Section 25 in Tamil Nadu Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2005
25. Operation and Maintenance Expenses.
(1)The operation and maintenance expenses shall be derived on the basis of actual operation and maintenance expenses for the past five years previous to current year based on the audited Annual Accounts excluding abnormal operation and maintenance expenses, if any, after prudence check by the Commission. The commission may, if considered necessary engage Consultant/Auditors in the process of prudence check for correctness.(2)The average of such normative operation and maintenance expenses after prudence check shall be escalated at the rate of 4% per annum to arrive at operation and maintenance expenses for current year i.e. base year and ensuing year.(3)The base operation and maintenance expenses so determined shall be escalated further at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant years of tariff period.(4)In case of the thermal power Generating Stations, which have not been in existence for a period of five years the operation and maintenance expenses shall be fixed at 1.0% of the capital cost (as admitted by the Commission) and shall be escalated at the rate of 4% per annum from the subsequent year to arrive at base operation and maintenance expenses. The base operation and maintenance expenses shall be further escalated at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant year.(5)In case of the thermal power generating stations declared under commercial operation on or after the notification of these Regulations, the base operation and maintenance expenses shall be fixed at 1.0% of the actual capital cost (as admitted by the Commission), in the year of commissioning and shall be subject to an annual escalation of 4% per annum for the subsequent years.(6)In case of the hydro electro Generating Stations, which have not been in existence for a period of five years, the operation and maintenance expenses shall be fixed at 1.0% of the capital cost as admitted by the Commission and shall be escalated at the rate of 4% per annum from the subsequent year to arrive at base operation and maintenance expenses. The base operation and maintenance expenses shall be further escalated at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant year.(7)In case of the hydro electric generating stations declared under commercial operation on or after the notification of these Regulations, the base operation and maintenance expenses shall be fixed at 1.0% of the actual capital cost as admitted by the Commission, in the year of commissioning and shall be subject to an annual escalation of 4% per annum for the subsequent years.(8)In respect of the transmission system declared under commercial operation on or after notification of these regulations the base operation and maintenance expenses shall be fixed at 1% of the capital cost (as admitted by the Commission), in the year of commissioning and shall be subject to an annual escalation of 4% per annum for the subsequent years.(9)In case of considerable variation between the normative expenses and actual expenses, the Commission may allow the Generating Company or the licensee to achieve the normative level over a period of time.(10)Increase in Operation and Maintenance expenses due to force majeure conditions like war, insurgency, change in law, may be considered by the Commission.(11)Any savings achieved by Generating Company or the licensee shall be allowed to be retained by them. When they exceed the normative expenses they shall bear the loss.(12)Where the Commission desires to fix multi year tariff a formula based on Consumers' Price Index and Wholesale Price Index shall be prescribed.
