Section 30 in The Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005
30. Capital cost.
- 30.1 Subject to prudence check by the Commission, the actual expenditure incurred on completion of the project shall form the basis for determination of the original cost of project. The original cost of project shall be determined based on the approved capital expenditure actually incurred up to the date of commissioning of the generating station and shall include capitalised initial spares subject to following ceiling norms as a percentage of the original cost as on the cut-off date:(i)Coal-based/lignite-fired generating stations - 2.5%(ii)Gas Turbine/Combined Cycle generating stations - 4.0%(iii)Hydro power generating stations - 1.5%Provided that where the power purchase agreement entered into between the Generating Company and the Distribution Licensee provides a ceiling of actual expenditure, the original cost of project shall not exceed such ceiling for the purpose of these Regulations:Provided further that in case of the existing generating stations, the actual original cost of project recorded in the books of account of the Generating Company, subject to prudence check by the Commission, shall be considered as the original cost of project for the purpose of these Regulations.30.2Additional Capitalisation: The following capital expenditure within the original scope of work actually incurred after the date of commissioning and up to the cut off date may be allowed by the Commission for inclusion in the original cost of project, subject to prudence check:(i)Deferred liabilities;(ii)Works deferred for execution;(iii)Procurement of initial capital spares in the original scope of work, subject to ceiling specified in Regulation 30.1;(iv)Liabilities to meet award of arbitration or for compliance of the order or decree of a court; and(v)On account of change in law.Provided that original scope of work along with estimates of expenditure shall be submitted along with the application for determination of tariff:Provided further that a list of the deferred liabilities and works deferred for execution shall be submitted along with the application for determination of tariff after the date of commissioning of the generating station.30.3The capital expenditure of the following nature actually incurred after the cut-off date may be allowed by the Commission for inclusion in the original cost of project, subject to prudence check:(i)Deferred liabilities relating to works/services within the original scope of work;(ii)Liabilities to meet award of arbitration or for compliance of the order or decree of a court;(iii)On account of change in law;(iv)Any additional works/services which have become necessary for efficient and successful operation of the generating station, but not included in the original project cost; and(v)Deferred works relating to ash pond or ash handling system in the original scope of work.30.4Any expenditure on other items/assets, not being generating assets, including, but not limited to, normal tools and tackles, personal computers, furniture, air-conditioners, voltage stabilizers, refrigerators, fans, coolers, TV, washing machines, heat-convectors, etc. bought after the cut-off date may be capitalised, with the prior approval of the Commission:Provided that the approval of the Commission under this Regulation 30.4 shall not be required where the aggregate expenditure on such assets in any financial year does not exceed Rupees Ten (10) crores.30.5Impact of additional capitalisation in tariff revision may be considered by the Commission twice in a tariff period, including revision of tariff after the cut-off date.30.6Any expenditure on replacement, renovation and modernization or extension of life of old fixed assets shall be considered after writing off the gross value of any such replaced assets from the original capital cost:Explanation - for the purpose of these Regulations, the term renovation and modernization shall have the same meaning as in Section 80 IA of the Income-tax Act, 1961.30.7The provisions of the Statements of Accounting Standards (AS10): Accounting for Fixed Assets of the Institute of Chartered Accountants of India shall apply, to the extent not inconsistent with these Regulations, in determining the original cost of the project.30.8The impact of any foreign exchange rate variation on a foreign currency loan taken to finance a project shall be treated in accordance with the Statements of Accounting Standard (AS 11): Accounting for the Effects of Changes in Foreign Exchange Rates of the Institute of Chartered Accountants of India:Provided that the actual or normative loan capital determined as per Regulation 31 and Regulation 32 of these Regulations shall be considered for inclusion in the above.30.9The approved capital expenditure of the project shall be considered as the original cost of such project for the purpose of these Regulations.30.10The amount of capital expenditure shall be assumed to have been incurred evenly during the year for the purpose of these Regulations.
