CENTRAL ELECTRICITY REGULATORY COMMSSION

7th Floor, Core-3, Scope Complex, Lod Ro!d, Ne" #elh $$% %%3

&U'LIC NOTICE S()*ect+ #r!,t Re-(l!t o./ o. term/ !.d co.d t o./ o, t!r ,,

In exercise of powers conferred under Electricity Act, 2003 (the Act), the Commission has made draft regulations on the terms and conditions of tariff

!otice is here"y gi#en under su"$section (3) of %ection &'( of the Act read with

%ection 23 of the )eneral Clauses Act, &(*', that the suggestions+comments on the draft regulations may "e sent to the undersigned latest "y 23 & 200,

-he suggestions+comments recei#ed after that in the Commission.s office shall

not "e considered while finalising these regulations %d+$ 0A121 SAC3AN4 SECRETARY & & 200,

&

Ce.tr!l Electr c t5 Re-(l!tor5 Comm // o. Core 3, 6th Floor, Scope Complex, Ne" #elh 7 $$% %%31 (-ele !o 2,3/,*&& 0A1 !o 2,3/00&0) !o 2$'+23(3)+2003$CE4C &st 5anuary 200,

In exercise of powers conferred under %ection &'( of the Electricity Act, 2003, and all other powers ena"ling in this "ehalf, and after pre#ious pu"lication, the Central Electricity 4egulatory Commission here"y ma6es the following regulations, namely7 $

C3A&TER $ &RELIMINARY

&

Short t tle !.d comme.ceme.t+

(&) -hese regulations may "e called the

Central Electricity 4egulatory Commission (-erms and Conditions of -ariff) 4egulations, 200,

(2)

-hese regulations shall come into force on & , 200,, and unless re#iewed earlier

or extended "y the Commission, shall remain in force for a period of 3 years

(3)

8ords and expressions used in these regulations and not defined herein "ut

defined in the Act, shall ha#e the meaning assigned to them under the Act

Scope !.d exte.t o, !ppl c!t o.+ (&) -hese regulations shall apply where the capital cost$"ased tariff is determined "y the Commission

(2)

8here tariff has "een determined through the process of "idding in accordance

with the guidelines issued "y the Central )o#ernment, the Commission shall adopt such tariff in accordance with the pro#isions of the Act

Norm/ o, oper!t o. to )e ce l .- .orm/+ 0or remo#al of dou"ts, it is clarified

that the norms of operation specified under these regulations are the ceiling norms and this shall not preclude the generating company or the transmission licensee, as the case may "e, and the "eneficiaries from agreeing to impro#ed norms of operation

T!r ,, determ .!t o.+ (&) -he tariff in respect of a generating station under these regulations shall "e determined unit$wise o r for the whole generating station and the tariff for the transmission system shall "e determined line$ wise, su"$station$wise and system$wise, as the case may "e, and aggregated to regional tariff

(2)

0or the purpose of tariff, the capital cost of the pro9ect shall "e "ro6en up into 8here "rea6 up of the pro9ect

stages and "y distinct units forming part of the pro9ect

cost is not a#aila"le and in case of on$going pro9ects the common facilities shall "e apportioned on the "asis of the installed capacity of the units and lines or su"$stations In relation to multi$purpose hydro electric pro9ects, with irrigation as well as power

component, the capital cost chargea"le to power component of the pro9ect shall only "e considered for tariff purpose

Expl!.!t o. 0or the purpose of this chapter, the :pro9ect: includes a generating station and the transmission system

Appl c!t o. ,or determ .!t o. o, t!r ,,+ (&) -he generating company or the

transmission licensee, as the case may "e, may file an application for fixation of tariff in respect of the completed units of the generating station or the lines or su"$stations of the transmission system

(2)

In case of the existing generating station or the existing transmission system, the

generating company or the transmission licensee, as the case may "e, shall ma6e an application for determination of tariff as per Appendix I to these regulations

(3)

In case of a generating station or the transmission system declared under

commercial operation on or after & , 200,, an application for fixation of tariff shall "e made in two stages, namely7

(i)

A generating company or a transmission licensee may ma6e an

application as per Appendix I to these regulations, for determination of pro#isional tariff in ad#ance of the anticipated date of completion of pro9ect "ased on the capital expenditure actually incurred up to the date of ma6ing the application or a

date prior to ma6ing of the application, duly audited and certified "y the statutory auditors and the pro#isional tariff shall "e charged from the date of commercial operation of the respecti#e unit of the generating station or the line or su"$station of the transmission system;

(ii)

A generating company or the transmission licensee shall ma6e a fresh

application as per Appendix I to these regulations, for determination of final tariff "ased on actual capital expenditure incurred up to the date of commercial operation of the generating station or the transmission system, duly certified "y the statutory auditors "ased on annual audited accounts

Core '(/ .e// + 0or the purpose of these regulations, the core "usiness means

the regulated acti#ities of generation or transmission of electricity and does not include any other "usiness or acti#ities of the generating company or the transmission licensee li6e consultancy, telecommunication, etc

'

T!x o. I.come+ (&) -ax on the income streams of the generating company or from its core "usiness shall "e

the transmission licensee, as the case may "e,

computed as an expense and shall "e reco#ered from the "eneficiaries

(2)

Any under$reco#eries or o#er$reco#eries of tax on income shall "e ad9usted e#ery the "asis of income tax assessment under the Income -ax Act, &*/& as

year on

certified "y the statutory Auditors

<ro#ided that tax on any income stream other than the core "usiness shall not constitute a pass through component in the tariff and tax on such other income shall "e paya"le "y the generating company or transmission licensee, as the case may "e

<ro#ided further that the generating station$wise profit "efore tax in the case of a generating company and the region$wise profit "efore tax in case of a transmission licensee as estimated for a year in ad#ance shall constitute the "asis for distri"ution of the corporate tax lia"ility to all the generating stations and regions

<ro#ided further that the "enefits of tax$holiday as applica"le in accordance with the pro#isions of the Income$-ax Act, &*/& shall "e passed on to the "eneficiaries

<ro#ided further that the credit for carry forward losses, una"sor"ed depreciation shall "e gi#en in the proportion as stated in the second pro#iso to this regulation, in the a"sence of any other e=uita"le "asis

<ro#ided further that the tax allocated to the generating station and the regions shall "e charged to the "eneficiaries in the same proportion as annual fixed charges

T!x E/cro" Mech!. /m+

(&) -he "eneficiaries shall maintain an interest

"earing tax escrow account in a scheduled "an6 All amounts of interest shall "e credited to that account

(2)

-he tax lia"ility shall "e estimated two months "efore the commencement of each

year and intimated to the "eneficiaries -he generating company or the transmission licensee shall endea#our to minimi>e its lia"ility on account of taxes reco#era"le from the "eneficiaries

(3)

-he generating company or the transmission licensee shall "e authorised to

withdraw the amounts for settling the tax lia"ility on presentation to the escrow holder of a certificate from their statutory auditors that such amounts are immediately due and paya"le to the taxing authority

(,)

-he generating company or the transmission licensee shall pay into the tax

escrow account any refund recei#ed from the taxing authority

(3)

-he refunds, if any, shall not "e paid "ac6 to the "eneficiaries and shall "e Any "alance due or returna"le shall "e rolled o#er to

ad9usted in the escrow account the next year

(/) -he escrow accounts shall "e reflected in the "oo6s of accounts of the "eneficiaries as their "an6 account

Expl!.!t o. 0or the purpose of this chapter, the "eneficiary includes the person "uying power from a generating station and the person a#ailing of the inter$state transmission system for

'

con#eyance of electricity on payment of Annual 0ixed Charges or Annual Capacity Charges and Annual -ransmission charges respecti#ely

Extr! R(pee L !) l t5 (&) Extra rupee lia"ility towards interest payment and loan

repayment actually incurred, in the rele#ant year shall "e admissi"le; pro#ided it directly arises out of 0oreign Exchange 4ate ?ariation and is not attri"uta"le to the generating company or the transmission licensee or its suppliers or contractors E#ery generating company and the transmission licensee shall reco#er 0oreign Exchange 4ate ?ariation on a year to year "asis as income or expense in the period in which they arise and shall "e ad9usted on a year to year "asis

&0

Reco8er5 o, I.come-t!x !.d Fore -. Exch!.-e R!te 9!r !t o.+ 4eco#ery of

Income$tax and 0oreign Exchange 4ate ?ariation shall "e done directly "y the generating company or the transmission licensee, as the case may "e, from the "eneficiaries without ma6ing any application "efore the Commission

<ro#ided that in case of any o"9ections "y the "eneficiaries to the amounts claimed on account of income$tax or 0oreign Exchange 4ate ?ariation, the generating company or the transmission licensee, as the case may "e, may ma6e an appropriate application "efore the Commission for its decision

C3A&TER :

T3ERMAL &O;ER GENERATING STATIONS

&&

#EFINITIONS+ @nless the context otherwise re=uires for the purpose of this

chapter, (i) <Act= means the Electricity Act, 2003

(ii)

>Add t o.!l C!p t!l /!t o.? means

the capital expenditure actually

incurred after the date of commercial operation of the generating station and admitted "y the Commission after prudence chec6 su"9ect to pro#isions regulation &3

(iii)

<A(thor t5 : means Central Electricity Authority referred to in %ection '0

of the Act

(i#)

:A(x l !r5 E.er-5 Co./(mpt o. or AU@?

in relation to a period

means the =uantum of energy consumed "y auxiliary e=uipment of the generating station, and shall "e expressed as a percentage of the sum of gross energy in 68h generated at generator terminals of all the units of the generating station minus energy in 68h deli#ered at the generating station switchyard to the sum of energy in 68h generated at generator terminals of all the units of the generating station

(#)

?A8! l!) l t5? in relation to a thermal generating station for any period

means the percentage ratio of sum of a#erage declared capacities (ACs) for all the time "loc6s during that period and the rated installed capacity of the generating station in accordance with the following formula7 . A8! l!) l t5 A

{ 0 #C 4 B CL } x $%%C . x{ IC0$-AU@ C$%%4 }

.

A$ where, IC B Installed Capacity of the generating station in C8

ACi B A#erage declared capacity of the ith time "loc6 of the period

n B !um"er of time "loc6s during the period

A@1n B !ormati#e Auxiliary Energy Consumption as a percentage of gross generation

C2 B )ross C8 of capacity of unit(s) 6ept closed on account of )eneration scheduling order

Expl!.!t o.7 -he a#aila"ility in any period shall "e limited to &00D if it wor6s out more than &00D "ased on the a"o#e formula

&0

(#i)

<'e.e, c !r5= in relation to a generating station means the person "uying

power generated at such a generating station on payment of Annual 0ixed Charges

(#ii)

E'locD. in relation to a com"ined cycle thermal generating station includes

com"ustion tur"ine F generator(s), associated waste heat reco#ery "oiler(s), connected steam tur"ine F generator and auxiliaries

(#iii)

?Comm // o.?

means the Central Electricity 4egulatory Commission

referred to in %ection '/ of the Act

(ix)

<C(t o,, #!te= means the date of first financial year closing after one year

of the date of commercial operation of the generating station

(x)

<#!te o, Commerc !l Oper!t o. or CO#. in relation to a unit means date

declared "y the generator after demonstrating the Caximum Continuous 4ating (CC4) or Installed Capacity (IC) through a successful trial run and in relation to the generating station the date of commercial operation means the date of commercial operation of the last unit or "loc6 of the generating station

(xi)

E#ecl!red C!p!c t5 or #C?

means the capa"ility of the generating

station to deli#er ex$"us electricity in C8 declared "y the generating company In relation to any period or time "loc6 duly ta6ing into account the a#aila"ility of fuel

&&

Note In case of gas tur"ine generating station or a com"ined cycle generating station, the generating company shall declare the capacity for units and modules on gas fuel and the li=uid fuel separately, and these shall "e scheduled separately -otal declared capacity and total scheduled generation for the generating station shall "e the sum of the declared capacity and scheduled generation for gas fuel and li=uid fuel for the purpose of computation of a#aila"ility and scheduled <lant 2oad 0actor respecti#ely

(xii)

>Ex /t .- Ge.er!t .- St!t o.? means a generating station declared under

commercial operation from a date prior to & , 200,

(xiii)

EGro// C!lor , c 9!l(e or GC9= in relation to a thermal generating station

means the heat produced in 6Cal "y complete com"ustion of one 6ilogram of solid fuel or li=uid fuel or one standard cu"ic meter of gaseous fuel, as the case may "e

(xi#)

EGro// St!t o. 3e!t R!te or G3R= means the heat energy in 6Cal input

re=uired to generate one 68h of electric energy at generator terminals

(x#)

<I., rm &o"er= means electricity generated prior to commercial operation

of the unit of a generating station

&2

(x#i)

EI./t!lled C!p!c t5 or IC. means

the summation of the name plate

capacities of the units in the generating station or the capacities of the generating station as determined in consultation with the Authority from time to time considering the up$rating, de$rating, as applica"le

(x#ii) EM!x m(m Co.t .(o(/ R!t .- or MCR= in relation to a unit of the thermal generating station means the maximum continuous output at the generator terminals, guaranteed "y the manufacturers at rated parameters and, in relation to a unit or "loc6 of a com"ined cycle thermal generating station means the maximum continuous output at the generator(s) terminals, guaranteed "y the manufacturer with water+steam in9ection (if applica"le) and corrected to 30 G> grid fre=uency and site conditions

(x#iii) ?Oper!t o. !.d M! .te.!.ce Expe./e/ or OEM Expe./e/ : means the expenditure incurred in operation and maintenance of the generating station, including part thereof and includes the expenditure on manpower, repairs, spares, consuma"les, insurance and other o#erheads

(xix)

>Or - .!l &ro*ect Co/t? means the actual expenditure incurred "y the

pro9ect de#eloper, as per the original scope of pro9ect up to the first financial year closing after one year of the date of commercial operation of the last unit as admitted "y the Commission for the purpose of tariff

&3

(xx)

?&l!.t Lo!d F!ctor or &LF? in a gi#en period, means the percentage of

sum of 68h generated at generator terminals of all the units corresponding to scheduled generation to installed capacity, expressed in 6ilowatts (68) multiplied "y num"er of hours in that period

(xxi)

<&ro*ect= includes a generating station

(xxii)

>Sched(led Ge.er!t o. or SG? for any period or time "loc6 means

schedule of generation in C8 ex$"us gi#en "y the 4egional 2oad Aispatch Centre

Note 0or the gas tur"ine generating station or a com"ined cycle generating station for any time "loc6, if the a#erage fre=uency is "elow ,* 32 G> "ut not "elow ,* 02 G> and the scheduled generation is more than *( 3D of the declared capacity, the scheduled generation shall "e deemed to ha#e "een reduced to *( 3D of the declared capacity and if the a#erage fre=uency of the time "loc6 is "elow ,* 02 G> and the scheduled generation is more than */ 3D of the declared capacity, the scheduled generation shall "e deemed to ha#e "een reduced to */ 3D the declared capacity

(xxiii) >Sm!ll G!/ T(r) .e &o"er St!t o.? means and includes the gas$"ased and naptha$"ased thermal power stations with gas tur"ines in the capacity range of 30 C8 or "elow

&,

(xxi#) :U. t? in relation to a thermal power generating station means steam generator, tur"ine generator and their auxiliaries, or in relation to a com"ined cycle thermal generating station, means tur"ine$generator and auxiliaries

(xx#) <Ye!r= means a financial year

&2

Compo.e.t/ o, T!r ,,7

-he tariff for sale of electricity from a thermal power

generating station (which includes gas$"ased and naptha$"ased generating station) shall comprise of two parts, namely, the reco#ery of annual capacity (fixed) charges and energy (#aria"le) charges (i) -he annual capacity (fixed) charges shall consist of7 (a) (") (c) (d) (e) (ii) Interest on loan capital Aepreciation, including Ad#ance Against Aepreciation, 4eturn on e=uity, Hperation and maintenance expenses, and Interest on wor6ing capital

-he energy (#aria"le) charges shall co#er fuel cost

&3

Norm/ o, Oper!t o.7 -he norms of operation as gi#en hereunder shall apply7 04 T!r-et A8! l!) l t5 ,or reco8er5 o, ,(ll C!p!c t5 0F xed4 ch!r-e/ (a) All thermal generating stations, except those $ (0D

co#ered under clause (") "elow (") )enerating stations of !ey#eli 2ignite Corporation (!2C)

(-<%$II, %tage IIII)

$ '2D

&3

Note $ 4eco#ery of capacity (fixed) charges "elow the le#el of target a#aila"ility shall "e on pro$rata "asis At >ero a#aila"ility, no capacity charges shall "e paya"le

Note : -he Commission, "ased on an application made "y the generating company and for reasons to "e recorded in writing, may relax the norms of target a#aila"ility as it may consider appropriate, for any generating station,

<ro#ided that no such relaxation shall "e allowed without an opportunity to the "eneficiaries of the generating station

0 4

T!r-et &l!.t Lo!d F!ctor ,or I.ce.t 8e 0)!/ed o. /ched(led -e.er!t o.4 (a) All thermal generating stations except those co#ered under clause (") "elow (") )enerating stations of !2C (-<%$II, %tage IIII) $ (0D $ '2D

0 4

Gro// St!t o. 3e!t R!te (a) Coal$"ased thermal power generating stations
:%%C:$%C:F% M; /et/ F%% M; !.d !)o8e /et/

Auring sta"ili>ation period %u"se=uent period

2/00 JCal+68h 2300 JCal+68h

2330 JCal+68h 2,30 JCal+68h

&/

Note $ In respect of 300 C8 and a"o#e units where the "oiler feed pumps are electrically operated, the heat rate of ,0 6Cal+68h shall "e reduced from the generating station heat rate indicated a"o#e

Note : 0or generating stations ha#ing com"ination of 200+2&0+230 C8 set and 300 C8 and a"o#e sets, normati#e gross generating station heat rate shall "e the weighted a#erage generating station heat rate

(")

2ignite$fired thermal power generating stations

-he gross generating station heat rates indicated a"o#e for coal$"ased thermal power stations shall "e corrected, using multiplying factors as gi#en "elow7 (i) (ii) (iii) (i#) 0or lignite ha#ing 30D moisture7 Cultiplying factor of & &0 0or lignite ha#ing ,0D moisture7 Cultiplying factor of & 0' 0or lignite ha#ing 30D moisture7 Cultiplying factor of & 0, 0or other #alues of moisture content, multiplying factor shall "e pro$rated for moisture content "etween 30$,0 and ,0$30 depending upon the rated #alues of multiplying factor for the respecti#e range gi#en under Clauses (I) to (iii) a"o#e

(c)

)as$"ased and naptha$"ased generating stations

&'

(i)

Existing generating stations owned "y !ational -hermal

<ower Corporation 2td

!ame of )enerating Com"ined cycle station (6Cal+68h) 2000 )andhar )<% 20'3 Jawas )<% 20'3 Anta )<% 20'3 Aadri )<% 2&00 Auraiya )<% 2000 0arida"ad )<% 2000 Jayam6ulam )<%
(ii)

Hpen cycle (6Cal+68h)

2*00 30&0 30&0 30&0 30,3 2*00 2*00

)enerating stations declared under commercial operation on

or after & , 200, Hpen cycle $ 2'33 6Cal+68h &*00 6Cal+68h

Com"ined cycle $

(iii)

%mall )as -ur"ine <ower )enerating %tations (a) Assam )as Kased <ower %tation, Jathalguri $$ $$ 3223 6Cal+68h 2230 6Cal+68h

Hpen Cycle Com"ined Cycle

(")

Agartala

)as

Kased

<ower

%tation,

4amachandranagar Hpen Cycle $$ 33(0 6Cal+68h

&(

(c)

Hther than (a) and (") a"o#e ; th N!t(r!l G!/ ; th L G( d F(el & 02 x 3&23 6cal+68h & 02 x 2030 6cal+68h

Hpen Cycle Com"ined Cycle

3&23 6cal+68h 2030 6cal+68h

0 84

Seco.d!r5 ,(el o l co./(mpt o. Coal$"ased generating stations St!) l H!t o. per od S()/eG(e.t per od

(a)

All thermal generating stations except those co#ered under clause (") "elow , 3 ml+68h 2 0 ml+68h

(")

)enerating stations of !2C (-<%$II, %tage IIII) , 3 ml+68h 3 0 ml+68h

Note %econdary fuel oil consumption norms may "e re#iewed after two years

084

A(x l !r5 E.er-5 Co./(mpt o. (a) Coal$"ased generating stations ; th cool .- to"er ; tho(t cool .- to"er ( 3 per cent

200 C8 series 300 C8 series %team dri#en pumps

* 0 per cent

' 3 per cent

' 0 per cent ( 3 per cent

Electrically dri#en pumps * 0 per cent

&*

(") )as$"ased and !aphtha$"ased generating stations

Com"ined cycle Hpen cycle

3 0 per cent & 0 per cent

Note Auring sta"ili>ation period, normati#e auxiliary consumption shall "e rec6oned at 0 3 per cent o#er and a"o#e the norms indicated at (a) and (") a"o#e

08 4

St!) l H!t o. per od In relation to a unit, sta"ili>ation period shall "e rec6oned as follows

commencing from the date of commercial operation of that unit7 (a) coal$"ased and lignite$fired generating stations &(0 days $

(")

Hpen cycle gas+li=uid fuel "ased generating stations $

*0 days

(c) Com"ined cycle gas+li=uid fuel "ased generating stations

*0 days

Note -he sta"ili>ation period and relaxed norms applica"le during the sta"ili>ation period shall cease to apply from & , 200/

20

&,

C!p t!l Co/t+

%u"9ect to prudence chec6 "y the Commission, the actual

expenditure incurred on completion of the pro9ect shall form the "asis for fixation of final tariff -he final tariff shall "e fixed "ased on the admitted capital expenditure actually

incurred up to the date of commercial operation of the generating station and shall include capitalised initial spares su"9ect to following ceiling norms as a percentage of plant and e=uipment cost7 (i) (ii) Coal+lignite "ased pro9ects7 )as+li=uid fuel "ased pro9ects7 2 3D , 0D

<ro#ided that where the power purchase agreement entered into "etween the generating company and the "eneficiaries pro#ides a ceiling of actual expenditure, the capital expenditure shall not exceed such ceiling for the purpose of determination of tariff

In case of the existing generating stations, the cost admitted "y the Commission prior to & , 200, shall form the "asis for tariff fixation

&3

Add t o.!l c!p t!l /!t o.+

(&)

-he following capital expenditure within the

original scope of wor6 actually incurred after the date of commercial operation and up to the cut off date may "e admitted "y the Commission, su"9ect to prudence chec67 (i) (ii) (iii) Aeferred lia"ilities, 8or6s deferred for execution, 2ia"ilities to meet award of ar"itration or the satisfaction of the order or decree of a court, and

2&

(i#)

Hn account of change in law

<ro#ided that original scope of wor6s along with estimates of expenditure shall "e su"mitted along with the application for pro#isional tariff

<ro#ided further that a list of the deferred lia"ilities and wor6s deferred for execution shall "e su"mitted along with the application for final tariff after the date of commercial operation of generating station

(2)

-he capital expenditure of the following nature actually incurred after the cut off

date may "e admitted "y the Commission, su"9ect to prudence chec67

(i)

Aeferred lia"ilities relating to wor6s+ser#ices within the original scope of wor6

(ii)

2ia"ilities to meet award of ar"itration or satisfaction of the order or decree of a court,

(iii) (i#)

Hn account of change in law, Any additional wor6s+ser#ices which ha#e "ecome necessary for efficient and successful operation of the generating station, "ut not included in the original pro9ect cost, and

(#)

Aeferred wor6s relating to ash pond or ash handling system in the original scope of wor6

22

(3)

Impact of additional capitalisation in tariff re#ision within the appro#ed pro9ect cost

may "e considered "y the Commission once in a tariff period

Note $ Any expenditure admitted on account of committed lia"ilities within the original scope of wor6 and the expenditure deferred on techno$economic grounds "ut falling within the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio arri#ed at in the manner indicated in regulation &'

Note : Any expenditure on replacement of old assets shall "e considered after writing off the entire #alue of the original assets from the original capital cost

Note 3 Any expenditure admitted on account of new wor6s not in the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio of '0730

Note I Any expenditure admitted on reno#ation and moderni>ation and life extension shall "e ser#iced on normati#e de"t$e=uity ratio of '0730 after writing off the original amount of the replaced assets from the original capital cost

Note F

23

-he scrutiny of the pro9ect cost estimates "y the Commission shall "e limited to the reasona"leness of the capital cost, financing plan, interest during construction, use of efficient technology and such other matters for the purposes of determination of tariff

&/

S!le o, I., rm &o"er+

Any re#enue (other than the fuel cost) earned "y the

generating company from sale of infirm power, shall "e ta6en as reduction in capital cost and shall not "e treated as re#enue

&'

#e)t-EG( t5 R!t o

(&)

In case of a generating station declared under & , 200,, de"tFe=uity ratio as on the date of

commercial operation on or after

commercial operation for the purpose of determination of tariff shall "e '0730 8here e=uity employed is more than 30D, the amount of e=uity for the purpose of tariff shall "e limited to 30D and the "alance amount shall "e considered as the loan In case of a generating station where actual e=uity employed is less than 30D, the actual e=uity shall "e considered

(2)

In case of the existing generating stations, the de"t$e=uity ratio considered "y the

Commission for the purpose of fixation of tariff for the period prior to & , 200, shall "e considered

&(

&!5me.t o, C!p!c t5 0F xed4 Ch!r-e/7

(&) the capacity charges shall "e

computed on the following "asis and their reco#ery shall "e related to target a#aila"ility

(i)

I.tere/t o. lo!. c!p t!l

2,

(a)

Interest on loan capital shall "e computed loan wise on the

outstanding loans arri#ed at in the manner indicated in regulation &', duly ta6ing into account the schedule of repayment and actual interest rates

(")

In case of the existing generating station, the normati#e loan

outstanding as on & , 200, shall "e considered as the opening loan and the repayment shall "e wor6ed out on normati#e "asis -he weighted a#erage rate of interest on loan shall "e wor6ed out on the actual outstanding loan and applied to the normati#e loan for calculation of interest on loan in the respecti#e year

(ii)

#eprec !t o., .cl(d .- Ad8!.ce A-! ./t #eprec !t o. (a) #eprec !t o. 0or the purpose of tariff, depreciation shall "e computed in the following manner, namely, (i) -he #alue "ase for the purpose of depreciation shall "e the

historical cost of the asset

(ii)

Aepreciation shall "e calculated annually as per straight line

method at the rate of depreciation as prescri"ed in the schedule attached to the regulations at Appe.d x-II

<ro#ided that the total depreciation during the life of the pro9ect shall not exceed *0D of the appro#ed original cost, which

23

shall include additional capitali>ation on account of foreign exchange rate #ariation up to 3& 03 200,

(iii)

Hn repayment of entire loan, the remaining deprecia"le #alue

shall "e spread o#er the "alance useful life of the asset

(i#)

Aepreciation shall "e

chargea"le from the first year of

operation

In case of operation of the asset for part of the year,

depreciation shall "e charged on pro$rata "asis

(#)

Aepreciation

against

assets

relating

to

en#ironmental

protection shall "e allowed on case$to$case "asis at the time of fixation of tariff su"9ect to the condition that the en#ironmental standards as prescri"ed ha#e "een complied with during the pre#ious tariff period

(" )

Ad8!.ce A-! ./t #eprec !t o. In addition to allowa"le depreciation, the generating company shall

"e entitled to Ad#ance Against Aepreciation, computed in the manner gi#en hereunder7

(i)

Ad#ance Against Aepreciation (AAA) shall "e permitted

where#er loan repayment considered for wor6ing out interest on

2/

loan exceeds the depreciation allowa"le as per schedule and shall "e computed as follows7

AAA B 2oan repayment as referred a"o#e amount su"9ect to a ceiling of &+&0th of original loan amount minus Aepreciation as per schedule

(ii)

Ad#ance Against Aepreciation in a year shall "e calculated

"y considering actual or normati#e loan arri#ed at in the manner indicated in regulation &'

(iii)

Ret(r. o. EG( t57 4eturn on e=uity shall "e computed on the e=uity "ase determined in

accordance with regulation &' and shall "e as follows7 (a) Central <ower %ector @nits $&,D

(") Independent <ower <roducers $&,D, if payment security mechanism similar to Central

<ower %ector @tilities is pro#ided "y the )o#ernment $&/D, if no payment security

mechanism similar to Central <ower %ector @tilities is pro#ided "y the )o#ernment

2'

<ro#ided that on any e=uity in#ested in any foreign currency shall "e allowed a return on e=uity up to the prescri"ed limit in the same currency and the payment on this account shall "e made in Indian 4upees "ased on the exchange rate pre#ailing on the due date of "illing

Expl!.!t o. <remium raised "y the generating company while issuing share capital and in#estment of internal resources created out of free reser#e of the existing

generating company, if any, for the funding of the pro9ect, shall also "e rec6oned as paid up capital for the purpose of computing the return on e=uity, pro#ided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the generating station and forms part of the appro#ed financial pac6age

(i#)

Oper!t o. !.d M! .te.!.ce expe./e/

!ormati#e HIC expenses shall "e as follows7

(a)

Coal$"ased and lignite$"ased generating stations7

(4s in la6h+C8)

Lear 200,$03 2003$0/ 200/$0' 200'$0( 200($0*

200+2&0+230 C8 sets &0 ,0 &0 (2 && 23 && '0 &2 &'

