Case: Power Grid Corporation of India Ltd. Vs Bihar State Electricity Board and Ors.. Central Electricity Regulatory Commission

JudgesBhanu Bhushan and A.H. Jung, Members
IssueElectricity Law
Judgement DateFebruary 06, 2007
CourtCentral Electricity Regulatory Commission


  1. The petition has been filed for approval of tariff for 400 kV S/C Meramundali-Jeypore transmission line along with extension of Meramundali and Jeypore sub-station (hereinafter referred to as "the transmission line") in Eastern Region for the period 1.6.2004 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 the reimbursement by the beneficiaries of expenditure incurred towards publishing of notices in the newspapers and petition filing fee.

  2. The investment approval for the transmission line was accorded by Board of Directors of the petitioner company under its letter dated 22.11.2000 at an estimated cost of Rs. 16651 lakh, including IDC of Rs. 1826 lakh. The date of commercial operation of the transmission line with line length of 456 ckt-kms (for O&M purpose) is 1.6.2004, though the transmission line was completed in January 2004.

  3. The provisional transmission charges for the transmission line were approved by the Commission by its order dated 13.2.2004 in Petition No. 96/2003 with anticipated date of commercial operation as 1.1.2004. The present petition is for approval of final tariff from the date of commercial operation.

  4. The petitioner has claimed the transmission charges as under:

    (Rs. in lakh)

     2004-05 2005-06 2006-07 2007-08 2008-09
     (Pro rata)
    Depreciation 332.63 399.16 399.16 399.16 399.16
    Interest on Loan 862.01 997.22 935.40 851.26 763.52
    Return on Equity 357.14 428.57 428.57 428.57 428.57
    Advance against Depreciation 0.00 42.29 475.63 583.13 583.13
    Interest on Working Capital 43.94 53.79 61.43 63.07 62.87
    O & M Expenses 156.56 195.37 203.44 211.17 220.00
     Total 1752.29 2116.40 2503.61 2536.35 2457.24 

    5. The details submitted by the petitioner in support of its claim for interest on working capital are given hereunder:

    (Rs. in lakh)

     2004-05 2005-06 2006-07 2007-08 2008-09
     (Pro rata)
    Maintenance Spares 148.32 155.74 165.08 174.99 185.49
    O & M expenses 15.66 16.28 16.95 17.60 18.33
    Receivables 350.46 352.73 417.27 422.73 409.54
    Total 514.44 524.75 599.30 615.31 613.36
    Rate of Interest 10.25% 10.25% 10.25% 10.25% 10.25%
    Interest 43.94 53.79 61.43 63.07 62.87 

    6. The reply to the petition has been filed by Bihar State Electricity Board and West Bengal State Electricity Board. No comments or suggestions have been received from the general public in response to the notices published by the petitioner under Section 54 of the Electricity Act, 2003.


  5. As per Clause (1) of Regulation 52 of the 2004 regulations, subject to prudence check, 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 capitalised initial spares subject to a ceiling norm as 1.5% of original project cost. The regulation is applicable in case of the transmission system declared under commercial operation on or after 1.4.2004.

  6. The petitioner has claimed the capital expenditure of Rs. 14832.22 lakh after accounting for capitalisation of Rs. 468.65 lakh on account of IEDC/IDC for the period 1.1.2004 to 31.5.2004 over the capital expenditure of Rs. 14363.57 lakh as on 1.1.2004. The petitioner has not claimed any additional capitalization on works or on account of FERV.

    Time Overrun

  7. The scheduled date of commissioning of the transmission line was June 2003. The construction of line was completed in the month of January 2004. The transmission line has, however, been declared under commercial operation on 1.6.2004. Thus, there is delay of about of 12 months in the commissioning.

  8. The petitioner has explained the delay of seven months as attributable to unprecedented rains and floods, objections by land owners, and delay in clearing of forest land. The petitioner has placed on record the correspondents exchanged with different authorities. There is satisfactory explanation for the delay of 7 months in completion of the transmission line.

  9. Out of total delay of 12 months, 5 months period is stated to be on account of non-completion of Meramundali bay which was to be constructed by the third respondent. On that issue, the petitioner has submitted that the matter used to be deliberated in EREB meetings and the Commercial Committee meetings wherein it emerged that the required bay at Meramundali sub-station could not be commissioned by the third respodent before 31.5.2004. The petitioner has thus explained that 5 months delay was not attributable to it. The first and second respondents in their affidavits have submitted that IDC and IEDC capitalized by the petitioner for the period of 5 months from January 2004 to May 2004 may be disallowed. On consideration of the material on record, we are satisfied with the reasons furnished by the petitioner to explain the delay of five months in commissioning of the transmission line. Accordingly, the petitioner is entitled to claim IDC and IDEC for the said period of five months.

  10. Accordingly, the capital cost of Rs. 14832.22...

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