In the matter of Approval of CERC (Conduct of Business) Regulations for the truing up and determination of Transmission Tariff for ECEPL and NCC Power Projects Ltd generation projects in Srikakulam Area-Part-C – EQ
Summary:
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## 1. **Project Cost & Investment Approvals**
| **Parameter** | **Details** |
|————–|————-|
| **Original Investment Approval** | 28.03.2013 (BoD 285th Meeting) |
| **Original Estimated Cost** | ₹51,420 lakh (including IDC ₹2,879 lakh) – Feb 2013 PL |
| **Revised Cost Estimate (RCE)** | 29.03.2017 (BoD 339th Meeting) |
| **RCE Estimated Cost** | ₹70,310 lakh (including IDC ₹7,643 lakh) – Aug 2016 PL |
| **Scope** | Establishment of 765/400 kV Srikakulam Pooling Station, upgradation from 400 kV to 765 kV, extension of Angul substation, bus & line reactors |
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## 2. **Truing-up of Transmission Tariff (2019-24 Tariff Period)**
### **2.1 Capital Cost & Additional Capital Expenditure (ACE) Allowed**
| **Asset** | **Capital Cost as on 01.04.2019 (₹ lakh)** | **ACE Allowed (2019-24) (₹ lakh)** | **Capital Cost as on 31.03.2024 (₹ lakh)** |
|———-|——————————————|———————————–|——————————————|
| Asset-1 | 51,740.57 | 158.93 | 51,899.50 |
| Asset-2 | 10,489.94 | 111.51 | 10,601.45 |
| **Total** | **62,230.51** | **270.44** | **62,500.95** |
– **ACE allowed under:**
– **Regulation 24(1)(a)** – Undischarged liabilities payable at future date
– **Regulation 25(1)(d)** – Liability for works executed prior to cut-off date
### **2.2 Debt-Equity Ratio (2019-24)**
| **Asset** | **Debt (70%)** | **Equity (30%)** | **Total** |
|———-|—————|—————–|———-|
| Asset-1 | 36,329.65 | 15,569.85 | 51,899.50 |
| Asset-2 | 7,421.02 | 3,180.44 | 10,601.45 |
| **Combined** | **43,750.67** | **18,750.29** | **62,500.96** |
### **2.3 Trued-up Annual Fixed Charges (AFC) – 2019-24**
**Asset-1 (₹ lakh)**
| **Particulars** | **2019-20** | **2020-21** | **2021-22** | **2022-23** | **2023-24** |
|—————–|————|————|————|————|————|
| Depreciation | 2,720.38 | 2,724.41 | 2,724.58 | 2,724.75 | 2,724.75 |
| Interest on Loan | 2,394.47 | 2,044.23 | 1,817.99 | 1,680.26 | 1,536.01 |
| Return on Equity | 2,919.67 | 2,923.96 | 2,924.14 | 2,924.33 | 2,924.33 |
| Interest on WC | 135.54 | 122.42 | 111.65 | 110.33 | 124.42 |
| O&M Expenses | 337.58 | 349.50 | 361.73 | 374.48 | 387.60 |
| **Total AFC** | **8,507.63** | **8,164.51** | **7,940.09** | **7,814.13** | **7,697.11** |
**Asset-2 (₹ lakh)**
| **Particulars** | **2019-20** | **2020-21** | **2021-22** | **2022-23** | **2023-24** |
|—————–|————|————|————|————|————|
| Depreciation | 558.04 | 558.86 | 561.54 | 563.45 | 563.72 |
| Interest on Loan | 519.77 | 457.78 | 413.06 | 387.84 | 357.59 |
| Return on Equity | 591.07 | 591.94 | 594.80 | 596.84 | 597.12 |
| Interest on WC | 93.99 | 89.18 | 84.84 | 86.88 | 101.54 |
| O&M Expenses | 1,581.02 | 1,635.83 | 1,693.75 | 1,754.83 | 1,816.03 |
| **Total AFC** | **3,343.90** | **3,333.59** | **3,347.99** | **3,389.83** | **3,436.00** |
### **2.4 Key Truing-up Adjustments**
| **Parameter** | **Commission’s Decision** |
|————–|————————–|
| **Depreciation** | Allowed as per WAROD under Regulation 33, 2019 Tariff Regulations |
