after the date of commercial operation on account of replacement or removal on account of obsolescence or shifting from one project to another project:

Provided that in case replacement of transmission asset is recommended by Regional Power Committee, such asset shall be decapitalised 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.”

44. The Petitioner has claimed capital cost of Rs. 1891.53 lakh as on 31.3.2019. The Commission has worked out the capital cost of Rs. 1889.83 lakh as on 31.3.2019 and the same has been considered as opening capital cost as on 1.4.2019 for determination of tariff in accordance with Regulation 19 of the 2019 Tariff Regulations.

Additional Capital Expenditure (“ACE”)

45. Regulation 24 and Regulation 25 of the 2019 Tariff Regulations provides as follows:

“24. Additional Capitalisation 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 23of 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:

(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;

(d) The replacement of such asset or equipment has otherwise been allowed by the Commission.”

46. The Petitioner has claimed ACE for 2019-2024 tariff period on account of undischarged liability towards final payment/withheld payment due to contractual exigencies for works executed within the cut-off date. ACE for the year 2019-2020, 2020-2021 and 2022-2023 for the transmission asset has been claimed under Regulation 24(1)(a) (Undischarged liabilities recognized to be payable at a future date) and 24(1)(b) (Work deferred for execution of the 2019 Tariff Regulations. ACE claimed is as follows:

(Rs. in lakh)

FR Apportioned approved Cost Capital cost (as on 31.3.2019) ACE claimed as per Auditor's Certificate Capital cost (as on 31.3.2024) 2019-20 2020-21 2022-23 2259.69 1891.53 212.71 17.46 3.21 2124.91

47. The Petitioner vide affidavit dated 21.9.2022 has submitted the package-wise and vendor-wise details of the ACE claimed in 2019-2024 period and the same is as follows:

Party Name Particular Year Outstanding liability as on 31.3.2019 Discharge of liability 2019-20 2020-21 2021-22 2022-23 Sterling & Wilson Ltd. Sub-station 2018-19 233.38 212.71 17.46 -- 3.21

48. We have considered the submission of the Petitioner. ACE has been allowed under Regulation 24(1)(a) and 24(1)(b) of the 2019 Tariff Regulations as the same is towards un-discharged liabilities recognised to be payable at a future date. Accordingly, ACE allowed for 2019-2024 tariff period for the transmission asset is as follows:

(Rs. in lakh)

Particulars ACE allowed for 2019-20 ACE allowed for 2020-21 ACE allowed for 2022-23 Expenditure as per Auditor's Certificate 212.71 17.46 3.21 Undischarged IDC 1.64 Total 214.35 17.46 3.21

49. Accordingly, ACE for 2019-2024 tariff period and the capital cost as on 31.3.2024 for the transmission asset considered is as follows:

(Rs. in lakh)

RCE Apportioned approved cost Capital cost (as on 31.3.2019) ACE allowed Capital Cost (as on 31.3.2024) 2019-20 2020-21 2022-23 2259.69 1889.83 214.35 17.46 3.21 2124.85

Debt-Equity Ratio

50. Regulation 18 of the 2019 Tariff Regulations provides as follows:

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

Provided that:

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

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

iii. any grant obtained for the execution of the project shall not be considered as a part of capital structure for the purpose of debt: equity ratio.

Explanation- The premium, if any, raised by the generating company or the transmission licensee, as the case may be, while issuing share capital and investment of internal resources created out of its free reserve, for the funding of the project, shall be reckoned as paid up capital for the purpose of computing return on equity, only if such premium amount and internal resources are actually utilised for meeting the capital expenditure of the generating station or the transmission system.

(2) The generating company or the transmission licensee, as the case may be, shall submit the resolution of the Board of the company or approval of the competent authority in other cases regarding infusion of funds from internal resources in support of the utilization made or proposed to be made to meet the capital expenditure of the generating station or the transmission system including communication system, as the case may be.

(3) In case of the generating station and the transmission system including communication system declared under commercial operation prior to 1.4.2019, debt: equity ratio allowed by the Commission for determination of tariff for the period ending 31.3.2019 shall be considered:

Provided that in case of a generating station or a transmission system including communication system which has completed its useful life as on or after 1.4.2019, if the equity actually deployed as on 1.4.2019 is more than 30% of the capital cost, equity in excess of 30%shall not be taken into account for tariff computation;

Provided further that in case of projects owned by Damodar Valley Corporation, the debt: equity ratio shall be governed as per sub-clause (ii) of clause (2) of Regulation 72 of these regulations.

