Central Electricity Regulatory Commission
North Eastern Electric Power ... vs Assam State Electricity Board And Ors. on 30 April, 2008
ORDER
1. The petitioner has filed this petition for approval of tariff in respect of Ranganadi Hydro Electric Project (3X135 MW)(hereinafter referred to as "the generating station") for the period 1.4.2004 to 31.3.2009 in accordance with the provisions of the Central Electricity Regulatory Commission (Terms & Conditions of Tariff) Regulations, 2004 (hereinafter referred to as "the 2004 regulations".
2. The generating station, located in the State of Arunachal Pradesh, is a run-of-river type scheme with diurnal pondage for peaking power and is designed to generate annual energy of 1509.69 MUs (revised) in a 90% dependable year. Units I & II of the generating station were commissioned on 12.2.2002 and Unit-III on 12.4.2002.
3. The tariff of the generating station for the period from 12.2.2002 to 31.3.2004 has been approved by the Commission vide its order dated 29.4.2008, in Petition No. 115/2007.
4. The details of the fixed charges claimed by the petitioner in the present petition are as hereunder:
(Rs in lakh) Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Depreciation 3517 3533 3531 3531 3531 Interest on Loan 5574 4445 3506 2678 2038 Return on Equity 10277 10324 10318 10318 10318 Advance against Depreciation 3823 3841 3839 3839 1953 Interest on working capital 598 590 585 583 551 O & M Expenses 1981 2060 2142 2228 2317 Total 25770 24793 23921 23177 20708
5. The details of interest on working capital furnished by the petitioner and its claim for interest thereon are summarized hereunder:
(Rs in lakh) Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Maintenance spares 1373 1455 1542 1635 1733 O&M expenses 165 172 179 186 193 Receivables 4295 4132 3987 3863 3451 Total Working Capital 5833 5759 5708 5684 5377 Rate of Interest 10.25% 10.25% 10.25% 10.25% 10.25% Interest on Working Capital 598 590 585 583 551 CAPITAL COST
6. Regulation 33 of the 2004 regulations provides as follows:
Subject to prudence check by the Commission, the actual expenditure incurred on completion of the project shall form the basis for determination of final tariff. The final tariff shall be determined based on the admitted capital expenditure actually incurred up to the date of commercial operation of the generating station and shall include initial capital spares subject to a ceiling norm of 1.5% of the original project cost as on the cut off date.
Provided further that where the power purchase agreement entered into between the generating company and the beneficiaries provides a ceiling of actual expenditure, the capital expenditure shall not exceed such ceiling for determination of tariff.
In case of existing generating stations, the project cost admitted by the Commission prior to 1.4.2004 shall form the basis for determination of tariff
7. The admitted capital expenditure of Rs. 143006.10 lakh up to the date of commercial operation of the generating station was inclusive of undischarged liability of Rs. 2591.07 lakh as on 12.4.2002. As such, the Commission in Petition No. 115/2007 considered the capital cost of Rs. 140415.03 lakh for the purpose of tariff as on the date of commercial operation of the generating station, after adjusting the undischarged liability Additional Capital expenditure for the period 2001-04
8. The additional capital expenditure amounting to Rs. 678.11 lakh during 2002-03 and Rs. 3098.62 lakh during 2003-04, has been allowed by the Commission in order dated 29.4.2008 in Petition No. 115/2007 and this has been considered for the purpose of tariff for the period 2004-09.
Undischarged liability during 2001-04
9. The Commission in the past has taken a consistent view that for computation of capital cost for tariff, the outstanding liabilities are not to form part of the capital cost. Accordingly, amount of Rs. 1391.47 lakh as on 31.3.2004 included in the capital cost on account of undischarged liabilities, as furnished by the petitioner are deducted from the gross block for the purpose of tariff.
10. In view of the above, the capital cost as on 1.4.2004, considered for the purpose of tariff for the period 2004-09, is as under:
(Rs. in lakh) Particulars Amount Capital Cost as on 12.4.2002 including undischarged liabilities 143006.10 Additional capitalisation for 2002-03 678.11 Additional capitalisation for 2003-04 3098.62 Less:
Un-discharged liability as on 31.3.2004 1391.47 Capital Cost as on 1.4.2004 145391.36 Additional capitalization for the period 2004-09
11. The petitioner has claimed following additional capital expenditure during the years 2004-05 and 2005-06 in the present petition:
2004-05 (Rs. in lakh) Works/ Assets Amount claimed
1. Civil works 279.9
2. Buildings 126.9
3. Electrical 147.2
4. Plant & machinery 140.7
5. Misc.
3.3
6.