| **Interest on Loan** | Based on actual weighted average interest rate on loan portfolio |
| **Return on Equity** | Grossed-up with **MAT rate of 17.472%** (15% tax + 12% surcharge + 4% cess); base rate 15.50% → effective **18.782%** |
| **O&M Expenses** | Allowed as per normative rates for bays, GIS, transformers under 2019 Tariff Regulations (Asset-2 O&M claim of ₹1,600-1,838 reduced to normative ₹1,581-1,816) |
| **Interest on Working Capital** | Based on SBI 1-year MCLR + 350 bps; rates: 12.05% (2019-20), 11.25% (2020-21), 10.50% (2021-23), 12.00% (2023-24) |
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## 3. **Determination of Transmission Tariff (2024-29 Tariff Period)**
### **3.1 Effective Date of Commercial Operation (E-COD) & Weighted Average Life (WAL)**
| **Parameter** | **Determination** |
|————–|——————|
| **E-COD (Combined Asset)** | **05.05.2017** (weighted average of individual asset CODs) |
| **Lapsed Life as on 01.04.2024** | 6 years |
| **Weighted Average Life (WAL)** | **25 years** (based on asset mix: buildings – 25 yrs, substation – 25 yrs, PLCC – 13 yrs, IT – 7 yrs) |
| **Remaining Useful Life as on 01.04.2024** | **19 years** |
### **3.2 Capital Cost & ACE – 2024-29**
| **Parameter** | **Amount (₹ lakh)** |
|————–|——————-|
| Opening Capital Cost as on 01.04.2024 | 62,500.95 |
| ACE claimed/ allowed | **Nil** |
| Closing Capital Cost as on 31.03.2029 | 62,500.95 |
### **3.3 Debt-Equity Ratio (2024-29)**
| **Funding** | **Amount (₹ lakh)** | **Ratio** |
|————|——————-|———-|
| Debt | 43,750.67 | 70% |
| Equity | 18,750.29 | 30% |
| **Total** | **62,500.96** | **100%** |
### **3.4 Annual Fixed Charges (AFC) Allowed – 2024-29 (Combined Asset)**
(₹ lakh)
| **Particulars** | **2024-25** | **2025-26** | **2026-27** | **2027-28** | **2028-29** |
|—————–|————|————|————|————|————|
| Depreciation | 3,305.72 | 3,259.69 | 3,258.65 | 3,229.64 | 3,229.64 |
| Interest on Loan | 1,622.01 | 1,343.06 | 1,079.29 | 821.17 | 558.42 |
| Return on Equity | 3,521.68 | 3,521.68 | 3,521.68 | 3,521.68 | 3,521.68 |
| O&M Expenses | 1,533.25 | 1,614.79 | 1,697.43 | 1,785.63 | 1,883.60 |
| Interest on WC | 191.85 | 190.52 | 190.13 | 189.27 | 189.97 |
| **Total AFC** | **10,174.51** | **9,929.74** | **9,747.18** | **9,547.39** | **9,383.30** |
| *Petitioner’s Claim* | *10,192.99* | *9,949.31* | *9,767.62* | *9,568.92* | *9,405.95* |
| **Reduction** | **(18.48)** | **(19.57)** | **(20.44)** | **(21.53)** | **(22.65)** |
### **3.5 Key Determinations – 2024-29**
| **Parameter** | **Commission’s Decision** |
|————–|————————–|
| **Depreciation** | WAROD @ 5.17-5.29%; depreciable value spread over balance useful life of 19 years (Regulation 33, 2024 Tariff Regulations) |
| **Interest on Loan** | Weighted average rate @ 8.15-8.29%; floating rate impact to be trued-up later |
| **Return on Equity** | Base rate **15.50%**; grossed-up with MAT rate **17.472%** → effective **18.782%** (to be trued-up annually) |
| **O&M Expenses** | Allowed as per **Regulation 36(3)(a)** norms for 765 kV/400 kV bays, GIS, transformers; GIS bays allowed at **0.70×** normative bay rate |
| **Interest on Working Capital** | SBI 1-year MCLR (8.65%) + **325 bps** = **11.90%** for entire block |
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