301 - · pdf file12. ntpc limited, korba stps stage 1 and 2, p.o: vikas bhavan, jamnipali,...

ANNEXURE P-17 301

ANNEXURE P-18 303

ANNEXURE P-19 (COLLY) 314

Order in Petition No. 135/TT/2012 Page 1 of 26

CENTRAL ELECTRICITY REGULATORY COMMISSION NEW DELHI

Petition No. 135/TT/2012

Coram:

Shri Gireesh B. Pradhan, Chairman Shri A.K. Singhal, Member

Shri A.S. Bakshi, Member

Date of Hearing: 13.11.2014 Date of Order : 18.12.2015

In the matter of:

Approval of annual fixed cost and of transmission tariff for 400 kV JPL Tamnar-

Raipur D/C line and 2 nos. 315 MVA, 400/220 kV Transformer along with 4 nos. of

400 kV bays and 2 nos. of 220 kV bays for tariff block 2009-14 under Section 61,

62 of the Electricity Act, 2003 and Regulation-79(1)(a) of the Central Electricity

Regulatory Commission (Terms and Conditions of Tariff) Regulations 2009.

And In the matter of:

Jindal Power Limited Tamnar-496 107, District Raigarh, Chhattisgarh ……Petitioner

Vs

1. Jindal Power Limited,Tamnar-496 107, District Raigarh,Chhattisgarh

2. Jindal Steel and Power Limited,Kharsia Road, Raigarh,Chhattisgarh-496 001

3. Chhattisgarh State Power Distribution Company Limited,PO: Sundernagar, Dangania,Raipur-492 013

4. Gujarat Urja Vikas Nigam Limited,Sardar Patel Vidyut Bhavan, Race Course,Vadodra-390 007

ANNEXURE P-20 317


5. MSEDCL, Prakashgad, 5th Floor, Bandra East, Mumbai-400 051 6. MP Power Trading Company Limited, Shakti Bhavan, Vidyut Nagar, Rampur, Jabalpur-482 008 7. Goa Electricity Department, Government of Goa, 3rd Floor, Vidyut Bhavan, Panjim-403 001 8. Electricity Department, Union Territory of Daman & Diu, Sachivalaya, Moti Daman, Daman-396 210 9. UT of Dadra Nagar and Haveli, Secretariat, Electricity Department, 66 kV Amli Road, Silvasa-396 230 10. Western Region Transmission (Maharashtra) Private Limited, 12th Floor, Building No. 10-B, DLF Cyber City, Gurgaon, Haryana-122 002 11. ESSAR Power MP Limited, Thana Road, New Chunkumari stadium, Waidhan, District-Singrauli, Madhya Pradesh-486 886

12. NTPC Limited, Korba STPS Stage 1 and 2, P.O: Vikas Bhavan, Jamnipali, Korba District, Chhattisgarh-495 450 13. NTPC Limited, Vindhyachal STPS Stage 1, PO: Vindhyanagar, Sidhi District, Madhya Pradesh-486 885 14. NTPC Limited, Kawas Gas Power Station, PO: Aditya Nagar, Surat District, Gujarat-394 516 15. NTPC Limited, Gandhar Gas Power Station, PO: NTPC Township, Bharuch District, Gujarat-392 215

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16. NTPC Limited, Sipat Thermal Power Station, Sipat, Chhattisgarh-495 558, 17. Nuclear Power Corporation of India Limited, Kakrapara Atomic Power Station, PO: Via Vyara, Surat District, Gujarat-395 651 18. Nuclear Power Corporation of India Limited, Tarapur Atomic Power Station-1 & 2, PO: TAPP, Thane District, Maharashtra-401 504 19. Torrent Powergrid Limited, Torrent House, Off Ashram Road, Ahmedabad, Gujarat-380 009 20. Narmada Control Authority, Narmada Sadan, Sector-B, Scheme no. 74, Vijayanagar, Indore, Madhya Pradesh-452 010 21. Coastal Gujarat Power Limited, UMPP Mundra, Gujarat 22. Lanco Power Limited, Plot No. 397, Phase-III, Udyog Vihar, Gurgaon, Haryan-122 016 23. Aryan Coal Beneficiary, Chakabura, Korba, Chhattisgarh 24. Power Grid Corporation of India Limited, Bhadravati HVDC, Sumthana Village, Bhadravathi Tehsil, Chandrapur District, Maharashtra-442 902 25. Power Grid Corporation of India Limited, Vindhyachal HVDC, PO: Vindhyanagar, Post Box no. 12, Singrauli District, Madhya Pradesh-486 885 26. Power Grid Corporation of India Limited, Western Region-1 Headquarters, PO: Uppalwadi, Sampritinagar, Nagpur-400 026

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27. NTPC SAIL Power Company Private Limited, Puranena Village, District-Durg, Bhilai-490 021 28. Ratnagiri Gas and Power Private Limited, 2nd Floor, Block-2, IGL Complex, Sector-126, Expressway, U.P (India) Noida-201 304 29. Bharat Aluminium Company Limited, Captive Power Plant-II, BALCO Nagar, Korba, Chhattisgarh-495 684 30. ESSAR Power Transmission Company Limited, A-5, Sector-3, Gautam Buddha Nagar, Noida, Uttar Pradesh-201 301 31. NTPC Limited, Mauda TPS, PO: Mauda, District-Nagpur 32. KSK Mahanadi Power Company Limited, 8-2-293/82/A/431/A,

Road No. 22, Jubilee Hills, Hyderabad-500 033 ……..Respondents

For petitioner: Shri Sanjay Sen, Sr. Advocate, Jindal Power Ltd.,

Shri Rajesh Maurya, JPL

Shri Hemant Singh, JPL

For respondents: Shri Ajay Dua, NTPC

Shri Shyam Kumar, NTPC

Shri Rajesh Jain, NTPC

Shri Alok Shankar, Advocate, Essar Power Trans. Co. Ltd.

Ms Suparna Srivastava, Advocate, CSPDCL

Shri Manohar Malik, Aryan Coal Beneficiary

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ORDER

The present petition has been filed by Jindal Power Limited (JPL) seeking

approval of annual fixed cost and transmission charges for the 400 kV JPL

Tamnar-Raipur D/C line and 2 nos. 315 MVA, 400/220 kV Transformer along with

4 nos. of 400 kV bays and 2 nos. of 220 kV bays (hereinafter referred to as

“transmission assets”) for the period from 9.5.2011 to 31.3.2014 based on the

Central Electricity Regulatory Commission (Terms and Conditions of Tariff)

Regulations, 2009 (hereinafter referred to as “the 2009 Tariff Regulations”).

Background of the case

2. The petitioner had set up a Thermal Power Plant at Tanmar, District

Raigarh, Chattisgarh having capacity of 1000 (4x250) MW. The petitioner, as part

of the generation project had established a dedicated transmission line (length

258.40 km) for connecting the generating station upto inter-State transmission

system (ISTS) for onward transmission of power. The generating units of the

petitioner’s plant are also connected with the various units of another group

company i.e. Jindal Steel and Power Ltd (JSPL). JSPL had also set up a captive

plant of 358 MW and was in the process of commissioning 450 MW plant. JSPL

intended to sell its surplus power through use of the dedicated transmission line of

JPL.

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3. The petitioner had approached the Commission for grant of inter-State

transmission license for use of the aforesaid dedicated line as ISTS which was

granted by the Commission vide order dated 9.5.2011 in Petition No. 105/2010.

The transmission assets covered under the licence are (a) 400 kV JPL Tamnar-

Raipur D/C line and (c) 2 Nos. 315 MVA, (b) 400/220 kV Transformer along with 4

Nos. of 400 kV bays and 2 Nos. of 220 kV bays at Tanmar Sub-station. After the

issue of licence, these assets are considered to be part of the ISTS system with

effect from 9.5.2011.

4. It was observed that the petitioner had neither filed any “Memo of Parties”

nor impleaded any respondents in the petition. The petitioner vide affidavit dated

3.7.2012 submitted that the copy of the petition was served on Power Grid

Corporation of India Limited (PGCIL), Jindal Steel and Power Limited (JSPL) and

CSPDCL. Subsequently, the petitioner, vide affidavit dated 25.9.2012 amended

the “Memo of Parties”, by impleading 32 entities as respondents, which included

inter-State generating stations of NTPC and distribution companies and other

entities in other regions.

5. NTPC has submitted vide affidavit dated 4.12.2014 that its generating

stations in the Western Region like Korba STPS, Vindhyachal STPS, Kawas GPS,

Gandhar GPS, Sipat STPS and Mauda STPS have been impleaded by the

petitioner as respondents. These generating stations are Inter-State Generating

Stations supplying power to its long term customers and as per Regulation 8(6) of

the Sharing of Inter-State Transmission Charges and Losses Regulations, 2010,

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the charges payable by long term customers, for availing supplies from inter-State

generating stations, shall be billed directly to them based on their share of capacity

in such generating stations. Accordingly, the inter-State generating stations are not

liable to pay any transmission charges and prayed that the petitioner be directed to

delete these generating stations from the array of respondents. CSPDCL in its

reply has submitted that in line with the Commissions’ order dated 10.12.2010 in

Petition No. 105/2010, only those beneficiaries of the Western Region are to be

impleaded ,which have been granted connectivity and long term access to the

instant assets of the petitioner.

6. We have considered the submissions of the parties. The subject

transmission line has been treated as Inter-State Transmission System (ISTS)

after grant of transmission licence. The petitioner was granted transmission

licence on 9.5.2011 in Petition No. 105/2010 in which the constituents of the

Western Region were made the respondents. After the introduction of sharing of

transmission charges with effect from 1.7.2011, the allocation of transmission

charges is done on the basis of the system studies which establish the extent to

which a transmission line is being used by the DICs and accordingly, transmission

charges are being levied. The petitioner has impleaded all the DICs in the Western

Region as respondents. We are of the view that since the distribution companies

pay for both the injection node and drawl node, the distribution companies of the

Western Region and the long term customers of the petitioner should have been

treated as necessary parties and others as proforma parties.

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7. The petitioner had prayed for approval of provisional tariff as per clause (4)

of Regulation 5 of the 2009 Tariff Regulations. The provisional tariff was granted

vide order dated 26.9.2012 under Regulation 5(4) of the 2009 Tariff Regulations

subject to adjustment as provided under Regulation 5(3) of the 2009 Tariff

Regulations.

8. Chattisgarh State Power Distribution Company Limited (CSPDCL),

Respondent No.3, has filed an Appeal No.119/2013 before the Appellate Tribunal

for Electricity (“The Tribunal”) against the Commission’s order dated 26.9.2012

allowing provisional transmission tariff. CSPDCL has also filed Petition

No.6/MP/2014 before the Commission seeking cancellation/revocation of the

transmission licence granted for the instant assets of the petitioner. Petition No.

6/MP/2014 has been disposed of by the Commission vide order dated 9.12.2015

by rejecting the prayer of CSPDCL for cancellation of licence. The transmission

charges for the instant assets are allowed subject to the outcome of the Appeals

filed by CSPDCL and MPPMCL.

Effective date for fixation of tariff

9. The transmission assets were part of the generating station prior to

9.5.2011 and were used by the petitioner for evacuation of power from the

generating station and were serviced through the revenue stream of generation

tariff. The tariff of the generating station including transmission assets was not

regulated by the Commission. The petitioner has submitted the balance sheets

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from 2008-09 to 2010-11 to show that the revenue recovered from the generation

business included the cost of transmission of electricity through dedicated line. As

the investment in the transmission assets has been serviced and used by the

petitioner for their own purpose prior to 9.5.2011, we are of the view that there is

no requirement now to determine tariff for transmission assets prior to 9.5.2011.

The tariff of the transmission assets will be determined from the date it was

granted licence and the said date is taken as the effective date for determination of

tariff.

10. The petitioner has also claimed the cost of ICTs and bays at Raipur Sub-

station apart from the assets covered in the transmission licensee. The petitioner

has submitted that 400 kV bays at the PGCIL Raipur end are required for

connectivity of the licensed line with the ISTS network just as the 400 kV line bays

at JPL end. The petitioner has submitted that the bays were erroneously not

included in the petition for grant of license but the same are an integral part of the

ISTS element. The petitioner has submitted that 2 nos. of 400 kV bus sectionalizer

bays for reliability of the system were installed to facilitate maintenance and

continuity of supply of power. The petitioner has further submitted that while these

bays at the PGCIL Raipur end are owned by the petitioner, they are being

maintained under a contract with PGCIL against payment of annual maintenance

charges by the petitioner to PGCIL. The petitioner has also prayed to include

these bays in the licensed project and to allow transmission charges for the same.

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11. We have considered the submissions of the petitioner. The two bays were

not included in the scope of the project for which licence was granted. While

seeking the transmission licence, the petitioner could have sought licence for the

two bays. In the absence of the licence for the two bays, we are not inclined to

allow tariff for the two bays and the tariff has been granted in the instant petition

for only those transmission elements which have been included in the

transmission licence. The details of the elements granted tariff in the instant

petition are as under:-

S. No. Name of Transmission element Quantity

1 400 kV JPL Tamnar-PGCIL Raipur D/C line 258.4 km

2 315 MVA, 400/220 kV Transformer 2 Nos.

3 400 kV Bays at Tanmar# 4 Nos.

4 220 kV Bays at Tanmar 2 Nos.

#Capital cost of the bays at Raipur and Bus Sectionalizer bays has not been allowed.

12. Since the effective date for determination of tariff has been taken as

9.5.2011, the instant assets are deemed to have been commissioned from that

date for the purpose of determination of tariff. Accordingly, the capital cost of the

instant assets is to be determined as on 9.5.2011 in accordance with clause (1) of

Regulation 7 of the Transmission Licence Regulations.

13. The petitioner has claimed the transmission charges as under:-

(` in lakh)

Particulars 2011-12 2012-13 2013-14

Depreciation 1514.00 1690.00 1690.00

Interest on Loan 1492.00 1504.00 1333.00

Return on Equity 1675.00 1869.00 1869.00

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Interest on Working Capital 107.00 132.00 131.00

O & M Expenses 445.00 526.00 555.00

Total 5233.00 5721.00 5577.00

14. The details submitted by the petitioner in support of its claim for interest on

working capital are as under:-

(` in lakh)

Particulars 2011-12 2012-13 2013-14

Maintenance Spares 67.00 79.00 83.00

O & M expenses 37.00 44.00 46.00

Receivables 872.00 953.00 930.00

Total 976.00 1076.00 1059.00

Rate of Interest 12.25% 12.25% 12.25%

Interest 107.00 132.00 130.00

15. No comments or suggestions have been received from the general public in

response to the notices published by the petitioner under Section 64 of the

Electricity Act. CSPDCL, Respondent No 3, has filed its reply vide affidavits dated

24.12.2012 and 30.12.2013. CSPDCL has mainly raised issues like grant of

license without any identified beneficiary, aging effect on the transmission system,

provisional transmission tariff, etc. The petitioner has not filed rejoinder to the

replies of the respondents. The submissions made by the respondents and their

clarifications have been dealt in relevant paragraphs of this order.

16. We have considered the submissions of the parties and perused the

material on record, we proceed to dispose of the petition.

Capital Cost

17. Regulation 7 of the 2009 Tariff Regulations provides as follows:-

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“(1) Capital cost for a project shall include:-

(a) The expenditure incurred or projected to be incurred, including interest during construction and financing charges, any gain or loss on account of foreign exchange risk variation during construction on the loan – (i) being equal to 70% of the funds deployed, in the event of the actual equity in excess of 30% of the funds deployed, by treating the excess equity as normative loan, or (ii)being equal to the actual amount of loan in the event of the actual equity less than 30% of the fund deployed, - up to the date of commercial operation of the project, as admitted by the Commission, after prudence check.

(b) capitalised initial spares subject to the ceiling rates specified in regulation 8; and

(c) additional capital expenditure determined under regulation 9:

Provided that the assets forming part of the project, but not in use shall be taken out of the capital cost.

(2) The capital cost admitted by the Commission after prudence check shall form the basis for determination of tariff: Provided that in case of the thermal generating station and the transmission system, prudence check of capital cost may be carried out based on the benchmark norms to be specified by the Commission from time to time: Provided further that in cases where benchmark norms have not been specified, prudence check may include scrutiny of the reasonableness of the capital expenditure, financing plan, interest during construction, use of efficient technology, cost over-run and time over-run, and such other matters as may be considered appropriate by the Commission for determination of tariff.”

18. As discussed at para-9, the tariff for the transmission assets is allowed with

effect from the effective date i.e. 9.5.2011. The petitioner has submitted fixed cost

of the transmission assets as `26926 lakh as opening balance being gross fixed

assets of `32187 lakh as on date of commissioning of the transmission project and

accumulated depreciation of `5261 lakh from the date of actual commissioning till

date of grant of the transmission license as per Auditors’ certificate dated 5.5.2014.

