Prima Facie Highlights of

Draft CERC Tariff 19-24

By
SARIT SINHA, EEMG Dept
 Basic Components
Tariff

2014-19 2019-24

1. Fixed Charges 1. Fixed Charges

2. Energy Charges 2. Energy Charges

3. Incentive 3. Incentive

4. Deviation 4. DSM ( In effect

Settlement from 01-Jan-19)
Mechanism (DSM)
 Energy Charges

2014-19 2019-24 2014-19 2019-24

Heatrate APC (%)
VSTPS-1 2450 2410 VSTPS-1 9.00 9.00
VSTPS-2 2375 2375 VSTPS-2 5.75 7.05
VSTPS-3 2375 2375 VSTPS-3 5.75 6.25
VSTPS-4 2375 2375 VSTPS-4 5.75 6.25
VSTPS-5 2351 2363 VSTPS-5 6.75 7.25
Heat Rate of New Units after 01.04.2009 = 1.05 X Design Heat Rate

 GCV as received: 85 kcal/kg discount for variation during storage

 VSTPS-2: Additional 0.8% APC allowed for tube & ball mills

 Sp Oil consumption: 0.5 ml/kwh

 Sample ECR calculation (2014-19)

VSTPS-2 Specific calculation

GHR(N) 2375 kcal/kwh

APC(N) 5.75 %
LEGENDS:
CVPF 3500 kcal/kg ECRN= Energy Charge Normative
GHRN= Gross Heat rate Normative
LPPF 2.0 Rs/kg SCFN = Sp. Oil Cons. Normative
GCVR= GCV of coal received
GCVF= GCV of coal fired
SFC(N) 0.5 ml/kwh CVSF= CV of sec. Fuel
AUXN= APC normative
CVSF 10 Kcal/ml LPPF= Landed Price Of Prim. Fuel
LPSF= Landed price of sec. Fuel
LPSF 0.05 Rs/ml
Variable charge :
ECR= Net Heat-rate(n) * LPPF/GCV
ECR(N) 1.45 Rs/unit
 Sample ECR calculation(2019-24)

VSTPS-2 Specific calculation

GHR(N) 2375 kcal/kwh

APC(N) 7.05 %
CVPF 3500-85 kcal/kg LEGENDS:
ECRN= Energy Charge Normative
GHRN= Gross Heat rate Normative
LPPF 2.0 Rs/kg SCFN = Sp. Oil Cons. Normative
GCVR= GCV of coal received
SFC(N) 0.5 ml/kwh GCVF= GCV of coal fired
CVSF= CV of sec. Fuel
CVSF 10 Kcal/ml AUXN= APC normative
LPPF= Landed Price Of Prim. Fuel
LPSF 0.05 Rs/ml LPSF= Landed price of sec. Fuel

Variable charge :
ECR= Net Heat-rate(n) * LPPF/GCV
ECR(N) 1.51 Rs/unit
 Sharing of With Beneficiaries

 Gain in marginal contribution to be shared with beneficiaries in

50:50 ratio (earlier 40% sharing with beneficiaries)

 50% following incomes are to be shared with beneficiaries:

a) Income from rent of land or buildings;

b) Income from sale of scrap;
c) Income from statutory investments;
d) Interest on advances to suppliers or contractors;
e) Rental from staff quarters;
f) Rental from contractors;
g) Income from advertisements;
h) Interest on investments and bank balances
i) Saving in interest due to re-financing of loan
 Incentives

2014-19 2019-24

 Incentive: payable at a flat  For SGPLF > 85%

rate of 50 paise /kWh for  65 paisa/unit in peak hours
ex-bus SG corresponding to  50paisa/unit in off-peak hours
SG in excess of ex-bus
energy corresponding to
Normative Annual Plant
Load Factor (NAPLF). i.e.
85%
 Fixed Charges
Capacity Charges

