CENTRAL ELECTRICITY REGULATORY COMMISSION

NEW DELHI

Petition No. 173/TT/2016

Coram:

Shri Gireesh B. Pradhan, Chairperson

Shri A.K. Singhal, Member
Shri A.S. Bakshi, Member
Dr. M.K. Iyer, Member

Date of Order: 19.12.2017

In the matter of:

Truing up of transmission tariff of 2009-14 tariff period under Regulation 6 of Central

Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2009,
and determination of transmission tariff for 2014-15 tariff period Central Electricity
Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014 of
Maharashtra State Electricity Transmission Company Ltd. (MSETCL) owned
Transmission Lines/System conveying electricity to other States under Regulation 86
of Central Electricity Regulatory Commission (Conduct of Business) Regulations,
1999.

And in the matter of:

Maharashtra State Electricity Transmission Company Limited

„Prakashganga‟, Plot No. C-19, E-Block,
Bandra Kurla Complex, Bandra (East),
Mumbai-400 051 ……Petitioner

Vs

1. Power Grid Corporation of India Limited

"Saudamini", Plot No. 2, Sector-29,
Near IFFCO Chowk,
Gurgaon-122 001

2. M. P. Power Transmission Company Limited

Block No.2, Shakti Bhawan, Rampur
Jabalpur-482 008

3. Gujarat Energy Transmisison Coporation Limited

Sardar Patel Vidyut Bhawan,

Order in Petition No. 173/TT/2016 Page 1 of 26

 Race Cource, Vadodara-390 007

4. Electricity Department,
Goa, Vidyut Bhawan,
3rd Floor, Tiswadi,
Panji-403 001

5. Karnataka Power Transmission Coporation Limited

Kaveri Bhavan, K. G. Road,
Bangalore-560 009 ……Respondents

For petitioner : Shri Shrikant B. Petkar, MSETCL

Shri R. N. Fatekade, MSETCL

For respondents : None

ORDER

The present petition has been filed by Maharashtra State Electricity

Transmission Company Limited (MSETCL) for truing up of capital expenditure of

2009-14 tariff period for combined 09 nos. of Transmission Lines/System (hereinafter

referred to as “transmission assets”) owned by MSETCL conveying electricity to other

States (hereinafter referred to as “transmission scheme”), under Regulation 6 of the

Central Electricity Regulatory Commission (Terms and Conditions of Tariff)

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

actual capital expenditure for the period from COD to 31.3.2014, and for determination

of tariff for the period from 1.4.2014 to 31.3.2015 under the Central Electricity

Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014

(hereinafter referred to as “the 2014 Tariff Regulations”).

Order in Petition No. 173/TT/2016 Page 2 of 26

2. The transmission charges for the instant lines for the period from 1.7.2011 to

31.3.2012, 2012-13 and 2013-14 were allowed vide order dated 18.5.2015 in Petition

No. 256/TT/2013 for inclusion in the POC transmission charges in accordance with

2009 Tariff Regulations.

3. The details of the assets covered in the instant petition along with the actual

COD are furnished below:-

Srl. Name of the inter-State Transmission Connecting States Date of

No. Line COD
Asset-I: 220 kV Kalmeshwar-Pandurna Maharashtra -M.P. 4.11.1988
1
S/C line
Asset-II: 220 kV Mudshingi-Amona S/C Maharashtra-Goa 22.6.1981
2
line
Asset-III: 220 kV Tillari-Amona-2 S/C Maharashtra-Goa 11.1.1978
3
line
Asset-IV: 220 kV Nasik-Navsari-1 D/C Maharashtra-Gujarat 31.5.1977
4
line
Asset-V: 220 kV Nasik-Navsari-2 D/C Maharashtra-Gujarat 28.1.1989
5
line
Asset-VI: 220 kV Kolhapur-Chikkodi Maharashtra-Karnataka 1.11.1970
6
Ckt-I S/C line
Asset-VII: 220 kV Kolhapur-Chikkodi Maharashtra-Karnataka 1.11.1970
7
Ckt-II S/C line
Asset-VIII: 400 kV SSP-Dhule Ckt-1 Maharashtra-Gujarat 13.12.1998
8
S/C line
Asset-IX: 400 kV SSP-Dhule Ckt-2 S/C Maharashtra-Gujarat 22.12.1998
9
line

4. The details of the transmission charges allowed vide order dated 18.5.2015 in

Petition No. 256/TT/2013 for the instant assets are summarized hereunder:-

(` in lakh)
Sl. No Name of the lines Line Length 2011-12* 2012-13 2013-14
(ckt. km.) (Pro rata) (Pro-rata) (Pro-rata)
1 Asset-I 33.80 18364123 30809410 26828243
2 Asset-II 18.00 9779711 16407378 14287230
3 Asset-III 30.00 16299518 27345630 23812050
4 Asset-IV 100.00 54331725 91152100 79373500