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19. The capital cost has been determined and allowed by applying the net fixed

asset approach upto effective date after considering cumulative depreciation i.e.

capital cost as on actual commercial operation date has been considered after

segregation of the assets by excluding the cost of bays at Raipur end and Bus

sectionalizer bays and part of 400/220 kV sub-station equipment as it is not part of

the transmission license. The capital cost considered for the purpose of

computation of transmission charges is as under:-

(` in lakh)

Capital cost as per auditors’ certificate 32186.47

Less: Cost of bays at Raipur & cost of bus sectionalizer 3930.83

Gross fixed assets on actual COD i.e. 16.8.2008 28255.64

20. The petitioner has submitted the amount of the cumulative depreciation

upto effective date vide affidavit dated 5.12.2014 and has reduced the cumulative

depreciation from the gross block. In view of the exclusion of bays at Raipur and

bus sectionalizer bays, the cumulative depreciation upto effective date has been

recalculated. Thus, the recalculated cumulative depreciation has been reduced

from the gross fixed assets in line with the petitioner’s claim. The summary of the

depreciation is as given hereunder:-

(` in lakh)

Particulars 2008-09 (pro-rata)*

2009-10 2010-11 2011-12 (pro-rata)**

Depreciation during the year 912.97 1480.08 1480.08 154.09

Cumulative depreciation 912.97 2393.05 3873.13 4027.22

*16.8.2008 to 31.3.2009, **1.4.2011 to 8.5.2011

21. The petitioner has submitted that the interest during construction of `1450

lakh is included in the capital cost of `32186.47 lakh as on actual COD. The

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transmission project was consolidated with generation prior to actual COD. As the

tariff is now allowed from a date much later after actual COD, it is assumed that

entire IDC amount must have been discharged prior to the effective date of tariff.

However, the petitioner is directed to submit separate details of IDC and loan of

entire generation business and transmission business at the time of truing-up

petition.

22. CSPDCL has submitted that the capital cost is to be worked out by

adjusting the applicable transmission charges or gain from the transmission line

for the period from actual COD to 8.5.2011 for determination of tariff. CSPDCL has

also submitted that the applicable transmission charges from actual COD to

8.5.2011 are not possible to separate out as it was part of generating station.

23. We have considered the submission of CSPDCL. It is noted from the details

submitted by the petitioner that the petitioner has paid the actual debt prior to

9.5.2011. Therefore, the outstanding balance of debt as on 9.5.2011 has been

considered as NIL. Accordingly, the capital cost as on effective date has been

worked out to `24228.42 lakh by reducing cumulative depreciation of `4027.22

lakh i.e. up to date of license, from gross fixed assets as on actual COD of

`28255.64 lakh. Thus, the capital cost worked out has been considered for the

purpose of the tariff computation.

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Addtional Capital Expenditure

24. The petitioner has not claimed any additional capital expenditure during the

period 9.5.2011 to 31.3.2014.

Debt-Equity Ratio 25. Regulation 12 of the 2009 Tariff Regulations provides as under:-

“12. Debt-Equity Ratio. (1) For a project declared under commercial operation on or after 1.4.2009, if the equity actually deployed is more than 30% of the capital cost, equity in excess of 30% shall be treated as normative loan: Provided that where equity actually deployed is less than 30% of the capital cost, the actual equity shall be considered for determination of tariff: Provided further that the equity invested in foreign currency shall be designated in Indian rupees on the date of each investment. Explanation.- The premium, if any, raised by the generating company or the transmission licensee, as the case may be, while issuing share capital and investment of internal resources created out of its free reserve, for the funding of the project, shall be reckoned as paid up capital for the purpose of computing return on equity, provided such premium amount and internal resources are actually utilised for meeting the capital expenditure of the generating station or the transmission system. (2) In case of the generating station and the transmission system declared under commercial operation prior to 1.4.2009, debt-equity ratio allowed by the Commission for determination of tariff for the period ending 31.3.2009 shall be considered. (3) Any expenditure incurred or projected to be incurred on or after 1.4.2009 as may be admitted by the Commission as additional capital expenditure for determination of tariff, and renovation and modernisation expenditure for life extension shall be serviced in the manner specified in clause (1) of this regulation.”

26. The petitioner has claimed tariff based on debt: equity ratio of 70:30 in line

with the 2009 Tariff Regulations as overleaf:-

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(` in lakh)

Particulars As on effective date

Amount (%)

Debt 17270.00 70.00

Equity 9656.00 30.00

Total 26926.00 100.00

27. The petitioner vide affidavit dated 14.9.2012 has submitted that the debt-

equity ratio actually maintained by the petitioner for financing of integrated project

was 80:20 as on actual COD i.e.16.8.2008, as per details as given under:-

(` in lakh)

Particulars As on actual COD

Amount (%)

Debt 22180.15 80.00

Equity 5545.04 20.00

Total 27725.19 100.00

28. The petitioner has further submitted that the debt-equity ratio for the

additional capital expenditure was in the ratio of 59:41 from COD to 31.3.2009 i.e.

prior to license date, as under:-

(` in lakh) Particulars Capitalisation

upto effective date

Amount (%)

Debt 312.97 59.00

Equity 217.49 41.00

Total 530.46 100.00

29. The petitioner, in support of the claim has submitted a separate balance

sheet as on 9.5.2011 vide affidavit dated 5.5.2014 for the licensed transmission

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business, duly certified by the Auditor. The petitioner has also submitted the

balance sheet of the company i.e. Jindal Power Ltd, which reflects the combined

financial position for generation business and transmission business. The balance

sheet of licensed transmission business has been considered for the purpose of

transmission tariff after reconciling the petitioner’s claim of debt: equity ratio with

the balance sheet of licensed transmission business in the instant petition.

However, on an analysis of the balance sheet of licensed transmission business, it

is observed that the petitioner has indicated NIL share capital of licensed

transmission business, instead the entire fund has been indicated as inter-

company balance. As such, from the submission of the petitioner, it is inferred that

the petitioner has not earmarked and infused the share capital against the licensed

transmission business and accordingly, the entire funding has been treated as

debt for the purpose of transmission tariff in the instant petition.

30. Taking the capital base as `24228.42 lakh as on 9.5.2011, the debt and

equity corresponding to admissible capital cost works out as under:-

(` in lakh)

Particulars As on 9.5.2011

Amount (%)

Debt 24228.42 100.00

Equity - -

Total 24228.42 100.00

31. The debt: equity ratio arrived at as on the date of licence has been

considered to work out the tariff in accordance with the 2009 Tariff Regulations.

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Return on Equity (RoE) 32. Regulation 15 of the 2009 Tariff Regulations provides for working out RoE

as under:-

“15. (1) Return on equity shall be computed in rupee terms, on the equity base determined in accordance with regulation 12. (2) Return on equity shall be computed on pre-tax basis at the base rate of 15.5% for thermal generating stations, transmission system and run of the river generating station, and 16.5% for the storage type generating stations including pumped storage hydro generating stations and run of river generating station with pondage and shall be grossed up as per clause (3) of this regulation: Provided that in case of projects commissioned on or after 1st April, 2009, an additional return of 0.5% shall be allowed if such projects are completed within the timeline specified in Appendix-II: Provided further that the additional return of 0.5% shall not be admissible if the project is not completed within the timeline specified above for reasons whatsoever. (3) The rate of return on equity shall be computed by grossing up the base rate with the Minimum Alternate/Corporate Income Tax Rate for the year 2008-09, as per the Income Tax Act, 1961, as applicable to the concerned generating company or the transmission licensee, as the case may be: (4) Rate of return on equity shall be rounded off to three decimal points and be computed as per the formula given below: Rate of pre-tax return on equity = Base rate / (1-t) Where t is the applicable tax rate in accordance with clause (3) of this regulation. (5) The generating company or the transmission licensee as the case may be, shall recover the shortfall or refund the excess Annual Fixed charge on account of Return on Equity due to change in applicable Minimum Alternate/ Corporate Income Tax Rate as per the Income Tax Act, 1961 (as amended from time to time) of the respective financial year directly without making any application before the Commission; Provided further that Annual Fixed charge with respect to the tax rate applicable to the generating company or the transmission licensee, as the case may be, in line with the provisions of the relevant Finance Acts of the respective financial year during the tariff period shall be trued up in accordance with Regulation 6 of these regulations".

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33. The petitioner has claimed the RoE as per Regulation 15 of the 2009 Tariff

Regulations. However, as mentioned under para-30, the petitioner has not

earmarked or infused share capital against the licensed business and therefore,

entire funding has been treated as debt. Accordingly, return on equity works out

NIL for respective tariff block with no equity.