(4) In case of the generating station and the transmission system including communication system declared under commercial operation prior to 1.4.2019, but where debt: equity ratio has not been determined by the Commission for determination of tariff for the period ending 31.03.2019, 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.

(6) Any expenditure incurred for the emission control system during the tariff period as may be admitted by the Commission as additional capital expenditure for determination of supplementary tariff, shall be serviced in the manner specified in clause (1) of this Regulation.”

51. Debt-equity ratio considered for the purpose of computation of tariff for 2019-2024 tariff period is allowed as per Regulation 18(3) of the 2019 Tariff Regulations. Debt-equity ratio considered for the purpose of computation of tariff for 2019-2024 tariff period is as follows:

(Rs. in lakh)

Funding Capital cost (as on 1.4.2019) (Rs. in lakh) (in %) ACE in 2019-2024 (Rs. in lakh) (in %) Capital cost (as on 31.3.2024) (Rs. in lakh) (in %) Debt 1322.88 70.00 164.51 70.00 1487.39 70.00 Equity 566.95 30.00 70.51 30.00 637.45 30.00 Total 1889.83 100.00 235.01 100.00 2124.85 100.00

Depreciation

52. Regulation 33 of the 2019 Tariff Regulations provides as follows:

“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:

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.

(9) Where the emission control system is implemented within the original scope of the generating station and the date of commercial operation of the generating station or unit thereof and the date of operation of the emission control system are the same, depreciation of the generating station or unit thereof including the emission control system shall be computed in accordance with Clauses (1) to (8) of this Regulation.

(10) Depreciation of the emission control system of an existing or a new generating station or unit thereof where the date of operation of the emission control system is subsequent to the date of commercial operation of the generating station or unit thereof, shall be computed annually from the date of operation of such emission control system based on straight line method, with salvage value of 10%, over a period of-

a) twenty five years, in case the generating station or unit thereof is in operation for fifteen years or less as on the date of operation of the emission control system; or

b) balance useful life of the generating station or unit thereof plus fifteen years, in case the generating station or unit thereof is in operation for more than fifteen years as on the date of operation of the emission control system; or

c) ten years or a period mutually agreed by the generating company and the beneficiaries, whichever is higher, in case the generating station or unit thereof has completed its useful life.”

53. Depreciation has been worked out considering the admitted capital expenditure as on 31.3.2019 and accumulated depreciation up to 31.3.2019 at Weighted Average Rate of Depreciation (WAROD). WAROD at Annexure-II has been worked out after considering the depreciation rates of assets as prescribed in the 2019 Tariff Regulations. Depreciation allowed in respect of the transmission asset is as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation A Opening Gross Block 1889.83 2104.18 2121.64 2121.64 2124.85 B ACE 214.35 17.46 0.00 3.21 0.00 C Closing Gross Block (A+B) 2104.18 2121.64 2121.64 2124.85 2124.85 D Free hold land 0.00 0.00 0.00 0.00 0.00 E Average Gross Block (A+C)/2 1997.00 2112.91 2121.64 2123.24 2124.85 F Weighted average rate of Depreciation (WAROD) (in %) 5.28 5.28 5.28 5.28 5.28 G Balance useful life of the asset (Year) 25 24 23 22 21 H Lapsed life at the beginning of the year (Year) 0 1 2 3 4 I Aggregate Depreciable Value 1797.30 1901.62 1909.47 1910.92 1912.36 J Depreciation during the year 105.44 111.56 112.02 112.11 112.19 K Cumulative Depreciation 106.26 217.82 329.85 441.95 554.14 L Remaining Depreciable Value (I-K) 1691.04 1683.79 1579.63 1468.96 1358.22

Interest on Loan (“IoL”)

54. Regulation 32 of the 2019 Tariff Regulations provides as follows:

“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 2019-2024 shall be deemed to be equal to the depreciation allowed for the corresponding year/period. In case of de-capitalization of assets, the repayment shall be adjusted by taking into account cumulative repayment on a pro rata basis and the adjustment should not exceed cumulative depreciation recovered upto the date of de-capitalisation of such asset.

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

(5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio after providing appropriate accounting adjustment for interest capitalized:

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

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

(5a) The rate of interest on loan for installation of emission control system shall be the weighted average rate of interest of actual loan portfolio of the emission control system or in the absence of actual loan portfolio, the weighted average rate of interest of the generating company 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.”