Order in Petition No. 173/TT/2016 Page 3 of 26

 5 Asset-V 100.00 54331725 91152100 79373500
6 Asset-VI 15.41 8372519 14046539 12231456
7 Asset-VII 24.00 13039614 21876504 19049640
8 Asset-VIII 142.00 154823310 265185994 258047512
9 Asset-IX 142.00 154823310 265185994 258047512
Total 484165554 823161648 771050643
*YTC for 9 months has been taken as Sharing Regulations, 2010 came into force from
1.7.2011.

5. The petitioner was directed vide RoP dated 25.10.2016 to submit the details of

trued up ARR by the SERC for the periods 2011-12, 2012-13 and 2013-14.

6. In response, the petitioner vide affidavit dated 23.11.2016 has submitted the

following:-

(` in lakh)
Particulars ARR trued up ARR trued up in order
in order dated dated 26.6.2015 in
13.2.2014 in MERC Case No. 207 of
MERC Case 2014.
No. 39 of
2013.
2011-12 2012-13 2013-14
Aggregate Revenue 297787 348123 423488
Requirement
Less: Non-tariff and Other 47501 29585 28887
Income
Net ARR 250286 312238 394601
Add: Incentive for higher 4511 5295 6894
availability
Add: Revenue Gap of 84518 112891 96616
previous years
Total ARR 339315 430424 498111

7. The Commission in order dated 18.5.2015 in Petition No 256/TT/2013 has

considered the following ARR:-

(` in lakh)

Order in Petition No. 173/TT/2016 Page 4 of 26

ARR approved by the 2011-12 2012-13 2013-14
Commission 3393.15 4474.89 4200.05

8. The petitioner has submitted the following details of the trued up ARR for the

periods 2012-13 and 2013-14:-

(` in lakh)
Trued up ARR approved by MERC 2012-13 2013-14
as per order dated 26.6.2015. 4304.24 4981.11

9. We have considered the submissions of the petitioner. The trued-up ARR of

2011-12 was already considered in the Commission‟s order dated 18.5.2016 in

Petition No. 256/TT/2013. Based on the trued up ARR submitted by the petitioner for

the periods 2012-13 and 2013-14, we proceed to true-up the tariff of 2012-13 and

2013-14 period of the assets covered in the instant petition based on the ARR

approved by MERC.

10. The petitioner has submitted vide affidavit dated 31.8.2016 that the trued-up

ARR for the periods 2012-13 and 2013-14. The details of the approved ARR furnished

by the petitioner are given hereunder:-

Line* Type 2012-13 2013-14

+500kV HVDC 1504 1504
+800kV HVDC N.A N.A
765kV D/C N.A N.A
765kV S/C N.A N.A
400kV D/C 7348 7468
400kV D/C Quad. Moose
400 kV S/C
220 kV D/C 13978 14597
220 kV S/C
132 kV D/C 12869 13304
132 kV S/C 1722 1737
110 kV 686 686
66 kV 3281 3281

Order in Petition No. 173/TT/2016 Page 5 of 26

 ARR approved by MERC ** 4304.24 4981.11
*Line length in ckt. km. ** ARR in ` in lakh

Procedure for calculating trued-up YTC for the Nine transmission lines

11. The petitioner has submitted that the capital costs of the instant transmission

lines are not available. As such, indicative cost of lines of various configurations

owned and operated by PGCIL has been considered by us for the purpose of

computation of capital cost. The indicative cost of 400 kV D/C Quad Moose

transmission line has been taken as base and indicative cost of lines with

configurations other than 400 kV D/C Quad Moose have been made equivalent to

indicative cost of 400 kV D/C Quad Moose (i.e. by dividing indicative cost of the 400

kV D/C Quad Moose line by the indicative cost of line of other configurations). For

example-the indicative cost of 400 kV D/C Quad Moose is `202 lakh/km (cost/ckt.

km.=`101 lakh) and of 765 kV S/C is `159.25 lakh/km. Therefore, the ratio of

indicative cost of ckt. km. of 400 kV D/C Quad Moose and indicative cost of ckt. km. of

765 kV S/C is `0.63 lakh (i.e. `101 lakh/`159.25 lakh) and so on for other

configurations.

12. Further, the petitioner also owns lines of 110 kV and 66 kV level but the

indicative cost data provided by the CTU is for voltage level up to 132 kV level.