34. It has also been noticed that the petitioner was in the process of separating

the accounts of the licensed transmission business and generation business at the

time of filing petition. Based on the separated accounts, if equity is allocated

against the licensed transmission business, the petitioner is granted liberty to

submit the same at the time of truing-up.

Interest on Loan

35. Regulation 16 of the 2009 Tariff Regulations provides that;

“16. (1) The loans arrived at in the manner indicated in regulation 12 shall be considered as gross normative loan for calculation of interest on loan. (2) The normative loan outstanding as on 1.4.2009 shall be worked out by deducting the cumulative repayment as admitted by the Commission up to 31.3.2009 from the gross normative loan.

(3) The repayment for the year of the tariff period 2009-14 shall be deemed to be equal to the depreciation allowed for that year:

(4) Notwithstanding any moratorium period availed by the generating company or the transmission licensee, as the case may be the repayment of loan shall be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed, (5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project:

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

Provided further that if the generating station or the transmission system, as the case may be, does not have actual loan, then the weighted average rate of interest of the generating company or the transmission licensee as a whole shall be considered. (6) The interest on loan shall be calculated on the normative average loan of the year by applying the weighted average rate of interest.

(7) The generating company or the transmission licensee, as the case may be, shall make every effort to re-finance the loan as long as it results in net savings on interest and in that event the costs associated with such re-financing shall be borne by the beneficiaries and the net savings shall be shared between the beneficiaries and the generating company or the transmission licensee, as the case may be, in the ratio of 2:1.

(8) The changes to the terms and conditions of the loans shall be reflected from the date of such re-financing.

(9) In case of dispute, any of the parties may make an application in accordance with the Central Electricity Regulatory Commission (Conduct of Business) Regulations, 1999, as amended from time to time, including statutory re-enactment thereof for settlement of the dispute:

Provided that the beneficiary or the transmission customers shall not withhold any payment on account of the interest claimed by the generating company or the transmission licensee during the pendency of any dispute arising out of re-financing of loan.”

36. The petitioner has submitted that the entire actual loan for integrated project

has been repaid prior to inception of the licensed transmission business. The

petitioner vide affidavit dated 14.9.2012 has submitted the Auditor’s certificate

dated 13.9.2012 for the actual repayment of the loans as follows:-

(` in lakh)

Financial Year

Opening Balance

Proceeds from

borrowings

Repayment of

borrowings

Closing balance as on

31st March

2007-08 111212.00 197280.00 - 308492.00

2008-09 308492.00 12890.00 8107.00 313275.00

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2009-10 313275.00 5696.00 212445.00 106526.00

2010-11 106526.00 - 106526.00 -

2011-12 - - - -

37. The outstanding debt as on effective date has been worked out by taking into

account the actual repayment of loan and outstanding loan. Similar principle was

adopted in Petition No.60/2001 while allowing tariff for Chamera HE Project Stage

I. The outstanding loan as on license debt has been considered as given

hereunder:-

(` in lakh)

Particulars 2011-12 2012-13 2013-14

Gross Normative Loan 24228.42 24228.42 24228.42

Cumulative Repayment upto Previous Year 24228.42 24228.42 24228.42

Net Loan-Opening - - -

Addition due to Additional Capitalization - - -

Repayment during the year - - -

Net Loan-Closing - - -

Average loan - - -

Weighted average rate of Interest on loan - - -

Interest - - -

38. As the transmission assets of the petitioner were not regulated by the

Commission prior to issue of the license, the debt is to be considered with

reference to the actual repayment. However, the petitioner has claimed the cost of

debt on normative loan considering the repayment equal to depreciation but the

issue of the cost of debt does not exist as the repayment has already been made

and net outstanding loan is NIL as on the date of licence. The consideration of the

cost of debt even after the repayment of the loan would lead to additional servicing

of the investment. Thus, no interest on loan is allowed in the instant petition.

337


Depreciation

39. Regulation 17 of the 2009 Tariff Regulations provides for computation of

depreciation in the following manner:-

“17. (1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission.

(2) The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset.

Provided that in case of hydro generating stations, the salvage value shall be as provided in the agreement signed by the developers with the State Government for creation of the site:

Provided further that the capital cost of the assets of the hydro generating station for the purpose of computation of depreciable value shall correspond to the percentage of sale of electricity under long-term power purchase agreement at regulated tariff.

(3) Land other than the land held under lease and the land for reservoir in case of hydro generating station shall not be a depreciable asset and its cost shall be excluded from the capital cost while computing depreciable value of the asset.

(4) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in Appendix-III to these regulations for the assets of the generating station and transmission system: Provided that, the remaining depreciable value as on 31st March of the year closing after a period of 12 years from date of commercial operation shall be spread over the balance useful life of the assets.

(5) In case of the existing projects, the balance depreciable value as on 1.4.2009 shall be worked out by deducting the cumulative depreciation as admitted by the Commission up to 31.3.2009 from the gross depreciable value of the assets.

(6) Depreciation shall be chargeable from the first year of commercial operation. In case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis.”

40. The petitioner has claimed actual depreciation as a component of Annual

Fixed Charges. However, Clause 17 (4) of the 2009 Tariff Regulations provides

that depreciation shall be calculated annually based on Straight Line Method and

338


at rates specified in Appendix-III to these regulations for the assets of the

generating station and transmission system. It further provides that the remaining

depreciable value as on 31st March of the year closing after a period of 12 years

from date of commercial operation shall be spread over the balance useful life of

the asset. The transmission assets in the instant petition have been considered to

be put on commercial operation after the licence was granted by the Commission

to the petitioner on 9.5.2011, though the actual COD is 16.8.2008. Accordingly, the

transmission assets will complete 12 years beyond 2013-14. As such, to

determine the allowable depreciation, first the cost of transmission assets as on

effective date has been considered as under:-

(` in lakh)

Particulars 2008-09 2009-10 2010-11 2011-12

Serviceable Gross Block (a) 27725.19 28255.64 28255.64 28255.64

Addition during 2009-14 530.46 - - -

Closing Gross Block 28255.64 28255.64 28255.64 28255.64

Average Gross Block 27990.42 28255.64 28255.64 28255.64

Rate of Depreciation 3.2311% 5.2610% 5.2610% 5.2610%

Depreciation (as per the petitioner) 912.97 1480.08 1480.08 154.09

Cumulative Depreciation (b) 912.97 2393.05 3873.13 4027.22

Fixed assets as on effective date (a-b)

24228.42

41. In view of above, the allowable depreciation has been considered as

hereunder:-

(` in lakh)

Particulars 2011-12 2012-13 2013-14

Opening Gross Block 24228.42 24228.42 24228.42

Additional Capital Expenditure - - -

Closing Gross Block 24228.42 24228.42 24228.42

Average Gross Block 24228.42 24228.42 24228.42

Rate of Depreciation 5.2461% 5.2461% 5.2461%

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Operation and Maintenance Expenses (O&M Expenses)

42. Clause (g) of Regulation 19 of the 2009 Tariff Regulations specifies norms

for O&M Expenses for transmission system based on type of sub-stations and the

transmission line. Norms specified in respect of O&M Expenses for transmission

assets covered in the petition are as follows:-

Elements 2011-12 2012-13 2013-14

D/C (Twin and Triple conductor (` lakh per km) 0.701 0.741 0.783

43. Accordingly, the allowable O & M Expenses for the instant assets are as

under:-

(` in lakh)

Particulars 2011-12 (pro-rata)

2012-13 2013-14

O & M Expenses 446.01 525.54 555.49

Interest on Working Capital

44. The components of the working capital and the interest thereon are

discussed hereinafter:-

(i) Receivables As per Regulation 18(1) (c) (i) of the 2009 Tariff Regulations, receivables

as a component of working capital will be equivalent to two months of fixed

Depreciable Value 21798.38 21798.38 21798.38

Remaining Depreciable Value 21798.38 20659.66 19388.61

Depreciation 1138.72 1271.05 1271.05

340


cost. The petitioner has claimed the receivables on the basis of 2 months

of annual transmission charges claimed in the petition. In the tariff being

allowed, receivables have been worked out on the basis of 2 months

transmission charges.

(ii) Maintenance Spares Regulation 18 (1) (c) (ii) of the 2009 Tariff Regulations provides for

maintenance spares @ 15% per annum of the O & M Expenses as part of

the working capital from 1.4.2009. The value of maintenance spares has

accordingly been worked out.

(iii) O & M Expenses Regulation 18(1) (c) (iii) of the 2009 Tariff Regulations provides for O&M

Expenses for one month to be included in the working capital. The

petitioner has claimed O&M expenses for 1 month of the respective year.