300 C8 and a"o#e sets * 3/ * '3 &0 &2 &0 32 &0 *3

2(

Note $ 0or the generating stations ha#ing com"ination of 200+2&0+230 C8 sets and 300 C8 and a"o#e set, the weighted a#erage #alue for HIC expenses shall "e adopted

Note : In respect of -anda -hermal <ower %tation and -alcher <ower %tation operation and maintenance norms gi#en hereunder shall apply (4s in la6h+C8) the

Lear 200,$03 2003$0/ 200/$0' 200'$0( 200($0*

(")

-anda -<% * (( &0 2( &0 /* && && && 3/

-alcher -<% &, &2 &, /* &3 2( &3 (* &/ 32

)as$"ased and li=uid fuel$"ased thermal power generating stations7 (4s in la6h+C8)

Lear

200,$03 2003$0/ 200/$0' 200'$0( 200($0*

Note

)as$"ased and li=uid fuel$"ased power generating stations other than small gas tur"ine power generating stations 8ith 8arranty %pares 8ithout any of &0 years 8arrantee %pares 3 20 ' (0 3 ,& ( && 3 /2 ( ,, 3 (3 ( '' / 0( * &2

%mall gas tur"ine power generating stations 8ithout any 8arranty %pares * ,/ * (, &0 2, &0 /3 && 0'

2*

A separate application may "e made to claim a"normal HIC expenses o#er and a"o#e the allowa"le HIC expenses, to "e computed in the manner indicated a"o#e (#) I.tere/t o. ;orD .- C!p t!l (a) 8or6ing capital shall co#er7 Co!l )!/edCL -. te-)!/ed -e.er!t .- /t!t o./ (i) Cost of coal or lignite for one month corresponding to target a#aila"ility,

(ii)

Cost of coal or lignite stoc6 for M month generating stations and one month for

for pit$head non$pit$head

generating stations, corresponding to the Ntarget a#aila"ilityO,

(iii)

Hne month.s stoc6 of secondary fuel oil, corresponding to the Ntarget a#aila"ilityO,

(i#)

Hperation and Caintenance expenses for one month;

(#)

Caintenance spares P &D of the plant and e=uipment cost as on & , 200, or the date of commercial operation, whiche#er is later; and

(#i)

4ecei#a"les e=ui#alent to two months of fixed and #aria"le charges for sale of electricity calculated on Qtarget

a#aila"ilityQ;

30

G!/-)!/edCL G( d ,(el )!/ed -e.er!t .- /t!t o./ (i) 0uel cost for one month corresponding to the Ntarget

a#aila"ilityO duly ta6ing into account the mode of operation of the generating station on gas fuel and li=uid fuel;

(ii)

2i=uid fuel stoc6 for M month;

(iii)

HIC expenses for one month;

(i#)

Caintenance spares P &D of the plant and e=uipment cost

as on & , 200, or the date of commercial operation, whiche#er is later; and

(#)

4ecei#a"les e=ui#alent to two months of fixed and #aria"le

charges for sale of electricity calculated on Qtarget a#aila"ilityQ;

(")

4ate of interest on wor6ing capital shall "e on a normati#e "asis

and shall "e e=ual to the short$term <rime 2ending 4ate of %tate Kan6 of India as on & , 200, or on & st April of the year in which the generating station is declared under commercial operation, whiche#er is later -he interest on wor6ing capital shall "e paya"le on normati#e "asis notwithstanding that the generating company has not ta6en wor6ing capital loan from any outside agency

3&

(2)

0ull capacity charges shall "e reco#era"le at target a#aila"ility specified in

regulation &3 4eco#ery of capacity (fixed) charges "elow the le#el of target a#aila"ility shall "e on pro$rata "asis At >ero a#aila"ility, no capacity charges shall "e paya"le

(3)

-he payment of capacity charges shall "e on monthly "asis in 4s+68+Conth in

proportion to the allocated capacity

&*

E.er-5 Ch!r-e/ (i) Ge.er!t .- /t!t o./ co8ered (.der A'T

Energy (#aria"le) Charges shall co#er fuel costs and shall "e wor6ed out on the "asis of paise per 68h on ex$"us energy scheduled to "e sent out from the generating station as per the following formula7

Energy Charges B 4ate of Energy Charges 1 %cheduled )eneration (ex$ "us)

(ii)

Ge.er!t .- /t!t o./ other th!. tho/e co8ered (.der A'T

Energy (#aria"le) charges shall co#er fuel costs and shall "e wor6ed out on the "asis of paise per 68h on ex$"us energy deli#ered + sent out from the generating station as per the following formula7

Energy Charges B 4ate of Energy Charges 1 Energy deli#ered (ex$"us) 8here,

32

4ate of Energy Charges (4EC) for "oth items (i) I (ii) a"o#e shall "e the sum of the cost of normati#e =uantities of primary and secondary fuel for deli#ering ex$"us one 68h of electricity and shall "e computed as under7

<p x (Rp)n S <s x (Rs)n 4EC B (&$(A@1n) ) 8here,

<p

B <rice of primary fuel namely coal or 2ignite or )as or !aphtha in 4s+Jg or 4s+cum or 4s +litre as the case may "e

(Rp)n B

Ruantity of primary fuel re=uired for generation of one 68h of electricity at generator terminals in Jg or litre or cum as the case may "e, and shall "e computed on the "asis of )ross )enerating station Geat 4ate (less heat contri"uted "y secondary fuel oil for coal+lignite "ased generating stations) and gross calorific #alue of coal+lignite or gas or !aphtha actually fired

<s

<rice of %econdary fuel oil in 4s +ml, !ormati#e Ruantity of %econdary fuel oil+6wh !ormati#e Auxiliary Energy Consumption
33

(Rs)n B A@1nB

(iii)

Ad*(/tme.t o. !cco(.t o, 8!r !t o. . pr ce or he!t 8!l(e o, ,(el/ Initially )ross Calorific ?alue of coal+lignite or gas or naphtha shall "e

ta6en as per actual in the preceding three months Any #ariation shall "e ad9usted on a month to month "asis on the "asis of )ross Calorific ?alue of coal+lignite or gas or naphtha recei#ed and "urnt and landed cost incurred "y the generating company for procurement of coal+lignite, oil, or gas or !aptha as the case may "e !o separate petition need to "e filed with the Commission for fuel price ad9ustment In case of any disputes, an appropriate application in accordance with Central Electricity 4egulatory Commission (Conduct of Kusiness

4egulations), &***, as amended from time to time or any statutory re$enactment thereof shall "e made "efore the Commission

(i#)

L!.ded Co/t o, Co!l

-he landed cost of coal for the purpose of computation of energy charges shall "e arri#ed at after considering normati#e transit and handling losses as

percentage of the =uantity of coal dispatched "y the coal supply Company during the month as gi#en "elow7

<it Gead generating stations 4ail 0ed !on$<it Gead generating stations

7 7

0 3D 0 (D

3,

20

I.ce.t 8e 7 An incenti#e shall "e paya"le at a flat rate of 23 0 paise+68h for corresponding to scheduled generation in excess of generation

generation

corresponding to target <lant 2oad 0actor

2&

#e8elopme.t S(rch!r-e+

-he generating company shall "e entitled to a

de#elopment surcharge of 3D on e#ery "ill for capacity charges raised "y it in respect of generation at regional le#el -he de#elopment surcharge shall not "e paya"le for plants operating exclusi#ely within a %tate su"9ect to the following conditions7 -he le#y of de#elopment surcharge shall "e

(i)

%urcharge collected "y the utilities shall "e 6ept in a separate "an6

account and may "e in#ested in securities of recognised infrastructure funds li6e IA0C or IAKI tax$free "onds and income therefrom shall also "e credited to that "an6 account;

(ii)

-he generating company shall maintain separate accounts in its "oo6s and

reflect the "alance in the Ae#elopment %urcharge 4eser#e Account and the in#estment represented against the same in the "alance sheet;

(iii)

Hn the purchase of the underta6ing or on any other such contingency the

reser#e and the corresponding in#estments shall "e transferred to the successor underta6ing to su"ser#e the same o"9ecti#e of fresh capacity addition;

33

(i#)

-he fund can "e made use of to the extent of &+3 rd of the e=uity

re=uirement for any capacity addition in the respecti#e region and the "alance 2+3rd "eing pro#ided "y the generating company;

(#)

-o the extent to which the fund is used as e=uity in any new capacity

addition, pro rata reduction for the return on e=uity in the determination of tariff of the new pro9ect shall "e allowed;

(#i)

A certificate in the prescri"ed form regarding the use of these funds shall

"e filed with the Commission e#ery year, duly #erified "y the statutory auditors of the generating company;

(#ii)

-he use of these funds in any other manner shall "e only with the prior

appro#al of the Commission either on petition or suo motto for which the due process as per the Central Electricity 4egulatory Commission (Conduct of Kusiness) 4egulations, &***, as amended from time to time, including statutory re$enactment thereof shall "e followed

22

U./ched(led I.terch!.-e0UI4 Ch!r-e/ !ppl c!)le to /t!t o./ co8ered (.der ?ariation in actual generation or actual drawal and scheduled generation

A'T7 (&)

or scheduled drawal shall "e accounted for through @nscheduled Interchange (@I)Charges @I for generating station shall "e e=ual to its actual generation minus its scheduled generation @I for "eneficiary shall "e e=ual to its total actual drawal minus its total scheduled drawal @I shall "e wor6ed out for each &3 minute time "loc6 Charges

3/

for all @I transactions shall "e "ased on a#erage fre=uency of the time "loc6 and the following rates shall apply7 A8er!-e FreG(e.c5 o, t me )locD 30 3 G> and a"o#e Kelow 30 3 G> and up to 30 ,( G> Kelow ,* 0, G> and up to ,* 02 G> Kelow ,* 02 G> Ketween 30 3 G> and ,* 02 G> UI R!te 0&! /e per D;h4 0 00 ( 00 3*2 00 /00 00 linear in 0 02 G> step

(Each 0 02 G> step is e=ui#alent to ( 00 paise +68h within the a"o#e range) Note -he a"o#e a#erage fre=uency range and @I rates are su"9ect to change through a separate notification "y the Commission from time to time

(2)

In case the declaration of its capa"ility "y the generating station is on lower side

and the actual generation is more than the declared capacity, @I charges due to the generating station on account of such extra generation shall "e reduced to >ero and the amount shall "e credited towards @I account of "eneficiaries in the ratio of their capacity share in the generating station

23

Re)!te7 0or payment of "ills of capacity charges and energy charges through

the letter of credit, a re"ate of 2 per cent shall "e allowed If the payments are made "y a mode other than through the letter of credit "ut within a period of one month of

3'

presentation of "ills "y the generating company or the transmission licensee as the case may "e, a re"ate of & per cent shall "e allowed

2,

L!te &!5me.t S(rch!r-e7 In case the payment of "ills of capacity charges and

energy charges "y the "eneficiary (ies) is delayed "eyond a period of & month from the date of "illing a late payment surcharge at the rate of & 3 percent per month shall "e le#ied "y the generating company or the transmission licensee, as the case may "e

23

Sched(l .-7 4ead with the pro#isions of the Indian Electricity )rid Code, the

methodology of scheduling and calculating a#aila"ility shall "e as under7

(i)

Each day starting from 00 00 hrs shall "e di#ided into */ time "loc6s of &3

minutes inter#als

(ii)

-he generator shall ma6e an ad#ance declaration of capa"ility of its

generating station -he declaration shall "e for that capa"ility which can "e actually made a#aila"le

-he declaration shall "e for the capa"ility of the generating station to deli#er ex$ "us C8 for each time "loc6 of the day -he capa"ility as declared "y generator, referred to as declared capacity, would form the "asis of generation scheduling

(iii)

8hile ma6ing or re#ising their declaration of capa"ility, the generator shall

ensure that its declared capa"ility during pea6 hours is not less than that during

3(

other hours Gowe#er, exception to this rule shall "e allowed in case of tripping+re$synchronisation of units as a result of forced outage of units

(i#)

-he generation scheduling shall "e done in accordance with the operating

procedure, as stipulated in the Indian Electricity )rid Code

(#)

Kased on the declaration of the generator, 4egional 2oad Aespatch

Centre shall communicate their shares to the "eneficiaries out of which they shall gi#e their re=uisitions

(#i)

Kased on the re=uisitions gi#en "y the "eneficiaries and ta6ing into

account technical limitations on #arying the generation and also ta6ing into account transmission system constraints, if any, 4egional 2oad Aespatch Centre shall prepare the economically optimal generation schedules and drawal schedules and communicate the same to the generator and the "eneficiaries

4egional 2oad Aespatch Centre shall also formulate the procedure for meeting contingencies "oth in the long run and in the short run (Aaily scheduling)

(#ii)

-he scheduled generation and actual generation shall "e at the

generator.s ex$"us 0or "eneficiaries, the scheduled and actual net drawals shall "e at their respecti#e recei#ing points

3*

(#iii)

0or calculating the net drawal schedules of "eneficiaries, the transmission

losses shall "e apportioned to their drawals

(ix)

%cheduled generation of the generating station for each time "loc6,

referred to as scheduled generation shall mean the %cheduled C8 to "e %ent Hut Ex$"us from the generating station

(x)

Actual generation of the generating station for each time "loc6, referred to

as actual generation, shall mean actual C8 actually %ent Hut Ex$"us from the generating station

(xi)

In case of forced outage of a unit, 4egional 2oad Aespatch Centre shall

re#ise the schedules on the "asis of re#ised declared capa"ility -he re#ised schedules shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the re#ision is ad#ised "y the generator to "e the first one -he re#ised declared capa"ility shall also "ecome effecti#e from the ,th time "oc6

(xii)

In the e#ent of "ottlenec6 in e#acuation of power due to any constraint,

outage, failure or limitation in the transmission system, associated switchyard and su"$ stations owned "y Central -ransmission @tility (as certified "y 4egional 2oad Aespatch Centre ) necessitating reduction in generation, 4egional 2oad Aespatch Centre shall re#ise the schedules which shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the "ottlenec6 in e#acuation of power has ta6en place to "e the first one Also, during the first, second and

,0

third time "loc6s of such an e#ent, the scheduled generation of the generating station shall "e deemed to ha#e "een re#ised to "e e=ual to actual generation and also the scheduled drawals of the "eneficiaries shall "e deemed to ha#e "een re#ised to "e e=ual to their actual drawals

(xiii)

In case of any grid distur"ance, scheduled generation of all the generating

stations and scheduled drawal of all the "eneficiaries shall "e deemed to ha#e "een re#ised to "e e=ual to their actual generation+drawal for all the time "loc6s affected "y the grid distur"ance Certification of grid distur"ance and its duration shall "e done "y 4egional 2oad Aespatch Centre

(xi#)

4e#ision of declared capa"ility "y the generator(s) and re=uisition "y

"eneficiary(ies) for the remaining period of the day shall also "e permitted with ad#ance notice 4e#ised schedules+declared capa"ility in such cases shall "ecome effecti#e from the /th time "loc6, counting the time "loc6 in which the re=uest for re#ision has "een recei#ed in 4egional 2oad Aespatch Centre to "e the first one