Therefore, we have added line length of 110 kV and 66 kV level to 132 kV level and

considered the indicative cost of 132 kV level as indicative cost for all the transmission

lines having voltage level 132 kV and below.

Order in Petition No. 173/TT/2016 Page 6 of 26

13. Yearly break up of indicative cost of various configurations owned and operated

by PGCIL is given hereunder:-

For 2012-13

Cost Cost
Type Co-efficient
(` in lakh) (` in lakh/circuit)
+/- 500 kV 152 152 (A) a=E/A 0.74
HVDC
765 kV D/C 357.00 178.5 (B) b= E/B 0.63
765 kV S/C 179.20 179.20 (C) c=E/C 0.63
400 kV D/C 122.60 61.3 (D) d=E/D 1.83
400 kV D/C 224.80 112.4 (E) e=E/E 1.00
Quad. Moose
400 kV S/C 84.20 84.20 (F) f=E/F 1.33
220 kV D/C 67.80 33.9 (G) g=E/G 3.32
220 kV S/C 41.40 41.40 (H) h=E/H 2.71
132 kV D/C 53.00 26.5 (I) i=E/I 4.24
132 kV S/C 32.40 32.40 (J) j=E/J 3.47

For 2013-14

Cost
Type Cost (` in lakh) Co-efficient
(` in lakh/circuit)
+/- 500 kV HVDC 157 157 (A) a=E/A 0.74
765 kV D/C 412.00 206 (B) a= E/B 0.56
765 kV S/C 179.80 179.80 (C) b= E /C 0.65
400kV D/C Twin 130.40 65.2 (D) c= E /D 1.78
Moose
400 kV D/C Quad 232.60 116.3(E) d= E /E 1.00
Moose
400 kV S/C Twin 87.00 87.00 (F) e= E /F 1.34
Moose
220 kV D/C 61.40 30.7 (G) f= E /G 3.79
220 kV S/C 37.80 37.80 (H) g= E/H 3.08
132 kV D/C 48.40 24.2 (I) h= E /I 4.81
132 kV S/C 30.00 30.00 (J) i= E /J 3.88

14. After getting ratio with respect to 400 kV D/C Quad Moose, YTC per ckt. km. of

400 kV D/C Quad Moose transmission line has been calculated as follows:-

Order in Petition No. 173/TT/2016 Page 7 of 26

 ARR for FY……….in `

YTC per ckt. km. =--------------------------------------------------------------------------

400 kV D/C Quad Moose ( Length of 500 kV HVDC/a)+

(Length of 765 kV DC/b) + (Length of 765 kV SC/c) +
(Length of 400 kV DC QM/d) + (Length of 400 kV DC
TM /e) + (Length of 400 kV SC TM /f) + (Length of 220
kV DC /g) + (Length of 220 kV SC /h) + (Length of 132
kV DC /i) + (Length of 132 kV SC /j)

*value of a, b, c, d, e, f, g, h, i & j are as given in para 13 and length in ckt. km. as

given in para 4 above.

DC- Double circuit, SC- Single circuit, QM- Quad Moose, TM- Twin Moose

15. We have not carried out any due diligence of the tariff of these lines (for

consideration of POC calculations) as the jurisdiction to determine the tariff of the lines

owned by STU vests with the State Regulatory Commission. We have considered the

ARR of the STU as approved by the State Regulatory Commission and have adopted

the methodology for the purpose of calculation of POC charges and apportionment of

transmission lines and charges to the transmission system of different configurations

of the STU. This methodology has been adopted uniformly for the lines owned by

other STUs used for inter-State transmission of power, duly certified by respective

RPCs for the purpose of inclusion in the POC mechanism.

16. Accordingly, on the basis of the line length in ckt. km. and the trued up ARR

approved by the State Commission for the years 2012-13 and 2013-14 and POC cost

data for the respective years, YTC for the instant transmission assets for the years

Order in Petition No. 173/TT/2016 Page 8 of 26

2012-13 and 2013-14 have been calculated as given below:-

For 2012-13:

Total ARR approved by the SERC= `43042400000

(` in lakh)
S. No Asset For entire system (Maharashtra)
Line YTC (Per YTC
Length ckt. km.)
(ckt. km.)
1 500 kV HVDC 1504 3250429 4888645822
2 400 kV S/C 7348 1796290 13199138430
3 220 kV S/C 13978 876761 12255359145
4 132 kV S/C 18558 684301 12699256603
Total 43042400000

For 2013-14:

Total ARR approved by the SERC= `49811100000

(` in lakh)
S. Asset For entire system (Maharashtra)
No Line Length YTC (` per ckt. YTC
(ckt. km.) km.)
1 500 kV 1504 3889227.86 5849398698
HVDC
2 400 kV S/C 7468 2155177.22 16094863484
3 220 kV S/C 14597 941341.77 13740765883
4 132 kV S/C 19008 743164.56 14126071935
Total 49811100000

Trued-up YTC of the nine transmission lines:-

17. The YTC per ckt. km., total ARR for the transmission system in Maharashtra is

matching with the ARR approved by the MERC and it is as given below:-

(` in lakh)
Voltage Level 2012-13 2013-14
400 kV S/C 1796290 2155177.22
220 kV S/C 876761 941341.77

Order in Petition No. 173/TT/2016 Page 9 of 26

18. Trued-up YTC of the nine transmission lines calculated as per the methodology

discussed above is as follows:-

(` in lakh)
Srl. Name of the Line Line 2012-13 2013-14
No. Length
(ckt. km.)
1 Asset-I 33.80 29634522 31817352
2 Asset-II 18.00 15781698 16944152
3 Asset-III 30.00 26302830 28240253
4 Asset-IV 100.00 87676100 94134177
5 Asset-V 100.00 87676100 94134177
6 Asset-VI 15.41 13510887 14506077
7 Asset-VII 24.00 21042264 22592202
8 Asset-VIII 142.00 255073180 306035165
9 Asset-IX 142.00 255073180 306,035,165
Total 791770761 914438720

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

governed and shall be considered in the YTC as per the provisions of Central

Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and

Losses) Regulations, 2010 (2010 Sharing Regulations). The annual transmission

charges allowed herein shall be adjusted against the ARR of the petitioner approved

by MERC.

Determination of Annual Transmission Charges for 2014-15

20. The petitioner has submitted that MERC has trued-up the ARR for the year 2014-

15. The details of the total ARR approved by MERC for 2014-15 are as follows:-

(` in lakh)
Srl. Asset For entire system (Maharashtra)
No.
Line length YTC (in ` YTC in ` per
(ckt. km.) per ckt. km.) ckt. km.)
1. 500 kV 1504.00 3061639.58 4604705935
2. 400 kV S/C 7891.40 1705216.98 13456549306

Order in Petition No. 173/TT/2016 Page 10 of 26

 3. 220 kV S/C 14942.22 721810.60 10785452758
4. 132 kV S/C 18122.57 576479.61 10447292001
Total 39294000000

21. The YTC per ckt. km., total ARR for the transmission system in Maharashtra is

matching with the ARR approved by the MERC and it is as follows:-

(` in lakh)
Voltage Level 2014-15
220 kV SIC 721811
400 kV SIC 1705217

22. The petitioner has prayed for grant of transmission charges of `716134540 for the

year 2014-15 as per the methodology adopted by the Commission in order dated

18.5.2015 in Petition No. 256/TT/2013 for the instant nine transmission lines

conveying electricity to other States. The details of the petitioner‟s claim are as

follows:-

(` in lakh)
Sl. Name of the lines Line length YTC (in ` per ckt.
No. (ckt. Km.) km.) (FY 2014-15)
1 Asset-I 33.80 24397212
2 Asset-II 18.00 12992598
3 Asset-III 30.00 21654330
4 Asset-IV 100.00 7218100
5 Asset-V 100.00 72181100
6 Asset-VI 15.41 11123108
7 Asset-VII 24.00 17323464
8 Asset-VIII 142.00 242140.814
9 Asset-IX 142.00 242140.814
Total `716134540

23. It is observed that States have been submitting the information required for

determining the annual transmission charges of their inter-State transmission lines, in

contrasting manner thereby causing divergence in working out the tariff. In some

cases, it was observed that the data related to funding and depreciation was not

Order in Petition No. 173/TT/2016 Page 11 of 26

available and in other cases the assets have already completed their useful life or

nearing their useful life. In most of the petitions, the States have expressed their

inability to furnish the audited capital cost of transmission lines as the lines are older.

The tariff workings for such old assets are found to be ending in skewed results. It is

further observed that the YTC figures worked out by the existing methodology are

found to be on a higher side. Considering these facts, the Commission has

conceptualized a modified methodology for determining the tariff of States‟ inter-State

transmission lines.

24. The methodology is broadly based on the following:-

(a) PGCIL‟s Annual Report data has been used as the reference data; based

on which, year wise benchmark cost has been derived.

(b) Useful life of transmission lines has been considered as 25 years. Thus, if

life is more than or equal to 25 years as on 1.4.2014, only O & M Expenses and

Interest on Working Capital (IWC) are allowed as per the existing Tariff

Regulations, in lieu of complete tariff.

(c) It is expected that the States do have the audited financial data of recently

commissioned (i.e. on or after 1.4.2014) lines.

