In the matter of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for the Transmission Assets under “Transmission System for Phase-I Generation Projects in Jharkhand and West Bengal Part A1” – EQ

Summary:

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**Key Procedural Notes:**
– The project received investment approval in 2011, with a revised cost estimate in 2016.
– The Commission had previously determined tariffs for this asset for the 2014-19 and 2019-24 periods.
– No replies were filed by any of the respondents, despite opportunities being given.
– A hearing was held on 30.10.2025, after which the order was reserved.

### Part A: Truing-Up for the 2019-24 Tariff Period

This section reconciles the provisional tariff approved earlier with the actual financial performance.

**1. Capital Cost:**
– **Opening Cost (as on 1.4.2019):** ₹67,507.83 Lakhs (approved in a previous order).
– **Additional Capital Expenditure (ACE):** The petitioner claimed ₹2,802.13 Lakhs in ACE for works executed prior to the cut-off date (31.3.2019) but paid for during 2019-24. The commission allowed this in full under Regulation 25(1)(d) of the 2019 Tariff Regulations.
– **Closing Cost (as on 31.3.2024):** **₹70,309.96 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, primarily in Interest on Working Capital.

| Particulars (in ₹ Lakhs) | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 |
| :— | :— | :— | :— | :— | :— |
| **Total AFC Approved** | **11,099.38** | **10,740.68** | **10,479.37** | **10,353.32** | **10,313.40** |
| *Petitioner’s Claim* | *11,099.37* | *10,740.69* | *10,479.37* | *10,353.30* | *10,327.68* |

– **Depreciation:** Allowed as per Weighted Average Rate of Depreciation (WAROD).
– **Interest on Loan (IoL):** Calculated based on the petitioner’s actual weighted average interest rate on its loan portfolio.
– **Return on Equity (RoE):** Allowed at a base rate of 15.50%, grossed up with the Minimum Alternate Tax (MAT) rate (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):** ₹70,309.96 Lakhs (the trued-up cost from the previous period).
– **Projected ACE:** The petitioner claimed ₹109.32 Lakhs for the 2024-29 period, also for liabilities 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):** **₹70,419.28 Lakhs**.

**2. Financial Components (Annual Fixed Charges – AFC):**
The commission approved the following tariffs, which are slightly lower than the petitioner’s claims, primarily due to minor adjustments in O&M and IWC calculations.

| Particulars (in ₹ Lakhs) | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 |
| :— | :— | :— | :— | :— | :— |
| **Total AFC Allowed** | **10,076.05** | **9,775.02** | **9,478.67** | **9,158.87** | **8,888.78** |
| *Petitioner’s Claim* | *10,090.57* | *9,789.22* | *9,492.49* | *9,172.37* | *8,899.75* |

– **Debt-Equity Ratio:** Maintained at 70:30.
– **Depreciation:** Calculated based on the straight-line method as per the new regulations.
– **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).

### Other Key Decisions and Directions

– **Filing Fee & Publication:** The petitioner is entitled to recover the petition filing fee and publication expenses directly from the beneficiaries.
– **CTUIL Expenses:** PGCIL is permitted to bear the fees and charges of the Central Transmission Utility of India Ltd. (CTUIL) and recover them as additional O&M expenses through a separate petition, as per Regulation 99 of the 2024 Tariff Regulations.
– **License Fee & RLDC Charges:** PGCIL is allowed to recover license fees and RLDC fees and charges from the beneficiaries.
– **Security, Insurance & Capital Spares:** The petitioner is allowed to file a **single, separate, consolidated petition** to claim these expenses (security, insurance, and capital spares > ₹10 Lakhs) for the 2024-29 period, as they are not included in this order.
– **GST:** The prayer regarding GST was deemed “premature” as it is currently not levied on transmission services.
– **Billing and Recovery:** Charges will be recovered monthly as per the relevant sharing regulations (2020 Sharing Regulations).

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