De-capitalization (-) 22.5 Total 675.5 2005-06 (Rs. in lakh) Works/ Assets Amount claimed
1. Civil works 16
2. Building 0
3. Electrical (-)30
4. Plant & machinery 124
5. De-capitalization (-) 191 Total (-) 81
12. The additional capital expenditure claimed pertains to works/ assets within the approved cost of the generating station for making balance payments, in respect of main power plant building & permanent residential buildings, water supply & sanitation for the project colony, electrical works in the switchyard, plant & machinery in generating station, furniture & fixture, EDP equipment etc and also includes de-capitalization of assets. Hence, the amount claimed by the petitioner as additional capital expenditure for the years 2004-05 and 2005-06, is allowed. Undischarged liabilities during 2004-09
13. The petitioner vide affidavit dated 23.10.2007 has furnished details of un discharged liabilities, as follows: (Rs. in lakh) (Rs. in lakh) As on Amount 31.3.2005 1218.88 31.3.2006 1155.74
14. In conformity with the decision referred to at para 9 above, un-discharged liabilities are not to form part of the capital cost. Accordingly, the above amounts on account of undischarged liabilities as furnished by the petitioner have been deducted from the gross block for the purpose of tariff for the period 2004-09.
15. The capital cost for the tariff period 2004-09, has been worked out as under:
(Rs. in lakh) Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Opening Capital cost as on 1st April of the financial year (including additional capitalization for 2002-03 and 2003-04) 145391.36 146239.45 146221.59 146221.59 146221.59 Additional Capitalization 675.50 (-)81.00
-
-
-
Increase on account of discharge of undischarged liability as on 31st March of the financial year 172.59 63.14
-
-
-
Capital cost as on 31st March of the financial year 146239.45 146221.59 146221.59 146221.59 146221.59
16. The completion cost of the generating station as per Ministry of Power approval of June, 2001 is Rs. 145545 lakh. It is observed that the gross block as on 31.3.2005 and 31.3.2006, after consideration of the additional capital expenditure and after adjustment of un-discharged liabilities is Rs. 146239.45 lakh and Rs. 146221.59 lakh respectively, and is higher than the approved cost. Hence, the total capital expenditure for the purpose of tariff has been restricted to the approved cost of Rs. 145545 lakh.
17. In view of above, capital cost considered for tariff period 2004-09, after adjustment of additional capitalization and the increase /decrease in un-discharged liabilities for the respective years, is as under:
(Rs. in lakh) Particulars 2004-05 2005-06 2006-07 2007-08 2008-09 Opening Capital Cost as on 1st April of the financial year (including additional capitalization for 2002-03 and 2003-04) 145391.36 145545.00 145545.00 145545.00 145545.00 Additional capitalization 0 0
-
-
-
Increase on account of discharge of undischarged liability as on 31st March of the financial year 153.64 0
-
-
Capital Cost as on 31st March of the financial year 145545.00 145545.00 145545.00 145545.00 145545.00 EXTRA RUPEE LIABILITY
18. There is no FERV claim as there is no foreign loan.
DEBT-EQUITY RATIO
19. Regulation 36 of the 2004 regulations, as amended, provides as under:
(1) In case of the existing generating stations, debt-equity ratio considered by the Commission for the period ending 31.3.2004 shall be considered for determination of tariff with effect from 1.4.2004.
Provided that in cases where the tariff for the period ending 31.3.2004 has not been determined by the Commission, debt-equity ratio shall be as may be decided by the Commission. Provided further that in case of the existing generating stations where additional capitalization has been completed on or after 1.4.2004 and admitted by the Commission under Regulation 34, equity in additional capitalization to be considered shall be,-
(a) 30% of the additional capital expenditure admitted by the Commission, Or
(b) equity approved by the competent authority in the financial package, for additional capitalisation, or
(c) actual equity deployed, Whichever is the least.
Provided further that in case of additional capital expenditure admitted under the second proviso, the Commission may consider equity of more than 30% if the generating company is able to satisfy the Commission that deployment of such equity of more than 30% was in the interest of general public.