Tariff Methodology
25. As per the petitions filed by the States, their ISTS lines generally are of 132 kV,

220 kV or 400 kV configuration. In the absence of an established tariff data base, in

order to develop this methodology Annual Reports of PGCIL from 1989-90 to 2013-14

have been referred to. The Annual Reports depict, inter alia, the information pertaining

to year wise total transmission lines‟ length in ckt. km. and corresponding Gross

Order in Petition No. 173/TT/2016 Page 12 of 26

Block. This pan-India data represents all the five transmission regions and is a

composite mix of parameters like terrains, wind-zones, tower and conductor type etc.

+/- 500 kV HVDC and 765 kV and above voltage level AC lines too have come up in

between and the data also includes those lines. Voltage level-wise data as on

30.4.2017, obtained from PGCIL indicates that the percentage of 220 kV, 132 kV and

66 kV transmission lines taken together make it around 8.3% of the total line length

owned by PGCIL. Further, 132 kV transmission lines were established in NER prior to

1990, and transmission lines of 220 kV voltage levels were last commissioned in

around the year 2004 in NR. Majority of the transmission lines consist of 400 kV which

corresponds to 66% of the total transmission line lengths. Thus, the 400 kV and lesser

voltage levels account for approximately 75% of the transmission lines. Assuming the

above referred spread of voltage wise percentages for earlier years too, it can be said

that the year wise average transmission line cost figures derived from PGCIL data,

when further reduced by 25%, fairly represent the average transmission line capital

cost corresponding to a 400 kV S/C line. Considering 400 kV S/C transmission line

cost as reference cost, analysis of PGCIL‟s indicative cost data (P/L February, 2017)

suggests the following:-

Reference cost of 400 kV S/C TL ` X lakh/km

1 400 kV D/C TL 1.39 X
2 220 kV D/C TL 0.57 X
3 220 kV S/C TL 0.36 X
4 132 kV D/C TL 0.43 X
5 132 kV S/C TL 0.31 X

26. Therefore, for arriving at the costs of transmission lines of other voltage levels

and circuit configurations, the average transmission line cost data shall be multiplied

by the factors illustrated in the above table. Lower voltage levels can be treated as

Order in Petition No. 173/TT/2016 Page 13 of 26

part of 132 kV. The above table contemplates Twin Moose conductor which is widely

used in States‟ transmission lines.

27. Based on respective year end data, average transmission line length during the

year has been worked out. Difference between a particular year‟s average

transmission line length figures and that for the immediate preceding year provides us

the transmission line length added during that year. Average gross block

corresponding to transmission lines has been divided by the average transmission line

length to arrive at the Average Cost of transmission line (in ` lakh per ckt. km.) during

the year. Thus, considering the year of COD of a State‟s ISTS line and its ckt. km., its

cost would be worked out by relating it to PGCIL‟s transmission line cost during that

year. Although the Commission has relied on PGCIL‟s Annual Reports, there are

certain deviations in the cost data worked out. PGCIL was incorporated in 1989-90

and the transmission assets of NTPC, NHPC, NEEPCO etc. were taken over by

PGCIL by mid 1991-92. Thus, as the base data for these years was not available, the

corresponding average cost of transmission line could not be worked out. The

average cost from 1992-93 onwards up to 2013-14 shows an increasing trend at a

CAGR of 5.17%. Therefore, for the years 1989-90, 1990-91 and 1991-92, the average

cost of transmission line has been back derived considering the 1992-93 average

cost. Similarly, abnormal dip/spikes in the transmission line cost for the years 1996-

97, 2001-02 and 2004-05 has been corrected by considering the average values of

the transmission line costs in the immediate preceding and succeeding years.

28. While calculating tariff, the following has been considered:-

Order in Petition No. 173/TT/2016 Page 14 of 26

(a) Useful life of the transmission line shall be deemed to be 25 years.

(b) Prevailing depreciation rates as per the 2014 Tariff Regulations shall be

considered uniformly for all the previous tariff periods so as to do away

with the Advance Against Depreciation which was in vogue during earlier

tariff periods. Notwithstanding the depreciation considered as recovered

earlier, for the purpose of these tariff calculations, remaining depreciable

value shall be spread over the remaining useful life of the transmission

line, where the elapsed life is more than or equal to 12 years.

(c) Normative Debt-Equity ratio shall be 70:30.

(d) Normative loan repayment during a year shall be deemed to be equal to

the depreciation allowed for that year.

(e) Rate of Interest on normative loan shall be the weighted average rate of

interest as derived on the basis of PGCIL‟s Balance Sheet.

(f) In order to avoid complexity, grossing up of rate of Return on Equity with

tax rate is being dispensed with.