(x#)

If, at any point of time, 4egional 2oad Aespatch Centre o"ser#es that

there is need for re#ision of the schedules in the interest of "etter system operation, it may do so on its own and in such cases, the re#ised schedules shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the re#ised schedule is issued "y 4egional 2oad Aespatch Centre to "e the first one

,&

(x#i)

)eneration schedules and drawal schedules issued+re#ised "y 4egional

2oad Aespatch Centre shall "ecome effecti#e from designated time "loc6 irrespecti#e of communication success

(x#ii) 0or any re#ision of scheduled generation, including post facto deemed re#ision, there shall "e a corresponding re#ision of scheduled drawals of the "eneficiaries

(x#iii) A procedure for recording the communication regarding changes to schedules duly ta6ing into account the time factor shall "e e#ol#ed "y Central -ransmission @tility

2/

#emo./tr!t o. o, #ecl!red C!p!) l t5 7

-he generating company may "e

re=uired to demonstrate the declared capa"ility of its generating station as and when as6ed "y the 4egional 2oad Aespatch Centre of the region in which the generating station is situated In the e#ent of the generating company failing to demonstrate the declared capa"ility, the capacity charges due to the generator shall "e reduced as a measure of penalty -he =uantum of penalty for the first mis$declaration for any duration+"loc6 in a day shall "e the charges corresponding to two days fixed charges 0or the second mis$declaration the penalty shall "e e=ui#alent to fixed charges for four days and for su"se=uent mis$declarations, the penalty shall "e multiplied in the geometrical progression as per AK- order dated 0, 0& 2000 of the Commission

,2

-he operating log "oo6s of the generating station shall "e a#aila"le for re#iew "y 4<C or the 4EK, as the case may "e -hese "oo6s shall 6eep record of machine operation and maintenance

2'

Meter .- !.d Acco(.t .-7

Cetering arrangements, including installation,

testing and operation and maintenance of meters and collection, transportation and processing of data re=uired for accounting of energy exchanges and a#erage fre=uency on &3 minute time "loc6 "asis shall "e pro#ided "y <ower )rid Corporation of India+4egional 2oad Aespatch Centres <rocessed data of the meters along with data

relating to declared capa"ility and schedules etc , shall "e supplied "y 4egional 2oad Aespatch Centres to 4egional <ower Committee or the 4egional Electricity Koard and 4egional <ower Committee or the 4egional Electricity Koard shall issue the 4egional Accounts for energy as well as @I charges on monthly "asis @I accounting procedures shall "e go#erned "y the orders of the Commission

2(

' ll .- !.d &!5me.t o, C!p!c t5 Ch!r-e/ 7 Killing and payment of capacity

charges shall "e done on a monthly "asis in the following manner7

(i)

Each "eneficiary shall pay the capacity charges in proportion to its

percentage share in Installed Capacity of the generating station

Note $ Allocation of total capacity of central sector generating stations is made "y Central )o#ernment from time to time which also has an unallocated portion

,3

Allocation of the unallocated portion shall "e made "y the Central )o#ernment from time to time, for the total unallocated capacity -he total capacity share of

any "eneficiaries would "e sum of its capacity share plus allocation out of the unallocated portion In case of no specific distri"ution of unallocated power "y the Central )o#ernment, the unallocated power shall "e added to the allocated shares in the same proportion as the allocated shares

Note : -he "eneficiaries may propose surrendering part of their allocated share to other %tates within+outside the region In such cases, depending upon the technical feasi"ility of power transfer and specific agreements reached "y the generating company with other %tates within+outside the region for such transfers, the shares of "eneficiaries may "e re$allocated "y the Central )o#ernment for a specific period 8hen such re$allocations are made, the "eneficiaries who surrender the share shall not "e lia"le to pay capacity charges for the surrendered share -he capacity charges for the capacity surrendered and reallocated as a"o#e shall "e paid "y the %tate(s) to whom the surrendered capacity is allocated Except for the period of reallocation of capacity as a"o#e, the "eneficiaries of the generating station shall continue to pay the full fixed charges as per allocated capacity shares

(ii)

-he "eneficiaries shall ha#e full freedom for negotiating any transaction for

utilisation of their capacity shares In such cases, the "eneficiary ha#ing allocation in the capacity of the generating station shall "e lia"le for full payment

,,

of capacity charges and energy charges (including that for sale of power under the transactions negotiated "y them) for all its scheduled and unscheduled transactions from its capacity share

(iii)

If there is any capacity which remains un$re=uisitioned during day$to$day

operation, 4egional 2oad Aespatch Centre shall ad#ise all "eneficiaries in the region and the other 4egional 2oad Aespatch Centre so that such capacity may "e re=uisitioned through "ilateral arrangements with the concerned generating company+"eneficiary(ies) under intimation to the 4egional 2oad Aespatch Centre -his information shall also "e made a#aila"le online "y 4egional 2oad Aespatch Centres through their respecti#e we"sites

(i#)

-he capacity charges shall "e paid "y the "eneficiary(ies) including those

outside the region to the generating company e#ery month in accordance with the following formulas7

(a)

-otal Capacity charges paya"le to the thermal power generating

company for the7

&st month B (&xACC&)+&2 2nd month B (21ACC2 $ &1ACC&)+&2 3rd month B (3xACC3 $ 21ACC2)+&2 ,th month B (,xACC, $ 3xACC3)+&2 3th month B (31ACC3 $ ,xACC,)+&2

,3

/th month B (/1ACC3 $ 3xACC3)+&2 'th month B ('1ACC' $ /xACC/)+&2 (th month B ((xACC( $ 'xACC')+&2 *th month B (*xACC* $ (xACC()+&2 &0th month B (&0xACC&0 F *xACC*)+&2 &&th month B (&&xACC&& $ &0xACC&0)+&2 &2th month B (&2xACC&2 $ &&xACC&&)+&2

(")

Each "eneficiary ha#ing firm allocation in capacity of the generating

station shall pay for the 7

&st month B T ACC& x 8K& U+&200 2nd month B T21ACC2 x 8K2 $ &1ACC&x 8K&U+&200 3rd month B (3xACC3 x 8K3 $ 21ACC2 x 8K2U+&200 ,th month B (,xACC, x 8K, $ 3xACC3 x 8K3U+&200 3th month B (31ACC3 x 8K3 $ ,xACC, x 8K,U+&200 /th month B (/1ACC3 x 8K/ $ 3xACC3 x 8K3U+&200 'th month B ('1ACC' x 8K' $ /xACC/ x 8K/U+&200 (th month B ((xACC( x 8K( $ 'xACC' x 8K'U+&200 *th month B (*xACC* x 8K* $ (xACC( x 8K(U+&200 &0th month B (&0xACC&0 x 8K&0$ *xACC* x 8K*U+&200 &&th month B (&&xACC&& x 8K&&$ &0xACC&0x 8K&0U+&200 &2th month B (&2xACC&2 x 8K&2$ &&xACC&&x 8K &&U+&200

,/

8here, ACC&, ACC2, ACC3, ACC,, ACC3 ACC/, ACC', ACC(, ACC*, ACC&0, ACC&& and ACC&2 are the amount of Annual Capacity Charge corresponding to EA#aila"ility. for the cumulati#e period up to the end of & st, 2nd 3rd, ,th, 3th, /th, 'th, (th, *th, &0th, &&th and &2th months respecti#ely

And, 8K&, 8K2, 8K3, 8K,, 8K3, 8K/, 8K', 8K(, 8K*, 8K&0, 8K&& and 8K&2 are the weighted a#erage of percentage allocated capacity share of the "eneficiary during the cumulati#e period up to & st, 2nd 3rd, ,th, 3th, /th, 'th, (th, *th, &0th &&th and &2th month respecti#ely, and

,'

C3A&TER 3

3Y#RO &O;ER GENERATING STATIONS

2*

#e, . t o./+

@nless the context otherwise re=uires for the purpose of this

chapter,

(i)

<Act= means the Electricity Act, 2003

(ii)

?Act(!l e.er-5? means the =uantum of energy actually generated "y the

generating station o#er a specified period and shall "e measured at the generator terminals

(iii)

>Add t o.!l C!p t!l /!t o.? means the capital expenditure actually

incurred after the date of commercial operation the date of commercial operation of the station and admitted "y the Commission after prudence chec6 su"9ect to pro#isions of regulation 32

(i#)

<A(thor t5 : means Central Electricity Authority referred to in %ection '0

of the Act

(#)

:A(x l !r5 E.er-5 Co./(mpt o.= or ?AU@? in relation to a period means

the =uantum of energy consumed "y auxiliary e=uipment of the generating station, and shall "e expressed as a percentage of the sum of gross energy in

,(

68h generated at generator terminals of all the units of the generating station minus energy in 68h deli#ered at the generating station switchyard to the sum of energy in 68h generated at generator terminals of all the units of the generating station

(#i)

<'e.e, c !r5= in relation to a generating station means the person "uying

power generated at such a generating station on payment of annual capacity charges

(#ii)

?C!p!c t5 I.dex: means the a#erage of the daily capacity indices o#er

one year

(#iii)

?Comm // o.?

means the Central Electricity 4egulatory Commission

referred to in %ection '/ of the Act

(ix)

<C(t o,, #!te= means the date of first financial year closing after one year

of the date of commercial operation of the generating station

(x)

<#!te o, Commerc !l Oper!t o. or CO#. in relation to a unit means date

declared "y the generator after demonstrating the Caximum Continuous 4ating (CC4) or Installed Capacity (IC) through a successful trial run and in relation to the generating station the date of commercial operation means the date of commercial operation of the last unit or "loc6 of the generating station

,*

(xi)

?#! l5 C!p!c t5 I.dex? means percentage of the declared capacity to the

maximum a#aila"le capacity for the day and shall "e mathematically expressed as hereunder7$

Aeclared Capacity (C8) Aaily Capacity Index B $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ x &00 Caximum A#aila"le Capacity (C8) Aaily capacity index shall "e limited to &00D in case it exceeds this limit

(xii)

E#ecl!red C!p!c t5 or ?#C? means the capacity in C8 to "e a#aila"le

from the generating station o#er the pea6ing hours of next day, as declared "y the generator, ta6ing into account the a#aila"ility of water, optimum use of water and a#aila"ility of machines and for this purpose, the pea6ing hours shall not "e less than 3 hours within 2, hour period, in case of pondage and storage$type generating stations and in case of purely run$ofFri#er type generating stations the capacity to "e a#aila"le from the generating station during the next day, as declared "y the generating station, ta6ing into account the a#aila"ility of water, optimum use of water and a#aila"ility of machines

(xiii) <#eemed Ge.er!t o. ? means the energy which a generating station was capa"le of generating "ut could not generate due to the conditions of grid or power system, "eyond the control of generating station and results in spillage of water

30

(xi#)

?#e/ -. E.er-5? means the =uantum of energy which could "e generated

in a *0 percent dependa"le year with *3 percent installed capacity of the generating station

(x#)

>Ex /t .- Ge.er!t .- St!t o.? means a generating station declared under

commercial operation from a date prior to & , 200,

(x#i)

<I., rm &o"er= means electricity generated prior to commercial operation

of the unit of a generating station

(x#ii) EI./t!lled C!p!c t5 or IC. means

the summation of the name plate

capacities of the units in the generating station or the capacities of the generating station as determined in consultation with the Authority from time to time considering the up$rating, de$rating, as applica"le

(x#iii) ?M!x m(m A8! l!)le C!p!c t5? means the following7 (a) <ondage and storage type generating stations -he maximum capacity in C8, the generating station can generate with all units running, under the pre#ailing conditions of water le#els, flows and with &00D gate openings, o#er the pea6ing hours of next day

Expl!.!t o. -he pea6ing hours for this purpose shall not "e less than 3 hours within a 2, hours period

3&

(")

<urely run$of$ri#er type generating stations -he maximum capacity in C8, the generating station can generate

with all units running, under the pre#ailing conditions of water le#els, flows and with &00D gate openings o#er the next day

(xix)

?Oper!t o. !.d M! .te.!.ce Expe./e/ or OEM Expe./e/ : means the

expenditure incurred in operation and maintenance of the generating station, including part thereof including the expenditure on manpower, repairs, spares, consuma"les, insurance and other o#erheads

(xx)

>Or - .!l &ro*ect Co/t?

means the actual expenditure incurred "y the

pro9ect de#eloper, as per the original scope of pro9ect up to first financial year closing after one year of the date of commercial operation of the last unit as admitted "y the Commission for the purpose of tariff

(xxi)

?&r m!r5 E.er-5 ? means the =uantum of energy generated up to the

design energy on per year "asis in the generating station

(xxii) ?&ro*ect ? means a generating station and includes the complete hydro power generating facility co#ering all components such as dam, inta6e, water conductor systems, power generating station, generating units of the scheme as apportioned to power generation

32

(xxiii) ?S!le!)le &r m!r5 E.er-5? means the =uantum of primary energy a#aila"le for sale (ex$"us) after allowing for free energy to the home state

(xxi#) ?Seco.d!r5 E.er-5? means the =uantum of energy generated in excess of the design energy on per year "asis in the generating station

(xx#) ?S!le!)le Seco.d!r5 E.er-5? means the =uantum of secondary energy a#aila"le for sale (ex$"us) after allowing for free energy to the home state

(xx#i) ?Sched(led E.er-5? means the =uantum of energy to "e generated at the generating station o#er the 2,$hour period, as scheduled "y the 4egional 2oad Aespatch Centre

(xx#ii) <Ye!r= means a financial year

30

Norm/ o, Oper!t o.+ -he norms of operation shall "e as under7 (i) Norm!t 8e c!p!c t5 .dex ,or reco8er5 o, ,(ll c!p!c t5 ch!r-e/ (a) #(r .- , r/t 5e!r o, commerc !l oper!t o. o, the -e.er!t .-

/t!t o. (i) (ii) <urely 4un$of$ri#er type generating stations <ondage and storage type generating stations $ (3D $ (0D

(")

A,ter , r/t 5e!r o, oper!t o. o, the -e.er!t .- /t!t o.