This has been considered in the working capital.

(iv) Rate of Interest on Working Capital In accordance with clause (3) of Regulation 18 of the 2009 Tariff

Regulations, as amended, rate of interest on working capital shall be on

normative basis and shall be equal to State Bank of India Base Rate @

11.75% (Base rate as on 1.4.2011 i.e. 8.25% plus 350 basis points) for the

instant assets. The interest on working capital for the assets covered in the

petition has been worked out accordingly.

341


45. The necessary computation in support of the interest on working capital is

as under:-

(` in lakh)


2012-13 2013-14

Maintenance Spares 74.68 78.83 83.32

O & M expenses 41.49 43.80 46.29

Receivables 303.02 307.86 313.09

Total 419.19 430.49 442.72

Rate of Interest 11.75% 11.75% 11.75%

Interest 44.13 50.58 52.02

Transmission Charges

46. The transmission charges allowed for the instant assets are as under:-

(` in lakh)


2012-13 2013-14

Depreciation 1138.72 1271.05 1271.05

Interest on Loan - - -

Return on Equity - - -

Interest on Working Capital 44.13 50.58 52.02

O & M Expenses 446.01 525.54 555.49

Total 1628.86 1847.17 1878.56

Sharing of Transmission Charges

47. The billing, collection and disbursement of the transmission charges shall be

governed by the provision of Central Electricity Regulatory Commission (Sharing of

Inter-state Transmission Charges and Losses) Regulations, 2010 as amended from

time to time.

48. This order disposes of Petition No. 135/TT/2012.

sd/- sd/- sd/-

(A.S. Bakshi) (A.K. Singhal) (Gireesh B. Pradhan) Member Member Chairperson

342

ANNEXURE P-21 343

ROP in Petition No. 313/TT/2014 Page 1 of 2


Petition No. 313/TT/2014

Subject : Approval of annual fixed cost and determination of tariff for the licensed transmission business for the financial year 2014-19 and truing up for the financial year 2011-14.

Date of Hearing : 11.7.2017

Coram : Shri Gireesh B. Pradhan, Chairperson Shri A. K. Singhal, Member Shri A.S. Bakshi, Member

Dr. M. K. Iyer, Member

Petitioner : Jindal Power Limited

Respondents : Jindal Power Limited and 27 others

Parties present : Shri M.G. Ramachandran, Advocate, JPL Shri Hemant Singh, Advocate, JPL Shri Nimesh Jha Advocate, JPL Shri Anshuman Sharma, Advocate, JPL Shri Shreshth Sharma, Advocate, JPL Shri M.N. Ravi Shankar, JPL

Record of Proceedings

The learned counsel for Jindal Power Limited submitted that the information sought by the Commission vide ROP dated 25.10.2016 has been submitted and any additional information, if required, shall also be provided.

2. The Commission directed the petitioner to submit the following additionalinformationon affidavit, with an advance copy to the respondents, by 11.8.2017

(a) Directors Report and Auditor's comments on the bifurcated financialaccounts for the period as on actual date of commercial operation 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 including the date oflicense.

(b) It has been submitted that transmission billing for the period 9.5.2011 to30.6.2011 amounting to `6.6 crore is presently outstanding which forms a part ofcurrent asset under trade receivables component of the balance sheet. Clarify

ANNEXURE P-23 409

ROP in Petition No. 313/TT/2014 Page 2 of 2

under which financial year the said outstanding amount has been accounted as receivable as part of current assets by reconciling with financial statements. (c) Details for additional O&M Expenses claimed for 2009-14 period.

3. The Commission directed the respondents to file their replies by 21.8.2017 with an advance copy to the petitioner who shall file its rejoinder, if any by 28.8.2017 failing which the matter would be decided on the basis of the information already available on record.

By order of the Commission

Sd/-

(T. Rout) Chief (Law)

410

ANNEXURE P-24 (Colly)

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CENTRAL ELECTRICITY REGULATORY COMMISSION

No. L-7/165(180)/2008-CERC New Delhi, the 26th May 2009

NOTIFICATION

In exercise of powers conferred under Section 178 of the Electricity Act,

2003 and all other powers enabling it in this behalf and after previous publication,

the Central Electricity Regulatory Commission hereby makes the following

regulations, namely:

CHAPTER - I -- PRELIMINARY

1. Short Title and Commencement(1) These regulations may be called the Central Electricity Regulatory

Commission (Procedure, Terms and Conditions for grant of Transmission

Licence and other related matters) Regulations, 2009.

(2) These regulations shall come into force from the date of their

publication in the official gazette.

2. Definitions and Interpretation

(1) In these regulations, unless the context or subject-matter otherwise

requires,-(a) “Act” means “The Electricity Act, 2003 (36 of 2003);

(b) “agreement” means the agreement, contract, memorandum of

understanding, or any other covenant on any aspect relating to the inter-

State transmission of electricity, entered into between the licensee, the

long-term customers and the Central Transmission Utility or the deemed

licensee;

416ANNEXURE P-25

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(c) “applicant” means a person who has made an application for grant of

licence or, for amendment of licence, as the case may be;

(d) “application” means the application made for grant of licence or, for

amendment of licence, as the case may be, and includes annexures,

enclosures to such application;

(e) “bid process coordinator” means an agency notified by the Central

Government for coordinating the process of inviting bids for procurement of

services for inter-State transmission of electricity in accordance with the

guidelines for competitive bidding;

(f) “Central Transmission Utility” means the Central Transmission Utility

notified by the Central Government under sub-section (1) of Section 38 of

the Act;

(g) “Commission” means the Central Electricity Regulatory Commission

referred to in Section 76 of the Act;

(h) "deemed licensee” means a person, who is deemed to be a licensee for

inter-State transmission of electricity under any of the provisos to Section

14 of the Act;

(i) “Empowered Committee” means the Empowered Committee referred to

in the guidelines for encouraging competition;

(j) “financial year” means a period of twelve months commencing on 1st April

of a year and terminating on 31st March of the following year;

(k) “Grid Code” means the Indian Electricity Grid Code specified by the

Commission under clause (h) of sub-section (1) of Section 79 of the Act;

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(l) “guidelines for competitive bidding” means the guidelines issued by the

Central Government from time to time in terms of Section 63 of the Act for

development of transmission projects;

(m) “guidelines for encouraging competition” means the guidelines issued

by the Central Government for encouraging competition in development of

transmission service;

(n) “licence” means a licence granted by the Commission under Section 14

of the Act to a person to undertake inter-State transmission of electricity;

(o) “licensee” means a person who has been granted a licence, and

includes a deemed licensee;

(p) "long-term customer” means a long-term customer as defined in the

Central Electricity Regulatory Commission (Open Access in interState

Transmission) Regulations, 2008, including statutory amendments and

re-enactments thereof;

(q) “project” means an element or elements of the inter-State transmission

system included in the transmission plan;

(r) “standards” means the technical standards, safety requirements and grid

standards specified by the Central Electricity Authority under Section 73 of

the Act;

(s) “state owned or controlled company” means a company in which not less

than fifty one percent of the paid-up share capital is held or the majority of

directors on whose Board are appointed, by the Central Government, or by

any State Government or Governments, or by any Government company or

companies, or by the Central Government and any State Government or

Governments and any Government company or companies;

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(t) “transmission charges“ means the transmission charges approved or

adopted, as the case may be, by the Commission for the project;

(u) “transmission plan” means the short-term and perspective plan prepared

by the Central Electricity Authority or network plan prepared by the Central

Transmission Utility in accordance with the National Electricity Policy.

(2) Save as aforesaid and unless repugnant to the context or the subject-matter

otherwise requires, words and expressions used in these regulations and not

defined, but defined in the Act or the Grid Code shall have the meanings assigned

to them respectively in the Act or the Grid Code.

(3) The General Clauses Act, 1897 (10 of 1897), as amended from time to time,

shall apply for the interpretation of these regulations as it applies for interpretation

of an Act of Parliament.

CHAPTER - II -- SELECTION OF PROJECT AND IMPLEMENTING AGENCY

3. Selection of Projects

The Empowered Committee shall identify the projects included in the transmission

plan to be developed under the guidelines for competitive bidding.

4. Project Developer

(1) In case of the projects identified by the Empowered Committee for

development under the guidelines for competitive bidding, selection of the project

developer shall be made in accordance with the procedure laid down under these

guidelines.

(2) The projects included in the transmission plan and not identified by the

Empowered Committee to be developed under the guidelines for competitive

bidding may be developed by the Central Transmission Utility or other deemed

419

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licensee, or a state owned or controlled company identified as project developer on

or before 5.1.2011.

CHAPTER - III -- GRANT OF LICENCE

5. Proceedings before the Commission

All proceedings before the Commission under these regulations shall be governed

by the Central Electricity Regulatory Commission (Conduct of Business)

Regulations, 1999, including amendments and statutory re-enactments thereof.

6. Eligibility for Grant of licence No person shall be eligible for grant of licence unless it is–

(a) selected through the process under the guidelines for competitive

bidding, or

(b) a state owned or controlled company identified as a project

developer on or before 5.1.2011, or

(c) a generating company which has established the dedicated

transmission line, and intends to use such dedicated transmission line as

the main transmission line and part of the inter-State transmission system:

7. Procedure for Grant of Licence

(1) The application for grant of licence shall be made to the Commission in

Form-I appended to these regulations and shall be accompanied by such fee as

may be prescribed by the Central Government from time to time.

(2) In case of the person selected for implementation of the project in

accordance with the guidelines for competitive bidding, the application shall also

contain such additional information, as may be required under these guidelines.

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(3) The application shall be supported by affidavit of the person acquainted with

the facts stated therein.

(4) Before making an application, the applicant shall serve a copy of the

application on each of the long-term customers of the project and shall submit

evidence to that effect along with the application and shall also post the complete

application along with annexures and enclosures on its web site, the particulars of

which shall be given in the application.

(5) The application shall be kept on the web site till such time the licence is

issued or the application is rejected by the Commission.

(6) Immediately on making the application, the applicant shall forward a copy of

the application to the Central Transmission Utility.

(7) The applicant shall, within 7 days after making the application, publish a

notice of its application in Form-II attached to these regulations, in at least two daily

newspapers, one in English language and one in vernacular language, having

circulation in each State or Union Territory where an element of the project or a

long-term customer is situate, in the same language as of the daily newspaper in

which the notice of the application is published.

(8) As far as possible, within 7 days of receipt of the application the Secretariat

of the Commission shall convey defects, if any, if noticed on preliminary scrutiny of

the application for rectification and the defects conveyed shall be rectified by the

applicant in such time as may be indicated in the letter conveying the defects.

(9) In the notice published in the newspapers under clause (7) it shall be

indicated that the suggestions and objections, if any, on the application, may be

filed before the Secretary, Central Electricity Regulatory Commission, Third Floor,

Chanderlok Building, Janpath, New Delhi-110001 (or the address where the office

of the Commission is situated), with a copy to the applicant, by any

421

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person, including the long-term customers, within 30 days of publication of the

notice,.

(10) The applicant shall within 15 days from the date of publication of the notice

as aforesaid submit to the Commission on affidavit the details of the notice

published, indicating the newspapers in which the notice has been published and

the date and place of their publication and shall also file before the Commission the

relevant copies of the newspapers, in original, in which the notice has been

published.

(11) The Central Transmission Utility shall send its recommendations, if any, to

the Commission on the proposal made in the application within a period of thirty

days from the date of receipt of application by it:

Provided that copy of the recommendations, if any, made by the Central

Transmission Utility shall always be forwarded to the applicant;

Provided further that the recommendations of the Central Transmission

Utility shall not be binding on the Commission.

(12) The applicant may file its comments, duly supported by an affidavit, on the

recommendations made by the Central Transmission Utility and the suggestions

and objections, if any, received in response to the public notice published by him,

within 45 days of service of copy of the application on the Central Transmission

Utility or publication of notices in the newspapers, with an advance copy to the

Central Transmission Utility or the person who has filed the suggestions and

objections on the proposal made in the application, as the case may be.

(13) The Commission after considering the suggestions and objections received

in response to the public notice published by the applicant and the

recommendations, if any, of the Central Transmission Utility may, propose to grant

the licence or for reasons to be recorded in writing, reject the application.

422

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(14) Before granting a licence, the Commission shall publish a notice of its

proposal in such two daily newspapers, as the Commission may consider

appropriate, stating the name and address of the person to whom it proposes to

grant the licence, details of the project for which it proposes to grant licence,

location or route of the elements of the project, in addition to any other details that

the Commission may consider appropriate, to invite further suggestions and

objections on its proposal.

(15) The Commission may after consideration of the further suggestions and

objections, if any, received in response to the public notice as aforesaid, grant

licence as nearly as practicable in Form-III attached to these regulations or for

reasons to be recorded in writing, reject the application if such application is not in

accordance with the provisions of the Act, the rules or regulations made thereunder

or any other law for the time being in force or for any other valid reason.

(16) The Commission may before granting licence or rejecting the application

provide an opportunity of hearing to the applicant, the Central Transmission Utility,

the long-term customers, or the person who has filed suggestions and objections,

or any other person:

Provided further that the applicant shall always be given a reasonable

opportunity of being heard before rejecting the application.

(17) The Commission shall within 15 days of making the order to grant the licence,

send a copy of the licence to the Central Government, the Central Electricity

Authority, the Central Transmission Utility, the applicant and the long-term

customers.

CHAPTER - IV -- TRANSMISSION CHARGES

8. Determination of Transmission Charges

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(1) In case the licensee has been selected for implementation of the project in

accordance with the guidelines for competitive bidding, the transmission charges

shall be adopted by the Commission in accordance with Section 63 of the Act.

(2) In all other cases, the transmission charges, incentive, or disincentive and

other charges shall be determined in accordance with the terms and conditions for

determination of tariff specified by the Commission under Section 61 of the Act and

in force from time to time.

9. Impact of Change of Law on Transmission Charges

In case the licensee has been selected for development of the project in

accordance with the guidelines for competitive bidding, impact of change of law on

the transmission charges shall be subject to the provisions made in the

agreements.

CHAPTER – V -- TERMS AND CONDITIONS OF LICENCE 10. Obligations of Licensee

(1) The licensee shall, during the validity of the licence, maintain insurance

in accordance with prudent utility practices or as may be necessary under-

(a) any of the agreements; and

(b) the laws in force in India:

Provided that the licensee may opt for self-insurance.

(2) The licensee shall build the project in a time-bound, efficient, coordinated

and economical manner.

(3) The licensee shall, establish, operate and maintain the project in

accordance with the prudent utility practices and the agreements.

(4) The licensee shall comply with such directions of the National Load

Despatch Centre under section 26 of the Act, or the Regional Load Despatch

424

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Centre under sub-section (3) of section 28 or sub-section (1) of section 29 thereof,

as may be issued from time to time for maintaining the availability of the project:

Provided that without prejudice to any other action which may be taken

against the licensee under any other law for the time being in force, the

Commission, on an application made by the National Load Despatch Centre or the

Regional Load Despatch Centre and after hearing the licensee, on being satisfied

that the licensee has failed to maintain the availability of the transmission system

may issue such directions to the National Load Despatch Centre or the Regional

Load Despatch Centre to take control of the operations of the transmission system

of such licensee for such period and on such terms, as the Commission may

decide.

(5) The licensee shall strictly comply with all laws in force and, in particular, the

Act, the rules and regulations framed pursuant to the Act, the Grid Code, the

standards, orders and directions issued by the Commission.

(6) The licensee shall provide non-discriminatory open access to its

transmission system for use by any other licensee, including a distribution licensee

or an electricity trader, or generating company or any other person in accordance

with the Central Electricity Regulatory Commission (Open Access in inter-state

Transmission) Regulations, 2008, as amended from time to time.

(7) The licensee shall pay the licence fee in accordance with the Central

Electricity Regulatory Commission (Payment of Fee) Regulations, 2008 or such

other regulations as may be in force from time to time.

(8) Wherever prior approval of the Commission is required, the licensee shall

make an appropriate application before the Commission in accordance with

Central Electricity Regulatory Commission (Conduct of Business) Regulations,

1999 as amended from time to time including statutory re-enactment thereof,.

425

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(9) The licensee shall comply with all other regulations, including the regulations

specified by the Commission regarding utilisation of the transmission assets for a

business other than transmission of electricity.

11. Prohibited Activities

The licensee shall not enter into any contract or otherwise engage in the business

of trading of electricity:

12. Assignment of Licence

In case of default by the licensee in debt repayment, the Commission may, on an

application made by the lenders, assign the licence to a nominee of the lenders.

1[13. Term of Licence.- (1) The transmission licence shall, unless revoked earlier,

continue to be in force for a period of 25 years from the date of issue.

