Petition No. 68/2011. Case: Power Grid Corporation of India Limited Vs Bihar State Electricity Board and Ors.. Central Electricity Regulatory Commission
| Case Number | Petition No. 68/2011 |
| Judges | Pramod Deo, Chairperson, S. Jayaraman, V.S. Verma and M. Deena Dayalan, Members |
| Issue | Electricity Law |
| Judgement Date | September 05, 2011 |
| Court | Central Electricity Regulatory Commission |
Order:
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This petition has been filed seeking approval for determination of Transmission tariff for 220/132 kV, 160 MVA ICT at Baripada under ERSS-II in Eastern Region (hereinafter referred to as the "transmission asset") from anticipated date of commercial operation, i.e., 01.04.11 to 31.03.2014 under the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations 2009 (hereinafter referred to as "the 2009 Regulations"). ThePetitioner has also sought the following reliefs:
(a) Allow grossing up of base rate of return with the applicable tax rate as per the Finance Act for the relevant year and direct settlement of tax liability between the transmission licensee and the beneficiaries/ long term transmission customers on year to year basis;
(b) Approve the reimbursement of expenditure by the beneficiaries towards petition filing fee, and publishing of notices in newspapers in terms of Regulation 42 of the 2009 Regulations, and other expenditure (if any) in relation to the filing of petition;
(c) Allow thePetitioner to bill and adjust impact on Interest on Loan due to change in interest rate on account of floating rate of interest applicable during 2009-14 period, if any, from theRespondents;
(d) Allow the Petitioner to bill and recover service tax on transmission charges separately from theRespondents, if at any time exemption from service tax is withdrawn and transmission of Power is notified as a taxable service; and
(e) Allow thePetitioner to bill and recover licensee fee separately from theRespondents.
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The investment approval and expenditure sanction to the transmission asset was accorded by the Board of Directors of the Petitioner vide letter dated 24.12.2007 for ` 22752 lakh including Interest During Construction of ` 1466 lakh, based on 3rd Quarter, 2007 price level. Initially thePetitioner claimed tariff on the basis of the anticipated date of commercial operation, i.e., 1.4.2011 and later submitted, vide affidavit dated 4.5.2011, that the anticipated date of commercial operation has been declared as the actual date of commercial operation.
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The present petition covers determination of transmission tariff for 220/132 kV 160 MVA ICT (second) at Baripada.
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ThePetitioner has claimed transmission tariff based on the actual expenditure incurred up to date of commercial operation and additional capital expenditure projected to be incurred from the date of commercial operation to 31.3.2011 and during the years 2011-12 and 2012-13.
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Details of the transmission charges claimed by thePetitioner are given over leaf:
(` in Lakh)
2011-12
2012-13
2013-14
Depreciation
54.02
61.04
61.04
Interest on Loan
62.28
65.46
59.90
Return on equity
53.66
60.63
60.63
Interest on Working Capital
7.50
8.09
8.20
O & M Expenses
70.28
74.30
78.55
Total
247.74
269.52
268.32
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The details submitted by thePetitioner in support of its claim for interest on working capital are given hereunder:
( ` in Lakh)
2011-12
2012-13
2013-14
Maintenance Spares
10.54
11.14
11.78
O&M expenses
5.86
6.19
6.55
Receivables
41.29
44.92
44.72
Total
57.69
62.26
63.05
Interest
7.50
8.09
8.20
Rate of Interest
13.00%
13.00%
13.00%
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No comments or suggestions have been received from the general public in response to the notices published by thePetitioner under Section 64 of the Electricity Act, 2003. Reply to the petition has been filed by Bihar State Electricity Board (BSEB),Respondent No. 1 and Jharkhand State Electricity Board (JSEB),Respondent No. 6.
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The BSEB,Respondent No. 1 and JSEB,Respondent No. 6, have filed their reply vide their affidavits dated 1.6.2011 and 7.7.201, respectively. The issues raised by them are similar and hence are dealt together. They are as under:
(a) That the actual capital expenditure is expected to be `1156.11 lakh as against the apportioned approved cost of `1224.26 lakh and that there has been a huge over-estimation in approval of the project scheme by the Board of Directors of thePetitioner.
