In the matter of CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for Truing up and determination for “Transmission System associated with SEWA-II HEP” in the Northern Region – EQ

Summary:

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## 1. **Transmission Assets Overview**

| **Asset** | **Description** | **COD** | **Remarks** |
|———-|—————–|——–|————-|
| **Asset-I** | One circuit of 132 kV D/C SEWA-II Hiranagar line along with associated bays at Hiranagar Sub-station and one circuit of 132 kV D/C SEWA-II Mahanpur line and associated bays at Mahanpur | 01.09.2009 | Notional COD for Combined Assets: **01.09.2011** |
| **Asset-II** | Second circuit of 132 kV D/C SEWA-II Hiranagar line along with associated bays at Hiranagar Sub-station | 01.07.2010 | |
| **Asset-III** | 132 kV S/C SEWA-II Mahanpur-Kathua transmission line along with associated bays at Kathua | 01.09.2011 | |
| **Combined Asset** | Merger of Asset-I, II & III | **01.09.2011** (E-COD) | Present Petition No. 499/TT/2025 |

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## 2. **Project Cost & Investment Approvals**

| **Parameter** | **Details** |
|————–|————-|
| **Investment Approval (IA)** | 18.07.2005 (Board of Directors) |
| **Original Estimated Cost** | ₹9,847 lakh (including IDC ₹473 lakh) – Q4 2004 price level |
| **FR Apportioned Cost** | ₹9,847 lakh |
| **Scope** | 132 kV transmission lines and associated bays for evacuation of power from SEWA-II HEP |

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## 3. **Truing-up of Transmission Tariff (2019-24 Tariff Period)**

### **3.1 Capital Cost & Additional Capital Expenditure (ACE) Allowed**

| **Parameter** | **Amount (₹ lakh)** | **Remarks** |
|————–|——————-|————-|
| Capital Cost as on 01.04.2019 (allowed vide Order dated 15.07.2020 in Pet. No. 139/TT/2020) | 8,594.61 | Opening capital cost |
| ACE claimed for 2019-24 | 59.49 | |
| – Transmission Work (FY 2019-20) | 9.49 | Regulation 25(1)(d) – Undischarged liability |
| – Land Compensation (FY 2022-23) | 50.00 | Regulation 25(1)(a) – Land acquisition payment |
| **ACE Allowed** | **59.49** | |
| Capital Cost as on 31.03.2024 | **8,654.10** | |

**Key Observation:** Land compensation of ₹50 lakh pertained to Asset-III (132 kV Mahanpur-Kathua Transmission Line). The acquisition process remained pending since **20.08.2009** due to non-receipt of revenue documents from J&K authorities. Payment was finalized in FY 2022-23 after MoM issued by Deputy Commissioner, Kathua on 06.10.2021. CERC **allowed** the claim under Regulation 25(1)(a) of 2019 Tariff Regulations.

### **3.2 Debt-Equity Ratio (2019-24)**

| **Funding** | **As on 01.04.2019** | **ACE (2019-24)** | **As on 31.03.2024** |
|————|———————|——————-|———————|
| Debt (70%) | 6,016.23 | 41.64 | 6,057.87 |
| Equity (30%) | 2,578.38 | 17.85 | 2,596.23 |
| **Total** | **8,594.61** | **59.49** | **8,654.10** |

### **3.3 Trued-up Annual Fixed Charges (AFC) – 2019-24 (Combined Asset)**

(₹ lakh)

| **Particulars** | **2019-20** | **2020-21** | **2021-22** | **2022-23** | **2023-24** |
|—————–|————|————|————|————|————|
| Depreciation | 454.01 | 454.26 | 454.25 | 455.00 | 455.66 |
| Interest on Loan | 166.59 | 124.13 | 81.47 | 41.02 | 10.98 |
| Return on Equity | 484.54 | 484.81 | 484.81 | 486.21 | 487.62 |
| O&M Expenses | 145.93 | 151.13 | 156.37 | 161.93 | 167.56 |
| Interest on WC | 22.98 | 21.10 | 19.32 | 19.03 | 21.56 |
| **Total AFC** | **1,274.05** | **1,235.43** | **1,196.22** | **1,163.20** | **1,143.38** |
| *Petitioner’s Claim* | *1,274.04* | *1,235.39* | *1,196.23* | *1,163.10* | *1,143.37* |
| **Variance** | **+0.01** | **+0.04** | **(0.01)** | **+0.10** | **+0.01** |

### **3.4 Key Truing-up Adjustments – 2019-24**

| **Parameter** | **Commission’s Decision** |
|————–|————————–|
| **Depreciation** | Allowed as per WAROD @ 5.27-5.28% under Regulation 33, 2019 Tariff Regulations |
| **Interest on Loan** | Based on actual weighted average interest rate (8.95% to 9.27%); loan fully repaid by FY 2023-24 |
| **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 132 kV D/C lines (₹0.377-0.433 lakh/km) and 132 kV bays (₹16.08-18.46 lakh/bay). Petitioner’s claim of ₹145.93-167.55 lakh **accepted in full** (lower than ₹147.33-168.96 lakh allowed provisionally) |
| **Interest on Working Capital** | 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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