Bare Acts Live

The Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005

Published vide Notification No. (MERC/Legal/132/2005/1718, dated 23rd August, 2005

mh674

(a) "Accounting Statement" means for each financial year, the following statements, namely-

(i) balance sheet, prepared in accordance with the form contained in Part I of Schedule VI to the Companies Act, 1956;

(ii) profit and loss account, complying with the requirements contained in Part II of Schedule VI to the Companies Act, 1956;

(iii) cash flow statement, prepared in accordance with the Accounting Standard on Cash Flow Statement (AS-3) of the Institute of Chartered Accountants of India;

(iv) report of the statutory auditors';

(v) cost records prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956;

(b) "Act" means the Electricity Act, 2003 (36 of 2003), including amendments thereto;

(c) "Allocation Statement" means for each financial year, a statement in respect of each of the separate businesses of the Licensee, showing the amounts of any revenue, cost, asset, liability, reserve or provision, which has been either;

(i) charged from or to each such separate business together with a description of the basis of that charge; or

(ii) determined by apportionment or allocation between the Licensed Business and every other separate business of the Licensee, together with a description of the basis of the apportionment or allocation;

(d) "Applicant" means a Licensee or Generating Company who has made an application for determination of tariff or an application for annual performance review in accordance with the Act and these Regulations and includes a Licensee or Generating Company whose tariff is the subject of a review by the Commission either suo motu or on a petition filed by any interested or affected person or as part of an annual performance review;

(e) "Aggregate Revenue Requirement" means the requirement of the Licensee for recovery, through tariffs, of allowable expenses and return on capital pertaining to his Licensed Business, in accordance with these Regulations;

(f) "Auxiliary Consumption" in relation to a period, means the quantum of energy consumed by auxiliary equipment of the generating station and shall be expressed as a percentage of the sum of gross energy generated at the generator terminals of all the units of the generating station:

(g) "Availability" in relation to a thermal generating station for any period means the average of the daily average declared capacities for all the days during that period expressed as a percentage of the installed capacity of the generating station minus normative auxiliary consumption in MW, as specified in these Regulations, and shall be computed in accordance with the following formula:

                                     N
Availability = 1000  x  ∑DC₁ { N x IC x (100 - AUX_n) } %

where - N = number of time blocks in the given period

DC = Average Declared Capacity for the i^th time block in such period

IC = Installed Capacity of the generating station in MW

AUX = Normative Auxiliary Consumption in MW, expressed as a percentage of gross generation

(h) "Availability" in relation to a transmission system for a given period means the time in hours during that period the transmission system is capable of transmitting electricity at its rated voltage expressed in percentage of total hours in the given period and shall be calculated as provided in Annexure-II to these Regulations;

(i) "Balancing and Settlement Code" refers to such code as may be stipulated by the Commission or as may be published by the State Load Despatch Centre and approved by the Commission, for the balancing of energy accounts and settlement of differences between energy scheduled and actual energy among the users of the grid in the State of Maharashtra;

(j) "Block" in relation to a combined cycle thermal generating station includes combustion turbine - generators, associated waste heat recovery boilers, connected steam turbine - generators and auxiliaries;

(k) "Bulk Power Transmission Agreement" means an agreement that contains the terms and conditions under which a Transmission System User is entitled to the access to an intra-State transmission system of a Transmission Licensee;

(l) "Commission" means the Maharashtra Electricity Regulatory Commission;

(m) "Conduct of Business Regulations" means such regulations as may be specified under clause (zl) of sub-section (2) of Section 181 read with sub-section (1) of Section 92 of the Act;

(n) "Control Period" means a period comprising one or more financial years, as may be stipulated by the Commission, for submission of forecast in accordance with Part C of these Regulations;

(o) "Cut-off Date" means the date of the first financial year closing after three hundred and sixty-five (365) days of the date of commissioning of a generating station;

(p) "Daily Capacity Index" means the declared capacity expressed as a percentage of the maximum available capacity for the day and shall be calculated in accordance with the following formula:

(q) "Date of commissioning" means-,

(i) in relation to a unit of a generating station, means the date declared by the Generating Company after demonstrating the Maximum Continuous Rating or Installed Capacity through a successful trial run;

(ii) in relation to a generating station, the date of commissioning of the last unit or block of the generating station in accordance with clause (i) above; and

(iii) in relation to a capital expenditure project relating to the Transmission Business, Distribution Business or Retail Supply Business of a Licensee, the date on which the project is ready to be put to commercial use;

(r) "Declared Capacity" means-

(i) for a thermal generating station, the capability of the generating station to deliver ex-bus electricity in MW declared by such generating station in relation to any period of the day or whole of the day, duly taking into account the availability of fuel:

(ii) for run-of-river hydro power generating stations with pondage and storage-type power stations, the ex-bus capacity in MW expected to be available from the generating station over the peaking hours of the next day, as declared by the generating station, taking into account the availability of water, optimum use of water and availability of machines and for this purpose, the peaking hours shall not be less than three (3) hours within a twenty-four (24) hour period;

(iii) for purely run-of-river hydro power generating stations, the ex-bus capacity in MW expected to be available from the generating station during the next day, as declared by the generating station, taking into account the availability of water, optimum use of water and availability of machines;

(s) "Deemed Generation" means the energy which a hydro power generating station was capable of generating but could not generate due to reasons beyond the control of the generating station or on account of non-availability of Transmission Licensee's transmission lines or on receipt of backing down instructions from the State Load Despatch Centre resulting in spillage of water;

(t) "Design Energy" in relation to a hydro power generating station means the quantum of energy which could be generated in a 90 per cent dependable year with 95 per cent installed capacity of the generating station;

(u) "Distribution Business" means the business of operating and maintaining a distribution system for supplying electricity in the area of the supply of the Distribution Licensee;