(2) In case of the generating stations for which investment approval was accorded prior to 1.4.2004 and which are likely to be declared under commercial operation during the period 1.4.2004 to 31.3.2009, debt and equity in the ratio of 70:30 shall be considered: Provided that where equity actually employed to finance the project is less than 30%, the actual debt and equity shall be considered for determination of tariff: Provided further that the Commission may in appropriate cases consider equity higher than 30% for determination of tariff, where the generating company is able to establish to the satisfaction of the Commission that deployment of equity higher than 30% was in the interest of general public.
(3) In case of the generating stations for which investment approval is accorded on or after 1.4.2004, debt and equity in the ratio of 70:30 shall be considered for determination of tariff:
Provided that where equity actually employed is more than 30%, equity in excess of 30% shall be treated as notional loan;
Provided further that where deployment of equity is less than 30%, the actual debt and equity shall be considered for determination of tariff.
(4) The debt and equity amount arrived at in accordance with above Clause (1), (2) or (3), as the case may be, shall be used for calculation of interest on loan, return on equity, advance against depreciation and foreign exchange rate variation.
20. The Commission in order dated 29.4.2008 in Petition No. 115/2007, allowed debt-equity ratio of 1:1 for calculation of tariff for the period 2001-04. Accordingly, the debt-equity ratio of 1:1 has been considered in tariff, for the period 2004-09. However, in case of additional capital expenditure for the period 2004-09, the debt-equity ratio of 70:30 has been considered for the purpose of tariff, as the petitioner has stated that the total funding has been done from internal accruals. Equity works out to Rs. 72695.68 lakh as on 1.4.2004 and Rs. 72741.77 lakh as on 1.4.2005.
INTEREST ON LOAN
21. Clause (i) of regulation 38 of the 2004 regulations, as amended, inter alia provides that:
(a) Interest on loan capital shall be computed loan wise on the loans arrived at in the manner indicated in regulation 36.
(b) The loan outstanding as on 1.4.2004 shall be worked out as the gross loan as per regulation 36 minus cumulative repayment as admitted by the Commission up to 31.3.2004. The repayment for the period 2004-09 shall be worked out on a normative basis.
(c) The generating company shall make every effort to re-finance the loan as long as it results in net benefit to the beneficiaries. The costs associated with such re-financing shall be borne by the beneficiaries.
(d) The changes to the loan terms and conditions shall be reflected from the date of such re-financing and benefit passed on to the beneficiaries.
(e) In case of any dispute, any of the parties may approach the Commission with proper application. However, the beneficiaries shall not withhold any payment as ordered by the Commission to the generating company during pendency of any dispute relating to re-financing of loan.
(f) In case any moratorium period is availed of by the generating company, depreciation provided for in the tariff during the years of moratorium shall be treated as repayment during those years and the interest on loan capital shall be calculated accordingly.
(g) The generating company shall not make any profit on account of re-financing of loan and interest on loan.
(h) The generating company may, at its discretion, swap loans having floating rate of interest with loans having fixed rate of interest, or vice-versa, at its own cost, and gains or losses as a result of such swapping shall accrue to the generating company.
Provided that the beneficiaries shall be liable to pay interest for the loans initially contracted, whether on floating or fixed rate of interest.
22. The salient features of computation of interest on loan allowed in tariff are summarized below:
i) Interest on loan capital has been computed loan wise on the loans arrived at in the manner indicated in Regulation 36 of the 2004 regulations.
ii) The loan outstanding as on 1.4.2004 has been worked out as the gross loan in accordance with Regulation 36 minus cumulative repayment as admitted by the Commission up to 31.3.2004.
iii) The loan drawls up to the date of commercial operation of the generating station i.e. 12.04.2002, have been considered.
iv) The normative repayment for the period 2004-09 has been worked out as per the following formula: actual repayment during the year x normative net loan at the beginning of the year actual net loan at the beginning of the year.
v) In the present case, some of the GOI loans having higher rate of interest were pre-paid during 2003-04 by taking syndicated loan having floating rate of interest on 19.3.2004.