2019-24
2014-19
 Capacity charge rate for Peak hours
Capacity Charges Calculation: shall be 25% > CC of Off-Peak hours
 CC = ((AFC) ( PAFY/NAPAF)
subject to ceiling of (AFC)
 Peak period > 4hrs in a day & Peak
period declaration in 1 month
 Corresponding to 85%DC, advance by WRLDC
(83% In case of coal
shortage)
 Pro-rata reduction for DC< 83%

 Flat straight line method

 Quarterly reconciliation: DC Loss in
for less than 85/83% DC. Off-peak period can be offset against DC
gain of peak period but NOT the reverse

AFC Annual fixed cost specified for the year, Rs
NAPAF = Normative annual plant availability factor %
PAFY = Plant availability factor achieved in the year,%
 Genco may charge one tariff (fixed
+variable) for 25 yr old project if
buyer-seller agrees. On refusal by buyer,
Genco is free to sell balance energy to market.
 Fixed Charges
Elements

2014-19 2019-24
1. Return On Equity 1. Return On Equity
2. Interest on loan Capital 2. Interest on loan Capital
3. Depreciation 3. Depreciation
4. O&M Cost 4. O&M Cost
5. Interest On Working Capital 5. Interest On Working Capital
6. Special allowance for R&M 6. Special allowance for R&M
7. Compensation allowance 7. Discontinued
 1. Return on Equity
2014-19
 Base rate of 15.50%
 Debt: Equity= 70:30
Tax on ROE:
 Rate of return= Base rate/(1-t)
t= effective tax rate
Example: 15.5/(1-24/100)= 20.4
2019-24
 Base rate of 15.50%
 Debt: Equity= 70:30
 ROE reduction by 1% for
lacking performance of
RGMO, FGMO, Data Telemetry
for the deficiency period
 No Additional ROE for timely
COD
 2. Interest on loan capital

2019-24
 Rate of interest = weighted average rate of interest calculated on the
basis of the actual loan portfolio

 Normative loan outstanding= Gross normative loan – Repayment

 To be charged from 1st year of COD irrespective of moratorium

 3. Depreciation

2014-19 2019-24
Depreciation on straight line  5% of the value as scrap
method
 95% recovered in the life time
 10% of the value as scrap
of plant (25yrs)
 90% recovered in the life time
 100% depreciable for IT
of plant (25yrs)
equipments, software
 First 12 yrs on Wt average
 First 12 yrs on Wt average
depreciation rate
depreciation rate
 Balance amount in equal 13 yrs
 Balance amount in equal 13 yrs
installment
installment
 Depreciation rate 5.28% of
 Depreciation rate 5.28% of
capital cost for coal based
capital cost for coal based
station
station
 Land is not depreciable
 4 - O&M Cost

O&M Cost in Rs Lakh/MW/year

Year 210 MW Unit 500 MW Unit Year 210 MW Unit 500 MW Unit

Yearly rise @ 6.3% Yearly rise @ 3.2 %

14-15 23.90 16.00 19-20 30.59 20.38

15-16 25.40 17.01 20-21 31.57 21.03

16-17 27.00 18.08 21-22 32.58 21.71

17-18 28.70 19.22 22-23 33.62 22.40

18-19 30.51 20.43 23-24 34.69 23.12

Water charges, security expenses(new introduction) will be allowed separately

 5. Interest on working capital
Component of working capital 14-19 19-24 Unit

Cost of coal stock for days 15 15 Days

Advance payment towards Cost of Coal for month 1 1 Month

Cost of Secondary Fuel Oil for generation of months 2 2 Month

Cost of Maintenance spare : Percentage of O&M Cost 20 20 %

Receivables equivalent to months capacity charges &

2 1.5 Month
energy charges for sale of electricity

O&M expenses of month 1 1 Month

Advance payment towards Cost of Limestone 1 1 Month

Cost of Limestone stock for Generation month 1 1 Month

Normative Plant Availability Factor 85 83 %

Rate of interest on working capital shall be on normative basis and is equal to bank rate as
on 1.4.2019 or as on 1st April of the year during the tariff period 2019-24
 6 - Special Allowance for R&M