(v) "Distribution Open Access Regulations" means the regulations as may be specified by the Commission under sub-section (47) of Section 2 read with sub-section (2), (3) and (4) of Section 42 of the Act;

(w) "Existing Generating Station" means a generating station which had a date of commissioning prior to the date of notification of these Regulations;

(x) "Expected Revenue from Tariff and Charges" means the revenue estimated to accrue to the Licensee from the Licensed Business at the prevailing tariffs;

(y) "Fees and Charges Regulations" means such regulations as may be specified under clause (zp) of sub-section (2) of Section 181 read with clause (g) of sub-section (1) of Section 86 of the Act;

(z) "Force Majeure Event" means, with respect to any party, any event or circumstance which is not within the reasonable control of, or due to an act or omission of, that party and which, by the exercise of reasonable care and diligence, that party is not able to prevent, including, without limiting the generality of the foregoing:

(i) acts of God, including but not limited to lightning, storm, action of the elements, earthquakes, flood, drought and natural disaster;

(ii) strikes, lockouts, go-slow, bandh or other industrial disturbances;

(iii) acts of public enemy, wars (declared or undeclared), blockades, insurrections, riots, revolution, sabotage, vandalism and civil disturbance;

(iv) unavoidable accident, including but not limited to fire, explosion, radioactive contamination and toxic dangerous chemical contamination;

(v) any shutdown or interruption of the grid, which is required or directed by the State or Central Government or by the Commission or the State Load Despatch Centre; and

(vi) any shut down or interruption, which is required to avoid serious and immediate risks of a significant plant or equipment failure;

(za) "Generation Business" means the business of production of electricity from a generating station for the purpose of giving supply to any premises or enabling a supply to be so given;

(zb) "Gross Calorific Value" in relation to a thermal generating station means the heat produced in kCal by complete combustion of one kilogram of solid fuel or one litre of liquid fuel or one standard cubic meter of gaseous fuel, as the case may be;

(zc) "Gross Station Heat Rate" means the heat energy input in kCal required to generate one kWh of electrical energy at generator terminals;

(zd) "Installed Capacity" means the summation of the name plate capacities of all the units of the generating station or the capacity of the generating station (reckoned at the generator terminals) as approved by the Commission from time to time;

(ze) "Maximum Available Capacity" in relation to a hydro power generating station means-

(i) for run-of-river hydro power generating stations with pondage and storage-type power stations, the maximum capacity in MW that the generating station can generate with all units running under prevailing conditions of water levels available for usage and flows over the peaking hours of the next day, and for this purpose, the peaking hours shall not be less than three (3) hours within a twenty-four (24) hour period;

(ii) for purely run-of-river hydro power generating stations, the maximum capacity in MW that the generating station can generate with all units running under prevailing conditions of water levels available for usage and flows over the peaking hours of the next day;

(zf) "New Generating Station" means a generating station with a date of commissioning on or after the date of notification of these Regulations;

(zg) "Non-Tariff Income" means income relating to the Licensed Business other than from tariff, excluding any income from Other Business and, in case of the Retail Supply Business of a Distribution Licensee, excluding income from wheeling and receipts on account of cross-subsidy surcharge and additional surcharge on charges of wheeling;

(zh) "Officer" means an officer of the Commission;

(zi) "Other Business" means any business engaged in by a Transmission Licensee under Section 41 of the Act or by a Distribution Licensee under Section 51 of the Act for optimum utilization of the assets of such Transmission Licensee or of such Distribution Licensee;

(zj) "Plant Load Factor", for a given period, means the total sent-out energy corresponding to scheduled generation during such period, expressed as a percentage of sent out energy corresponding to installed capacity in that period and shall be computed in accordance with the following formula:

                                                             N
i Plant Load Factor (%) = 1000  x  ∑SG₁ { N x IC x (100 - AUX_n) } %
                                                       i = 1

where - N = number of time blocks in the given period

SG = Scheduled Generation in MW for the i^th time block in such period

IC = Installed Capacity of the generating station in MW

AUX = Normative Auxiliary Consumption in MW, expressed as a percentage of gross generation

(zk) "Rated Voltage" means the manufacturer's design voltage at which the transmission system is designed to operate or such lower voltage at which the line is charged, for the time being, in consultation with Transmission System Users;

(zl) "Retail Supply Business" means the business of sale of electricity by a Distribution Licensee to his consumers in accordance with the terms of his licence;

(zm) "Run-of-river power station" means a hydro power generating station with or without upstream pondage;

(zn) "Scheduled Generation" at any time or for any given period or time block means the schedule of generation in MW ex-bus given by the State Load Despatch Centre;

(zo) "Secretary" means the Secretary to the Commission;

(zp) "Standards of Performance Regulations" means the regulations as may be specified by the Commission under Section 57 and Section 59 of the Act;

(zq) "Storage type power station" means a hydro power generating station associated with large storage capacity to enable variation in generation of electricity according to demand;

(zr) "Transmission Business" means the business of establishing or operating transmission lines;

(zs) "Transmission Open Access Regulations" means the regulations as may be specified by the Commission under sub-section (47) of Section 2 read with Section 30 of the Act;

(zt) "Transmission System User" means a person who has been allotted transmission capacity rights to access an intra-state transmission system pursuant to a Bulk Power Transmission Agreement, except as provided in the Transmission Open Access Regulations;

(zu) "Unit" in relation to a thermal generating station means steam generator, steam turbine, generator and auxiliaries and in relation to a combined cycle thermal generating station, means gas turbine, generator and auxiliaries.

