Section 26 in Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019
26. Additional Capitalisation beyond the original scope.
(1)The capital expenditure, in respect of existing generating station or the transmission system including communication system, incurred or projected to be incurred on the following counts beyond the original scope, may be admitted by the Commission, subject to prudence check:(a)Liabilities to meet award of arbitration or for compliance of order or directions of any statutory authority, or order or decree of any court of law;(b)Change in law or compliance of any existing law;(c)Force Majeure events;(d)Need for higher security and safety of the plant as advised or directed by appropriate Indian Government Instrumentality or statutory authorities responsible for national or internal security;(e)Deferred works relating to ash pond or ash handling system in additional to the original scope of work, on case to case basis:Provided also that if any expenditure has been claimed under Renovation and Modernisation (R&M) or repairs and maintenance under O&M expenses, the same shall not be claimed under this Regulation;(f)Usage of water from sewage treatment plant in thermal generating station.(2)In case of de-capitalisation of assets of a generating company or the transmission licensee, as the case may be, the original cost of such asset as on the date of de-capitalisation shall be deducted from the value of gross fixed asset and corresponding loan as well as equity shall be deducted from outstanding loan and the equity respectively in the year such de-capitalisation takes place with corresponding adjustments in cumulative depreciation and cumulative repayment of loan, duly taking into consideration the year in which it was capitalised.