(g) Bank rate as defined in 2014 Tariff Regulations as on 1.4.2014 shall be

applied for calculating the rate of interest on working capital on normative

basis.

(h) O & M Expenses as per the 2014 Tariff Regulations shall be considered.

(i) Where the life of transmission line is more than or equal to 25 years as on

1.4.2014, only O & M Expenses and IWC shall be allowed in lieu of

complete tariff.

Order in Petition No. 173/TT/2016 Page 15 of 26

29. Thus, in effect, this is a normative tariff working methodology which has been

applied in the cases where the information relating to audited capital cost is not

available.

30. In the instant case, the petitioner has not been able to provide the audited

capital cost certificates. Accordingly, the tariff for the instant assets has been trued-up

in line with the methodology explained in foregoing paragraphs. Assets 1 to 7 have

already completed twenty five years. Therefore, as per the above methodology, only

IWC and O & M Expenses are allowable for these assets. Tariff for Assets 8 and 9

has been separately worked out.

31. The annual transmission charges allowed for Assets 1 to 7 for 2014-15 are as

follows:-

(` in lakh)
Sl. Particular IWC O & M Annual
No. Expenses Transmission
Charges
1. Asset-I 0.75 13.66 14.41
2. Asset-II 0.40 7.27 7.67
3. Asset-III 0.67 12.12 12.79
4. Asset-IV 2.23 40.40 42.63
5. Asset-V 2.23 40.40 42.63
6. Asset-VI 0.34 6.23 6.57
7. Asset-VII 0.54 9.70 10.23

32. The Assets 8 and 9 were put into commercial operation on 13.12.1998 and

22.12.1998 respectively. Assets 8 and 9 would complete 25 years beyond the current

tariff period of 2014-19. Accordingly, tariff for 2014-15 for Assets 8 and 9 have been

worked out as per the methodology discussed above.

Order in Petition No. 173/TT/2016 Page 16 of 26

Return on Equity (“RoE”)

33. In view of para 28(f), RoE is not being grossed up with the tax rate.

34. The details of Return on Equity allowed for Assets 8 and 9 as per the above

said provisions are as under:-

(` in lakh)
Return on Equity 2014-15 2014-15
Asset-VIII Asset-IX
Gross Notional Equity 747.20 747.20
Opening Equity 747.20 747.20
Average Equity 747.20 747.20
Rate of Return on Equity 15.50% 15.50%
Return on Equity 115.82 115.82

Interest on Loan (“IOL”)

35. Clause (5) & (6) of Regulation 26 of the 2014 Tariff Regulations provides as

under:-

“(5) The rate of interest shall be the weighted average rate of interest calculated on the
basis of the actual loan portfolio after providing appropriate accounting adjustment for
interest capitalized:
Provided that if there is no actual loan for a particular year but normative loan is still
outstanding, the last available weighted average rate of interest shall be considered:
Provided further that if the generating station or the transmission system, as the case
may be, does not have actual loan, then the weighted average rate of interest of the
generating company or the transmission licensee as a whole shall be considered.
(6) The interest on loan shall be calculated on the normative average loan of the year
by applying the weighted average rate of interest.”

36. The IOL considered and allowed for Assets 8 and 9 for the 2014-15 tariff is as

under:-

(` in lakh)
Interest on Loan 2014-15 2014-15
Asset-VIII Asset-IX
Gross Normative Loan 1743.48 1743.48

Order in Petition No. 173/TT/2016 Page 17 of 26

 Cumulative Repayment upto 1743.48 1743.48
Previous Year
Net Loan-Opening 0.00 0.00
Addition due to Additional 0.00 0.00
Capitalisation
Repayment during the year 0.00 0.00
Net Loan-Closing 0.00 0.00
Average Loan 0.00 0.00
Weighted Average Rate of 7.1141% 7.1141%
Interest on Loan
Interest on Loan 0.00 0.00

Depreciation

37. Clause (2), (5) and (6) of Regulation 27 of the 2014 Tariff Regulations provide as

follows:-

"27. Depreciation:

(2) The value base for the purpose of depreciation shall be the capital cost of the asset
admitted by the Commission. In case of multiple units of a generating station or
multiple elements of transmission system, weighted average life for the generating
station of the transmission system shall be applied. Depreciation shall be chargeable
from the first year of commercial operation. In case of commercial operation of the
asset for part of the year, depreciation shall be charged on pro rata basis”

“(5) Depreciation shall be calculated annually based on Straight Line Method and at
rates specified in Appendix-II to these regulations for the assets of the generating
station and transmission system:

Provided that the remaining depreciable value as on 31st March of the year closing
after a period of 12 years from the effective date of commercial operation of the station
shall be spread over the balance useful life of the assets.