Special allowance @ Rs 7.5 Special allowance @ Rs 9.5

Lac/MW/Yr for 2014-15 for R&M
beyond useful life of 25 years of
the units and thereafter escalated
@ 6.35% every year for tariff
period 2014-19
Lac/MW/Yr for 2019-24 for R&M
beyond useful life of 25 years of
the units

 Allowance only if R&M not undertaken earlier & expenditure not

admitted by CERC
 No upward revision in Capital cost
 No relaxation of operating norms
 Special allowance to be included in Annual Fixed cost
 R&M Proposal for life extension along with estimate, cost
benefit analysis etc as per CERC
 Billing

Rebate:
• 2% rebate for payment mode within a period of 2 days of
presentation of bills

• 1% rebate for payment mode within a period of 3 days to 30 days of

presentation of bills

• Late payment surcharge :

Beyond a period of 45 days from the date of billing, a late payment

surcharge at the rate of 1.25% per month
THANK YOU
Fixed Cost recovery: 83% DC in a qtr
Specific Reagent consumption
Initial Spares: Initial spares shall be capitalised as a percentage of the Plant and
Machinery cost up to cut-off date, subject to following ceiling norms:
(a) Coal-based/lignite-fired thermal generating stations - 4.0%

Special Provision for thermal generating station which have completed 25 years of
operation from commercial operation date:

(1) In respect of a thermal generating station that has completed 25 years of operation
from the date of commercial operation, the generating company and the beneficiary
may agree on an arrangement where the total cost inclusive of the fixed cost and
the variable cost for the generating station as determined under these regulations,
shall be payable on scheduled generation instead of the pre-existing arrangement
of separate payment of fixed cost based on availability and energy charge based on
schedule.

(2) The beneficiary will have the first right of refusal and upon its refusal to enter into
an arrangement as above the generating company shall be free to sell the electricity
generated from such station in a manner as it deems fit.
Fixed Charges : 1 - RoE
Fixed Charges: 1 - RoE
Fixed Charges: 1 - RoE

30 Debt
Equity

70
Fixed Charges: 1 - RoE
Fixed Charges: 1 - RoE
Fixed Charges
2 - Interest on capital Loan
 Fixed Charges
3 - Depreciation

Depreciation on straight line method

 10% of the value as scrap
 90% recovered in the life time of plant (25yrs)
 First 12 yrs on Wt average depreciation rate
 Balance amount in equal 13 yrs installment
 Depreciation rate 5.28% (in 14-19] of capital cost for coal based
station
 Depreciation rate increased as advance against depreciation is
removed in CERC regulation 2009-14. Impact on us marginally
negative.
 6. Compensation allowance
Compensation Allowance based on plant life

2014-19
Yr of Operation Compensation Allowance Rs Lac/MW/year

0 – 10 Nil
11 – 15 0.20
16 – 20 0.50
21 - 25 1.00

Compensation allowance NIL after 25 years

 VSTPS Annual fixed cost break-up in Rs Crore

2018-19 VSTPS-1 VSTPS-2 VSTPS-3 VSTPS-4 VSTPS-5

Depreciation 0 58 190 299 149

Interest on Loan 0 0 47 220 127

Return on Equity 145 151 218 347 176

Interest on Working Capital 72 49 58 61 34

O&M Expenses inc water charge 400 225 225 179 97

Compensation Allowance (if appl) 0 5 2 0 0

Special allowance (if appl) 0 0 0 0

Total in Rs Crore 616 488 739 1105 583

Fixed cost, Paisa/unit 83 68 106 158 164
 VSTPS water consumption & charges

2015-16 Stage-1 Stage-2 Stage-3 Stage-4 Stage-5

Actual annual water

consumption (M3) 34009765 22431711 28329123 19491570 5455300

Actual annual water

consumption 38.06 25.1 31.71 21.8 14.47
(Cusec)

Water charges
allowed, Rs Cr 32.1 21.2 26.7 4.9 8.7

Water cost: 5.5 Rs/M3