In tariff period 2001-04 (in Petition No. 115/2007), the re-financing/substitution of GOI loan by syndicated loan having floating rate of interest was not considered in line with the Commission's order dated 13.12.2002 in Petition No. 94/2002. In tariff period 2004-09, the petitioner in their petition has considered the re-financing/substitution of GOI loan by syndicated loan having floating rate of interest in calculation of 'Interest on Loan'. None of the respondents have objected to the inclusion of re-financing/substitution of GOI loan by syndicated loan having floating rate of interest. As such, the re-financing/substitution of GOI loan by syndicated loan having floating rate of interest has been considered.
(vi) Annual trusteeship fees @0.03% and Service tax thereon @5% against PSU 6th series Bonds and Guarantee fees @0.25% against SLR loan are allowed. The annual trusteeship fees and Service tax thereon on PSU 6th series Bonds and Guarantee fees against SLR loan have been added to the yearly interest rate.
(vii) Arranger's fees against syndicated loan, amounting to Rs. 21.89 lakh have been added to the interest on loan in the year 2004-05.
(viii) On the basis of actual rate of interest on actual loans, the weighted rate of interest on average loan has been worked out and the same has been applied on the normative average loan during the year to arrive at the interest on loan.
23. The necessary calculations in support of weighted average rate of interest on loan are annexed to this order as Annexure-I
24. The computations of interest on loan by applying weighted average interest rate are appended below:
(Rs. in lakh) 2004-05 2005-06 2006-07 2007-08 2008-09 Deemed Loan Gross Loan Opening 72695.68 72803.23 72803.23 72803.23 72803.23 Cumulative repayment of deemed loan upto previous year 7387.23 17722.17 28446.66 36186.48 43846.71 Opening Balance 65308.45 55081.06 44356.57 36616.75 28956.52 Additions 107.55 0.00 0.00 0.00 0.00 Repayments 10334.94 10724.49 7739.82 7660.23 4675.55 Closing Balance 55081.06 44356.57 36616.75 28956.52 24280.97 Average Loan 60194.76 49718.81 40486.66 32786.63 26618.75 Wt.Average Rate of Interest 9.82% 9.23% 8.93% 8.61% 8.44% Interest on Loan 5909.19 4586.82 3614.88 2823.09 2245.41 Arranger's fee 21.89 Total Interest on Loan 5931.08 4586.82 3614.88 2823.09 2245.41 DEPRECIATION
25. Sub-clause (a) of Clause (ii) of Regulation 38 of the 2004 regulations provides for computation of depreciation in the following manner, namely:
(i) The value base for the purpose of depreciation shall be the historical cost of the asset.
(ii) Depreciation shall be calculated annually based on straight line method over the useful life of the asset and at the rates prescribed in Appendix II to these regulations. The residual life of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the historical capital cost of the asset. Land is not a depreciable asset and its cost shall be excluded from the capital cost while computing 90% of the historical cost of the asset. The historical capital cost of the asset shall include additional capitalisation on account of Foreign Exchange Rate Variation up to 31.3.2004 already allowed by the Central Government/Commission.
(iii) On repayment of entire loan, the remaining depreciable value shall be spread over the balance useful life of the asset.
(iv) Depreciation shall be chargeable from the first year of Operation. In case of operation of the asset for part of the year, depreciation shall be charged on pro rata basis.
26. The petitioner has claimed the depreciation on the capital expenditure considered by it. Moreover, the depreciation rate considered by the petitioner for assets such as 11 kV and 33 kV transmission lines, is 6% which is not in accordance with the depreciation rates provided in the Appendix II of the 2004 regulations.
27. The weighted average rate of depreciation has been considered as per the submission of the petitioner in Form 12. However, for 11 kV and 33 kV transmission lines 3.6% depreciation rate has been considered.