33

(i)

<urely 4un$of Fri#er type generating stations

$ *0D

(ii) Note

<ondage and storage type generating stations

$ (3D

0ull Capacity Charges shall "e reco#era"le if the station achie#es capacity index of *0D in case of purely run$of$ri#er stations and capacity index of (3D for pondage and storage type generating stations Gowe#er, for the & st year of operation of a newly commissioned hydro power generating station, normati#e capacity index shall "e (3D for purely run$of$ri#er and (0D for pondage or storage type hydro power generating station for reco#ery of full capacity charges

(ii)

A(x l !r5 E.er-5 Co./(mpt o. + (a) %urface hydro power generating stations with rotating exciters $ 0 2D of energy generated

mounted on the generator shaft

(")

%urface hydro power generating stations $ 0 3D of energy generated

with static excitation

system

(c)

@nderground hydro power generating stations with rotating exciters $ 0 ,D of energy generated

mounted on the generator shaft

(d) @nderground hydro power generating stations with static excitation system $ 0 'D of energy generated

3,

(iii)

Tr!./,orm!t o. lo//e/ 0rom generation #oltage to transmission #oltage $ 0 3 percent of energy

generated

3&

C!p t!l Co/t+

%u"9ect to prudence chec6 "y the Commission, the actual

expenditure incurred on completion of the pro9ect shall form the "asis for fixation of final tariff -he final tariff shall "e fixed "ased on the admitted capital expenditure actually

incurred up to the date of commercial operation of the station and shall include capitalised initial spares su"9ect to a ceiling norm as a percentage of plant and e=uipment cost of 2 3 D

<ro#ided further that where the power purchase agreement entered into "etween the generating company and the "eneficiaries pro#ides a ceiling of actual expenditure, the capital expenditure shall not exceed such ceiling for computation of tariff

In case of existing pro9ects, the pro9ect cost admitted "y the Commission prior to & , 200, shall form the "asis for tariff fixation

32

Add t o.!l c!p t!l /!t o.+ (&) -he capital expenditure within the original scope

of wor6 relating to following nature actually incurred after the date of commercial operation up to the cut off date may "e admitted "y the Commission su"9ect to prudence chec6 (i) (ii) Aeferred lia"ilities, 8or6s deferred for execution,

33

(iii)

2ia"ilities to meet award of ar"itration or in satisfaction of the order or

decree of a court, and (i#) Hn account of change in law

<ro#ided that original scope of wor6s along with estimates of expenditure shall "e su"mitted along with the application for pro#isional tariff

<ro#ided further that a list of the deferred lia"ilities and wor6s deferred for execution shall "e su"mitted along with the application for final tariff after the date of commercial operation of generating station

(2)

-he capital expenditure of the following nature actually incurred after the cut off

date may "e admitted "y the Commission su"9ect to prudence chec67

(i) wor6,

Aeferred lia"ilities relating to wor6s+ser#ices within the original scope of

(ii)

2ia"ilities to meet award of ar"itration or in satisfaction of the order or

decree of a court,

(iii)

Hn account of change in law

(#i)

Any additional wor6s+ser#ice which has "ecome necessary for efficient

and successful operation of plant "ut not included in the original capital cost

3/

(3)

Impact of additional capitalisation in tariff re#ision within the appro#ed pro9ect cost

may "e considered "y the Commission once in a tariff period

Note $ Any expenditure admitted on account of committed lia"ilities within the original scope of wor6 and the expenditure deferred on techno$economic grounds "ut falling within the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio arri#ed at in the manner indicated in regulation 3,

Note : Any expenditure on replacement of old assets shall "e considered after writing off the entire #alue of the original assets from the original capital cost

Note 3 Any expenditure admitted on account of new wor6s not in the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio of '0730

Note I Any expenditure admitted on reno#ation and moderni>ation and life extension shall "e ser#iced on normati#e de"t$e=uity ratio of '0730 after writing off the original amount of the replaced assets from the original capital cost

3'

Note F -he scrutiny of the pro9ect cost estimates "y the Commission shall "e limited to the reasona"leness of the capital cost, financing plan, interest during construction, use of efficient technology and such other matters for the purposes of determination of tariff

33

S!le o, I., rm &o"er+ Any re#enue earned "y the generating company from sale of infirm power, shall "e ta6en as reduction in capital cost and shall not "e treated as re#enue

3,

#e)t-EG( t5 R!t o7

(&)

In case of a generating station declared under & , 200,, de"tFe=uity ratio as on the date of

commercial operation on or after

commercial operation for the purpose of determination of tariff shall "e '0730 8here e=uity employed is more than 30D, the amount of e=uity for the purpose of tariff shall "e limited to 30D and the "alance amount shall "e considered as the loan In case of a generating station or the transmission system where actual e=uity employed is less than 30D, the actual e=uity shall "e considered

(2)

In case of the existing generating stations, the de"t$e=uity ratio considered "y the

Commission for the purpose of fixation of tariff for the period prior to & , 200, shall "e considered

33

Comp(t!t o. o, A..(!l Ch!r-e/7 -he two$part tariff for sale of electricity from

a hydro power generating station shall comprise of reco#ery of annual capacity charges and primary energy charges7

3(

(i)

C!p!c t5 Ch!r-e/7

-he capacity charge shall "e computed in

accordance with the following formula7

Capacity Charge B (Annual 0ixed Charges$ <rimary Energy Charge)

Note 8hen the capacity charge is negati#e, this amount shall "e set to >ero -he capacity charges shall "e calculated on annual "asis and shall "e "illed on monthly "asis in 4s +68+month in proportion to the allocated capacity

(ii)

A..(!l F xed Ch!r-e/7 Annual 0ixed Charges shall consist of7 (a) (") (c) (d) (e) Interest on loan capital, Aepreciation, including Ad#ance Against Aepreciation, 4eturn on e=uity, Hperation and maintenance expenses, and Interest on wor6ing capital

3/

Comp(t!t o. o, A..(!l F xed Ch!r-e/ 7 -he annual fixed charges shall "e

computed on the following "asis and their reco#ery shall "e related to capacity index7 (i) I.tere/t o. lo!. c!p t!l (&) Interest on loan capital shall "e computed loan wise on the

outstanding loans arri#ed at in the manner indicated in regulation 3, duly ta6ing into account the schedule of repayment and actual interest rate

3*

(2)

In case of the existing generating station, the normati#e loan

outstanding as on & , 200, shall "e considered as the opening loan and the repayment shall "e wor6ed out on normati#e "asis -he weighted a#erage rate of interest on loan shall "e wor6ed out on the actual outstanding loan and applied to the normati#e loan for calculation of interest on loan in the respecti#e year

(ii)

#eprec !t o., .cl(d .- Ad8!.ce A-! ./t #eprec !t o. (a) #eprec !t o. 0or the purpose of tariff, depreciation shall "e computed in the following manner, namely, (i) -he #alue "ase for the purpose of depreciation shall "e the

historical cost of the asset

(ii)

Aepreciation shall "e calculated annually as per straight line

method at the rate of depreciation as prescri"ed in the schedule attached to the regulations at Appe.d x-II

<ro#ided that the total depreciation during the life of the pro9ect shall not exceed *0D of the appro#ed original cost, which shall include additional capitali>ation on account of foreign exchange rate #ariation upto 3& 03 200,

/0

(iii)

Hn repayment of entire loan, the remaining deprecia"le #alue

shall "e spread o#er the "alance useful life of the asset

(i#)

Aepreciation shall "e

chargea"le from the first year of

operation

In case of operation of the asset for part of the year,

depreciation shall "e charged on pro$rata "asis

(#)

Aepreciation

against

assets

relating

to

en#ironmental

protection shall "e allowed on case$to$case "asis at the time of fixation of tariff su"9ect to the condition that the en#ironmental standards as prescri"ed ha#e "een complied with during the pre#ious tariff period

(" )

Ad8!.ce A-! ./t #eprec !t o. In addition to allowa"le depreciation, the generating company shall

"e entitled to Ad#ance Against Aepreciation, computed in the manner gi#en hereunder7

(i)

Ad#ance Against Aepreciation (AAA) shall "e permitted

where#er loan repayment considered for wor6ing out interest on loan exceeds the depreciation allowa"le as per schedule and shall "e computed as follows7

/&

AAA B 2oan repayment amount as referred a"o#e

su"9ect to a

ceiling of &+&0th of original loan amount minus Aepreciation as per schedule (ii) Ad#ance Against Aepreciation in a year shall "e calculated

"y considering the actual or normati#e loan arri#ed at in the manner indicated in regulation 3,

(iii)

Ret(r. o. EG( t57 4eturn on e=uity shall "e computed on the e=uity "ase determined in

accordance with regulation 3, and shall "e as follows7 (a) (") Central <ower %ector @tilities Independent <ower <roducers $&,D $&,D, if payment security mechanism similar to Central <ower %ector @tilities is pro#ided "y the )o#ernment $&/D, if no payment security mechanism similar to Central

<ower %ector @tilities is pro#ided "y the )o#ernment

<ro#ided that on any e=uity in#ested in any foreign currency shall "e allowed a return on e=uity up to the prescri"ed limit in the same currency and the payment on this account shall "e made in Indian 4upees "ased on the exchange rate pre#ailing on the due date of "illing

/2

Expl!.!t o. <remium raised "y the generating company while issuing share capital and in#estment of internal resources created out of free reser#e of the existing

generating station, if any, for the funding of the pro9ect, shall also "e rec6oned as paid up capital for the purpose of computing the return on e=uity, pro#ided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the generating station and forms part of the appro#ed financial pac6age

(i#)

Oper!t o. !.d M! .te.!.ce expe./e/

!ormati#e operation and maintenance expenses applica"le shall "e as gi#en hereunder (4s in la6h+C8)

Lear 200,$03 2003$0/ 200/$0' 200'$0( 200($0*

(#) I.tere/t o. ;orD .- C!p t!l (a)

HIC Expenses &0 *2 && 3/ && (& &2 2( &2 ''

8or6ing Capital shall co#er; (i) Hperation and Caintenance expenses for one month,

/3

(ii)

Caintenance spares P &D of the plant and e=uipment cost

as on & , 200, or the date of commercial operation, whiche#er is later, and

(iii)

4ecei#a"les e=ui#alent to two months of fixed charges for

sale of electricity, calculated on normati#e capacity index

(")

4ate of interest on wor6ing capital shall "e the short$term <rime

2ending 4ate of %tate Kan6 of India as on & , 200, or on & st April of the year in which the generating station is declared under commercial operation, whiche#er is later -he interest on wor6ing capital shall "e paya"le on normati#e "asis notwithstanding that the generating company has not ta6en wor6ing capital loan from any outside agency

3'

&r m!r5 E.er-5 Ch!r-e/7 (&) <rimary energy charges shall "e wor6ed out on

the "asis of paise per 68h rate on ex$"us energy scheduled to "e sent out from the hydro power generating station after ad9usting for the free power deli#ered to the home state

(2)

4ate of primary energy for all hydro power generating stations except for pumped

storage generating stations, shall "e ta6en as *0D of the lowest #aria"le charges of the central sector thermal power generating station of the concerned region -he primary energy charge shall "e computed "ased on the primary energy rate and salea"le energy

/,

of the pro9ect -his rate shall also "e the rate to "e used in merit order dispatch of the generating station

<rimary Energy Charge B <rimary %alea"le Energy (Ex$Kus) V <rimary Energy 4ate+(&$r) %econdary Energy Charge B %econdary %alea"le Energy(Ex$Kus)V %econdary Energy 4ate+(&$r) r B 0 &2 and represents &2D free power to the home state

(3)

%econdary Energy 4ate shall "e e=ual to <rimary Energy 4ate

Note In case of hydro power generating stations in the !E 4egion, the rate of primary energy shall "e ta6en as *0D of the lowest #aria"le charges of the central sector thermal power stations of the Eastern 4egion plus transmission charges (paise+68h) of Eastern 4egion

3(

I.ce.t 8eC# / .ce.t 8e 7 (&)

-he incenti#e shall "e paya"le in case of all the

generating stations, including in case of new generating stations in the first year of operation when the capacity index (CI) exceeds the normati#e capacity index target of *0D for purely run$of$ri#er type hydro power generating stations and (3D for pondage or storage type of hydro power generating stations and incenti#e shall accrue up to a maximum capacity index of &00D 8hen capacity index achie#ed is less than the

/3

normati#e #alue, disincenti#e shall "e deducted from the annual fixed charges paid or paya"le to the generating company on pro$rata "asis of the capacity index #alue

(2)

Incenti#e shall "e paya"le in accordance with the following formula + Incenti#e B 0 /3 x Annual 0ixed Cost x (CIA F CI!)+&00

(-his may "e a positi#e or negati#e =uantity)

8here, CIA is the Capacity Index achie#ed and CI ! is the normati#e #alue of Capacity Index in percent

(3)

-he incenti#es on account of higher capacity index and secondary energy shall

"e paya"le on monthly "asis, su"9ect to cumulati#e ad9ustment in each month of the financial year and final ad9ustment shall "e made at the end of the financial year

(,)

-he total incenti#e payment calculated on an annual "asis shall "e shared "y the

"eneficiaries "ased on the allocated capacity

(3)

I.ce.t 8e ,or complet o. o, h5dro po"er -e.er!t .- /t!t o./ !he!d o, In case of commissioning of a hydro power generating station or part

/ched(le7

thereof ahead of schedule, as set out in the first appro#al of the Central )o#ernment or the techno$economic clearance of the Authority, as applica"le, the generating station shall "ecome eligi"le for incenti#e for an amount e=ual to pro$rata reduction in interest during construction, achie#ed on commissioning ahead of the schedule -he incenti#e

//

shall "e reco#ered through tariff in twel#e e=ual monthly installments during the first year of operation of the generating station In case of delay in commissioning as set out in

the first appro#al of the Central )o#ernment or the techno$economic clearance of the Authority, as applica"le, interest during construction for the period of delay shall not "e allowed to "e capitalised for the purpose of tariff, unless the delay is on account of natural calamities or geological surprises

3*

#e8elopme.t S(rch!r-e7

-he generating company shall "e entitled to a

de#elopment surcharge of 3D on "oth capacity charges and primary energy charges for the purpose of fresh capacity addition and pro9ect de#elopment acti#ities -he

de#elopment surcharge shall not "e paya"le for operations exclusi#ely within a %tate -he le#y of de#elopment surcharge shall "e su"9ect to the following conditions7

(i)

Ae#elopment surcharge collected "y the utilities shall "e 6ept in a separate

"an6 account and may "e in#ested in securities of recognised infrastructure funds li6e IA0C or IAKI -ax free "onds and income therefrom shall also "e credited to that "an6 account;

(ii)

-he generating company shall maintain separate accounts in its "oo6s and

reflect the "alance in the Ae#elopment %urcharge 4eser#e Account and the in#estment represented against the same in their "alance sheet;

/'

(iii)

Hn the purchase of the underta6ing or on any other such contingency the

reser#e and the corresponding in#estments shall "e transferred to the successor underta6ing to su"ser#e the same o"9ecti#e of fresh capacity addition;

(i#)

-he fund can "e made use of to the extent of &+3 rd of the e=uity

re=uirement for any capacity addition in the respecti#e region and the "alance 2+3rd "eing pro#ided "y the generating company

(#)

-o the extent to which the fund is used as e=uity in any new capacity

addition, pro rata reduction for the return on e=uity in the determination of tariff of the new pro9ect shall "e allowed;

(#i)

A certificate in the prescri"ed form regarding the use of these funds shall

"e filed with the Commission e#ery year, duly #erified "y the statutory auditors of the generating company;

(#ii)

-he use of these funds in any other manner shall "e only with the prior

appro#al of the Commission either on petition or suo motto for which the due process as per the Central Electricity 4egulatory Commission (Conduct of Kusiness) 4egulations, &*** as amended from time to time, including statutory re$enactment thereof, shall "e followed

