In the matter of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for truing up and determination of the transmission tariff for Hiriyur and Kochi Sub-stations” in the Southern Region – EQ
Summary:
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## 1. Case Overview
| Parameter | Details |
|———–|———|
| **Petition Number** | 559/TT/2025 |
| **Order Date** | January 20, 2026 |
| **Petitioner** | Power Grid Corporation of India Limited (PGCIL) |
| **Respondents** | 14 Distribution Companies across Southern Region |
| **Regulatory Framework** | CERC Tariff Regulations, 2019 (for truing up) and 2024 (for new tariff period) |
| **Purpose** | Truing up of tariff for 2019-24 and determination of tariff for 2024-29 for augmentation project at Hiriyur and Kochi substations |
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## 2. Project Details
### 2.1 Asset Description
| Asset No. | Asset Name | Location | COD |
|———–|————|———-|—–|
| **Asset-1** | 1 x 500 MVA, 400/220 kV Transformer along with associated bays | Hiriyur Substation | October 31, 2022 |
| **Asset-2** | 1 x 500 MVA, 400/220 kV Transformer along with associated bays | Kochi Substation | July 15, 2023 |
| **Combined Asset** | Both assets combined for tariff determination | – | Effective COD: February 27, 2023 |
### 2.2 Project Scope
| Component | Hiriyur Substation | Kochi Substation |
|———–|——————-|——————|
| **400 kV ICT Bay** | 1 No. | 1 No. |
| **500 MVA, 400/220 kV ICT** | 1 No. | 1 No. |
| **220 kV ICT Bay** | 1 No. | 1 No. |
### 2.3 Project Timeline
| Milestone | Date |
|———–|——|
| **Project Discussion (1st SRSCT Meeting)** | September 7, 2018 |
| **Final Agreement (2nd SRPC TP Meeting)** | October 1, 2020 |
| **Investment Approval (IA)** | October 26, 2021 |
| **IA Communication Date** | October 27, 2021 |
| **Asset-1 COD** | October 31, 2022 |
| **Asset-2 COD** | July 15, 2023 |
| **Effective COD (Combined Asset)** | February 27, 2023 |
### 2.4 Cost Details
| Parameter | Amount (₹ Lakh) |
|———–|——————|
| **Original FR Cost (June 2021 price level)** | 9,351.00 |
| **IDC included in FR** | 258.00 |
| **Asset-1 Capital Cost as on COD (allowed)** | 2,843.51 |
| **Asset-2 Capital Cost as on COD (allowed)** | 3,144.39 |
| **Total Capital Cost as on COD** | 5,987.90 |
| **ACE (2019-24) – Asset-1** | 958.55 |
| **ACE (2019-24) – Asset-2** | 154.66 |
| **Total Capital Cost as on 31.3.2024** | **7,101.11** |
| **Projected ACE (2024-29)** | 2,134.65 |
| **Total Capital Cost as on 31.3.2029** | **9,235.76** |
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## 3. Key Issues and Decisions
### 3.1 Time Overrun Analysis
| Asset | SCOD | COD | Time Overrun | Condoned | Not Condoned |
|——-|——|—–|————–|———-|————–|
| **Asset-1** | October 31, 2022 | October 31, 2022 | **Nil** | – | – |
| **Asset-2** | Not specified | July 15, 2023 | **257 days** | 69 days | 188 days |
**Reason for Delay (Asset-2):** The detailed reasons for the 257-day delay in commissioning the Kochi substation transformer were examined, with 69 days condoned and 188 days attributed to controllable factors, resulting in disallowance of IDC/IEDC for the uncondoned period.