Part A

General

(i) Supply of electricity by a Generating Company to a Distribution Licensee:

(ii) Intra-State transmission of electricity;

(iii) Rates and charges for use of intervening transmission facilities, where these cannot be mutually agreed upon by the Licensees;

(iv) Wheeling of electricity;

(v) Retail sale of electricity:

(vi) Surcharge in addition to the charges for wheeling under the first proviso to sub-section (2) of Section 42 of the Act, in accordance with the Distribution Open Access Regulations;

(vii) Additional surcharge on the charges for wheeling under sub-section (4) of Section 42 of the Act, in accordance with the Distribution Open Access Regulations.

Part B

Procedure for Determination of Tariff

(a) transmission of electricity, in accordance with the terms and conditions contained in Part F of these Regulations;

(b) wheeling of electricity, in accordance with the terms and conditions contained in Part G of these Regulations; and

(c) retail sale of electricity, in accordance with the terms and conditions contained in Part H of these Regulations.

(a) an application made by a Licensee under the proviso to sub-section (1) of Section 36 of the Act;

(b) an application made by a Distribution Licensee under sub-section (5) of Section 64 of the Act.

(i) the application for determination of tariff for any financial year shall be made not less than one hundred and twenty (120) days before the commencement of such financial year;

(ii) the application for annual performance review during any financial year of the control period shall be made not less than one hundred and twenty (120) days before the close of such financial year:

(a) issue a tariff Order accepting the application with such modifications or such conditions as may be contained in such Order; or

(b) reject the application for reasons to be recorded in writing if such application is not in accordance with the provisions of the Act and the rules and regulations made thereunder or the provisions of any other law for the time being in force:

Part C

Multi-Year Tariff

(i) control period, at the commencement of which a forecast of the aggregate revenue requirement and expected revenue from existing tariffs and charges shall be submitted by the applicant and approved by the Commission;

(ii) applicant's forecast of aggregate revenue requirement and expected revenue from tariffs and charges during the control period, based on reasonable assumptions relating to the expected behaviour of the underlying financial and operational variables;

(iii) trajectory for specific variables as may be stipulated by the Commission, where the performance of the applicant is sought to be improved through incentives and disincentives;

(iv) annual review of performance vis-a-vis the approved forecast and categorization of variations in performance into those that were caused by factors within the control of the applicant (controllable factors) and those caused by factors beyond the control of the applicant (uncontrollable factors);

(v) mechanism for pass-through of approved gains or losses on account of uncontrollable factors;

(vi) mechanism for sharing of approved gains or losses arising out of controllable factors;

(vii) annual determination of tariff for each financial year within the control period, based on the approved forecast and results of the annual performance review.

(i) a generating station,

(ii) a Generating Company; and/or

(iii) a Licensee in respect of his Generation Business:

(a) Assumptions relating to the behaviour of individual variables that comprise the aggregate revenue requirement during the control period; or

(b) Assumptions relating to-

(i) percentage annual change in a suitable macro-economic or market index, or combination thereof, to which the aggregate revenue requirement of the applicant is correlated; and

(ii) percentage annual reduction in aggregate revenue requirement due to efficiency or productivity gains proposed to be achieved by the applicant during the control period:

(a) from the methodology specified in clause (a) of Regulation 15.2.1 to clause

(b) of that Regulation; or

(b) from the methodology specified in clause (b) of Regulation 15.2.1 to clause (a) of that Regulation, he shall apply to the Commission for approval of change of methodology along with the rationale therefor and such other details as the Commission may require, at least nine (9) months before the commencement of such control period.

(a) pass an order approving the change of method, subject to such conditions as it may specify in the said order; or

(b) reject the application for reasons to be recorded in writing, if it is not in accordance with the principles contained in Section 61 of the Act or these Regulations.

(a) In the case of a Transmission Licensee, estimates of transmission capacity allocated to Transmission System Users for each financial year within the control period;

(b) In the case of a Distribution Licensee, estimates of quantum of electricity supplied to consumers and wheeled on behalf of Distribution System Users for each financial year within the control period;

(c) Prevailing tariffs as at the date of making the application.

(a) pass an order approving the forecast of aggregate revenue requirement and expected revenue from tariff and charges for the control period, subject to such modifications and conditions as it may specify in the said Order; or

(b) reject the application for reasons to be recorded in writing, if it is not in accordance with the principles contained in Section 61 of the Act or these Regulations and direct the applicant to submit a revised forecast taking into consideration such factors as the Commission may deem appropriate.

(a) a comparison of the audited performance of the applicant for the previous financial year with the approved forecast for such previous financial year; and

(b) a comparison of the performance of the applicant for the first half of the current financial year with the approved forecast for the current financial year.

(a) Force Majeure Events;

(b) changes in law, judicial pronouncements and Orders of the Central Government, State Government or Commission;

(c) economy-wide influences, such as unforeseen changes in inflation rate, market-interest rates, taxes and statutory levies.

(a) Variation in the cost of power generation and/or power purchase due to the circumstances specified in Regulation 25;

(b) Variation in the number or mix of consumers or quantities of electricity supplied to consumers:

(a) Variations in capital expenditure on account of time and/or cost overruns/efficiencies in the implementation of a capital expenditure project not attributable to an approved change in scope of such project, change in statutory levies or force majeure events;

(b) Variations in technical and commercial losses, including bad debts;

(c) Variations in the number or mix of consumers or quantities of electricity supplied to consumers as specified in the first and second proviso to clause (b) of Regulation 17.6.1;

(d) Variations in working capital requirements;

(e) Failure to meet the standards specified in the Standards of Performance Regulations, except where exempted in accordance with those Regulations;

(f) Variations in labour productivity;

(g) Variations in any variable other than those stipulated by the Commission under Regulation 15.6 above, except where reviewed by the Commission under the second proviso to this Regulation 17.6.

(a) the approved aggregate gain or loss to the Generating Company or Licensee on account of uncontrollable factors and the mechanism by which the Generating Company or Licensee shall pass through such gains or losses in accordance with Regulation 18;

(b) the approved aggregate gain or loss to the Generating Company or Licensee on account of controllable factors and the amount of such gains or such losses that may be shared in accordance with Regulation 19;

(c) the approved modifications to the forecast of the Generating Company or Licensee for the remainder of the control period, if any, under Regulation 17.9 above.

(a) One-third of the amount of such gain shall be passed on as a rebate in tariffs over such period as may be specified in the Order of the Commission under Regulation 17.10;

(b) In case of a Licensee, one-third of the amount of such gain shall be retained in a special reserve for the purpose of absorbing the impact of any future losses on account of controllable factors under clause (b) of Regulation 19.2; and

(c) The balance amount of gain may be utilized at the discretion of the Generating Company or Licensee.

(a) One-third of the amount of such loss may be passed on as an additional charge in tariffs over such period as may be specified in the Order of the Commission under Regulation 17.10; and

(b) The balance amount of loss shall be absorbed by the Generating Company or Licensee.

(a) The approved forecast of aggregate revenue requirement and expected revenue from tariff and charges for such financial year, including approved modifications to such forecast; and

(b) Approved gains and losses to be passed through in tariffs, following the annual performance review.

Part D

Electricity Purchase and Procurement

(a) Procurement of power under any arrangement or agreement with a term or duration exceeding one year (i.e. long-term power procurement); and

(b) Procurement of power under any arrangement or agreement with a term or duration less than or equal to one year (i.e. short-term power procurement).

(a) A quantitative forecast of the unrestricted demand for electricity, within his area of supply, from each tariff category over the plan period;

(b) An estimate of the quantities of electricity supply from the approved sources of generation and power purchase;

(c) Standards to be maintained with regard to quality and reliability of supply, in accordance with the Standards of Performance Regulations;

(d) Measures proposed to be implemented as regards energy conservation and energy efficiency;

(e) The requirement for new sources of power generation and/or procurement, including augmentation of generation capacity and identified new sources of supply, based on (a) to (d) above;

(f) The plan for procurement of power including quantities and cost estimates for such procurement:

(a) pass an order approving the long-term power procurement plan, or modifications thereto, subject to such modifications and conditions as it may deem appropriate; or

(b) reject the long-term power procurement plan or application for modification thereto, for reasons recorded in writing, if such plan is not in accordance with the guidelines contained in this Part and directing the Distribution Licensee to submit a revised plan based on such considerations as it may specify:

(a) Requirement for power procurement under the approved long-term power procurement plan;

(b) Adherence to a transparent process of bidding in accordance with guidelines issued by the Central Government;

(c) Adherence to the terms and conditions for determination of tariff specified under Part E of these Regulations where the process specified in (b) above has not been adopted;

(d) Availability (or expected availability) of capacity in the intra-State transmission system for evacuation and supply of power procured under the agreement/arrangement;

(e) Need to promote cogeneration and generation of electricity from renewable sources of energy.

(a) Approval of a provisional tariff, on the basis of an application made to the Commission at any time prior to the application made under clause (b) below; and

(b) Approval of the final tariff, on the basis of an application made not later than three (3) months from the cut-off date.

(a) a transparent process of bidding in accordance with guidelines issued by the Central Government; or

(b) the terms and conditions contained in Part E of these Regulations.

Part E

Generation

(a) where such tariff is pursuant to a power purchase agreement or arrangement entered into subsequent to the date of notification of these Regulations; or

(b) where such tariff is pursuant to a power purchase agreement or arrangement entered into prior to the date of notification of these Regulations and the Commission has not previously approved of such agreement/arrangement or adopted the tariff contained therein; or

(c) where such tariff is pursuant to a power purchase agreement or arrangement which is the subject of a review by the Commission under Regulation above; or

(d) where the Distribution Licensee is engaged in the business of generation of electricity, in determining the transfer price at which electricity is supplied by the Generation Business of the Distribution Licensee to his Retail Supply Business:

(a) Return on equity capital;

(b) Income-tax;

(c) Interest on loan capital;

(d) Depreciation, including Advance Against Depreciation, and a mortization of intangible assets;

(e) Operation and maintenance expenses; and

(f) Interest on working capital.

(i) Coal-based/lignite-fired generating stations - 2.5%

(ii) Gas Turbine/Combined Cycle generating stations - 4.0%

(iii) Hydro power generating stations - 1.5%

(i) Deferred liabilities;

(ii) Works deferred for execution;

(iii) Procurement of initial capital spares in the original scope of work, subject to ceiling specified in Regulation 30.1;

(iv) Liabilities to meet award of arbitration or for compliance of the order or decree of a court; and

(v) On account of change in law.

(i) Deferred liabilities relating to works/services within the original scope of work;

(ii) Liabilities to meet award of arbitration or for compliance of the order or decree of a court;

(iii) On account of change in law;

(iv) Any additional works/services which have become necessary for efficient and successful operation of the generating station, but not included in the original project cost; and

(v) Deferred works relating to ash pond or ash handling system in the original scope of work.

(a) The amount of loan capital shall be equal to the sum of the outstanding balance of all long-term loans taken to finance the purchase or construction of the generating station, at the commencement of the financial year for which tariff is being determined, as reflected in the books of account of the Generating Company;

(b) The amount of equity capital shall be equal to-

(i) equity capital as at April 1, 2004 as determined by the Commission in accordance with the Explanation below; plus

(ii) equity component of approved capital expenditure for the financial year ending March 31, 2005:

(a) Target availability for full recovery of annual fixed charges shall be 80 per cent

(c) Target Plant Load Factor for incentive in accordance with Regulation 37 shall be 80 per cent

(a) Coal-based generating stations

		With cooling tower	Without cooling tower
(i)	200 MW series	9.0%	8.5%
(ii)	500 MW series
	Steam driven boiler feed pumps	7.5%	7.0%
	Electrically driven boiler feed pumps	9.0%	8.5%

(b) Gas Turbine/Combined Cycle generating stations

(i)	Combined cycle :	3.0%
(ii)	Open cycle :	1.0%

(c) Lignite-fired thermal power generating stations

Note : During stabilization period, normative auxiliary consumption shall be reckoned at 0.5 percentage point more than the norms indicated at (a), (b) and (c) above.