55. The Petitioner has prayed that the change in interest rate due to floating rate of interest applicable, if any, during 2019-2024 tariff period may be adjusted.

56. The weighted average rate of IoL has been considered on the basis of rate prevailing as on 1.4.2019. Accordingly, the floating rate of interest, if any, will be considered at the time of true up. IoL has been allowed in accordance with Regulation 32 of the 2019 Tariff Regulations. IoL allowed for 2019-2024 tariff period is as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 A Gross Normative Loan 1322.88 1472.92 1485.15 1485.15 1487.39 B Cumulative Repayments up to Previous Year 0.82 106.26 217.82 329.85 441.95 C Net Loan-Opening 1322.06 1366.66 1267.32 1155.30 1045.44 D Additions due to ACE 150.05 12.22 0.00 2.25 0.00 E Repayment during the year 105.44 111.56 112.02 112.11 112.19 F Net Loan-Closing 1366.66 1267.32 1155.30 1045.44 933.25 G Average Loan 1344.36 1316.99 1211.31 1100.37 989.34 H Weighted Average Rate of Interest on Loan (in %) 8.2272 8.2030 8.2011 8.2000 8.1962 I Interest on Loan (G*H) 110.60 108.03 99.34 90.23 81.09

Return on Equity (“RoE”)

57. Regulation 30 and Regulation 31 of the 2019 Tariff Regulations provides as follows:

“30. Return on Equity: (1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with Regulation 18 of these regulations.

(2) Return on equity shall be computed at the base rate of 15.50% for thermal generating station, transmission system including communication system and run-of-river hydro generating station, and at the base rate of 16.50% for the storage type hydro generating stations including pumped storage hydro generating stations and run-of-river generating station with pondage:

Provided that return on equity in respect of additional capitalization after cutoff date beyond the original scope, excluding additional capitalization on account of emission control system, shall be computed at the weighted average rate of interest on actual loan portfolio of the generating station or the transmission system or in the absence of actual loan portfolio of the generating station or the transmission system, the weighted average rate of interest of the generating company or the transmission licensee, as the case may be, as a whole shall be considered, subject to ceiling of 14%.

Provided further that:

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

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

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

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

b) an additional rate of return on equity of 0.25% shall be allowed for every incremental ramp rate of 1% per minute achieved over and above the ramp rate of 1% per minute, subject to ceiling of additional rate of return on equity of 1.00%:

Provided that the detailed guidelines in this regard shall be issued by National Load Dispatch Centre by 30.6.2019.

(3) The return on equity in respect of additional capitalization on account of emission control system shall be computed at the base rate of one-year marginal cost of lending rate (MCLR) of the State Bank of India as on 1st April of the year in which the date of operation (ODe) occurs plus 350 basis point, subject to ceiling of 14%;”

31. Tax on Return on Equity. (1) The base rate of return on equity as allowed by the Commission under Regulation 30 of these regulations shall be grossed up with the effective tax rate of the respective financial year. For this purpose, the effective tax rate shall be considered on the basis of actual tax paid in respect of the financial year in line with the provisions of the relevant Finance Acts by the concerned generating company or the transmission licensee, as the case may be. The actual tax paid on income from other businesses including deferred tax liability (i.e. income from business other than business of generation or transmission, as the case may be) shall be excluded for the calculation of effective tax rate.

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

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

Where “t” is the effective tax rate in accordance with clause (1) of this Regulation and shall be calculated at the beginning of every financial year based on the estimated profit and tax to be paid estimated in line with the provisions of the relevant Finance Act applicable for that financial year to the company on pro-rata basis by excluding the income of non-generation or non-transmission business, as the case may be, and the corresponding tax thereon. In case of generating company or transmission licensee paying Minimum Alternate Tax (MAT), “t” shall be considered as MAT rate including surcharge and cess.

Illustration-

(i) In case of a generating company or a transmission licensee paying Minimum Alternate Tax (MAT) @ 21.55% including surcharge and cess:

Rate of return on equity = 15.50/(1-0.2155) = 19.758%

(ii) In case of a generating company or a transmission licensee paying normal corporate tax including surcharge and cess:

(a) Estimated Gross Income from generation or transmission business for FY 2019-2020 is Rs. 1,000 crore;

(b) Estimated Advance Tax for the year on above is Rs. 240 crore;

(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 2019-2024 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.”

