Section 27 in Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019
27. Additional Capitalisation on account of Renovation and Modernisation.
(1)The generating company or the transmission licensee, as the case may be, intending to undertake renovation and modernization (R&M) of the generating station or unit thereof or transmission system or element thereof for the purpose of extension of life beyond the originally recognised useful life for the purpose of tariff, shall file a petition 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:Provided that the generating company making the applications for renovation and modernization (R&M) shall not be eligible for Special Allowance under Regulation 28 of these regulations;Provided further that the generating company or the transmission licensee intending to undertake renovation and modernization (R&M) shall be required to obtain the consent of the beneficiaries or the long term customers, as the case may be, for such renovation and modernization (R&M) and submit the same along with the petition.(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 (R&M), approval may be granted after due consideration of reasonableness of the proposed cost estimates, financing plan, schedule of completion, interest during construction, use of efficient technology, cost-benefit analysis, expected duration of life extension, consent of the beneficiaries or long term customers, if obtained, 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 after 25 years of operation from date of commercial operation, any additional capital expenditure which has become necessary for renovation of gas turbines/steam turbine or additional capital expenditure necessary due to obsolescence or non-availability of spares for efficient operation of the stations shall be allowed:Provided that any expenditure included in the renovation and modernisation (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 from the expenditure to be allowed after prudence check.(4)After completion of the renovation and modernisation (R&M), the generating company or the transmission licensee, as the case may be, shall file a petition for determination of tariff. Expenditure incurred or projected to be incurred and admitted by the Commission after prudence check, and after deducting the accumulated depreciation already recovered from the admitted project cost, shall form the basis for determination of tariff.