(a) Gross station heat rate for coal-based generating stations

Note 1 : In respect of 500 MW and above units where the boiler feed pumps are electrically operated, the gross station heat rate shall be 40 kCal/kWh lower than the station heat rate indicated above.

Note 2 : For generating stations having combination of 200/210/250 MW sets and 500 MW and above sets, the normative gross station heat rate shall be the weighted average station heat rate.

(b) For lignite-fired generating stations, the gross station heat rates specified under clause (a) above for coal-based generating stations shall be corrected, using multiplying factors as given below:

(i) For lignite having 50% moisture : Multiplying factor of 1.10

(ii) For lignite having 40% moisture : Multiplying factor of 1.07

(iii) For lignite having 30% moisture : Multiplying factor of 1.04

(iv) For other values of moisture content, multiplying factor shall be prorated for moisture content between 30-40 and 40-50 depending upon the rated values of multiplying factor for the respective range given under sub-clauses (i) to (iii) above.

(c) Gross station heat rate for gas turbine/combined cycle generating stations

(d) Gross station heat rate for small gas turbine generating stations

(a) Coal-based generating stations:

(b) Lignite-fired generating stations:

(a) Coal-based and lignite-fired generating stations	- 180 days
(b) Gas turbine/combined cycle generating stations	- 90 days

(a) Transit losses for coal based generating stations, as a percentage of quantity of coal dispatched by the coal supply company during the month, shall be as given below:

(i) Pit head generating stations	- 0.3%
(ii) Non-pit head generating stations	- 0.8%

(a) During first year after commissioning of the generating station

(i) Purely Run-of-river power stations	- 85%
(ii) Storage type and Run-of-river power stations with pondage	- 80%

(b) After first year after commissioning of the generating station

(i) Purely Run-of-river power stations	- 90%
(ii) Storage type and Run-of-river power stations with pondage	- 85%

Note : There shall be pro rata recovery of annual fixed charges in case the generating station achieves capacity index below the prescribed normative levels. At Zero capacity index, no fixed charges shall be payable to the generating station.

(a) Surface hydro electric power generating stations with rotating exciters mounted on the generator shaft - 0.2% of energy generated

(b) Surface hydro electric power generating stations with static excitation system - 0.5% of energy generated

(c) Underground hydro electric power generating stations with rotating exciters mounted on the generator shaft - 0.4% of energy generated

(d) Underground hydro electric power generating stations with static excitation system - 0.7% of energy generated

(i) The value base for the purpose of depreciation shall be the original cost of the asset as approved by the Commission in accordance with Regulation 30;

(ii) Depreciation shall be calculated annually, based on straight line method at the rates provided in the Annexure - I to the Regulation:

(a) In case of Coal based/oil-based/lignite-fired generating stations, working capital shall cover:

(i) Cost of coal or lignite for one and a half months for pit-head generating stations and two months for non-pit-head generating stations, corresponding to target availability;

(ii) Cost of oil for two months corresponding to target availability;

(iii) Cost of secondary fuel oil for two months corresponding to target availability;

(iv) Operation and Maintenance expenses for one month;

(v) Maintenance spares @ 1 per cent of the historical cost; and

(vi) Receivables for sale of electricity equivalent to two months of the sum of annual fixed charges and energy charges calculated on target availability; minus

(vii) Payables for fuel (including oil and secondary fuel oil) to the extent of one month of the cost of fuel calculated on target availability.

(b) In case of Gas Turbine/Combined Cycle generating stations, working capital shall cover:

(i) Fuel cost for one month corresponding to target availability duly taking into account the mode of operation of the generating station on gas fuel and/or liquid fuel;

(ii) Liquid fuel stock for fifteen (15) days corresponding to target availability;

(iii) Operation and maintenance expenses for one month;

(iv) Maintenance spares at 1 per cent of the historical cost; and

(v) Receivables for sale of electricity equivalent to two months of the sum of annual fixed charges and energy charges calculated on target availability, minus

(vi) Payables for fuel (including liquid fuel stock) to the extent of one month of the cost of fuel calculated on target availability.

(c) In case of hydro power generating stations, working capital shall cover:

(i) Operation and maintenance expenses for one month;

(ii) Maintenance spares at 1 per cent of the historical cost; and

(iii) Receivables for sale of electricity equivalent to two months of the annual fixed charges calculated on normative capacity index.

(d) In case of own generating stations, no amount shall be allowed towards receivables, to the extent of supply of power by the Generation Business to the Retail Supply Business, in the computation of working capital in accordance with these Regulations.

(e) Rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on the date on which the application for determination of tariff is made.

(a) The operation and maintenance expenses including insurance shall be derived on the basis of the average of the actual operation and maintenance expenses for the five (5) years ending March 31, 2004, based on the audited financial statements, excluding abnormal operation and maintenance expenses, if any, subject to prudence check by the Commission.

(b) The average of such operation and maintenance expenses shall be considered as operation and maintenance expenses for the financial year ended March 31, 2002 and shall be escalated at the rate of 4 per cent per annum to arrive at operation and maintenance expenses for the base year commencing April 1, 2005.