58. The Petitioner has submitted that MAT rate is applicable to the Petitioner's company. Accordingly, MAT rate applicable in 2019-2020 has been considered for the purpose of RoE, which will be trued-up with actual tax rate in accordance with Regulation 31(3) of the 2019 Tariff Regulations. RoE allowed is as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Return on Equity A Opening Equity 566.95 631.25 636.49 636.49 637.45 B Additions 64.31 5.24 0.00 0.96 0.00 C Closing Equity (A+B) 631.25 636.49 636.49 637.45 637.45 D Average Equity (A+C)/2 599.10 633.87 636.49 636.97 637.45 E Return on Equity (Base Rate) (in %) 15.500 15.500 15.500 15.500 15.500 F MAT Rate for respective year (in %) 17.472 17.472 17.472 17.472 17.472 G Rate of Return on Equity (in %) 18.782 18.782 18.782 18.782 18.782 H Return on Equity (D*G) 112.52 119.05 119.55 119.64 119.73

Operation & Maintenance Expenses (“O&M Expenses”)

59. O&M Expenses claimed by the Petitioner in respect of the transmission asset for 2019-2024 period is as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 500 MVA ICT at Misa Sub-station Norms (Rs. in lakh per MVA) 0.358 0.371 0.384 0.398 0.411 Total O&M Expenses claimed (Rs. in lakh) 179.00 185.50 192.00 199.00 205.50

60. The norms specified under Regulation 35(3)(a) of the 2019 Tariff Regulations provide as follows:

“35. Operation and Maintenance Expenses:

(3) Transmission system: (a) The following normative operation and maintenance expenses shall be admissible for the transmission system:

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Norms for sub-station Bays (Rs. Lakh per bay) 765 kV 45.01 46.60 48.23 49.93 51.68 400 kV 32.15 33.28 34.45 35.66 36.91 220 kV 22.51 23.30 24.12 24.96 25.84 132 kV and below 16.08 16.64 17.23 17.83 18.46 Norms for Transformers (Rs. Lakh per MVA) 765 kV 0.491 0.508 0.526 0.545 0.564 400 kV 0.358 0.371 0.384 0.398 0.411 220 kV 0.245 0.254 0.263 0.272 0.282 132 kV and below 0.245 0.254 0.263 0.272 0.282 Norms for AC and HVDC lines (Rs. Lakh per km) Single Circuit (Bundled Conductor with six or more sub-conductors) 0.881 0.912 0.944 0.977 1.011 Single Circuit (Bundled conductor with four sub-conductors) 0.755 0.781 0.809 0.837 0.867 Single Circuit (Twin & Triple Conductor) 0.503 0.521 0.539 0.558 0.578 Single Circuit (Single Conductor) 0.252 0.260 0.270 0.279 0.289 Double Circuit (Bundled conductor with four or more sub-conductors) 1.322 1.368 1.416 1.466 1.517 Double Circuit (Twin & Triple Conductor) 0.881 0.912 0.944 0.977 1.011 Double Circuit (Single Conductor) 0.377 0.391 0.404 0.419 0.433 Multi Circuit (Bundled Conductor with four or more sub-conductor) 2.319 2.401 2.485 2.572 2.662 Multi Circuit (Twin & Triple Conductor) 1.544 1.598 1.654 1.713 1.773 Norms for HVDC stations HVDC Back-to-Back stations (Rs. Lakh per 500 MW) (Except Gazuwaka BTB) 834 864 894 925 958 Gazuwaka HVDC Back-to-Back station (Rs. Lakh per 500 MW) 1,666 1,725 1,785 1,848 1,913 500 kV Rihand-Dadri HVDC bipole scheme (Rs. Lakh) (1500 MW) 2,252 2,331 2,413 2,498 2,586 ±500 kV Talcher-Kolar HVDC bipole scheme (Rs. Lakh) (2000 MW) 2,468 2,555 2,645 2,738 2,834 ±500 kV Bhiwadi-Balia HVDC bipole scheme (Rs. Lakh) (2500 MW) 1,696 1,756 1,817 1,881 1,947 ±800 kV, Bishwanath-Agra HVDC bipole scheme (Rs. Lakh) (3000 MW) 2,563 2,653 2,746 2,842 2,942

Provided that the O&M expenses for the GIS bays shall be allowed as worked out by multiplying 0.70 of the O&M expenses of the normative O&M expenses for bays;

Provided further that:

i. the operation and maintenance expenses for new HVDC bi-pole schemes commissioned after 1.4.2019 for a particular year shall be allowed prorata 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

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.

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.”

