In the matter of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for “Eastern Region Strengthening Scheme – VII (ERSS-VII)” – EQ
Summary:
—-
**Key Procedural Notes:**
– The project received investment approval in 2015, with a revised cost estimate in 2017.
– The Commission had previously determined tariffs for these assets for the 2014-19 and 2019-24 periods.
– None of the respondents filed replies, and no public comments were received.
### Part A: Truing-Up for the 2019-24 Tariff Period
This section reconciles the provisional tariff approved earlier with actual financial performance.
**1. Capital Cost:**
– **Opening Cost (as on 1.4.2019):** ₹10,913.24 Lakhs (approved in a previous order).
– **Additional Capital Expenditure (ACE):** The petitioner claimed ₹42.32 Lakhs. A significant point was that an earlier claim of ₹219 Lakhs (related to payments to the TBCB entity PKTCL) was excluded, as it is subject to a separate appeal (Appeal No. 8 of 2021). The Commission allowed the remaining **₹42.57 Lakhs** under Regulations 24(1)(a) and 25(1)(d) of the 2019 Tariff Regulations.
– **Closing Cost (as on 31.3.2024):** **₹10,955.81 Lakhs** (approved after true-up).
**2. Financial Components (Annual Fixed Charges – AFC):**
The commission approved the following components after true-up, making minor adjustments to the petitioner’s claims.
| Particulars (in ₹ Lakhs) | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
| :— | :— | :— | :— | :— | :— |
| **Total AFC Approved** | **1,962.47** | **1,904.62** | **1,863.54** | **1,839.87** | **1,821.30** |
| *Petitioner’s Claim* | *1,962.47* | *1,904.62* | *1,863.54* | *1,839.87* | *1,821.30* |
– **Depreciation:** Calculated based on Weighted Average Rate of Depreciation (WAROD).
– **Interest on Loan (IoL):** Calculated based on the petitioner’s actual weighted average interest rate.
– **Return on Equity (RoE):** Allowed at a base rate of 15.50%, grossed up with the Minimum Alternate Tax (MAT) rate of 17.472% to **18.782%** .
– **O&M Expenses:** Allowed strictly as per the norms specified in the 2019 Tariff Regulations.
– **Interest on Working Capital (IWC):** Calculated based on SBI’s 1-year MCLR plus 350 basis points.
### Part B: Tariff Determination for the 2024-29 Period
This section sets the tariff for the upcoming control period.
**1. Capital Cost:**
– **Opening Cost (as on 1.4.2024):** ₹10,955.81 Lakhs (the trued-up cost).
– **Projected ACE:** The petitioner claimed ₹26.19 Lakhs for the 2024-29 period for an outstanding liability related to pre-cut-off date works. This was allowed under Regulation 25(1)(d) of the 2024 Tariff Regulations.
– **Projected Closing Cost (as on 31.3.2029):** **₹10,982.00 Lakhs**.
**2. Financial Components (Annual Fixed Charges – AFC):**
The commission approved the following tariffs, which are slightly lower than the petitioner’s claims due to minor adjustments in depreciation and IWC.
| Particulars (in ₹ Lakhs) | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 |
| :— | :— | :— | :— | :— | :— |
| **Total AFC Allowed** | **1,794.62** | **1,755.83** | **1,721.56** | **1,665.45** | **1,638.13** |
| *Petitioner’s Claim* | *1,796.26* | *1,755.71* | *1,723.07* | *1,670.38* | *1,637.42* |
– **Debt-Equity Ratio:** Maintained at 70:30.
– **Depreciation:** Calculated based on the straight-line method as per the new regulations. The approved figures are slightly lower than the claim.
– **Return on Equity (RoE):** Base rate remains 15.50%, to be grossed up with the effective tax rate (MAT) for each year, subject to true-up.
– **O&M Expenses:** Calculated based on the updated norms in the 2024 Tariff Regulations.
– **Interest on Working Capital:** Rate set at 11.90% (SBI MCLR as on 1.4.2024 + 325 bps).
—-
For more information please see below link:
