In the matter of CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations with bays at Wardha under “Mauda Transmission System” in the Western Region – EQ

Summary:

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**1. Overview of the Petition**
– **Petitioner:** Power Grid Corporation of India Limited (PGCIL).
– **Purpose:**
1. **Truing-up** of Annual Fixed Charges (AFC) for the 2019-24 tariff period (based on 2019 Tariff Regulations).
2. **Determination** of AFC for the 2024-29 tariff period (based on 2024 Tariff Regulations).
– **Asset in Question (Combined Asset):**
– **Asset-I:** 400 kV D/C Mauda-Wardha line (Ckt.-I) with bays at Wardha (COD: 1.4.2012).
– **Asset-II:** 400 kV D/C Mauda-Wardha line (Ckt.-II) with bays at Wardha (COD: 1.6.2012).
– **Location:** Western Region, under the “Mauda Transmission System.”
– **Respondents:** State power distribution companies and electricity departments from Madhya Pradesh, Maharashtra, Gujarat, Goa, Silvassa, and Chhattisgarh (the beneficiaries).

**2. Key Prayers of the Petitioner (PGCIL)**
PGCIL requested the Commission to approve:
– Trued-up tariff for 2019-24 and new tariff for 2024-29.
– Admission of the claimed capital cost and additional capital expenditure (ACE) for 2019-24.
– Mechanisms for recovering shortfalls/refunds on Return on Equity (RoE) due to income tax rate changes.
– Reimbursement of petition filing fees and publication expenses.
– Separate recovery of RLDC fees, license fees, and future GST.
– Permission to file separate petitions for security expenses, insurance, and capital spares.

**3. Truing-up of Tariff for the 2019-24 Period (Looking Backward)**
This section details the final adjustments to the tariff for the previous control period.

– **Capital Cost:** The opening capital cost as on 1.4.2019 was confirmed at **₹25,352.27 Lakhs**.
– **Additional Capital Expenditure (ACE):** PGCIL claimed ACE for land compensation payments related to the transmission line.
– **Issue:** The payments were delayed and made during FY 2022-23 and 2023-24, well after the asset’s COD.
– **CERC Finding:** The Commission allowed the claim of **₹2.25 Lakhs** under Regulation 25(1)(d) of the 2019 Tariff Regulations, as the liability existed before the cut-off date but payment was delayed due to factors beyond PGCIL’s control (delays by government authorities/SDMs).
– **Return on Equity (RoE):**
– PGCIL claimed RoE based on Minimum Alternate Tax (MAT) rates, as its income was assessed under MAT.
– **CERC Decision:** The Commission allowed RoE to be grossed up using the notified MAT rates (inclusive of surcharge and cess) for each respective year. The final approved rates resulted in a grossed-up RoE of approximately **18.78%**.
– **Other Components:** Depreciation, Interest on Loan (IoL), and Operation & Maintenance (O&M) expenses were largely approved as claimed, with minor adjustments to IoL and Interest on Working Capital (IWC) based on actual rates.
– **Final Trued-up AFC:** The Commission approved the trued-up annual charges, which varied slightly from what was originally allowed, culminating in a final approved AFC for 2023-24 of **₹3,306.17 Lakhs**.

**4. Determination of Tariff for the 2024-29 Period (Looking Forward)**
This section sets the tariff for the next five years.

– **Opening Capital Cost:** Based on the trued-up value, the opening capital cost as on 1.4.2024 was set at **₹25,354.52 Lakhs**.
– **Projected Additional Capital Expenditure (ACE):**
– PGCIL projected an ACE of **₹50.00 Lakhs** for FY 2024-25, also for outstanding land compensation.
– **CERC Decision:** The claim was **allowed on a projected basis**, subject to final truing-up at the end of the 2024-29 period. PGCIL must submit supporting documents for actual payments made.
– **Depreciation Calculation:**
– A key change occurs in FY 2025-26. Since the asset completes 12 years of its useful life by 1.4.2025, Regulation 33(5) of the 2024 Tariff Regulations applies.
– **Impact:** From FY 2025-26 onwards, the remaining depreciable value is spread over the asset’s balance useful life, causing depreciation charges to drop significantly from **₹1,343.11 Lakhs** (in 2024-25) to approximately **₹243.63 Lakhs** per year for the remaining period.
– **Return on Equity (RoE):**
– The base rate of **15.50%** was applied.
– Grossed up with the MAT rate of 17.472%, this results in an allowed pre-tax RoE of approximately **18.78%** for the period, subject to annual truing-up based on actual taxes paid.
– **O&M Expenses:** These were calculated strictly based on the normative rates prescribed in Regulation 36 of the 2024 Tariff Regulations, based on the number of bays and line length. The approved O&M increases gradually from **₹220.05 Lakhs** in 2024-25 to **₹270.12 Lakhs** in 2028-29.
– **Final Approved AFC:** The total annual transmission charges for the 2024-29 period were approved as follows:
– **2024-25:** ₹3,147.42 Lakhs
– **2025-26:** ₹1,972.73 Lakhs
– **2026-27:** ₹1,962.27 Lakhs
– **2027-28:** ₹1,958.65 Lakhs
– **2028-29:** ₹1,967.77 Lakhs
*(Note the significant drop after 2024-25 due to the change in depreciation calculation).*

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