61. We have considered the submissions of the Petitioner. O&M Expenses allowed for the transmission asset are as follows:

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 500 MVA ICT at Misa Sub-station Norms (Rs. in lakh per MVA) 0.358 0.371 0.384 0.398 0.411 Total O&M Expenses claimed (Rs. in lakh) 179.00 185.50 192.00 199.00 205.50

Interest on Working Capital (“IWC”)

62. Regulation 34, Regulation 34(3), Regulation 34(4) and Regulation 3(7) of the 2019 Tariff Regulations specifies as follows:

“34. Interest on Working Capital: (1) The working capital shall cover:

(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 2019-2024 in which the generating station or a unit thereof or the transmission system including communication system or element thereof, as the case may be, is declared under commercial operation, whichever is later:

Provided that in case of truing-up, the rate of interest on working capital shall be considered at bank rate as on 1st April of each of the financial year during the tariff period 2019-2024.

(4) Interest on working capital shall be payable on normative basis notwithstanding that the generating company or the transmission licensee has not taken loan for working capital from any outside agency.”

“3. Definitions. - In these regulations, unless the context otherwise requires:-

‘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;”

63. The Petitioner has submitted that it has computed IWC for 2019-2024 period considering the SBI Base Rate plus 350 basis points as on 1.4.2019. The Petitioner has considered the rate of IWC as 12.05%. IWC is worked out in accordance with Regulation 34 of the 2019 Tariff Regulations. The Rate of Interest (RoI) considered is 12.05% (SBI 1-year MCLR applicable as on 1.4.2019 of 8.55% plus 350 basis points) for 2019-2020, 11.25% (SBI 1-year MCLR applicable as on 1.4.2020 of 7.75% plus 350 basis points) for 2020-2021 and from 2021-2022 onwards has been considered as 10.50% (SBI 1-year MCLR applicable as on 1.4.2020 of 7.00% plus 350 basis points). The components of the working capital and interest allowed thereon is as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Interest on Working Capital A Working Capital for O&M Expenses (Equivalent to annualized O&M Expenses for one month) 14.92 15.46 16.00 16.58 17.13 B Working Capital for Maintenance Spares (Equivalent to 15% of O&M Expenses) 26.85 27.83 28.80 29.85 30.83 C Working Capital for Receivables (Equivalent to 45 days of annual transmission charges) 63.97 66.14 65.90 65.68 65.21 D Total Working Capital (A+B+C) 105.74 109.42 110.70 112.11 113.16 E Rate of Interest (in %) 12.05 11.25 10.50 10.50 10.50 F Interest on working capital (D*E) 12.74 12.31 11.62 11.77 11.88

Annual Fixed Charges of 2019-2024 Tariff Period

64. Accordingly, the transmission charges allowed in respect of the transmission asset for 2019-2024 tariff period are as follows:

(Rs. in lakh)

Particulars 2019-20 2020-21 2021-22 2022-23 2023-24 Depreciation 105.44 111.56 112.02 112.11 112.19 Interest on Loan 110.60 108.03 99.34 90.23 81.09 Return on Equity 112.52 119.05 119.55 119.64 119.73 O&M Expenses 179.00 185.50 192.00 199.00 205.50 Interest on Working Capital 12.74 12.31 11.62 11.77 11.88 Total 520.31 536.46 534.53 532.75 530.39

Filing Fee and the Publication Expenses

65. The Petitioner has sought reimbursement of fee paid by it for filing the Petition and publication expenses.

66. We have considered the submissions of the Petitioner. The Petitioner shall be entitled for reimbursement of the filing fees and publication expenses in connection with the present Petition, directly from the beneficiaries on pro-rata basis in accordance with Regulation 70(1) of the 2019 Tariff Regulations.

Licence Fee & RLDC Fees and Charges

67. The Petitioner shall be entitled for reimbursement of licence fee in accordance with Regulation 70(4) of the 2019 Tariff Regulations for 2019-2024 tariff period. The Petitioner shall also be entitled for recovery of RLDC fee and charges in accordance with Regulations 70(3) of the 2019 Tariff Regulations for 2019-2024 tariff period.

Goods and Services Tax

68. The Petitioner has submitted that GST, if it is levied at any rate and at any point of time in future on charges of transmission of electricity, the same shall be borne and additionally paid by the Respondent(s) to the Petitioner and the same shall be charged and billed separately by the Petitioner. Further additional taxes, if any, are to be paid by the Petitioner on account of demand from Government/Statutory Authorities, the same may be allowed to be recovered from the beneficiaries.