(c) The base operation and maintenance expenses for each subsequent year shall be escalated at the rate of 4 per cent per annum to arrive at permissible operation and maintenance expenses for such financial year.

(a) Thermal generating stations

(i)	Coal-based generating stations
	200/210/250 MW sets	: Rs. 10.82 lakh/MW
	500 MW and above sets	: Rs. 9.73 lakh/MW

Note : For the generating stations having combination of 200/210/250 MW sets and 500 MW and above set, the weighted average value for operation and maintenance expenses shall be adopted.

(ii)	Gas Turbine/Combined Cycle generating stations other than small gas turbine power generating stations
	With warranty spares of 10 years :	Rs. 5.41 lakh/MW
	Without warranty spares :	Rs. 8.11 lakh/MW
(iii)	Small gas turbine power generating stations :	Rs. 9.84 lakh/MW
(iv)	Lignite-fired generating stations :	Rs. 10.82 lakh/MW

(b) Hydro power generating stations

(a) Energy charges shall cover fuel costs and shall be worked out on the basis of ex-bus energy sent out corresponding to scheduled generation as per the following formula:

(Qp)_n = Quantity of primary fuel required for generation of one kWh of electricity at generator terminals in Kg or litre or m³, as the case may be, and shall be computed on the basis of normative Gross Station Heat Rate (less heat contributed by secondary fuel oil for coal/lignite based generating stations) and gross calorific value of coal/lignite or gas or liquid fuel as fired

P_s = Landed cost of Secondary fuel oil in Rs./ml

(Q_s)n = Normative Quantity of Secondary fuel oil in ml/kWh as per Regulation 33.1.4, as the case may be, and

AUX_n = Normative Auxiliary Energy Consumption as percentage of gross generation as per Regulation 33.1.2, as the case may be.

(b) Adjustment of rate of energy charge (REC) on account of variation in price or heat value of fuels : Initially, gross calorific value of coal/lignite or gas or liquid fuel shall be taken as per actuals of the preceding three months. Any variation shall be adjusted on month to month basis on the basis of gross calorific value of coal/lignite or gas or liquid fuel received and burnt and landed cost incurred by the Generating Company for procurement of coal/lignite, oil, or gas or liquid fuel, as the case may be. In case of any dispute, an appropriate application in accordance with the Conduct of Business Regulations shall be made before the Commission.

(c) Landed Cost of fuel : The landed cost of fuel shall include price of fuel corresponding to the grade/quality of fuel inclusive of royalty, taxes and duties as applicable, transportation cost by rail/road/pipeline or any other means, and, for the purpose of calculation of energy charges, shall be arrived at after considering transit losses as per Regulation 33.1.6

(a) Energy charges shall be worked out on the basis of paise per kWh rate on exbus energy scheduled to be sent out from the hydro power generating station.

(b) The energy rate for a hydro power generating station shall be such rate as may be notified by the Commission from time to time, based on the price/variable cost of the least-cost available alternative source of power if such hydro power generating station was not to be despatched in accordance with the final despatch schedule of the State Load Despatch Centre.

(c) The energy charge shall be computed in accordance with the following formula

(a) Incentive shall be payable in case of all generating stations, including in case of new generating stations in the first year of operation, when the capacity index (CI) exceeds 90 per cent for purely run-of-river power generating stations and 85 per cent for run-of-river power station with pondage or storage type power generating stations and incentive shall accrue up to a maximum capacity index of 100 per cent.

(b) Incentive shall be payable to the generating company in accordance with the following formula:

Incentive = 0.65 x Annual Fixed Charge x (CI_A - CI_N)/100

(If incentive is negative, it shall be set to zero.)

Part F

Transmission

(a) transmission system access charges; and

(b) annual transmission charges.

(a) As a one-time payment by the Transmission System User at the time of obtaining access; or

(b) As a series of payments over the duration of the Bulk Power Transmission Agreement, due regard being given to the Transmission Licensee's cost of capital based on the normative debt:equity ratio as per Regulation 47; or

(c) As any combination of (a) and (b) above.

(a) Return on equity capital;

(b) Income-tax;

(c) Interest on loan capital;

(d) Depreciation, including advance against depreciation, and amortisation of intangible assets;

(e) Operation and maintenance expenses;

(f) Interest on working capital and deposits from Transmission System Users; and

(g) Contribution to contingency reserves.

(h) Non-tariff income; and

(i) Income from Other Business, to extent specified in these Regulations.

(a) give an in-principle approval to the investment plan submitted by the Transmission Licensee, with such modifications or conditions as the Commission deems appropriate; or

(b) reject the investment plan submitted by the Transmission Licensee and require the Transmission Licensee to submit a fresh investment plan taking into consideration such factors as the Commission may deem necessary.

(a)	AC system :-	98 per cent
(b)	HVDC bi-pole links and HVDC back-to-back stations :-	95 per cent

Note 1 : Recovery of annual transmission charges below the level of target availability shall be on pro rata basis. At zero availability, no transmission charges shall be payable.

Note 2 : - The target availability shall be calculated in accordance with procedure provided in the Annexure-II to these Regulations.

(a) Return at the allowable rate as per Regulation 50.1.1 above, applied on the amount of equity capital at the commencement of the financial year; plus

(b) Return at the allowable rate as per Regulation 50.1.1 above, applied on 50 per cent of the equity capital portion of the allowable capital cost, for the investments put to use in transmission business, calculated in accordance with Regulation 46 and Regulation 47 above, for such financial year.

(a) The interest rate shall be as approved by the Commission in the investment plan;

(b) The value base shall be the normative loan capital of such capital expenditure project/fixed asset;

(c) The normative loan capital shall be assumed to be repaid in accordance with the normative repayment schedule as per Regulation 48 of these Regulations.