### 3.2 Effective Date of Commercial Operation (E-COD)
**Petitioner’s Submission:**
– Combined Asset E-COD calculated as February 27, 2023
– Based on weighted average of individual asset CODs and capital costs
**KSEBL’s Objection:**
– Discrepancy noted between E-COD mentioned in petition and tariff forms
**Petitioner’s Response:**
– Typographical error acknowledged
– Confirmed E-COD as February 27, 2023
**Commission’s Decision:**
✅ **E-COD approved as February 27, 2023**
✅ Lapsed life as on April 1, 2024: **1 year**
✅ Remaining useful life: **24 years**
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## 4. Truing Up of Tariff (2019-24 Period)
### 4.1 Capital Cost Trued Up
| Asset | Capital Cost as on COD (₹ Lakh) | ACE Allowed (₹ Lakh) | Capital Cost as on 31.3.2024 (₹ Lakh) |
|——-|——————————–|———————-|————————————–|
| **Asset-1** | 2,843.51 | 958.55 | 3,802.06 |
| **Asset-2** | 3,144.39 | 154.66 | 3,299.05 |
| **Total** | **5,987.90** | **1,113.21** | **7,101.11** |
### 4.2 ACE Details (2019-24)
**Asset-1 ACE Breakdown:**
| Party Name | Particulars | Outstanding Liability as on COD | Discharge of Liability (₹ Lakh) |
|————|————-|——————————–|——————————–|
| M/s Linxon India Pvt Ltd | Sub-station | 1,336.39 | 457.15 |
| M/s Toshiba T&D System | Sub-station | 649.75 | 160.92 |
| Community Hall | Building and Civil Works | 50.00 | 50.00 |
| IDC Discharge | – | – | 12.57 |
| Misc Site Packages | – | – | 237.42 |
| **Total** | | | **958.55** |
**Asset-2 ACE Breakdown:**
| Party Name | Particulars | Outstanding Liability as on COD | Discharge of Liability (₹ Lakh) |
|————|————-|——————————–|——————————–|
| Construction of Boundary Wall | Building and Civil Works | 111.00 | 0.00 |
| Construction of additional rooms | Building and Civil Works | 56.02 | 0.00 |
| Site Levelling | Building and Civil Works | 70.00 | 0.00 |
| Other items | – | – | 154.66 |
| **Total** | | | **154.66** |
### 4.3 Annual Fixed Charges – Trued Up (2019-24)
**Asset-1:**
| Particulars | 2022-23 (Pro-rata 152 days) | 2023-24 |
|————-|——————————|———|
| Depreciation | 71.72 | 197.53 |
| Interest on Loan | 74.12 | 199.33 |
| Return on Equity | 76.54 | 210.80 |
| O&M Expenses | 108.12 | 268.25 |
| Interest on Working Capital | 7.02 | 20.74 |
| **Total AFC** | **337.51** | **896.65** |
**Asset-2:**
| Particulars | 2023-24 (Pro-rata 261 days) |
|————-|——————————|
| Depreciation | 123.43 |
| Interest on Loan | 117.31 |
| Return on Equity | 129.45 |
| O&M Expenses | 191.29 |
| Interest on Working Capital | 13.84 |
| **Total AFC** | **575.33** |
### 4.4 Comparison: Previous Order vs. Trued Up
**Asset-1:**
| Year | Previous Order (₹ Lakh) | Trued Up (₹ Lakh) | Difference |
|——|————————|——————-|————|
| 2022-23* | 345.07 | 337.51 | -7.56 |
| 2023-24 | 993.74 | 896.65 | -97.09 |
**Asset-2:**
| Year | Previous Order (₹ Lakh) | Trued Up (₹ Lakh) | Difference |
|——|————————|——————-|————|
| 2023-24* | 597.16 | 575.33 | -21.83 |
*Pro-rata periods
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## 5. Tariff Determination (2024-29 Period)
### 5.1 Combined Asset Capital Cost
| Year | Opening Capital Cost (₹ Lakh) | ACE Added (₹ Lakh) | Closing Capital Cost (₹ Lakh) |
|——|——————————-|——————–|——————————-|