,0

#eemed Ge.er!t o.7 (&) In case of reduced generation due to the reasons

"eyond the control of generating company or on account of non$a#aila"ility of

/(

Koard:s+-ransmission 2icensee:s transmission lines or on receipt of "ac6ing down instructions from the concerned 4egional 2oad Aespatch Centre resulting in spillage of water, the energy charges on account of such spillage shall "e paya"le to the generating company Apportionment of energy charges for such spillage among the

"eneficiaries shall "e in proportion of their shares in salea"le capacity of the generating station

(2)

Energy charges on the a"o#e account shall not "e admissi"le if the energy

generated during the year is e=ual to or more than Aesign Energy

,&

U./ched(led I.terch!.-e 0UI47 (&) ?ariation in actual generation or actual

drawal and scheduled generation or scheduled drawal shall "e accounted for through @nscheduled Interchange (@I)Charges @I for generating station shall "e e=ual to its actual generation minus its scheduled generation @I for "eneficiary shall "e e=ual to its total actual drawal minus its total scheduled drawal @I shall "e wor6ed out for each &3 minute time "loc6 Charges for all @I transactions shall "e "ased on a#erage fre=uency of the time "loc6 and the following rates shall apply7 A8er!-e FreG(e.c5 o, t me )locD 30 3 G> and a"o#e Kelow 30 3 G> and up to 30 ,( G> Kelow ,* 0, G> and up to ,* 02 G> Kelow ,* 02 G> Ketween 30 3 G> and ,* 02 G> UI R!te 0&! /e per D;h4 0 00 ( 00 3*2 00 /00 00 linear in 0 02 G> step

(Each 0 02 G> step is e=ui#alent to ( 00 paise +68h within the a"o#e range)

/*

Note -he a"o#e a#erage fre=uency range and @I rates are su"9ect to change through a separate notification "y the Commission from time to time

(2)

In case it is o"ser#ed that the declared capacity and declared energy or "oth

gi#en "y the generating station is on lower side compared with actual generation within a tolerance as specified "y the Central -ransmission @tility, then @I charges due to the generating station on account of such extra generation shall "e reduced to Wero and the amount shall "e credited towards @I account of "eneficiaries in the ratio of their capacity share in the station

,2

Re)!te7 0or payment of "ills of capacity charge and energy charge through the

letter of credit, a re"ate of 2 per cent shall "e allowed If the payments are made "y a mode other than through the letter of credit "ut within a period of one month of presentation of "ills "y the generating company or the transmission licensee as the case may "e, a re"ate of & per cent shall "e allowed

,3

L!te &!5me.t S(rch!r-e7 In case the payment of "ills of capacity charge and

energy charge "y the "eneficiary (ies) is delayed "eyond a period of & month from the date of "illing a late payment surcharge at the rate of & 3 percent per month shall "e le#ied "y the generating company or the transmission licensee, as the case may "e

,,

Sched(l .-7 4ead with the pro#isions of the Indian Electricity )rid Code, the

methodology of scheduling and calculating a#aila"ility shall "e as under7

'0

(i)

Each day starting from 00 00 hrs shall "e di#ided into */ time "loc6s of &3

minutes inter#als

(ii)

-he generator shall ma6e an ad#ance declaration of capacity of its

generating station -he declaration shall "e for that capacity which can "e actually made a#aila"le for a period of time not less than 3 hours within a 2, hours period for pondage and storage type of stations and for all "loc6s of the day for purely run$of$ri#er type stations

-he generator shall intimate the declared capacity (C8), maximum a#aila"le capacity (C8) and total Ex$Kus (C8h) to 4egional 2oad Aespatch Centre

-he declaration should also include limitation on generation during specific time period on account of restriction(s) on water use due to irrigation, drin6ing water, industrial, en#ironmental considerations etc

It shall "e ensured that declared capacity does not exceed the installed capacity of the plant -he o#er load capacity of the plant, where#er a#aila"le, shall also "e declared in case of system re=uirements

(iii)

8hile ma6ing or re#ising their declaration of capa"ility, the generator shall

ensure that its declared capacity during pea6 hours is not less than that during other hours Gowe#er, exception to this rule shall "e allowed in case of tripping+re$synchronisation of units as a result of forced outage of units

'&

(i#)

-he generation scheduling shall "e done in accordance with the operating

procedure, as stipulated in the Indian Electricity )rid Code

(#)

Kased on the declaration of the generator, 4egional 2oad Aespatch

Centre shall communicate their shares to the "eneficiaries out of which they shall gi#e their re=uisitions

(#i)

Kased on the re=uisitions gi#en "y the "eneficiaries and ta6ing into

account technical limitations on #arying the generation and also ta6ing into account transmission system constraints, if any, 4egional 2oad Aespatch Centre shall prepare the economically optimal generation schedules and drawal schedules and communicate the same to the generator and the "eneficiaries

4egional 2oad Aespatch Centre shall also formulate the procedure for meeting contingencies "oth in the long run and in the short run (Aaily scheduling)

(#ii)

-he scheduled generation and actual generation shall "e at the generating

station:s ex$"us C8h 0or "eneficiaries, the scheduled and actual net drawals shall "e at their respecti#e recei#ing points

(#iii)

0or calculating the net drawal schedules of "eneficiaries, the transmission

losses shall "e apportioned to their drawals

'2

(ix)

%cheduled generation of the generating station for each time "loc6,

referred to as scheduled generation shall mean the %cheduled C8h to "e %ent Hut Ex$"us from the generating station

(x)

Actual generation of the generating station for each time "loc6, referred to

as actual generation, shall mean actual C8h actually %ent Hut Ex$"us from the generating station

(xi)

In case of forced outage of a unit, 4egional 2oad Aespatch Centre shall

re#ise the schedules on the "asis of re#ised declared capa"ility -he re#ised schedules shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the re#ision is ad#ised "y the generator to "e the first one -he re#ised declared capa"ility shall also "ecome effecti#e from the ,th time "oc6

(xii)

In the e#ent of "ottlenec6 in e#acuation of power due to any constraint,

outage, failure or limitation in the transmission system, associated switchyard and su"$ stations owned "y Central -ransmission @tility(as certified "y 4egional 2oad Aespatch Centre ) necessitating reduction in generation, 4egional 2oad Aespatch Centre shall re#ise the schedules which shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the "ottlenec6 in e#acuation of power has ta6en place to "e the first one Also, during the first, second and third time "loc6s of such an e#ent, the scheduled generation of the generating station shall "e deemed to ha#e "een re#ised to "e e=ual to actual generation

'3

and also the scheduled drawals of the "eneficiaries shall "e deemed to ha#e "een re#ised to "e e=ual to their actual drawals

(xiii)

In case of any grid distur"ance, scheduled generation of all the generating

stations and scheduled drawal of all the "eneficiaries shall "e deemed to ha#e "een re#ised to "e e=ual to their actual generation+drawal for all the time "loc6s affected "y the grid distur"ance Certification of grid distur"ance and its duration shall "e done "y 4egional 2oad Aespatch Centre

(xi#)

4e#ision of declared capa"ility "y the generator(s) and re=uisition "y

"eneficiary(ies) for the remaining period of the day shall also "e permitted with ad#ance notice 4e#ised schedules+declared capa"ility in such cases shall "ecome effecti#e from the /th time "loc6, counting the time "loc6 in which the re=uest for re#ision has "een recei#ed in 4egional 2oad Aespatch Centre to "e the first one

(x#)

If, at any point of time, 4egional 2oad Aespatch Centre o"ser#es that

there is need for re#ision of the schedules in the interest of "etter system operation, it may do so on its own and in such cases, the re#ised schedules shall "ecome effecti#e from the ,th time "loc6, counting the time "loc6 in which the re#ised schedule is issued "y 4egional 2oad Aespatch Centre to "e the first one (x#i) )eneration schedules and drawal schedules issued+re#ised "y 4egional

2oad Aespatch Centre shall "ecome effecti#e from designated time "loc6 irrespecti#e of communication success

',

(x#ii) 0or any re#ision of scheduled generation, including post facto deemed re#ision, there shall "e a corresponding re#ision of scheduled drawals of the "eneficiaries

(x#iii) A procedure for recording the communication regarding changes to schedules duly ta6ing into account the time factor shall "e e#ol#ed "y Central -ransmission @tility

(xix)

(a)

<urely run$of$ri#er type hydro stations %ince there is no regulation possi"le in such stations, these shall "e

treated as must run stations -he maximum declared capacity, duly ta6ing into account the o#er load capa"ility, must "e e=ual to or greater than that re=uired to ma6e full use of the a#aila"le water spillage, unless plant is operating at full plant capacity -here shall "e no

(")

<ondage I %torage type hydro stations -hese hydro stations are designed to operate during pea6 hours to

meet system pea6 demand

-he declared capacity shall "e e=ual the

maximum a#aila"le capacity of the plant including o#erload capacity, where#er applica"le 42ACs shall ensure that generation schedules of

such type of stations shall "e prepared and the stations dispatched accordingly except in the e#ent of specific system

re=uirements+constraints

'3

,3

#emo./tr!t o. o, #ecl!red C!p!) l t5 7 (&) -he generating company may "e

re=uired to demonstrate the declared capacity of its generating station as and when as6ed "y the 4egional 2oad Aespatch Centre of the region in which the generating station is situated In the e#ent of the generating company failing to demonstrate the declared capacity, within the tolerance as specified "y Central -ransmission @tility, the capacity charges due to the generating station shall "e reduced as a measure of penalty

(2)

-he =uantum of penalty for the first mis$declaration for any duration or "loc6 in a

day shall "e the charges corresponding to two days fixed charges 0or the second mis$ declaration the penalty shall "e e=ui#alent to fixed charges for four days and for su"se=uent mis$declarations, the penalty shall "e multiplied in the geometrical progression as per AK- order dated 0, 0& 2000 of the Commission

(3)

-he operating log "oo6s of the generating station shall "e a#aila"le for re#iew "y

the 4egional <ower Committee or the 4egional Electricity Koard, as the case may "e -hese "oo6s 6eep record of machine operation and maintenance, reser#oir le#el and spillway gate operation

,/

Meter .- !.d Acco(.t .-7

Cetering arrangements, including installation,

testing and operation and maintenance of meters and collection, transportation and processing of data re=uired for accounting of energy exchanges and a#erage fre=uency on &3 minute time "loc6 "asis shall "e pro#ided "y the <ower )rid Corporation of India+4egional 2oad Aespatch Centres <rocessed data of the meters along with data

'/

relating to declared capa"ility and schedules etc , shall "e supplied "y 4egional 2oad Aespatch Centres to 4egional <ower Committee or the 4egional Electricity Koard and 4egional <ower Committee or the 4egional Electricity Koard shall issue the 4egional Accounts for energy as well as @I charges on monthly "asis @I accounting procedures shall "e go#erned "y the orders of the Commission

,'

' ll .- !.d &!5me.t o, C!p!c t5 Ch!r-e/ 7 Killing and payment of capacity

charges shall "e done on a monthly "asis in the following manner7

(i)

Each "eneficiary shall pay the capacity charges in proportion to its

percentage share in total salea"le capacity of the generating station %alea"le capacity shall mean total capacity minus free capacity to home state(s), if any

Note $ Allocation of total capacity of central sector generating stations is made "y Central )o#ernment from time to time which also has an unallocated portion Allocation of the unallocated portion shall "e made "y the Central )o#ernment from time to time, for the total unallocated capacity -he total capacity share of

any "eneficiaries would "e sum of its capacity share plus allocation out of the unallocated portion In case of no specific distri"ution of unallocated power "y the Central )o#ernment, the unallocated power shall "e added to the allocated shares in the same proportion as the allocated shares

''

Note : -he "eneficiaries may propose surrendering part of their allocated share to other %tates within+outside the region In such cases, depending upon the technical feasi"ility of power transfer and specific agreements reached "y the generating company with other %tates within+outside the region for such transfers, the shares of "eneficiaries may "e re$allocated "y the Central )o#ernment for a specific period 8hen such re$allocations are made, the "eneficiaries who surrender the share shall not "e lia"le to pay capacity charges for the surrendered share -he capacity charges for the capacity surrendered and reallocated as a"o#e shall "e paid "y the %tate(s) to whom the surrendered capacity is allocated Except for the period of reallocation of capacity as a"o#e, the "eneficiaries of the generating station shall continue to pay the full fixed charges as per allocated capacity shares

(ii)

-he "eneficiaries shall ha#e full freedom for negotiating any transaction for

utilisation of their capacity shares In such cases, the "eneficiary ha#ing allocation in the capacity of the generating station shall "e lia"le for full payment of capacity charges and energy charges (including that for sale of power under the transactions negotiated "y them) for all its scheduled and unscheduled transactions from its capacity share

(iii)

If there is any capacity which remains un$re=uisitioned during day$to$day

operation, 4egional 2oad Aespatch Centre shall ad#ise all "eneficiaries in the region and the other 4egional 2oad Aespatch Centre so that such capacity may

'(

"e re=uisitioned through "ilateral arrangements with the concerned generating company+"eneficiary(ies) under intimation to the 4egional 2oad Aespatch Centre -his information shall also "e made a#aila"le online "y 4egional 2oad Aespatch Centres through their respecti#e we"sites

(i#)

-he capacity charges shall "e paid "y the "eneficiary(ies) including those

outside the region to the generating company e#ery month in accordance with the following formulas7

ACC& ACC2 ACC3 ACC, ACC3 ACC/ ACC' ACC( ACC* ACC&0 ACC&& ACC&2

BA0C F ( %<E& S AE 2nd to &2th months) V <rimary Energy 4ate BA0C F ( %<E2 S AE 3rd BA0C F ( %<E3 S AE ,th BA0C F ( %<E, S AE 3th BA0C F ( %<E3 S AE /th BA0C F ( %<E/ S AE 'th BA0C F ( %<E' S AE (th BA0C F ( %<E( S AE *th
to &2th months

) V <rimary Energy 4ate

to &2th months

) V <rimary Energy 4ate ) V <rimary Energy 4ate ) V <rimary Energy 4ate

to &2th months

to &2th months

to &2th months

) V <rimary Energy 4ate ) V <rimary Energy 4ate ) V <rimary Energy 4ate ) V <rimary Energy 4ate ) V <rimary Energy 4ate

to &2th months

to &2th months

BA0C F ( %<E* S AE &0th BA0C F ( %<E&0 S AE &&th

to &2th months

to &2th months

BA0C F ( %<E&& S AE &2th month) V <rimary Energy 4ate B(A0C F %<E&2 ) V <rimary Energy 4ate

'*

8here, A0C B Annual 0ixed Charges

ACC&, ACC2, ACC3, ACC,, ACC3 ACC/, ACC', ACC(, ACC*, ACC&0, ACC&& and ACC&2 are the amount of Annual Capacity Charge for the cumulati#e period up to the end of &st, 2nd 3rd, ,th, 3th, /th, 'th, (th, *th, &0th, &&th and &2th months respecti#ely