69. We have considered the submissions of the Petitioner. Since GST is not levied on transmission services at present, we are of the view that the Petitioner's prayer is premature.

Security Expenses and Capital Spares

70. The Petitioner has submitted that security expenses in respect of the transmission asset are not claimed in the instant petition and it would file a separate petition for claiming the overall security expenses and the consequential IWC. Further, the Petitioner has sought reimbursement of capital spares at the end of tariff period.

71. We have considered the submissions of the Petitioner. The Petitioner has claimed consolidated security expenses on projected basis for 2019-2024 tariff period on the basis of actual security expenses incurred in 2018-2019 in Petition No. 260/MP/2020. The said petition has already been disposed of by the Commission vide order dated 3.8.2021 wherein the Commission has approved the security expenses from 1.4.2019 to 31.3.2024. Therefore, security expenses will be shared in terms of the order dated 3.8.2021 in Petition No. 260/MP/2020. Therefore, the Petitioner's prayer in the instant petition for allowing it to file a separate petition for claiming the overall security expenses and consequential IWC has become infructuous.

72. Also, the Petitioner's claim pertaining to capital spares, if any, will be dealt with in accordance with the provisions of the 2019 Tariff Regulations.

Sharing of Transmission Charges

73. With effect from 1.7.2011, sharing of transmission charges for inter-State transmission systems was governed by the provisions of the 2010 Sharing Regulations. However, with effect from 1.11.2020, sharing of transmission charges is governed by the Central Electricity Regulatory Commission (Sharing of Transmission Charges and Losses) Regulations, 2020 (in short “the 2020 Sharing Regulations’). Accordingly, the liabilities of the DICs for arrears of the transmission charges determined through this order shall be computed DIC-wise in accordance with the provisions of the sharing regulations and shall be recovered from the concerned DICs under Regulation 15(2)(b) of the 2020 Sharing Regulations. Billing, collection and disbursement of transmission charges for subsequent period shall be recovered in terms of the provisions of the 2020 Sharing Regulations as provided in Regulation 57 of the 2019 Tariff Regulations.

74. To summarize:

a) The trued-up AFC approved for the transmission asset for 2014-2019 tariff period are as follows:

2018-2019 (Pro-rata 3 days) 2.69

b) AFC allowed for the transmission asset for 2019-2024 tariff period in this order are as follows:

(Rs. in lakh)

2019-20 2020-21 2021-22 2022-23 2023-24 520.31 536.46 534.53 532.75 530.39

75. Annexure-I and Annexure-II given hereinafter shall form part of the order.

76. This order disposes of Petition No. 275/TT/2022 in terms of the above discussions and findings.

Annexure-I

2014-19 Admitted Capital Cost as on COD (Rs. in lakh) ACE (Rs. in lakh) Admitted Capital Cost as on 31.3.2019 (Rs. in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations (Rs. in lakh) Capital Expenditure 2018-19 Total 2018-19 Sub-station 1889.83 0.00 0.00 1889.83 5.28% 99.87 Total 1889.83 0.00 0.00 1889.83 99.87 Average Gross Block (Rs. in lakh) 1889.83 Weighted Average Rate of Depreciation (in %) 5.28%

Annexure-II

2019-24 Admitted Capital Cost as on 1.4.2019 (Rs. in lakh) Projected ACE (Rs. in lakh) Admitted Capital Cost as on 31.3.2024 (Rs. in lakh) Rate of Depreciation as per Regulations Annual Depreciation as per Regulations (Rs. in lakh) Capital Expenditure 2019-20 2020-21 2022-23 Total 2019-20 2020-21 2021-22 2022-23 2023-24 Sub Station 1889.83 214.35 17.46 3.21 235.02 2124.85 5.28% 105.44 111.56 112.02 112.11 112.19 Total 1889.83 214.35 17.46 3.21 235.02 2124.85 105.44 111.56 112.02 112.11 112.19 Average Gross Block (Rs. in lakh) 1997.00 2112.91 2121.64 2123.24 2124.85 Weighted Average Rate of Depreciation (in %) 5.28% 5.28% 5.28% 5.28% 5.28%

Power Grid Corporation of India Limited

Commission Order — Concise Analytical Summary (Petition No. 275/TT/2022)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments and Submissions

Respondents' Position

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Annexures and Numerical Tables (as recorded in the order)

Power Grid Corporation of India Limited

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