(6) In case of the existing projects, the balance depreciable value as on 1.4.2014 shall
be worked out by deducting the cumulative depreciation as admitted by the
Commission upto 31.3.2014 from the gross depreciable value of the assets.”

38. The details of the depreciation considered and allowed for the Assets 8 and 9

for the 2014-15 tariff period are given hereunder:-

(` in lakh)
Particulars 2014-15 2014-15
Asset-VIII Asset-IX

Order in Petition No. 173/TT/2016 Page 18 of 26

 Gross Block as on COD 2490.68 2490.68
Addition during 2014-19 due to 0.00 0.00
Projected Additional Capitalisation
Gross Block as on 31st March 2490.68 2490.68
Average Gross Block 2490.68 2490.68
Rate of Depreciation 5.2800% 5.2800%
Depreciable Value 2241.61 2241.61
Remaining Depreciable Value 561.44 561.44
Depreciation 51.04 51.04

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

39. The details of O&M Expenses allowed for Assets 8 and 9 are as follows:-

(` in lakh)
Particulars 2014-15 2014-15
Asset-VIII Asset-IX
O&M Expenses 57.37 57.37

Interest on Working Capital (“IWC”)

40. Clause 1 (c) of Regulation 28 and Clause 5 of Regulation 3 of the 2014 Tariff

Regulations specify as follows:-

“28. Interest on Working Capital

(c)(i) Receivables equivalent to two months of fixed cost;

(ii) Maintenance spares @ 15% of operation and maintenance expenses specified in

regulation 29; and

(iii) Operation and maintenance expenses for one month”

“(5) Bank Rate‟ means the base rate of interest as specified by the State Bank of India
from time to time or any replacement thereof for the time being in effect plus 350 basis
points;”

41. The petitioner is entitled to claim interest on working capital as per the 2014

Tariff Regulations. The components of the working capital and the petitioner‟s

entitlement to interest thereon are discussed hereunder:-

Order in Petition No. 173/TT/2016 Page 19 of 26

 (i) Maintenance spares
Regulation 28 of the 2014 Tariff Regulations provides for maintenance spares

@ 15% per annum of the O&M expenses. The value of maintenance spares

has accordingly been worked out.

(ii) O & M expenses

Operation and maintenance expenses have been considered for one month as

a component of working capital. The petitioner has claimed O&M expenses for

1 month of the respective year as claimed in the petition. This has been

considered in the working capital.

(iii) Receivables

Receivables as a component of working capital will be equivalent to two

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

months' annual transmission charges. In the tariff being allowed, receivables

have been worked out on the basis of 2 months' transmission charges.

(iv) Rate of interest on working capital

As provided in Regulation 28(3) of the 2014 Tariff Regulations, SBI Base Rate

(10.00%) as on 1.4.2014 plus 350 Bps i.e. 13.50 % have been considered as

the rate of interest on working capital.

42. The interest on working capital allowed for the Assets 8 and 9 for 2014-15 is

shown in the table below:-

(` in lakh)
Interest on Working Capital Asset-VIII Asset-IX

Maintenance Spares 8.61 8.61

O & M expenses 4.78 4.78
Receivables 2 Months 38.54 38.54

Order in Petition No. 173/TT/2016 Page 20 of 26

 Total 51.92 51.92
Interest 13.50% 7.01 7.01

Annual Transmission Charges

43. The details of Annual Transmission Charges allowed for the Assets 8 and 9 for

the year 2014-15 are enclosed as Annexures- (I) and (II) and tariff is summarised as

below:-

(` in lakh)
Particulars Asset-VIII Asset-IX
Depreciation 51.04 51.04
Interest on Loan 0.00 0.00
Return on Equity 115.82 115.82
Interest on Working Capital 7.01 7.01
O & M Expenses 57.37 57.37
Total 231.23 231.23

Filing Fee and Publication Expenses

44. The petitioner has sought reimbursement of fee paid by it for filing the petition

and publication expenses, in terms of Regulation 52 of the 2014 Tariff Regulations.

The petitioner shall be entitled for reimbursement of the filing fees and publication

expenses in connection with the present petition, directly from the beneficiaries on

pro-rata basis in accordance with clause (1) of Regulation 52 of the 2014 Tariff

Regulations.

Sharing of Transmission Charges

45. The transmission charges shall be recovered on monthly basis in accordance

with Regulation 43 of Central Electricity Regulatory Commission (Terms and Condition

of Tariff) Regulations, 2014 and shall be shared by the beneficiaries and long term

transmission customers in Central Electricity Regulatory Commission (Sharing of Inter

Order in Petition No. 173/TT/2016 Page 21 of 26

State Transmission Charges and Losses) Regulations, 2010 as amended from time to

time. Further, the transmission charges allowed in this order shall be adjusted against

the ARR approved by the MERC.