(2) If the useful life of the transmission asset for which transmission licence has

been issued extends beyond the period of 25 years, the Commission may consider

on merit of each case to grant licence for another term for which the licensee may

make an application in accordance with Regulation 7 two years before the expiry of

the initial period of licence:

Provided that when the licensee does not make an application for grant of

licence beyond the initial period of 25 years, the Commission may, to protect the

interest of the consumers or in public interest, issue such directions or formulate

such schemes as it may deem necessary for operation of the transmission assets

for the remaining part of its useful life.

(3) Where the tariff of the transmission assets has been determined by the

Commission under Section 62 of the Act, the tariff of such assets beyond the

period of 25 years shall be determined in accordance with the tariff regulations

applicable at that point of time:

1 Substituted vide amendment dated 25.5.2010

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(4) Where the Request for Proposal (RFPs) for the projects have been issued or

the projects have been awarded on the basis of competitive bidding under Section

63 of the Act on the date of notification of these regulations, the tariff of such

transmission assets beyond the initial period of licence shall be determined in

accordance with the following guidelines:

(i) For computation of Return on Equity, equity base shall be 30% of the Gross

Block or the actual equity invested in the project as per balance sheet as at the end

of 25th year whichever is lower, subject to prudence check by the Commission;

(ii) Other financial and technical norms i.e. Return on Equity, Interest on Loan,

O&M Expenses, Interest on working capital, target availability, incentive etc. shall

be considered on the basis of norms of tariff prevalent during the period in which

the initial period of licence is due to expire;

(5) For all future projects to be developed through competitive bidding, the

bidders shall be required to quote the tariff upto 35th year from date of commercial

operation which shall be considered for bid evaluation:

Provided that in case the licence is granted for another term, the tariff for

the extended period upto 35th year shall be payable on the basis of the rate quoted

at the bidding and adopted by the Commission for the respective year of operation.

(6) In case the transmission licensee covered under clauses (4) and (5) of this

regulation decides to undertake renovation & modernization of the transmission

system after the initial period of licence, it shall make an application for approval of

the cost of renovation and modernization alongwith the application for grant of

fresh licence, which shall be considered by the Commission in accordance with the

prevalent norms.]

14. Consequences of Late Payment or Non-payment of Licence Fee

Notwithstanding the liability of the licensee to pay the late payment surcharge

under the Central Electricity Regulatory Commission (Payment of Fee)

Regulations, 2008 or any other regulations in force, delay in payment or non-

payment of the licence fee or a part thereof, for a period exceeding 60 days, shall

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be construed as breach of the terms and conditions of the licence.

15. Accounts of the Licensee The licensee shall -

(a) maintain separate accounts for each business, including the

business of the undertaking utilising assets of the project, in such form and

containing such particulars as may be specified by the Commission and till

such time these are specified by the Commission, the accounts shall be

maintained in accordance with the Companies Act, 1956, as amended from

time to time.

(b) prepare from such records, accounting statements for each financial

year comprising a profit and loss account, a balance sheet and a statement

of source and application of funds together with notes thereto and showing

separately the amounts of any revenue, cost, asset, liability, reserve, or

provision which has been either:

(i) charged from or to any other business together with a

description of the basis of that charge; or

(ii) determined by apportionment or allocation between the

various business activities together with a description on the basis of

the apportionment or allocation.

(c) get the accounting statements prepared in accordance with

foregoing clauses, duly certified by the Auditors in respect of each

financial year, stating whether in their opinion the statements have been

properly prepared and give a true and fair view of the revenues, costs,

assets, liabilities, reserves reasonably attributable to the business to

which the statements relate.

16. Inspection of Accounts

Any person authorised by the Commission shall be entitled to inspect and verify

the accounts of the licensee at any reasonable point of time and the licensee shall

be under obligation to render all necessary assistance to the person so authorized

for inspection of accounts.

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17. Submission of Information

The licensee shall submit such information, as may be called for from time to time

by the Commission or the Regional Load Despatch Centre, or the Regional Power

Committee in order to fulfill responsibility of supervision and control over the

inter-State transmission system entrusted under the Act:

Provided that the Regional Load Despatch Centre or the Regional Power

Committee may from time to time, report to the Commission, such of the

developments, as they consider appropriate in regard to performance of licensee.

18. Prudential Reporting

The licensee shall, as soon as practicable, report to the Commission:

(a) any change in major shareholding, ownership or management of the

licensee. and

(b) any proceedings initiated by one or more of the parties signing the

agreement for interpretation, amendment or termination of the agreement.

19. Amendment of Licence

(1) The Commission may of its own motion or on an application made by the

licensee or otherwise make such alterations and amendments in the terms and

conditions of licence if the Commission is of the opinion that the public interest so

requires:

Provided that before ordering any alterations and amendments in the terms

and conditions of the licence, proposed to be made otherwise than on the

application of the licensee, the Commission shall publish a notice in two such daily

newspapers as it considers necessary with the following particulars, namely:-

(a) name and address of the licensee;

(b) alterations and modifications proposed to be made;

(c) grounds for such alterations and modifications; and

(d) statement inviting suggestions, if any, on the proposal for

consideration of the Commission within the time specified in the

notice.

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(2) The procedure specified in regulation 7 shall mutatis mutandis be applicable

in case the licensee makes an application for any alteration of or modification to

the terms and conditions of the licence.

(3) Where the licensee has made an application proposing any alteration

and modification of its licence, it shall publish a notice of such application, with

the following particulars, namely:-

(a) name of the applicant;

(b) that an application for alteration and modifications has been made

before the Commission;

(c) details of alteration and modifications proposed in the application,

(d) reasons for seeking such alterations and modifications;

(e) a statement that the application made before the Commission has

been posted on the web site and can also be inspected in the office of the

applicant;

(f) a statement that any suggestion to the proposal for alteration and

modifications made in the application may be submitted to the Secretary of

the Commission within one month of publication of the notice;

Note: For the purpose of this regulation and regulation 20, the term

“licensee” does not include the deemed licensee.

20. Revocation of Licence

(1) The Commission may revoke the licence, in any of the following

circumstances, namely:-

(a) Where the licensee in the opinion of the Commission, makes willful

and prolonged default in doing anything required of it by or under the Act, or

the Rules or the regulations framed pursuant to the Act;

(b) Where the licensee breaches any of the terms and conditions of its

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licence;

(c) Where the licensee fails, within the period fixed in this behalf by its

licence or any longer period which the Commission may allow therefor, to

show to the satisfaction of the Commission, that it is in a position fully and

efficiently to discharge the duties and obligations imposed on him by its

licence;

(d) Where in the opinion of the Commission the financial position of the

licensee is such that it is unable to fully and efficiently discharge the duties

and obligations imposed on it by its licence;

(e) Where licensee has failed or neglected to undertake transmission in

electricity;

(f) Where the licensee fails to submit the information as required under

these regulations;

(g) Where the licensee breaches any of the terms and conditions of

Transmission Service Agreement during the construction or operations

phase;

Provided that the licence shall not be revoked except after an

enquiry by the Commission in accordance with principles of natural justice,

and unless the licensee has been given not less three months’ notice in

writing stating the grounds for revocation of licence and considering the

cause shown by the licensee within the period of that notice against the

proposed revocation:

Provided further that the Commission may, instead of revoking the

licence, permit the licence to remain in force subject to such further terms

and conditions as it thinks fit to impose, and any further terms and

conditions so imposed shall be binding upon and be observed by the

licensee and shall be of like force and effect as if they were contained in the

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licence.

(2) When the licensee makes an application for revocation of the licence and

the Commission is satisfied that public interest so requires, the Commission may

revoke licence, on such terms and conditions as it thinks fit.

(3) The Commission shall serve a notice of revocation upon the licensee and fix

a date on which the revocation shall take effect and shall simultaneously specify

how and by whom the obligations under the licence are to be discharged after such

revocation.

(4) If the Commission at any stage is satisfied that the project has been

abandoned by the licensee thereby affecting its construction, operation or

maintenance, the Commission may direct the Central Transmission Utility or any

other person found suitable by the Commission, to immediately take over

construction, operation or maintenance of the project as an interim measure

pending finalization of proceedings for revocation of licence and sale and vesting

of utilities of the licensee in accordance with sections 20 and 21 of the Act.

CHAPTER - VI -- MISCELLANEOUS

21. Procedure for Securing Compliance of Terms and Conditions of Licence

(1) Where the Commission, on the basis of material in its possession is

satisfied that the licensee is contravening, or is likely to contravene, the terms and

conditions of licence, it shall serve a notice to the licensee narrating the terms and

conditions of licence contravened or likely to be contravened by him to seek its

explanation.