%<E&, %<E2, %<E3,XXXXXXX %<EY2 are the scheduled primary energy #alues up to &st, 2nd, 3rd XX&2th months of the year respecti#ely CC& BACC& x AE& AE BACC2 x AE2 AE BACC3 x AE3 AE BACC, x AE, AE

CC2

CC3 CC,

CC3 BACC3 x AE3 AE CC/ CC' CC( CC* BACC/ x AE/ AE BACC' x AE' AE BACC( x AE( AE BACC* x AE* AE

CC&0 BACC&0 x AE&0

(0

AE CC&& BACC&& x AE&& AE CC&2 BACC&2 x AE&2 AE 8here, CC&, CC2, CC3,XXX CC&2 is the monthly capacity charge up to & st, 2nd, 3rd XX&2th months of the year respecti#ely

AE B Annual Aesign Energy AE&, AE2, AE3, XXX AE&2 are the design energy #alues up to & st, 2nd, 3rd XX &2th months of the year respecti#ely

-otal capacity charges paya"le to the generator for the7

&st month B (CC&) 2nd month B (CC2 $CC&) 3rd month B (CC3 $ CC2) ,th month B (CC, $CC3) 3th month B (CC3 $ CC,) /th month B (CC/ $CC3) 'th month B (CC' $CC/) (th month B (CC( $CC') *th month B (CC* $CC() &0th month B(CC&0 F CC*)

(&

&&th month B(CC&& $CC&0) &2th month B(CC&2 $CC&&)

and, each "eneficiary ha#ing firm allocation in capacity of the generating station shall pay for the 7

&st month B T CC& x 8K& U+&00 2nd month B TCC2 x 8K2 $CC&x 8K&U+&00 3rd month B (CC3 x 8K3 $ CC2 x 8K2U+&00 ,th month B (CC, x 8K, $ CC3 x 8K3U+&00 3th month B (CC3 x 8K3 $ CC, x 8K,U+&00 /th month B (CC/ x 8K/ $ CC3 x 8K3U+&00 'th month B (CC' x 8K' $ CC/ x 8K/U+&00 (th month B (CC( x 8K( $ CC' x 8K'U+&00 *th month B (CC* x 8K* $ CC( x 8K(U+&00 &0th month B (CC&0 x 8K&0$ CC* x 8K*U+&00 &&th month B (CC&& x 8K&&$ CC&0x 8K&0U+&00 &2th month B (CC&2 x 8K&2$ CC&&x 8K &&U+&00 8here,

And, 8K&, 8K2, 8K3, 8K,, 8K3, 8K/, 8K', 8K(, 8K*, 8K&0, 8K&& and 8K&2 are the weighted a#erage of percentage allocated capacity share of the "eneficiary during the cumulati#e period up to &st, 2nd 3rd, ,th, 3th, /th, 'th, (th, *th, &0th, &&th and &2th month respecti#ely

(2

C3A&TER I

INTER-STATE TRANSMISSION

,(

#e, . t o./+ @nless the context otherwise re=uires, for the purpose of this

chapter7

(i)

<Act= means the Electricity Act, 2003,

(ii)

>Add t o.!l C!p t!l /!t o.? means

the capital expenditure actually

incurred after the date of commercial operation of the transmission system and admitted "y the Commission after prudence chec6 su"9ect to regulation 30

(iii)

?A(thor t5? means Central Electricity Authority referred to in section '0 of the Act

(i#)

? A8! l!) l t5? in relation to a transmission system for a gi#en period means the time in hours during that period the transmission system is capa"le to transmit electricity at its rated #oltage from the supply point to the deli#ery point and shall "e expressed in percentage of total hours in the gi#en period and shall "e calculated as per the procedure contained in Appendix$III to these regulations

(3

(#)

>'e.e, c !r5? for the purpose of this chapter means the person who has a#ailed of the transmission system on payment of transmission charges

(#i)

?Comm // o.?

means the Central Electricity 4egulatory Commission

referred to in %ection '/ of the Act

(#ii)

:Co.tr!cted &o"er?

means the power in C8 which the transmission

licensee has agreed to carry or which the transmission licensee is re=uired to carry as per allocation+agreement "etween the importing and exporting utility

(#iii)

ZC(t o,, #!te?

means the date of first financial year closing after one

year of the date of commercial operation of the transmission system

(ix)

<#!te o, Commerc !l Oper!t o. or CO#. means the date of charging the transmission system to its rated #oltage le#el or se#en days after the date on which it is declared ready for charging "y the transmission licensee, "ut is not a"le to charge for reasons not attri"uta"le to the transmission licensee, its suppliers or contractors

<ro#ided that the date of commercial operation shall not "e a date prior to the scheduled date of commercial operation mentioned in the transmission ser#ice agreement unless mutually agreed to "y all parties

(,

(x)

<Ex /t .- Tr!./m // o. S5/tem= means the transmission system declared under commercial operation from a date prior to & , 200,

(xi)

>Or - .!l &ro*ect Co/t? means the actual expenditure incurred "y the pro9ect de#eloper, as per the original scope of pro9ect up to first financial year closing after one year of the date of commercial operation of the last element as admitted "y the Commission for the purpose of tariff

(xii)

?Oper!t o. !.d M! .te.!.ce Expe./e/ or OEM Expe./e/ : means the expenditure incurred in operation and maintenance of the transmission system, including part thereof and includes the expenditure on manpower, repairs, spares, consuma"les, insurance and other o#erheads

(xiii)

< &ro*ect= includes the transmission system

(xi#)

?R!ted 9olt!-e?

means the manufacturers design #oltage at which the

transmission system is designed to operate or such lower #oltage at which the line is charged, for the time "eing, in consultation with supplier and recei#er of electricity

(x#)

?Tr!./m // o. Ser8 ce A-reeme.t : means the agreement, contract, memorandum of understanding, or any such co#enant, entered into

"etween the transmission licensee and the "eneficiary of the transmission ser#ice

(3

(x#i)

?Tr!./m // o. l ce./ee:, means a person granted licence for inter$state transmission of electricity and includes any person deemed to "e a transmission licensee for inter$state transmission of electricity

(x#ii) ? Tr!./m // o. S5/tem? means a line with associated su"$stations or a group of lines inter$connected together along with associated su"$stations

(x#iii) ?Ye!r? means a financial year1

,*1

Norm/ o, Oper!t o.+ -he norms of operation shall "e as under7$

04

A(x l !r5 E.er-5 Co./(mpt o. . the /()-/t!t o.+

(a) Note

AC %ystem

!I2

-he auxiliary energy consumption in the AC su"$station for the purpose of air$conditioning, lighting, technical consumption, etc shall "e "orne "y the transmission licensee as part of its normati#e operation I maintenance expenses

(")

0or G?AC su"$station

0or auxiliary energy consumption in G?AC su"$stations, the Central )o#ernment shall allocate appropriate share from the inter$state generating station+central generating station in the region 0ixed charges

(/

for such power shall "e "orne "y the "eneficiaries of the region in case of intra$regional assets and "y the "eneficiaries of the connected regions in case of inter$regional assets -he inter$state generating station or the

central generating station, as the case may "e, shall "ill the transmission licensee only for the #aria"le charges

0 4

T!r-et A8! l!) l t5 ,or reco8er5 o, ,(ll tr!./m // o. ch!r-e/ *(D

Note (a) 4eco#ery of fixed charges "elow the le#el of target a#aila"ility shall "e on pro$rata "asis At >ero a#aila"ility, no fixed charges shall "e paya"le (") -he procedure for calculation of transmission a#aila"ility is enclosed at Appendix$III

30

C!p t!l Co/t+ (&) %u"9ect to prudence chec6 "y the Commission, the actual

expenditure incurred on completion of the pro9ect shall form the "asis for fixation of final tariff -he final tariff shall "e fixed "ased on the admitted capital expenditure actually

incurred up to the date of commercial operation of the transmission system and shall include capitalised initial spares su"9ect to a ceiling norm as a percentage of plant and e=uipment cost of & 3D

<ro#ided that where the transmission ser#ice agreement entered into "etween the transmission licensee and the "eneficiaries pro#ides a ceiling of actual expenditure, the capital expenditure shall not exceed such ceiling for computation of tariff

('

(2)

In case of existing pro9ects, the pro9ect cost admitted "y the Commission prior to

& , 200, shall form the "asis for tariff fixation

3&

Add t o.!l c!p t!l /!t o.+

(&)

-he following capital expenditure within the

original scope of wor6 actually incurred after the date of commercial operation and up to the cut off date may "e admitted "y the Commission, su"9ect to prudence chec67 (#) (#i) (#ii) Aeferred lia"ilities, 8or6s deferred for execution, 2ia"ilities to meet award of ar"itration or the satisfaction of the order or decree of a court, and (#iii) Hn account of change in law

<ro#ided that original scope of wor6s along with estimates of expenditure shall "e su"mitted along with the application for pro#isional tariff

<ro#ided further that a list of the deferred lia"ilities and wor6s deferred for execution shall "e su"mitted along with the application for final tariff after the date of commercial operation of the transmission system

(2)

-he capital expenditure of the following nature actually incurred after the cut off

date may "e admitted "y the Commission, su"9ect to prudence chec67

(i) wor6,

Aeferred lia"ilities relating to wor6s+ser#ices within the original scope of

((

(ii)

2ia"ilities to meet award of ar"itration or satisfaction of the order or decree

of a court, (iii) (i#) Hn account of change in law, Any additional wor6s+ser#ices which ha#e "ecome necessary for efficient and successful operation of the transmission system, "ut not included in the original pro9ect cost, and

(3)

Impact of additional capitalisation in tariff re#ision within the appro#ed pro9ect cost

may "e considered "y the Commission once in a tariff period

Note $ Any expenditure admitted on account of committed lia"ilities within the original scope of wor6 and the expenditure deferred on techno$economic grounds "ut falling within the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio arri#ed at in the manner indicated in regulation 32

Note : Any expenditure on replacement of old assets shall "e considered after writing off the entire #alue of the original assets from the original capital cost

Note 3 Any expenditure admitted on account of new wor6s not in the original scope of wor6 shall "e ser#iced in the normati#e de"t$e=uity ratio of '0730

(*

Note I Any expenditure admitted on reno#ation and moderni>ation and life extension shall "e ser#iced on normati#e de"t$e=uity ratio of '0730 after writing off the original amount of the replaced assets from the original capital cost

Note F -he scrutiny of the pro9ect cost estimates "y the Commission shall "e limited to the reasona"leness of the capital cost, financing plan, interest during construction, use of efficient technology and such other matters for the purposes of determination of tariff

32

#e)t-EG( t5 R!t o+ (&) In case of the transmission system declared under

commercial operation on or after & , 200,, de"tFe=uity ratio as on the date of commercial operation for the purpose of determination of tariff shall "e '0730 8here e=uity employed is more than 30D, the amount of e=uity for the purpose of tariff shall "e limited to 30D and the "alance amount shall "e considered as the loan In case of the transmission system where actual e=uity employed is less than 30D, the actual e=uity shall "e considered

(2) In case of the existing transmission system, the de"t$e=uity ratio considered "y the Commission for the purpose of fixation of tariff for the period prior to & , 200, shall "e considered

*0

33

Tr!./m // o. Ch!r-e/ 7 -he tariff for transmission of electricity on inter$state

transmission system shall comprise of the reco#ery of annual transmission charges consisting of (a) (") (c) (d) (e) Interest on loan capital, Aepreciation, including Ad#ance Against Aepreciation, 4eturn on e=uity, Hperation and maintenance expenses, and Interest on wor6ing capital

3,

Comp(t!t o. o, Tr!./m // o. Ch!r-e/+ -he annual transmission charges shall

"e computed on the following "asis, namely7$ (i) I.tere/t o. lo!. C!p t!l (a) Interest on loan capital shall "e computed loan wise on the

outstanding loans arri#ed at in the manner indicated in regulation 32, duly ta6ing into account the schedule of repayment and actual interest rates

(")

In case of the existing transmission system, the normati#e loan

outstanding as on & , 200, shall "e considered as the opening loan and the repayment shall "e wor6ed out on normati#e "asis -he weighted a#erage rate of interest on loan shall "e wor6ed out on the actual outstanding loan and applied to the normati#e loan for calculation of interest on loan in the respecti#e year

(ii)

#eprec !t o., .cl(d .- Ad8!.ce A-! ./t #eprec !t o.

*&

(a)

#eprec !t o. 0or the purpose of tariff, depreciation shall "e computed in the

following manner, namely, (i) -he #alue "ase for the purpose of depreciation shall "e the

historical cost of the transmission system (ii) Aepreciation shall "e calculated annually as per straight line

method at the rate of depreciation as prescri"ed in the schedule attached to the regulations at Appe.d x-II

<ro#ided that the total depreciation during the life of the pro9ect shall not exceed *0D of the appro#ed original cost, which shall include additional capitali>ation on account of foreign exchange rate #ariation upto 3& 03 200,

(iii)

Hn repayment of entire loan, the remaining deprecia"le #alue

shall "e spread o#er the "alance useful life of the asset (i#) Aepreciation shall "e chargea"le from the first year of

operation

In case of operation of the asset for part of the year,

depreciation shall "e charged on pro$rata "asis (#) Aepreciation against assets relating to en#ironmental

protection shall "e allowed on case$to$case "asis at the time of fixation of tariff su"9ect to the condition that the en#ironmental standards as prescri"ed ha#e "een complied with during the pre#ious tariff period

*2

(")

Ad8!.ce A-! ./t #eprec !t o.