(b) That there has been nine months' time over-run and it has been attributed to the damage to the ICT during transportation. ThePetitioner has not disclosed the claim amount received from the insurer on account of the damages to the ICT during transportation.
(c) That the future changes in the tax rate should be dealt as per the proposed amendments to the 2009 Regulations, as directed by the Commission in the order dated 3.8.2010 in Petition No. 17/2010.
(d) That thePetitioner should avail the benefit of the Tax holiday as the date of commercial operation of the asset is 1.2.2011 and is eligible to claim tax holiday under Section 80-IA of the Income Tax Act, 1961.
(e) As regards the calculation of interest on working capital, theRespondent has pointed out that thePetitioner's calculations are based on State Bank India Advance Rate whereas it has to be the short term Prime lending rate.
(f) ThePetitioner's claim for reimbursement of application filing fee and the expenses incurred on publication of notices be negated in line with the Commission's order dated 11.9.2008 in P. No. 129/2005.
(g) That there is no provision for reimbursement of licence fee in the 2009 Regulations and hence thePetitioner's request for recovery of licence fee be rejected.
(h) That the Commission has already taken care of the wage hike on account of pay revision by increasing the norms for O&M expenses by 50% and any increase in the wage hike by beyond 50% must be taken care by thePetitioner by increasing its productivity.
(i) That there is no provision for reimbursement of levies, duties, cess or any other statutory tax in the 2009 Regulations as they are already included in the O&M expenses.
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ThePetitioner has filed its rejoinder only to the reply filed by BSEB, vide affidavit dated 5.7.2011. ThePetitioner has clarified its position on the issues raised by BSEB as under:
(a) With regard to huge over-estimation in approval of the project scheme by the Board of Directors of the petition, it has been submitted that the actual cost could be more or less than the estimated cost and in the instant case the actual cost is lower than the estimated cost.
(b) With regard to the claim amount received from the insurer on account of the damages to the ICT during transportation, it has been submitted that it has not received any relief in this context.
(c) With regard to MAT, it has been submitted that ROE of 17.481% is based on the MAT rate of 11.33% applicable for the year 2008-09. It has been further submitted that as per the amendment dated 21.6.2011 to Regulation 15 of the 2009 Regulations, thePetitioner shall
be allowed to recover the shortfall or refund the excess Annual Fixed Charges, on account of Return of Equity due to change in applicable MAT as per the relevant Finance Act directly from the beneficiaries without making any application to the Commission.
(d) The issue of Tax Holiday has been considered and decided by the Commission in its order dated 8.4.2011 in Petition No. 225/2010 and the same is applicable to this petition, as well.
(e) That the State Bank of India Advance Rate of 13% p.a. indicated in the petition is the short term prime lending rate of SBI as on 1.4.2011.
(f) That the payment towards filing fee, publishing of notices in newspapers, licence fee is not represented in the actual O&M expenses and they are an extra cost on thePetitioner and therefore need to be reimbursed.
(g) Licence fee has been introduced since 27.10.2008 and not captured in the O&M norms and it is an extra burden on thePetitioner and therefore need to be reimbursed.
(h) That thePetitioner furnished the actual O&M cost, transmission line and bay details of its transmission line for the five year period starting from 2004-05 to 2007-08, for the purpose of determination of norms for 2009-14 without taking into account expected manpower cost implications on account of wage revision. The compensation allowed in the 2009 Regulations on account of employee cost is insufficient to meet the actual expenditure due to wage revision. That thePetitioner may be allowed to approach the Commission with actual man power costs on account of wage revision during the tariff block 2009-14 for claiming the tariff.
(i) That the taxes, duties, levies, etc. are claimed as per the orders issued by the Commission.
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No rejoinder has been filed by thePetitioner to the reply filed by the JSEB. Having heard the representatives of the parties and perused the material on record, we proceed to dispose of the petition. While doing so, we also take care of the submissions of theRespondent in its reply and address...
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