| **1.4.2024** | 7,101.11 | – | – |
| **2024-25** | 7,101.11 | 1,652.74 | 8,753.85 |
| **2025-26** | 8,753.85 | 481.91 | 9,235.76 |
| **2026-27** | 9,235.76 | 0.00 | 9,235.76 |
| **2027-28** | 9,235.76 | 0.00 | 9,235.76 |
| **2028-29** | 9,235.76 | 0.00 | 9,235.76 |
| **As on 31.3.2029** | – | **2,134.65** | **9,235.76** |
### 5.2 ACE Details (2024-29 Projected)
**Asset-1 ACE Projection:**
| Party Name | Particulars | Outstanding as on 31.3.2024 | Discharge (₹ Lakh) |
|————|————-|—————————–|——————-|
| M/s Linxon India Pvt Ltd | Sub-station | 879.24 | 879.24 |
| M/s Toshiba T&D System | Sub-station | 160.92 | 160.92 |
| Community Hall | Building and Civil Works | 50.00 | 50.00 |
| **Total Asset-1** | | **1,090.16** | **1,090.16** |
**Asset-2 ACE Projection:**
| Party Name | Particulars | Outstanding as on 31.3.2024 | Discharge (₹ Lakh) |
|————|————-|—————————–|——————-|
| Construction of Boundary Wall | Building and Civil Works | 111.00 | 111.00 |
| **Total Asset-2** | | **111.00** | **111.00** |
**Year-wise ACE:**
| Year | Asset-1 (₹ Lakh) | Asset-2 (₹ Lakh) | Total (₹ Lakh) |
|——|——————|——————|—————-|
| **2024-25** | 1,586.14 | 66.60 | 1,652.74 |
| **2025-26** | 252.92 | 44.40 | 297.32* |
| **Total** | **1,839.06** | **111.00** | **1,950.06*** |
*Note: The order shows total ACE of ₹2,134.65 lakh for 2024-29, which includes additional amounts beyond the detailed vendor-wise breakdown
### 5.3 Debt-Equity Structure (Combined Asset)
| Funding | As on 1.4.2024 | ACE (2024-29) | As on 31.3.2029 |
|———|—————-|—————|—————–|
| **Debt** | ₹4,970.78 lakh (70%) | ₹1,494.26 lakh (70%) | ₹6,465.03 lakh (70%) |
| **Equity** | ₹2,130.33 lakh (30%) | ₹640.40 lakh (30%) | ₹2,770.73 lakh (30%) |
| **Total** | **₹7,101.11 lakh** | **₹2,134.65 lakh** | **₹9,235.76 lakh** |
### 5.4 Weighted Average Life (WAL) Calculation
| Element | Capital Cost as on 31.3.2024 (₹ Lakh) | Life (Years) | Weighted Life |
|———|—————————————|————–|—————|
| **Land** | 0.00 | – | – |
| **Building** | 0.00 | – | – |
| **Sub-station** | 6,803.17 | 25 | 170,079.25 |
| **PLCC** | 297.94 | 15 | 4,469.10 |
| **Total** | **7,101.11** | | **174,548.35** |
**WAL = 174,548.35 / 7,101.11 = 24.58 years ≈ 25 years**
### 5.5 Annual Fixed Charges (2024-29) – Combined Asset
| Particulars | 2024-25 | 2025-26 | 2026-27 | 2027-28 | 2028-29 |
|————-|———|———|———|———|———|
| Depreciation | 418.79 | 470.84 | 482.02 | 482.02 | 482.02 |
| Interest on Loan | 387.67 | 411.67 | 387.61 | 349.88 | 312.17 |
| Return on Equity | 446.68 | 506.82 | 520.40 | 520.40 | 520.40 |
| Interest on Working Capital | 34.27 | 37.12 | 37.98 | 38.24 | 38.75 |
| O&M Expenses | 362.40 | 381.66 | 401.22 | 422.06 | 445.18 |
| **Total AFC** | **1,649.81** | **1,808.12** | **1,829.23** | **1,812.60** | **1,798.51** |
### 5.6 Comparison: Claimed vs. Allowed (2024-29)
| Year | Claimed (₹ Lakh) | Allowed (₹ Lakh) | Difference |
|——|——————|——————|————|
| **2024-25** | 1,649.81 | 1,649.81 | 0.00 |
| **2025-26** | 1,808.12 | 1,808.12 | 0.00 |
| **2026-27** | 1,829.23 | 1,829.23 | 0.00 |
| **2027-28** | 1,812.61 | 1,812.60 | -0.01 |
| **2028-29** | 1,798.52 | 1,798.51 | -0.01 |
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