Section 4 in The Delhi Electricity Regulatory Commission (Terms and Conditions for Determination of Transmission Tariff) Regulations, 2011
4. General Approach And Guiding Principles.
(1)The Commission shall adopt Multi Year Tariff Framework for approval of ARR and expected revenue from tariffs and charges.(2)The Multi Year Tariff framework shall be based on the following:(a)Business Plan of the Transmission Licensee for the entire Control Period to be submitted to the Commission for approval, prior to the start of the Control Period;(b)Trajectory for specific parameters shall be stipulated by the Commission, where the performance of the Applicant is sought to be improved through incentives and disincentives;(c)Annual review of performance shall be conducted vis-a-vis the approved forecast.Baseline(5)The baseline values (operating and cost parameters) for the Control Period shall be determined by the Commission and based on the approved values by the Commission in the past, latest audited accounts, estimate of the actuals for the relevant year, prudence check and other factors considered appropriate by the Commission.(6)The Commission shall normally not revisit the performance targets.Capital Investment Plan(7)The Commission shall approve the system augmentation plan submitted by the Transmission Licensee, based on the load growth forecast during the Control Period. The same would be considered for computation of ARR, wherein the amount of electricity transmitted by the Transmission System shall be projected considering the estimated growth plan of its Beneficiaries and any plans of new transmission system, based on network expansion plans within the State.(8)Capital investment plan submitted by the Licensee shall also provide details of ongoing projects that will spill into the Control Period and new projects that will commence during the Control Period but may extend beyond the Control Period.(9)The capital investment plan shall be in conformity with the plans made by the CEA/CTU/STU. The investment plan shall be scheme-wise and each scheme shall include:(a)Purpose of investment (i.e. replacement of existing assets, meeting load growth, technical loss reduction, meeting reactive energy requirements, improvement in quality and reliability of supply, etc) ;(b)Capital Structure;(c)Capitalization Schedule;(d)Financing Plan;(e)Cost-benefit analysis;(f)Performance improvement envisaged in the Control Period.(10)For the Annual Performance Review, Transmission Licensee shall submit the actual capital expenditure incurred and capitalisation during the year under review along with the Annual Performance Review Filing.(11)The Commission shall review the actual capital expenditure incurred and capitalisation at the end of each year of the Control Period vis-a-vis the approved capital expenditure and capitalisation schedule. Based on trued up capital expenditure and capitalisation, the Commission shall true up Return on Capital Employed (RoCE) and depreciation while truing up for any year of the control Period. The Commission may also revise the capital expenditure and capitalisation for remaining years of the Control Period based on trued up Capital expenditure and capitalisation for any year.(12)Capital expenditure shall normally incurred by the Transmission Licensee after approval of the Commission.(13)The Licence shall quarterly submit the details of the scheme-wise asset capitalisation along with receipt of the Electrical Inspector certificate and other documents as may be prescribed by the Commission from time-to-time for allowing Return on Capital Employed and Description.Renovation and Modernisation(14)The Transmission Licensee for meeting the expenditure on Renovation and Modernization (R&M) for the purpose of extension of life beyond the useful life of the Transmission System, shall make an application 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, consent of beneficiaries and any other information considered to be relevant by the Transmission Licensee.(15)Where the Transmission Licensee makes an application for approval of R&M proposal, the approval shall be granted after due consideration of reasonableness of the cost estimates, financing plan, schedule of completion, interest during construction, use of efficient technology, cost-benefit analysis, and such other factors as may be considered relevant by the Commission.(16)Any expenditure incurred or projected to be incurred as admitted by the Commission after prudent check based on the estimates of Renovation and Modernization expenditure and life extension, and after writing off the original amount of the replaced assets and deducting the accumulated depreciation including advance against depreciation already recovered from the Original project cost, shall form the basis for determination of Tariff.Targets for Controllable parameters(17)The Commission shall set targets for the items or parameters that are deemed to be "controllable" and which include:(a)Availability of the Transmission System;(b)Operation and Maintenance Expenditure which includes employee expenses, repairs and maintenance expenses, administration and general expenses and other miscellaneous expenses viz. audit fees, rents, legal fees etc;(c)Return on Capital Employed; and(d)Depreciation.Truing Up(18)For controllable parameters,(a)Any surplus or deficit on account of Operation and Maintenance (O&M) expenses shall be to the account of the Licensee and shall not be trued up in ARR; and(b)Depreciation and Return on Capital Employed shall be trued up at the end of Control Period based on the actual capital expenditure and actual capitalisation vis-à-vis capital investment plan (capital expenditure and capitalisation) approved by the Commission;(c)Provided that in case any change to capital investment plan for the Control Period as per the regulation 4.10, depreciation and return on capital employed shall be adjusted during the mid term review based on the actual capital expenditure, actual capitalisation and revised capital investment plan (capital expenditure and capitalisation schedule) approved by the Commission.