(2) The notice may be served on him by delivering the same at the registered

office or at the usual or its last known place of residence or business, either through

registered post or speed post or by hand delivery through a messenger or

publication in the newspaper where the Commission is satisfied that it is not

reasonably practicable to serve the notice on the licensee through registered

post/speed post or by hand delivery or in any other manner as considered

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appropriate by the Commission in the facts and circumstances of the case.

(3) The Commission if it considers that it is necessary to bring the matters to

the attention of persons affected or likely to be affected by such contravention,

shall publish a notice in one or more newspapers specifying the terms and

conditions contravened or likely to be contravened by the licensee to invite

suggestions from such persons.

(4) The licensee or the persons affected or likely to be affected by the

contravention of the terms and conditions of the licence by the licensee may file

their objections or suggestions within 30 days from the date of receipt of notice

under clause (1) or publication of notice in the newspapers under clause (3), as the

case may be.

(5) The Commission shall on consideration of the objections and suggestions

received as aforesaid, pass such order or give such directions as may be

necessary to secure compliance of the terms and conditions of license.

22. Dispute Resolution

(1) All disputes or differences arising out of or connected with the interpretation of

the licence or the terms and conditions thereof, shall, as far as possible, be

resolved by mutual consultation and reconciliation in accordance with the

agreements.

(2) In the event of failure of the parties to resolve the disputes or differences in the

manner stated in clause (1), these shall be referred by the licensee to the

Commission for adjudication or arbitration, within one month of recording of such

failure.

23. Communication

(1) All communications under these regulations shall be in writing and shall be

delivered either in person to the addressee or its authorised agent, or sent by

registered post or speed post at the registered office or at the usual or last known

place of residence or business of the addressee.

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(2) All communications shall be deemed to have been given by the sender and

received by the addressee –

(a) when delivered in person to the addressee or to its authorised agent;

or

(b) on expiry of 15 days from the date of sending the communication by

registered or speed post at the address of the addressee.

24. Power to Relax

The Commission may, when it considers necessary or expedient to do so and for

reasons to be recorded in writing, relax or depart from any of the provisions of

these regulations.

25. Repeal and Saving

(1) Save as otherwise provided in these regulations, the Central Electricity

Regulatory Commission (Procedure, Terms & Conditions for grant of Transmission

Licence and other related matters) Regulations, 2003 are hereby repealed.

(2) The projects approved by the Commission prior to commencement of these

regulations shall be treated as special projects and these regulations shall apply to

such projects from the date of commencement of these regulations.

Sd/- (Alok Kumar)

Secretary

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FORM-I

Application Form for Grant of Transmission licence

1. Particulars of the Applicant

i) Name of the Applicant :

ii) Status : Individual/ partnership firm/ Private

Limited Company/ Public Limited

Company

iii) Address :

iv) Name, Designation & Address :

of the Contact Person

v) Contact Tel. No. :

vi) Fax No. :

vii) Email ID :

viii) Place of Incorporation/Registration :

ix) Year of Incorporation/Registration :

x) Following documents are to be enclosed:

(a) Certificate of registration

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(b) Original Power of Attorney of the

signatory to commit the

Applicant or its promoter

2. Particulars of the Project for which licence is being sought:

(a) Transmission Lines:

S.No. Name (end-points

location)

Voltage Class

(kV)

Length (Km) Type (S/C or

D/C)

(b) Sub-stations

S.No. Name

(location)

Voltage

Level(s)

(kV)

Transformer

(Nos. and

MVA

capacity)

Reactive / capacitive

compensation (device

with MVAR capacity)

No. of

bays

(c) Commissioning schedule; (d) Identified Long-term transmission customers of the Project:

(Agreements or status of discussion on Agreements to be submitted along with

application)

(e) Any other relevant information

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3. Levelised transmission charges in case of project selected through the

transparent process of competitive bidding and estimated completion cost of the

project in other cases:

(The levelised transmission charges estimated cost should be indicated in INR,

along with the base month and year in case of the estimated cost)

4. In case applicant has been selected in accordance with the guidelines for

competitive bidding, enclose:

(a) Recommendation of selection by the Empowered Committee

(b) Evaluation report made public by the Bid Process Coordinator.

5. List of documents enclosed:

Name of document

a)

b)

c)

d)

Dated :

Place:

(Signature of Applicant or the person Authorised

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Form II

(Form of Public Notice)

Monogram, if any, of the applicant

Name of the applicant (In bold letters)

Address of the applicant (In bold letters)

NOTICE (In bold letters)

(Under sub-section (2) of Section 15 of the Electricity Act, 2003)

(In bold letters)

(To be published in at least two daily newspapers, one in English and the other in the

vernacular language having circulation in each of the State/Union Territory where any

element of the Project or the long-term customer is situate in the same language as of the

daily newspapers.)

1. ……….. (Give here name of the applicant in BOLD LETTERS), having its Registered

Office at ……..(Give the address in BOLD LETTERS), which is incorporated under the

Companies Act, 1956, has made an application before the Central Electricity Regulatory

Commission, New Delhi under sub-section (1) of Section 15 of the Electricity Act, 2003

for grant of transmission licence in respect of the transmission lines, sub-stations and

other assets, the details of which are given

Sl.

No. Name of the line/Sub-

station (location)

Line length1/ Capacity2

Estimated Completion

Cost3 or Levelised

Transmission Charges4

(If applicant is selected

in accordance with

guidelines for

competitive bidding)

Commissioning

Schedule

Remarks 5

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Explanatory note: These are explanatory notes for submitting above information and not to be

included in the public notice. 1. In case of a transmission line. 2. In case of a sub-station. 3. The estimated cost in INR along with the base month and year of the estimated cost. 4. Levelised Transmission Charges based on tariff quoted and discount factor and

escalation factor used for evaluation by Bid Process Coordinator. 5. In the remarks column, in addition to any other details that may be considered

necessary, it should be clearly mentioned whether any of the assets will traverse or will be located, wholly are partly, in any cantonment, aerodrome, fortress, arsenal, dockyard or camp or any of the buildings or place in occupation of the Government for Defence purposes or up to a distance of 2

2. Complete application and other documents filed before the Commission are

available on the web site …….. (Give web site address) for access by any person.

The application can also be inspected at the office of the Company at………..

(Give address or reference to address, if given in the monogram) with ……… (Give

name of the person authorised to allow inspection) or Office of the Commission in

accordance with the procedure specified by the Commission.

3. Objections or suggestions, if any, be filed before the Secretary, Central

Electricity Regulatory Commission, ……………(Give address of the Office of the

Commission), with a copy of the objection(s)/suggestion(s) to the applicant or its

authorized agent, within 30 days of the publication of the notice in the newspaper.

Place : Name and Designation of the

Authorised signatory

Date :

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Form-III


TRANSMISSION LICENCE

1. The Central Electricity Regulatory Commission (hereinafter referred to as

“Commission”), in exercise of the powers conferred under Section 14 of the

Electricity Act, 2003 (hereinafter referred to as “Act”), hereby grants the licence

to ……. (hereinafter referred to as the licensee) to construct, own, maintain and

operate……. (Name of the Project), more

specifically described in the schedule attached to this licence, which shall be

read as a part and parcel of this licence, subject to the Act, the rules and the

terms and conditions specified under the Central Electricity Regulatory

Commission (Procedure, Terms and Conditions for grant of Transmission

Licence and other related matters) Regulations, 2008 which shall be read as

part and parcel of this licence.

2. The conditions such as but not limited to, completion schedule, transfer value,

liquidated damages, Project Implementation Guarantee Deposit, escalation

due to domestic inflation, which are specified in bid documents and provisions

in the Agreements, shall be treated as part of this licence, unless these

provisions are contrary to the Central Electricity Regulatory Commission

(Procedure, Terms and Conditions for grant of Transmission Licence and other

related matters) Regulations, 2008.

3. This licence is not transferable, except as provided in the Central Electricity

Regulatory Commission (Procedure, Terms and Conditions for grant of

Transmission Licence and other related matters) Regulations, 2008.

4. The grant of licence to the licensee shall not in any way or manner restrict the

right of the Commission to grant a licence to any other person within the same

area for the transmission system other than the Project described in the

schedule attached to this licence. The licensee shall not claim any exclusivity.

440

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5. The licence shall, unless revoked earlier, continue to be in force for a period of

25 (twenty five) years from the date of issue.

Place: New Delhi.

Date: ……………..

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SCHEDULE

1.0 Project Related Details:

The Project comprises of following elements of the Inter-State Transmission

System:

S.No. Name of the

transmission element

Scheduled date of

commissioning

Place: New Delhi

Date: ……………………

442

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