Case: Power Grid Corporation of India Limited Vs Karnataka Power Transmission Corporation Limited and Ors.. Central Electricity Regulatory Commission
| Judges | Pramod Deo, Chairperson, S. Jayaraman and V.S. Verma, Members |
| Issue | Electricity |
| Judgement Date | March 19, 2010 |
| Court | Central Electricity Regulatory Commission |
Order:
Pramod Deo, Chairperson, S. Jayaraman and V.S. Verma, Members, (New Delhi)
-
This petition has been filed for revision of transmission tariff due to additional capital expenditure incurred in respect of (a) Neelmangala Somanahally 400 kV D/C transmission line (Asset-I), and (b) Gooty-Raichur 400 kV D/C transmission line (Asset-II) along with bay extension (collectively referred to as "the transmission assets') under scheme for System Strengthening-III (the transmission scheme) in Southern Region during the period from 1.4.2008 to 31.3.2009, based on the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2004 (hereinafter referred to as "the 2004 regulations"). The petitioner has also prayed for reimbursement of the petition filing fee, licence fee and other expenditure in connection with the filing of the petition
-
The investment approval for the transmission scheme was accorded by Ministry of Power vide its letter dated 26.10.2004 at an estimated cost of Rs. 28478 lakh, which included IDC of Rs. 801 lakh. Asset-I and Asset-II were declared under commercial operation on 1.1.2007 and 1.5.2007, respectively.
-
The transmission charges for the assets were approved by the Commission vide its order dated 24.4.2009 in Petition No. 126/2008. The summary of the transmission charges approved by the said order dated 24.4.2009 is extracted hereunder:
Rs. in lakh
Asset-I
Asset-II
2006-07
2007-08
2008-09
2007-08
2008-09
Depreciation
30.13
130.01
137.99
498.95
567.22
Interest on Loan
47.47
199.86
203.90
844.09
924.23
Return on Equity
43.68
188.21
199.61
776.89
882.18
Advance against Depreciation
0.00
0.00
0.00
0.00
0.00
Interest on Working Capital
4.11
17.21
18.04
72.30
81.74
O & M Expenses
35.59
147.94
153.95
184.57
209.66
Total
160.98
683.24
713.49
2376.81
2665.03
-
The relevant details of the capital expenditure of the transmission assets claimed by the petitioner are as under:
Rs. in lakh
Capital cost as on 1.4.2008 (As per order dated 20.4.2009)
Additional Capital Expenditure during 2008-09
Capital cost as on 1.4.2009
Asset-I
4753.93
91.45
4845.38
Asset-II
21142.51
316.76
21459.27
-
The petitioner has claimed the transmission charges as under:
Rs. in lakh
Asset-I
Asset-II
2008-09
2008-09
Depreciation
139.42
571.35
Interest on Loan
206.00
931.47
Return on Equity
201.53
888.83
Advance against Depreciation
0.00
0.00
Interest on Working Capital
18.13
82.12
O & M Expenses
153.95
209.66
Total
719.03
2683.43
-
The details submitted by the petitioner in support of its claim for interest on working capital are given hereunder:
Rs. in lakh
Asset- I
Asset-II
2008-09
2008-09
Maintenance Spares
44.24
205.64
O & M expenses
12.83
17.47
Receivables
119.84
447.24
Total
176.91
670.35
Rate of Interest
10.25%
12.25%
Interest
18.13
82.12
-
The reply to the petition has been filed by Tamil Nadu Electricity Board (TNEB), which was received on 16.2.2010. TNEB vide its reply has contended that as per Clause (4) of the regulations 53 of the 2004 regulations, impact of additional capitalization may be considered only twice in a tariff period and therefore, the present petition is not maintainable. TNEB however, has not indicated the two instances when tariff was revised during the period 2004-09 for considering the impact of additional capital expenditure. We find from the records that impact of additional capital expenditure on tariff revision was considered only once in the past vide order dated 24.4.2009 in Petition No. 126/2008. Although the additional capital expenditure in respect of this asset was referred to as 2nd additional capital expenditure in the Commission's order dated 24.4.2009 in Petition No. 126/2008, earlier instance of impact of additional capital expenditure during 2006-07 was considered together with the determination of transmission tariff from the date of commercial operation vide Commission's order dated 8.2.2008 in Petition No. 128/2007. This order did not result in "revision" of tariff consequent to additional capital expenditure. Clause (4) of Regulation 53 of the 2004 regulations provides that "Impact of additional capitalization in tariff revision may be considered by the Commission twice in a tariff period, including revision of tariff after the cut off date." We have no doubt that this is the 2nd instance of revision of tariff by considering the impact of additional capital expenditure. Accordingly, the objection of the respondent is not tenable. TNEB has also objected to considering wage revision under O & M expenses and reimbursement of the petition filing fee. These concerns have been taken care of in the order.
CAPITAL COST
-
The details submitted by the petitioner in support of its claim for additional capital expenditure are given hereunder:
Rs. in lakh
Asset-I
Asset-II
Year
Amount
(Rs. in lakh)
Nature and
details of
expenditure
Year
Amount
(Rs. lakh)
Nature and details of expenditure
2008-09
Transmission line and sub-station = Rs. 91.45 lakh
Balance and retention payments
2008-09
Transmission line and Sub-station= Rs. 316.76 lakh
Balance and retention payments
Total
Rs. 91.45 lakh
Rs. 316.76 lakh
-
The petitioner has submitted audited capital cost up to 31.3.2009 duly certified by Chartered Accountant. The additional capital expenditure claimed is within the original scope of work and on account of retention/balance payments. The additional expenditure sought to be capitalised is allowed under Regulation 53 of the 2004 regulations.
Initial spares
-
Clause (1) of the Regulation 52 of the 2004 regulations inter alia provides that,-
(1) Subject to prudence check by the Commission, the actual expenditure incurred on completion of the project shall form the basis for determination of final tariff. The final tariff shall be determined based on the admitted capital expenditure actually incurred up to the date of commercial operation of the transmission system and shall include capitalized initial spares subject to a ceiling norm as 1.5% of original project cost.
-
The details of actual expenditure incurred and spares included therein by the petitioner as per original scope of project up to 31.3.2009 are as under:
Particulars
Capital Expenditures (Rs in lakh)
Remarks
Up to the date of commercial operation
From the date of commercial operation to 31-3-2007
From The date of commercial operation to 31-3-2008
From 1-4- 2008 to 31- 3-2009
Total
Initial Spares included therein
1
Asset-I
4111.73
99.14
543.06
91.45
4845.38
63.06
Claimed in this petition
2
Asset-II
19492.27
--
1650.24
316.76
21459.27
137.94
TOTAL
23604.00
99.14
2193.30
408.21
26304.65
201.00
-
Total actual expenditure incurred by the petitioner, for Asset-I and Asset-II up to 31.3.2009 is Rs. 26304.65 lakh. The total cost for Asset-I and Asset- II without initial spares is Rs...
To continue reading
Request your trial