28. Accordingly, the depreciation rate @ 2.39% as on 31.3.2004 has been considered and the depreciation for the tariff period 2004-09, is worked out as under:
(Rs. in lakh) 2004-05 2005-06 2006-07 2007-08 2008-09 Gross Block Opening Balance 145391.36 145545.00 145545.00 145545.00 145545.00 Increase/Decrease due to Additional Capitalization 0.00 0.00 0.00 0.00 0.00 Increase/Decrease due to un-discharged liability 153.64 0.00 0.00 0.00 0.00 Closing Balance 145545.00 145545.00 145545.00 145545.00 145545.00 Average 145468.18 145545.00 145545.00 145545.00 145545.00 Rate Of Depreciation 2.39% 2.39% 2.39% 2.39% 2.39% Depreciation recovered in tariff 3475.60 3477.44 3477.44 3477.44 3477.44 Cumulative Depreciation/AAD recovered in tariff 14525.18 21805.50 29085.83 36366.15 41041.70 ADVANCE AGAINST DEPRECIATION
29. As per Sub-clause (b) of Clause (ii) of Regulation 38 of the 2004 regulations, in addition to allowable depreciation, the generating company shall be entitled to Advance Against Depreciation, computed in the manner given hereunder:
AAD = Loan repayment amount as per regulation 38 (i) subject to a ceiling of 1/10th of loan amount as per regulation 36 minus depreciation as per schedule.
30. It is provided that Advance Against Depreciation shall be permitted only if the cumulative repayment up to a particular year exceeds the cumulative depreciation up to that year. It is further provided that Advance Against Depreciation in a year shall be restricted to the extent of difference between cumulative repayment and cumulative depreciation up to that year.
31. Advance Against Depreciation has been worked out as under:
(Rs. in lakh) Advance against Depreciation 2004-05 2005-06 2006-07 2007-08 2008-09 1/10th of Gross Loan(s) 7269.57 7280.32 7280.32 7280.32 7280.32 Repayment of the Loan 10334.94 10724.49 7739.82 7660.23 4675.55 Minimum of the above 7269.57 7280.32 7280.32 7280.32 4675.55 Depreciation during the year 3475.60 3477.44 3477.44 3477.44 3477.44 (A) Difference 3793.97 3802.88 3802.88 3802.88 1198.11 Cumulative Repayment of the Loan 17722.17 28446.66 36186.48 43846.71 48522.26 Cumulative Depreciation/ Advance against Depreciation 10731.22 18002.62 25282.95 32563.27 39843.59 (B) Difference 6990.95 10444.04 10903.53 11283.44 8678.67 Advance against Depreciation Minimum of (A) and (B) 3793.97 3802.88 3802.88 3802.88 1198.11 RETURN ON EQUITY
32. As per Clause (iii) of Regulation 38 of the 2004 regulations, return on equity shall be computed on the equity base determined in accordance with regulation 36 and shall be @ 14% per annum. Equity invested in any foreign currency shall be allowed a return up to the prescribed limit in the same currency and the payment on this account shall be made in Indian Rupees based on the exchange rate prevailing on the due date of billing.
33. The petitioner has claimed return on equity @ 14% in the petition.
34. The petitioner's entitlement towards return on equity works out as follows:
(Rs in lakh) Deemed Equity 2004-05 2005-06 2006-07 2007-08 2008-09 Opening Balance 72695.68 72741.77 72741.77 72741.77 72741.77 Additions 46.09 0.00 0.00 0.00 0.00 Closing Balance 72741.77 72741.77 72741.77 72741.77 72741.77 Average Equity 72718.73 72741.77 72741.77 72741.77 72741.77 Rate of Return on Equity 14.00% 14.00% 14.00% 14.00% 14.00% Return on Equity 10180.62 10183.85 10183.85 10183.85 10183.85 O&M EXPENSES
35. As per Clause (iv) of Regulation 38 of the 2004 regulations, the methodology for calculating operation & maintenance expenses for existing generating stations is as follows:
(a) "The operation and maintenance expenses including insurance, for the existing generating stations which have been in operation for 5 years or more in the base year of 2003-04, shall be derived on the basis of actual operation and maintenance expenses for the years 1998-99 to 2002-03 based on the audited balance sheets, excluding abnormal operation and maintenance expenses, if any, after prudence check by the Commission.
The average of such normalized operation and maintenance expenses after prudence check, for the years 1998-99 to 2002-03 considered as operation and maintenance expenses for the year 2000-01 shall be escalated at the rate of 4% per annum to arrive at operation and maintenance expenses for the base year 2003-04.
The base operation and maintenance expenses for the year 2003-04 shall be escalated further at the rate of 4% per annum to arrive at permissible operation and maintenance expenses for the relevant year of tariff period.
(b) In case of hydro electric generating stations which have not been in existence for a period of five years, the operation and maintenance expenses shall be fixed at 1.5% 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 operation and maintenance expenses for the base year 2003-04.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.
