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Union of India - Section

Section 29 in The Central Electricity Regulatory Commission (Terms And Conditions For Tariff Determination From Renewable Energy Sources) Regulations, 2009

29. Capital Cost Indexation Mechanism

.-The following indexation mechanism shall be applicable in case of small hydro power projects for adjustments in capital cost over the Control Period with the changes in Wholesale Price Index for Steel and Electrical Machinery:CC(n) = P&M(n) * (1+F1+F2+F3)P&M(n) = P&M(0) * (1+d(n))d(n) = [a*{(SI(n-1)/SI(0)-1}+{(EI(n-1)/EI(0))-1}]/(a+b)Where,-CC(n) = Capital Cost for nth yearP&M(n) = Plant and Machinery Cost for nthyearP&M(0) = Plant and Machinery Cost for thebase yearNote.- P&M(0) is to computed bydividing the base capital cost (for the first year of the Control Period) by(1+F1+F2+F3),i.e.
Small Hydro Project Base CapitalCost (Rs. Lakh/MW) Factor(1+F1+F2+F3) P&M(0)`(Rs. Lakh/MW)
SHP(< 5 MW) (HP, Uttarakhand, NE States) 700 1.40 500
SHP (5-25 MW) (HP, Uttarakhand, NE States) 630 1.40 450
SHP (<5 MW) (other States) 550 1.40 393
SHP (5-25 MW) (other States) 500 1.40 357
D(n) = Capital Cost escalation factor foryear (n) of Control period.SI(n-1) = Average WPI Steel Index prevalent forcalendar year (n-1) of the Control Period.SI(0) - Average WPI Steel Index prevalent forcalendar year (0) at the beginning of the Control Period, i.e., January 2008EI(n-1) = Average WPI Electrical Machinery Indexprevalent for calendar year (n-1) of the Control PeriodEI(0) = Average WPI Electrical and Machinery Index prevalent for calendar year (0) at the beginning of the Control Period, i.e., January 2008 to December 2008a = Constant to be determined by Commission from time totime,(In default it is 0.6), for weightage to Steel Indexb = Constant to be determined by Commission from time totime,(In default if its 0.4), for weightage to Electrical Machinery IndexF1 = Factor for Land and Civil Work (0.16)F2 = Factor for Erection and Commissioning (0.10)F3 = Factor for IDC and Financing Cost (0.14)