(a) The approved original cost of the project/fixed assets shall be the value base for calculation of depreciation;

(b) Depreciation shall be computed annually based on the straight line method at the rates specified in the Annexure I to these Regulations:

(a) employee costs, including bonus and contributions to provident fund, staff pension and gratuity computed under any law for the time being in force or any scheme approved by the Commission;

(b) repairs and maintenance;

(c) rent, rates and taxes, other than income-tax;

(d) legal charges;

(e) provisions for doubtful debts;

(f) auditors' fees;

(g) expenses on apprentice and training schemes;

(h) any other expense not covered above or elsewhere in these Regulations, relating to the Transmission Business that is allowable as a deduction in the calculation of income under the Income-tax Act, 1961.

(a) One-twelfth of the amount of operation and maintenance expenses for such financial year; plus

(b) One-twelfth of the sum of the book value of stores, materials and supplies including fuel on hand at the end of each month of such financial year; plus

(c) One and a half months equivalent of the expected revenue from transmission charges at the prevailing tariffs; minus

(d) Amount, if any, held as security deposits from Transmission System Users.

(a) Expenses or loss of profits arising out of accidents, strikes or circumstances which the management could not have prevented;

(b) Expenses on replacement or removal of plant or works other than expenses requisite for normal maintenance or renewal;

(c) Compensation payable under any law for the time being in force and for which no other provision is made:

Part G

Wheeling

(a) Wheeling of electricity;

(b) Retail sale of electricity:

(a) Return on equity capital;

(b) Income-tax;

(c) Interest on loan capital;

(d) Depreciation, including advance against depreciation and amortisation of intangible assets;

(e) Operation and maintenance expenses;

(f) Interest on working capital and deposits from consumers and Distribution System Users; and

(g) Contribution to contingency reserves.

(h) Non-tariff income; and

(i) Income from Other Business, to extent specified in these Regulations.

(a) give an in-principle approval to the investment plan submitted by the Distribution Licensee, with such modifications or conditions as the Commission deems appropriate; or

(b) reject the investment plan submitted by the Distribution Licensee and require the Distribution Licensee to submit a fresh investment plan taking into consideration such factors as the Commission may deem necessary.

(a) Return at the allowable rate as per Regulation 63.1.1 above, applied on the amount of equity capital at the commencement of the financial year; plus

(b) Return at the allowable rate as per Regulation 63.1.1 above, applied on 50 per cent of the equity capital portion of the allowable capital cost, for the investments put to use in distribution business, calculated in accordance with Regulation 60 and Regulation 61 above, for such financial year.

(a) The interest rate shall be as approved by the Commission in the investment plan;

(b) The value base shall be the normative loan capital of such capital expenditure project/fixed asset;

(c) The normative loan capital shall be assumed to be repaid in accordance with the normative repayment schedule as per Regulation 62 of these Regulations.

(a) The approved original cost of such project/ fixed assets shall be the value base for calculation of depreciation;

(b) Depreciation shall be computed annually based on the straight line method at the rates specified in the Annexure to these Regulations:

(a) employee costs, including bonus and contributions to provident fund, staff pension and gratuity computed under any law for the time being in force or any scheme approved by the Commission;

(b) repairs and maintenance;

(c) rent, rates and taxes, other than income-tax;

(d) legal charges;

(e) provisions for doubtful debts;

(f) auditors' fees;

(g) expenses on apprentice and training schemes;

(h) any other expense not covered above or elsewhere in these Regulations, relating to the Distribution Business that is allowable as a deduction in the calculation of income under the Income-tax Act, 1961.

(a) One-twelfth of the amount of Operation and Maintenance expenses for such financial year; plus

(b) One-twelfth of the sum of the book value of stores, materials and supplies including fuel on hand at the end of each month of such financial year; plus

(c) Two months equivalent of the expected revenue from wheeling charges at the prevailing tariffs; minus

(d) Amount, if any, held as security deposits under clause (b) of sub-section (1) of Section 47 of the Act from consumers and Distribution System Users.

(a) Expenses or loss of profits arising out of accidents, strikes or circumstances which the management could not have prevented;

(b) Expenses on replacement or removal of plant or works other than expenses requisite for normal maintenance or renewal;

(c) Compensation payable under any law for the time being in force and for which no other provision is made:

Part H

Retail Sale of Electricity

(a) Return on equity capital;

(b) Income-tax;

(c) Interest on loan capital;

(d) Depreciation, including advance against depreciation and amortisation of intangible assets;

(e) Cost of power generation/power purchase;

(f) Transmission charges;

(g) Operation and Maintenance expenses;

(h) Interest on working capital and on consumer security deposits; and

(i) Contribution to contingency reserves Revenue requirement from sale of electricity = Aggregate revenue requirement, as above, minus:

(j) Non-tariff income;

(k) Income from wheeling of electricity;

(l) Income from Other Business, to extent specified in these Regulations;

(m) Receipts on account of cross-subsidy surcharge; and

(n) Receipts on account of additional surcharge on charges of wheeling.

(a) give an in-principle approval to the investment plan submitted by the Distribution Licensee, with such modifications or conditions as the Commission deems appropriate; or

(b) reject the investment plan submitted by the Distribution Licensee and require the Distribution Licensee to submit a fresh investment plan taking into consideration such factors as the Commission may deem necessary.

(a) issue an Order approving such forecast with such modifications or conditions as may be specified in the said Order; or

(b) reject the forecast and ask the Distribution Licensee to submit a revised forecast taking into consideration such factors as it may specify.

(a) Return at the allowable rate as per Regulation 76.1.1 above, applied on the amount of equity capital at the commencement of the financial year; plus

(b) Return at the allowable rate as per Regulation 76.1.1 above, applied on

(a) The interest rate shall as approved by the Commission in the investment plan;

(b) The value base shall be the normative loan capital of such capital expenditure project/fixed asset purchased;

(c) The normative loan capital shall be assumed to be repaid in accordance with the normative repayment schedule as per Regulation 74 of these Regulations.

