Section 19 in Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2019
19. Capital Cost.
(1)The Capital cost of the generating station or the transmission system, as the case may be, as determined by the Commission after prudence check in accordance with these regulations shall form the basis for determination of tariff for existing and new projects.(2)The Capital Cost of a new project shall include the following:(a)The expenditure incurred or projected to be incurred up to the date of commercial operation of the project;(b)Interest during construction and financing charges, on the loans (i) being equal to 70% of the funds deployed, in the event of the actual equity in excess of 30% of the funds deployed, by treating the excess equity as normative loan, or (ii) being equal to the actual amount of loan in the event of the actual equity less than 30% of the funds deployed;(c)Any gain or loss on account of foreign exchange risk variation pertaining to the loan amount availed during the construction period;(d)Interest during construction and incidental expenditure during construction as computed in accordance with these regulations;(e)Capitalised initial spares subject to the ceiling rates in accordance with these regulations;(f)Expenditure on account of additional capitalization and de-capitalisation determined in accordance with these regulations;(g)Adjustment of revenue due to sale of infirm power in excess of fuel cost prior to the date of commercial operation as specified under Regulation 7 of these regulations;(h)Adjustment of revenue earned by the transmission licensee by using the assets before the date of commercial operation;(i)Capital expenditure on account of ash disposal and utilization including handling and transportation facility;(j)Capital expenditure incurred towards railway infrastructure and its augmentation for transportation of coal upto the receiving end of the generating station but does not include the transportation cost and any other appurtenant cost paid to the railway;(k)Capital expenditure on account of biomass handling equipment and facilities, for co-firing;(l)Capital expenditure on account of emission control system necessary to meet the revised emission standards and sewage treatment plant;(m)Expenditure on account of fulfilment of any conditions for obtaining environment clearance for the project;(n)Expenditure on account of change in law and force majeure events; and(o)Capital cost incurred or projected to be incurred by a thermal generating station, on account of implementation of the norms under Perform, Achieve and Trade (PAT) scheme of Government of India shall be considered by the Commission subject to sharing of benefits accrued under the PAT scheme with the beneficiaries.(3)The Capital cost of an existing project shall include the following:(a)Capital cost admitted by the Commission prior to 1.4.2019 duly trued up by excluding liability, if any, as on 1.4.2019;(b)Additional capitalization and de-capitalization for the respective year of tariff as determined in accordance with these regulations;(c)Capital expenditure on account of renovation and modernisation as admitted by this Commission in accordance with these regulations;(d)Capital expenditure on account of ash disposal and utilization including handling and transportation facility;(e)Capital expenditure incurred towards railway infrastructure and its augmentation for transportation of coal upto the receiving end of generating station but does not include the transportation cost and any other appurtenant cost paid to the railway; and(f)Capital cost incurred or projected to be incurred by a thermal generating station, on account of implementation of the norms under Perform, Achieve and Trade (PAT) scheme of Government of India shall be considered by the Commission subject to sharing of benefits accrued under the PAT scheme with the beneficiaries.(4)The capital cost in case of existing or new hydro generating station shall also include:(a)cost of approved rehabilitation and resettlement (R&R) plan of the project in conformity with National R&R Policy and R&R package as approved; and(b)cost of the developer's 10% contribution towards Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) project in the affected area.(5)The following shall be excluded from the capital cost of the existing and new projects:(a)The assets forming part of the project, but not in use, as declared in the tariff petition;(b)De-capitalised Assets after the date of commercial operation on account of replacement or removal on account of obsolescence or shifting from one project to another project:Provided that in case replacement of transmission asset is recommended by Regional Power Committee, such asset shall be de-capitalised only after its redeployment;Provided further that unless shifting of an asset from one project to another is of permanent nature, there shall be no de-capitalization of the concerned assets.(c)In case of hydro generating stations, any expenditure incurred or committed to be incurred by a project developer for getting the project site allotted by the State Government by following a transparent process;(d)Proportionate cost of land of the existing project which is being used for generating power from generating station based on renewable energy; and(e)Any grant received from the Central or State Government or any statutory body or authority for the execution of the project which does not carry any liability of repayment.