(c) In case of the hydro electric generating stations declared under commercial operation on or after 1.4.2004, the base operation and maintenance expenses shall be fixed at 1.5% 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.
36. The petitioner has claimed the following O&M expenses, considering capital cost of Rs. 122155 lakh as on date of commercial operation of the generating station:
(Rs.in lakh) Year 2004-05 2005-06 2006-07 2007-08 2008-09 O&M expenses 1981 2060 2142 2228 2317
37. The capital cost admitted by the Commission as on 12.4.2002 (after excluding undischarged liabilities) is Rs. 140415.03 lakh. O&M charges for the year 2003-04 are worked out as Rs. 2188 lakh. O&M expenses of Rs. 2188 lakh for the base year (2003-04) are escalated @ 4% per annum to compute O&M expenses for the period 2004-09, as follows:
(Rs.in lakh) Year 2004-05 2005-06 2006-07 2007-08 2008-09 O&M expenses 2275 2366 2461 2560 2662 INTEREST ON WORKING CAPITAL
38. In accordance with Clause (v) of Regulation 38 of the 2004 regulations, working capital in case of hydro generating stations shall cover:
(i) Operation and Maintenance expenses for one month;
(ii) Maintenance spares @ 1% of the historical cost escalated @ 6% per annum from the date of commercial operation; and
(iii) Receivables equivalent to two months of fixed charges for sale of electricity, calculated on normative capacity index.
39. Under the 2004 regulations, the rate of interest on working capital shall be the short-term Prime Lending Rate of State Bank of India as on 1.4.2004 or on 1st April of the year in which the generating unit/station is declared under commercial operation, whichever is later. The interest on working capital shall be payable on normative basis notwithstanding that the generating company has not taken working capital loan from any outside agency.
40. Working capital has been calculated considering the following elements
(a) Maintenance spares: The petitioner has claimed maintenance spares @ 1% of the historical cost of Rs 122155 lakh as on 31.3.2002 which works out to Rs. 1222 lakh for the year 2002-03 and Rs. 1295 for the year 2003-04. After considering 6% per annum escalation, the petitioner has claimed following amount towards maintenance spares for the tariff period 2004-09:
(Rs in lakh) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Maintenance Spares 1373 1455 1542 1635 1733 The Commission has considered the historical cost on date of commercial operation of the station as Rs. 140415.03 lakh. In terms of the 2004 regulations, maintenance spares for the year 2003-04 works out to Rs. 1486 lakhs respectively which have been escalated @ 6% per annum to compute the maintenance spares for the period 2004-09:
(Rs in lakh) Year 2004-05 2005-06 2006-07 2007-08 2008-09 Maintenance Spares 1575 1670 1770 1876 1988
(b) O&M Expenses: O&M expenses for working capital have been worked out for I month of O&M expenses approved above are considered in working capital of the respective year.
(c) Receivables: The receivables have been worked out on the basis of two months of fixed and variable charges.
41. The average SBI PLR of 10.25% as on 1.4.204 has been considered as the rate of interest on working capital during the tariff period 2004-09.
42. The necessary details in support of calculation of interest on working capital are appended below:
(Rs. in lakh) Interest on Working Capital 2004-05 2005-06 2006-07 2007-08 2008-09 Spares for Working Capital 1575.00 1670.00 1770.00 1876.00 1988.00 O & M expenses 189.58 197.17 205.08 213.33 221.83 Receivables 4381.03 4172.68 4025.86 3910.37 3390.14 Total Working Capital 6145.62 6039.85 6000.94 5999.71 5599.97 Interest Rate 10.25% 10.25% 10.25% 10.25% 10.25% Interest on Working Capital 629.93 619.08 615.10 614.97 574.00 ANNUAL FIXED CHARGES
43. The annual fixed charges for the period 1.4.2004 to 31.3.2009 allowed in this order are summed up as below:
(Rs in lakh) Annual Fixed Charges 2004-05 2005-06 2006-07 2007-08 2008-09 Interest on Loan 5931.08 4586.82 3614.88 2823.09 2245.41 Interest on Working Capital 629.93 619.08 615.10 614.97 574.00 Depreciation 3475.60 3477.44 3477.44 3477.44 3477.44 Advance Against Depreciation 3793.97 3802.88 3802.88 3802.88 1198.11 Return on Equity 10180.62 10183.85 10183.85 10183.85 10183.85 O & M Expenses 2275.00 2366.00 2461.00 2560.00 2662.00 TOTAL 26286.20 25036.07 24155.15 23462.24 20340.81 DESIGN ENERGY
44. The Commission vide order dated 11.04.2002 in Petition No. 87/2001 awarded provisional tariff for the generating station wherein the design energy was considered as 1874 Gwh. Subsequently, Central Electricity Authority (CEA) vide letter No. 3/58/2004-HP dated 30.1.2004 revised the annual design energy of the generating station to a lower value of 1509.69 Gwh.
