Section 15 in Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2014
15. Renovation and Modernisation.
(1)The generating company or the transmission licensee, as the case may be, for meeting the expenditure on renovation and modernization (R&M) for the purpose of extension of life beyond the originally recognised useful life for the purpose of tariff of the generating station or a unit thereof or the transmission system or an element thereof, shall make an application before the Commission for approval of the proposal with a Detailed Project Report giving complete scope, justification, cost-benefit analysis, estimated life extension from a reference date, financial package, phasing of expenditure, schedule of completion, reference price level, estimated completion cost including foreign exchange component, if any, and any other information considered to be relevant by the generating company or the transmission licensee.(2)Where the generating company or the transmission licensee, as the case may be, makes an application for approval of its proposal for renovation and modernisation, the approval shall be granted after due consideration of reasonableness of the cost estimates, financing plan, schedule of completion, interest during construction, use of efficient technology, cost-benefit analysis, and such other factors as may be considered relevant by the Commission.(3)In case of gas/ liquid fuel based open/ combined cycle thermal generating station, any expenditure which has become necessary for renovation of gas turbines/steam turbine after 25 years of operation from its COD and an expenditure necessary due to obsolesce or non-availability of spares for efficient operation of the stations shall be allowed :Provided that any expenditure included in the R&M on consumables and cost of components and spares which is generally covered in the O&M expenses during the major overhaul of gas turbine shall be suitably deducted after due prudence from the R&M expenditure to be allowed.(4)Any expenditure incurred or projected to be incurred and admitted by the Commission after prudence check based on the estimates of renovation and modernization expenditure and life extension, and after deducting the accumulated depreciation already recovered from the original project cost, shall form the basis for determination of tariff.