(a) The approved original cost of such fixed assets shall be the value base for calculation of depreciation;

(b) Depreciation shall be computed annually based on the straight line method at the rates specified in the Annexure to these Regulations:

(a) charges for use of intervening transmission facilities;

(b) wheeling charges for use of the distribution system of other Distribution Licensee;

(c) charges for access to and use of an inter-State transmission system, in accordance with tariffs specified by the Central Commission; and

(d) fees and charges of the Regional Load Despatch Centre and State Load Despatch Centre, as may be specified

(a) employee costs, including bonus and contributions to provident fund, staff pension and gratuity computed under any law for the time being in force or any scheme approved by the Commission;

(b) repairs and maintenance;

(c) rent, rates and taxes, other than income-tax;

(d) legal charges;

(e) provisions for doubtful debts;

(f) auditors' fees;

(g) expenses on apprentice and training schemes;

(h) any other expense not covered above or elsewhere in these Regulations, relating to the Distribution Business/Retail Supply Business that is allowable as a deduction in the calculation of income under the Income-tax Act, 1961.

(a) One-twelfth of the amount of Operation and Maintenance expenses for such financial year; plus

(b) One-twelfth of the sum of the book value of stores, materials and supplies including fuel on hand at the end of each month of such financial year; plus

(c) Two months equivalent of the expected revenue from sale of electricity at the prevailing tariffs; minus

(d) Amount held as security deposits under clause (a) and clause (b) of sub-section (1) of Section 47 of the Act from consumers and Distribution System Users; minus

(e) One month equivalent of cost of power purchased, based on the annual power procurement plan.

(a) Expenses or loss of profits arising out of accidents, strikes or circumstances which the management could not have prevented;

(b) Expenses on replacement or removal of plant or works other than expenses requisite for normal maintenance or renewal;

(c) Compensation payable under any law for the time being in force and for which no other provision is made:

Part I

Grant of Subsidies by State Government

Part J

Miscellaneous

Annexure I

Depreciation Schedule

Annexure-II

Procedure for calculation of Transmission System Availability

(i) AC transmission lines: Each circuit of AC transmission line shall be considered as one element.

(ii) Inter-Connecting Transformers (ICTs): Each ICT bank (three single phase transformer together) shall form one element.

(iii) Static VAR Compensator (SVC): SVC along with SVC transformer shall form one element. However, 50% credit to inductive and 50% to capacitive rating shall be given.

(iv) Switched Bus Reactor: Each switched Bus Reactor shall be considered as one element.

(v) HVDC Bi-pole links: Each pole of HVDC link along with associated equipment at both ends shall be considered as one element.

(vi) HVDC back-to-back station: Each block of HVDC back-to-back station shall be considered as one element. If associated AC line (necessary for transfer of inter-regional power through HVDC back-to-back station) is not available, the HVDC back-to-back station block shall also be considered as unavailable.

o               is Total number of AC lines.

AV_o           is Availability of o number of AC lines.

p                is Total number of switched bus reactors.

AV_p            is Availability of p number of switched bus reactors.

q                 is Total number of ICTs.

AV_q             is Availability of q number of ICTs.

r                   is Total number of SVCs.

AV_r              is Availability of number of SVCs.

s                  is Total number of HVDC poles..

AV_s             is Availability of s number of HVDC poles

t                   is Total number of HVDC back-to-back station blocks.

AV_t             is Availability of t number of HVDC back-to-back station blocks

(i) For each circuit of AC line - Surge Impedance Loading for Uncompensated line (SIL) multiplied by Circuit Km.

(ii) SIL rating for various voltage level and conductor configuration is given in Appendix-II to this Annexure. However, for the voltage levels and/or conductor configurations not listed in Appendix-II, appropriate SIL based on technical considerations may be used for availability calculation under intimation to Transmission System Users.

(iii) For each HVDC pole - The rated MW capacity x Circuit Km.

(iv) For each ICT bank - The rated MVA capacity.

(v) For SVC - The rated MVAR capacity (inductive & capacitive).

(vi) For switched Bus reactor - The rated MVAR capacity.

(i) Shut down of transmission elements availed by other agency/agencies for maintenance or construction of their transmission system.

(ii) Manual tripping of line due to over voltage and manual tripping of switched bus reactor as per the directions of SLDC.

(i) Outage of elements due to acts of God and force majeure events beyond the control of the transmission licensee. However, onus of satisfying the Commission or any such other forum/agency as specified by the Commission that element outage was due to aforesaid events and not due to design failure shall rest on the transmission licensee. A reasonable restoration time for the element shall be allowed by Commission or any such other forum/agency as specified by the Commission and any additional time taken by the transmission licensee for restoration of the element beyond the reasonable time shall be treated as outage time attributable to the transmission licensee. Commission or any such other forum/agency as specified by the Commission may consult the transmission licensee or any expert for estimation of restoration time. Circuits restored through ERS (Emergency Restoration System) shall be considered as available.

(ii) Outage caused by grid incident/disturbance not attributable to the transmission licensee, e.g. faults in substation or bays owned by other agency causing outage of the transmission licensee's elements, tripping of lines, ICTs, HVDC back-to back stations etc. due to grid disturbance. However, if the element is not restored on receipt of direction from SLDC while normalising the system following grid incident/disturbance within reasonable time, the element will be considered not available for whole period of outage and outage time shall be attributable to the transmission licensee.

Appendix-I

Formulae for calculation of Availability of each category of transmission elements

Appendix - II

Surge Impedance Loading (Sil) Of Ac Lines