45. CEA while approving the revised annual design energy of 1509.69 Gwh of the generating station vide letter dated 30.1.2004 has cited the following explanation on the review of design energy:
The review of design energy benefits form Ranganadi HE Project Stage -I has been carried out utilizing revised inflow data series near Yazali Dam Site for a period of 23 years from 1978-79 to 2000-01 and also considering relevant parameters of the water conductor system. The data pertaining to inflows and head loss in WCS has been vetted by CWC. The efficiency of the generating units has been considered as per guaranteed technical particulars of the units. Based on the above, the revised design energy benefits from the project, assessed as 1509.69 MU have been considered by the Authority and approved.
46. Since CEA is the authority for approval / revision of design energy of hydro electric projects, revision of annual design energy of the generating station from 1874 MUs to 1509.69 MUs has been considered from the year 2004-05 and onwards.
47. The month-wise design energy of the generating station is as follows:
Month Design Energy (Gwh) April 125.49 May 120.12 June 122.17 July 247.43 August 224.97 September 156.32 October 111.19 November 81.09 December 88.22 January 79.03 February 68.76 March 84.90 Total 1509.69
48. The rate of primary energy, normative values of capacity index and incentive shall be in accordance with the 2004 regulations.
IMPACT OF ADDITIONAL CAPITALISATION FOR THE YEARS 2001-04
49. The Commission has decided that additional capital expenditure for the period up to 31.3.2004 be added to the gross block as on 31.3.2004 to arrive at gross block as on 1.4.2004 for the purpose of fixation of tariff for the period 2004-05 to 2008-09. The Commission has further ordered that the utility would be entitled to earn return on equity @ 16% on equity portion of additional capitalization approved and interest on loan at the rate as applicable during 2001-02 to 2003-04. The return on equity and interest on loan are payable on additional capitalization from 1st April of the financial year following the financial year to which additional capital expenditure relates.
50. Based on the above impact of additional capitalization has been worked out as under, which the petitioner shall recover from the respondents along with tariff being approved through this order in five equal installments of Rs. 18.506 lakh each up to 31.3.2009:
(Rs in lakh) 2002-03 2003-04 Total Period 1.00 1.00 Additional Capitalisation 678.11 3098.62 3776.73 Financing of Additional Capitalisation Notional Loan 339.06 1549.31 1888.37 Notional Equity 339.06 1549.31 1888.37 Total Effective Additional Capitalisation Opening Loan Balance 0.00 339.06 Addition of Loan 339.06 1549.31 1888.37 Repayment of Loan 0.00 0.00 0.00 Closing Loan Balance 339.06 1888.37 Effective Loan 0.00 339.06 Weighted Average Rate of Interest on Loan 11.68% 11.29% Effective Equity 0.00 339.06 Interest on Loan 0.00 38.28 38.28 Return on Equity 16% 0.00 54.25 54.25 Impact of Additional Capitalisation 0.00 92.53 92.53
51. The petitioner has also sought reimbursement of filing fee of Rs. 25 lakh paid. A final view on reimbursement of filing fee is yet to be taken by the Commission for which views of the stakeholder have been called for. The view taken on consideration of the comments received shall apply in the present case as regards reimbursement of filing fee.
52. In addition to the charges approved above, the petitioner is entitled to recover other charges also like claim for reimbursement of income-tax, publication fee, other taxes, cess levied by statutory authority and other charges in accordance with the 2004 regulations.
53. The petitioner is billing the respondents on provisional basis in accordance with the order dated 11.4.2002 in Petition No. 87/2001. The provisional billing of tariff shall be adjusted in the light of the final tariff now approved by us.
54. This order disposes of Petition No. 89/2007.