In addition to allowa"le depreciation, the transmission licensee shall "e entitled to Ad#ance Against Aepreciation, computed in the manner gi#en hereunder7 (i) Ad#ance Against Aepreciation (AAA) shall "e permitted

where#er loan repayment considered for wor6ing out interest on loan exceeds the depreciation allowa"le as per schedule and shall "e computed as follows7 AAA B 2oan repayment amount as referred a"o#e su"9ect to a ceiling of &+&0th of original loan amount minus depreciation as per schedule (ii) Ad#ance Against Aepreciation in a year shall "e calculated

"y considering the normati#e loan arri#ed at in the manner indicated in regulation 32 (iii) Ret(r. o. EG( t57 4eturn on e=uity shall "e computed on the e=uity "ase determined in accordance with regulation 32 and shall "e as follows7
(a) Central <ower %ector @tilities $&,D

(") Hther than Central <ower %ector @tilities$&,D, if payment security mechanism similar to Central <ower %ector @tilities is pro#ided "y the )o#ernment $&/D, if no payment security mechanism similar to Central <ower %ector @tilities is pro#ided "y the )o#ernment
*3

<ro#ided that on any e=uity in#ested in any foreign currency shall "e allowed a return on e=uity up to the prescri"ed limit in the same currency and the payment on this account shall "e made in Indian 4upees "ased on the exchange rate pre#ailing on the due date of "illing

Expl!.!t o. <remium raised "y the transmission licensee while issuing share capital I in#estment of internal resources created out of free reser#e of the existing transmission licensee , if any, for the funding of the pro9ect, shall also "e rec6oned as paid up capital for the purpose of computing the return on e=uity, pro#ided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the transmission pro9ect and forms part of the appro#ed financial pac6age

(i#)

Oper!t o. !.d M! .te.!.ce expe./e/ (a) HIC expenses shall "e calculated "ased on the following norms7

Norm/ ,or OEM expe./e/ per )!5 !.d per cDt-Dm :%%I-%F OEM Expe./e/ 0R/ 0 3,/ . l!Dh per cDt-Dm4 OEM Expe./e/ 0R/ &2 3, . l!Dh per )!54 :%%F-%6 0 3/0 &2 (, :%%6-%7 0 3'3 &3 33 :%%7-%J 0 3*0 &3 (* :%%J-%K 0 ,0/ &, ,3

*,

(")

!otwithstanding the a"o#e, the norms applica"le for computation of

HIC expenses in respect of the transmission systems owned "y <ower )rid Corporation of India 2td in !orthern, %outhern and Eastern 4egions shall "e as under7 Norm/ ,or OEM Expe./e/ 0R/ . l!Dh per cDt-Dm4 Re- o. :%%3-%I :%%I-%F :%%F-%6 :%%6-%7 :%%7-%J :%%J-%K Norther. Re- o. 0 3,3 0 3&/ 0 ,(( 0 ,/& 0 ,33 0 ,0/ So(ther. Re- o. 0 333 0 30* 0 ,(3 0 ,3( 0 ,32 0 ,0/ E!/ter. Re- o. 0 '/* 0 /*/ 0 /2, 0 33& 0 ,'* 0 ,0/

Norm/ ,or OEM Expe./e/ 0R/1 . l!Dh per )!54 Re- o. :%%3-%I :%%I-%F :%%F-%6 :%%6-%7 :%%7-%J :%%J-%K Norther. Re- o. &3 (2 &3 *, &, 0' &, 20 &, 32 &, ,3 So(ther. Re- o. &' '0 &' 03 &/ ,0 &3 '3 &3 &0 &, ,3 E!/ter. Re- o. &/ '* &/ 32 &3 (/ &3 3* &, *2 &, ,3

(c)

-he total allowa"le HIC expenses for a transmission licensee shall

"e calculated "y multiplying the num"er of "ays and c6t$6m of line length with the applica"le norms for the HIC expenses per "ay and per c6t$Jm respecti#ely

Note

A separate application may "e made to claim a"normal HIC expenses o#er and a"o#e the allowa"le HIC expenses to "e computed in the manner indicated a"o#e

*3

(#)

I.tere/t o. ;orD .- C!p t!l

(&) 8or6ing capital shall co#er; (a) (") Hperation and maintenance expenses for one month; Caintenance spares P &D of the plant and e=uipment cost as on & , 200, or the date of commercial operation, whiche#er is later, and (c) 4ecei#a"les e=ui#alent to two months of transmission charges calculated on target a#aila"ility le#el

(2)

4ate of interest on wor6ing capital shall "e on normati#e "asis and shall "e

e=ual to the short$term <rime 2ending 4ate of %tate Kan6 of India as on & , 200, or on &st April of the year in which the transmission system is declared under commercial operation, whiche#er is later -he interest on wor6ing capital shall "e paya"le on normati#e "asis notwithstanding that the transmission licensee has not ta6en wor6ing capital loan from any outside agency

33

&!5me.t o, Tr!./m // o. Ch!r-e/ + 0ull annual transmission charges shall "e

reco#era"le at *( percent target a#aila"ility <ayment of transmission charge "elow *( percent shall "e on pro$rata "asis -he transmission charge shall "e calculated on monthly "asis In case of more than one "eneficiaries of the transmission system, the monthly transmission charges le#ia"le on each "eneficiary shall "e computed as per the following formula

*/

-ransmission Charges B

TC $$$$$$$$$ x $:

M' $$$$$$$$ MS

8here -C B Annual -ransmission Charges paya"le "y the "eneficiaries

CK

B Capacity allocation from Central sector generating stations to each "eneficiary indi#idually plus contracted power

C% B -otal Capacity from Central sector generating stations plus total contracted power

3/

I.ce.t 8e + -he transmission licensee shall "e entitled to incenti#e "eyond the

a#aila"ility of *(D as per ta"le "elow7 A#aila"ility D *(D and "elow *( 0&D $*( 30D *( 3&D $ ** 00D ** 0&D $ ** 30D ** 3& F** '3D Incenti#e As a percent of e=uity 0 00 & 00 & 00 & 00 & 00 Cumulati#e Incenti#e As a percent of e=uity 0 00 & 00 2 00 3 00 , 00

3'

Sh!r .- o, Tr!./m // o. Ch!r-e/ o, the .ter-re- o.!l !//et/ .cl(d .-

39#C /5/tem )5 the )e.e, c !r e/ + -he transmission charges of the inter$regional assets, including G?AC system shall "e shared in the ratio of 30730 "y the two contiguous regions -hese transmission charges shall "e reco#ered from the

"eneficiaries within the region "y pooling 30D of the transmission charges for such

*'

inter$regional assets with the transmission charges for transmission system of the respecti#e regions for facilitating further reco#ery from #arious "eneficiaries within the region

3(

#e8elopme.t S(rch!r-e + -he transmission licensee shall "e entitled to a

de#elopment surcharge of &0 percent on e#ery "ill raised "y it on account of transmission charges at regional le#el -he le#y of de#elopment surcharge shall "e su"9ect to the following conditions7

(i)

Ae#elopment surcharge collected "y the transmission licensee shall "e 6ept in a separate "an6 account and may "e in#ested in securities of recognised infrastructure funds li6e IA0C or IAKI -ax free "onds and income therefrom shall also "e credited to that "an6 account;

(ii)

-he transmission licensee shall maintain separate accounts in its "oo6s and reflect the "alance in the Ae#elopment %urcharge 4eser#e Account and the in#estment represented against the same in its "alance sheet;

(iii)

Hn the purchase of the underta6ing or on any other such contingency the reser#e and the corresponding in#estments shall "e transferred to the successor underta6ing to su"ser#e the same o"9ecti#e of fresh capacity addition;

*(

(i#)

-he fund can "e made use of to the extent of &+3 rd of the e=uity re=uirement for any capacity addition in the respecti#e region and the "alance 2+3rd "eing pro#ided "y the transmission licensee;

(#)

-o the extent to which the fund is used as e=uity in any new capacity addition, pro rata reduction for the return on e=uity in the determination of tariff of the new pro9ect shall "e allowed;

(#i)

A certificate in the prescri"ed form regarding the use of these funds shall "e filed with the Commission e#ery year, duly #erified "y the statutory auditors of the transmission licensee

(#ii)

-he use of these funds in any other manner shall "e only with the prior appro#al of the Commission either on petition or suo motto for which the due process as per the Central Electricity 4egulatory Commission (Conduct of Kusiness) 4egulations, &*** as amended from time to time, including statutory re$enactment thereof, shall "e followed

3*

Re)!te + 0or payment of "ills of transmission charges through letter of credit on 8here payments are made

presentation, a re"ate of 2 percent shall "e allowed

su"se=uently through opening of letter of credit or otherwise, "ut within a period of one month of presentation of "ills "y the -ransmission licensee, a re"ate of & percent shall "e allowed

**

/0

L!te p!5me.t /(rch!r-e + In case the payment of "ills of transmission charges

"y the "eneficiary (s) is delayed "eyond a period of & month from the date of "illing a late payment surcharge at the rate of & 3 percent per month shall "e le#ied "y the transmission licensee

&00

E@&LANATORY MEMORAN#UM Central Electricity 4egulatory Commission (hereinafter referred to as Nthe CommissionO) was constituted in 5uly &**( under the Electricity 4egulatory Commissions Act, &**( 8ith the omission %ection ,3A(2) of the Electricity (%upply) Act, &*,(, which ena"led the Central )o#ernment to determine the terms and conditions of tariff the 9urisdiction to regulate tariff came to "e #ested in the Commission Conse=uently, the Commission initiated steps to determine the terms and conditions of tariff Gowe#er, as an interim measure the Commission decided to continue with the terms and conditions laid down "y the Central )o#ernment and the pro9ectFspecific tariff notifications issued "y that )o#ernment "y #irtue of powers under %ection ,3A(2) of the Electricity (%upply) Act, &*,(, until the terms and conditions of tariff were notified "y the Commission

Auring &***, the Commission circulated a staff consultati#e paper to highlight

certain issues in "ul6 power tariff regulation, and certain other consultation papers, which were treated as suo motu petitions for determination of terms and conditions of tariff -hrough an ela"orate consultati#e process, the terms and conditions of tariff were notified "y the Commission in Carch 200&, #alid for a period of three years from & , 200& -he fresh terms and conditions of tariff, to "e effecti#e from & , 200, are re=uired to "e notified "y the Commission

Ceanwhile, the Electricity Act, 2003, (hereinafter referred to as Nthe ActO) came @nder %ection /& of the Act the Commission is to specify the terms and

into effect

conditions for the determination of tariff %ection /2 of the Act en#isages that "ased on the terms and conditions specified "y the Commission, the Commission shall determine
&0&

the actual tariff

An important feature of %ection /& is that the %tate Electricity

4egulatory Commissions are guided "y the principles and methodologies specified "y the Central Commission for determination of tariff applica"le to the generating companies and transmission licensees According to pro#isions of the Act, the Central Commission has 9urisdiction to specify the terms and conditions for the determination of tariff (including the principles and methodologies) as well as determine the tariff, which, inter alia, extends to7

(a) regulate the tariff of generating companies owned or controlled "y the central )o#ernment; (") regulate the tariff of generating companies other than those owned or controlled "y the Central )o#ernment specified in Clause (a) a"o#e, if such generating companies enter into or otherwise ha#e a composite scheme for generation and sale of electricity in more than one %tate; (c) regulate the inter$state transmission of electricity; (d) determine tariff for inter$state transmission of electricity;

-he terms and conditions of tariff are to "e specified "y the Commission through

the regulations after pre#ious pu"lication -he Commission solicited comments on the terms and conditions of tariff regulations dated 2/ 03 200& #alid for the period 0& 0, 200& $ 3& 03 200, and thereafter in 5une 2003 pu"lished a staff discussion paper on terms and conditions of tariff to elicit #iews from the sta6eholders and other persons interested in the su"9ect matter as a part of the consultati#e process -he organisations and indi#iduals listed in schedule attached to this order responded to the issues As a

&02

further step in the direction of the consultati#e process, the Commission held an open hearing from &0th to &2th !o#em"er 2003, when the sta6eholders and others concerned were gi#en opportunity to ma6e oral presentations A further opportunity for filing their

specific #iews on the thrust of the arguments made at the presentations made at the open hearing was gi#en to the sta6eholders -his opportunity was a#ailed of "y a large num"er of sta6eholders

-he Commission, in the process of specifying the terms and conditions for

determination of tariff is to perform a delicate tas6 of "alancing the interests of all sta6eholders on the one hand and the consumers of electricity on the other hand In order to meet the massi#e in#estment re=uirement and growth targets of electricity sector, the Commission has to facilitate fresh in#estments, "oth through the pu"lic sector as well as the pri#ate sector for growth of the electricity industry and "ring a"out o#er all efficiency in the sector At the same time it has to "e ensured that the price of electricity, which is an essential commodity, to the end consumers are reasona"le and afforda"le 8hile deciding on the terms and conditions of tariff, the Commission has "een guided "y this twin o"9ecti#e

-he Act lays the foundations for new un"undled power sector functioning in

a competiti#e en#ironment pro#iding for new opportunities for in#estment in generation, transmission, distri"ution and trading as well as pro#iding new choices to consumers It is the responsi"ility of the Commission, the lead

regulator in the electricity sector, to translate the o"9ecti#e of the Act into action to

&03

accomplish the intent and to create a new and #i"rant electricity supply industry In this direction, the Commission strongly feels the need for mo#ing away from the pre#ailing cost$plus regime for the determination of tariff to a competiti#e mar6et -he ideal way to achie#e this o"9ecti#e would "e to adopt the competiti#e "idding route for all new in#estment in generation, transmission and distri"ution Gowe#er, the leading role in this direction is to "e performed "y the Central )o#ernment "y laying down the guidelines for competiti#e "idding as en#isaged "y %ection /3 of the Act -he Commission, therefore, urges the Central )o#ernment to prescri"e the guidelines for the purpose of adopting transparent "idding procedure for all future pro9ects A transparent competiti#e "idding process for pro9ects pro#ides an in$"uilt incenti#e for maximi>ing efficiency at a competiti#e cost It results in cheaper tariff and "enefits the consumers -he

Commission is of the considered opinion that the future in#estment in the central power sector pro9ects also needs to "e through the competiti#e "idding process and the central power sector utilities should o"tain pro9ects through this route rather than de#eloping pro9ects on cost$plus "asis

'

@nder the pre#ailing circumstances and in the a"sence of proper competiti#e

en#ironment, the Commission has no option "ut to perform the function of regulation of tariff in the cost$plus regime !e#ertheless, the Commission has decided to mo#e away from intrusi#e regulation "ased on actual parameters to light handed regulation "ased on normati#e parameters as far as possi"le since the Commission firmly "elie#es in minimum regulation In line with this o"9ecti#e and within the constraints of regulating
&0,

tariff in a cost$plus regime, the Commission intends to mo#e towards laying down the normati#e parameters, as against actuals, for regulation and determination of tariff, since normati#e parameters would pro#ide strong moti#ation for achie#ing efficiency and economy in the electricity sector Accordingly, the Commission "y adopting this approach has tended towards normati#e parameters practically in all respects, except the capital cost of the pro9ect -he Commission would ha#e li6ed to specify e#en the

pro9ect cost on a normati#e "asis Gowe#er, for this purpose, a whole range of factors including financial, technical and site related issues ha#e to "e ta6en into account, which re=uires deeper study, analysis and more in#ol#ed interaction with the sta6eholders and in#estors %ince the fresh terms and conditions ha#e to "e implemented in a time$"ound manner, these studies could not "e underta6en -herefore, though the normati#e pro9ect cost is not "eing specified at present, the Commission may, at a later stage, mo#e in this direction

In the a"o#e "ac6ground, the Commission has prepared the draft regulations on

the terms and conditions for determination of tariff 8hile preparing the draft regulations, the #iews expressed "y the sta6eholders at the open hearing held on &0 th, &&th and &2th !o#em"er 2003 and #iews recei#ed thereafter ha#e "een duly 6ept in mind -he Commission has decided that the terms and conditions "eing notified shall "e applica"le for a period of fi#e years to minimise the regulatory uncertainties -he detailed reasons for the pro#isions made in the draft regulations will "e gi#en in the Hrder "eing issued separately

&03