46. This order disposes of Petition No. 173/TT/2016.

Sd/- Sd/- Sd/- Sd/-

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

Order in Petition No. 173/TT/2016 Page 22 of 26

 Annexure I
Name of the Tr. System: 400 kV SSP-Dhule ckt-1
S/C line (Maharashtra -
Gujarat)
COD 13.12.1998

CALCULATION OF ANNUAL TRANSMISSION CHARGES

(Rs. In lacs)
Rationalised cost of 400 kv line Rs 17.54
lakh per ckt km
Transmission Line length , in ckt km 142.00
Multiplication factor 1.00
2014-15
Gross Block 2490.68
Addition during 2014-19 due to 0.00
Projected Additional Capitalisation
Gross Block total 2490.68
Average Gross Blcok 2490.68

Depreciation
Rate of Depreciation 5.2800% 5.2800%
Depreciable value 90% 2241.61
Elapsed Life as on 31.03.2014 14 14.00
Balance useful life of the asset 11.00
Remaining Depreciable value 561.44
Cumulative Depreciation 1578.0948 1680.17 1731.21
663.52 51.04
Depreciation 51.04

Interest on Loan
Gross Normative Loan 1743.48 1743.48
Cumulative Repayment upto Previous 1743.48
Year
Net Loan-Opening 0.00
Addition due to Additional 0.00
Capitalisation
Repayment during the year 0.00
Net Loan-Closing 0.00
Average Loan 0.00
Weighted Average Rate of Interest on Loan 7.1141%
Interest 0.00

Return on Equity
Gross Notional Equity 747.20
Opening Equity 747.20
Average Equity 747.20
Rate of Return on Equity 15.50%
Return on Equity 115.82

Order in Petition No. 173/TT/2016 Page 23 of 26

Interest on Working Capital
Maintenance Spares 8.61
O & M expenses 4.78
Receivables 2 Months 38.54
Total
51.92
Interest 13.50% 7.01

Annual Transmission Charges

Depreciation 51.04
Interest on Loan 0.00
Return on Equity 115.82
Interest on Working Capital 7.01
O & M Expenses 57.37
Total 231.23

O&M for S/C (Twin & triple 0.404

Conductor) in Rs. Lakhs/ Km

Order in Petition No. 173/TT/2016 Page 24 of 26

 Annexure II
Name of the Tr. System: 400 kV SSP-Dhule ckt-2 S/C line
(Maharashtra -Gujarat)
COD 22.12.1998

CALCULATION OF ANNUAL TRANSMISSION CHARGES

(Rs. In lacs)
Rationalised cost of 400 kv line Rs 17.54
lakh per ckt km
Transmission Line length , in ckt km 142.00
Multiplication factor 1.00
2014-15
Gross Block 2490.68
Addition during 2014-19 due to 0.00
Projected Additional Capitalisation
Gross Block total 2490.68
Average Gross Blcok 2490.68

Depreciation
Rate of Depreciation 5.2800% 5.2800%
Depreciable value 90% 2241.61
Elapsed Life as on 31.03.2014 14 14.00
Balance useful life of the asset 11.00
Remaining Depreciable value 561.44
Cumulative Depreciation 1578.0948 1680.17 1731.21
663.52 51.04
Depreciation 51.04

Interest on Loan
Gross Normative Loan 1743.48 1743.48
Cumulative Repayment upto 1743.48
Previous Year
Net Loan-Opening 0.00
Addition due to Additional 0.00
Capitalisation
Repayment during the year 0.00
Net Loan-Closing 0.00
Average Loan 0.00
Weighted Average Rate of Interest on Loan 7.1141%
Interest 0.00

Return on Equity
Gross Notional Equity 747.20
Opening Equity 747.20
Average Equity 747.20
Rate of Return on Equity 15.50%
Return on Equity 115.82

Order in Petition No. 173/TT/2016 Page 25 of 26

Interest on Working Capital
Maintenance Spares 8.61
O & M expenses 4.78
Receivables 2 Months 38.54
Total
51.92
Interest 13.50% 7.01

Annual Transmission Charges

Depreciation 51.04
Interest on Loan 0.00
Return on Equity 115.82
Interest on Working Capital 7.01
O & M Expenses 57.37
Total 231.23

O&M for S/C (Twin & triple 0.404

Conductor) in Rs. Lakhs/ Km

Order in Petition No. 173/TT/2016 Page 26 of 26