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8.1. According to learned counsel for the Appellant, the Annual Performance Review of variable charges, like Power Purchase Cost has been specifically left out of the scope of APR, according to the 2007 Regulations. As such, reduction of Power Purchase Cost and T&D loss are without any jurisdiction. APR was done under the 2007 Regulations while the State Commission applied the 2005 Regulations for carrying out such review. Even if the 2005 Regulations are applied the normative allowable purchase cost for the FY 2006-07 has to be arrived at after taking into account the purchasable quantum of energy on the basis of the approved T&D loss of 5.74%. 8.2. According to the learned counsel for the State Commission, the Appellant had not challenged the FPPCA order dated 31.1.2008 vide which the State Commission had considered the T&D loss of 4.76% on actual basis. Since FPPCA order had attained finality, in the impugned APR order, the State Commission has allowed the variable charges according to the FPPCA order dated 31.1.2008. Further, the State Commission did not approve T&D loss of 5.74% in the Tariff order for the FY 2006-07 but only provisionally considered as 5.74% as projected by the Appellant in its petition. The State Commission in its Tariff Order for the FY 2006-07 had clearly recorded lack of data furnished by the Appellant in its petition. 8.3. Let us first examine the 2005 Tariff Regulations under which the tariff for the FY 2006-07 was determined. According to the Regulation 11 of Schedule 5, the variation in fuel and power purchase cost has to be dealt as per FPPCA formula specified under Schedule 7. The FPPCA formula in Schedule 7 takes into account the normative T&D loss fixed by the State Commission for calculating the FPPCA. 8.4. In the tariff order for the FY 2006-07 dated 8.5.2006, the State Commission has allowed the T&D loss of 5.74% for the year 2006-07; as projected by the Appellant. Even though the State Commission has recorded that the Appellant in the data furnished with the petition, has not given proper quantitative disclosure of energy handled during the year 2004-05, it finally decided the T&D loss at 5.74% for the FY 2006-07. We are unable to accept the argument of learned counsel for the State Commission that the T&D loss decided in the tariff order was provisional only because the State Commission decided to "allow for the present a T&D loss of 5.74%". If the actual T&D loss level achieved by the Appellant was found to be better than the normative level, the same cannot be substituted for the approved normative T&D loss retrospectively.

8.5. However, we notice that the Appellant vide its application dated 20.9.2007 filed before the State Commission had made a claim of FPPCA for the FY 2006-07. The State Commission vide its order dated 31.1.2008 decided the total variable cost allowed for FY 2006-07 and the amount of FPPCA to be recovered from the consumers. In this order, the State Commission used the FPPCA formula according to the 2005 Regulations. The loss factor used in the formula has also been based on the normative T&D loss as per the formula specified in the 2005 Regulations. Subsequently, the Appellant filed a Petition with the State Commission on 1.4.2008 for review of FPPCA order dated 31.1.2008 claiming additional cost of energy saved on account of achieving T&D loss level below the normative level to be passed on to the Appellant in FPPCA. The State Commission by its order dated 18.12.2008 rejected the Review Petition. The Appellant did not file any Appeal against the FPPCA order dated 31.1.2008. Thus, the FPPCA order dated 31.1.2008 has attained finality. 8.6. According to learned counsel for the State Commission, the variable cost for FY 2006-07 as allowed in the FPPCA order has been adopted in the impugned order. We find that the State Commission in the impugned order has not determined the FPPCA but has applied the variable cost as determined in the FPPCA order. Thus, we do not find any infirmity in the order of the State Commission.

8.9. Now we shall examine the 2007 Regulations dated 9.2.2007 as amended on 31.12.2007. The first control period under the Multi Year Tariff according to the Regulations is FY 2007-08. The base year for the first control period is FY 2006-07. Similarly, FY 2007-08 is the base year for control period 2008-11. Regulation 2.5.6 (ii) provides for any variation in expenditure on account of FPPCA for a base year to be adjusted with the ARR of any ensuing year. Regulation 2.6 stipulates Annual Performance Review to cover annual fixed charges, incentives as per Schedule 10 and effect of gain sharing as per Schedule 9B. The incentives as per Schedule 9B and gain sharing as per Schedule 10 of the 2007 Regulations, in our view, are not applicable to the FY 2006-07 as norms have been decided for only the ensuing years of the control period and cannot be applied retrospectively to the FY 2006-07. However, the review of fixed charges of the FY 2006-07 as per the Regulations 2005 will have to be done so that the trued-up amount can be adjusted in the future ARR and tariff of the Appellant. 8.10. Regulation 2.8.7 of the 2007 Regulations also provides for FPPCA as per the formula specified in Schedule 7. However, the formula as specified in the 2007 Regulations will be applicable only for the ensuing years of the MYT Control Period. Regulation 2.8.7.1 also provides for adjustment of FPPCA against old power purchase liabilities as under:

8.12. The cause for challenging the FPPCA arose immediately after the FPPCA order dated 31.1.2008. The Appellant did not challenge the FPPCA order which has since reached finality. The Appellant cannot challenge the variable cost adopted in the APR order dated 15.9.2008 on the basis of the FPPCA order dated 31.1.2008.

8.13. In view of above, we decide this issue against the Appellant.

9. The second issue is regarding the interest on working capital.

9.1. According to the learned counsel for the Appellant the interest on working capital should not have been reduced to the actuals and should have been retained at the normative level as per the 2005 Regulations. Further, when working capital is funded through internal resources, the internal funds also carry cost. 9.2. According to the learned counsel for the State Commission Regulations 2.7.1, 4.6.5.1 and 4.6.5.2 of 2007 Regulations would show that the State Commission is entitled to take the actual amount of interest on working capital incurred by the Appellant. 9.3. Let us first examine the relevant Regulations of the 2005 Regulations. The relevant Regulation 4.6.5 is reproduced below: