Petition for determination of tariff for the new Transmission and Distribution System of Damodar Valley Corporation – EQ

Summary:

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### 1. Key Regulatory Context

– **Forum:** Central Electricity Regulatory Commission (CERC)
– **Petition No.:** 389/TT/2025
– **Petitioner:** Damodar Valley Corporation (DVC) – a statutory corporation and power utility operating in West Bengal and Jharkhand.
– **Respondents:** West Bengal State Electricity Distribution Company Limited (WBSEDCL) and another unnamed respondent (likely the state transmission utility or another affected party).

– **Purpose:** Determination of tariff for new transmission assets for the **2024-29 tariff period**. This is a regulatory proceeding under the CERC (Terms and Conditions of Tariff) Regulations, which govern the revenue and return on investment for transmission projects.

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### 2. Nature of the Asset & Business Implication

| Asset Element | Description | Business Relevance |
| :— | :— | :— |
| **220kV GIS Sub-station** | A gas-insulated switchgear substation, typically used where space is constrained or for higher reliability. | Represents a significant capital investment. Tariff determination sets the annual revenue that DVC can recover through transmission charges. |
| **220kV LILO at RTPS** | A “Loop In Loop Out” arrangement at Ramagundam Thermal Power Station. This involves tapping into an existing transmission line to connect the new substation to the grid. | Indicates integration of new infrastructure into the existing network. LILO arrangements are critical for network expansion and reliability. |

The approval of tariff for these assets will determine:
– **Revenue Stream:** The annual transmission charges that DVC can bill to beneficiaries (primarily WBSEDCL and other distribution companies in the region).
– **Capital Cost Recovery:** The allowed return on equity (ROE), interest on loans, depreciation, and operation & maintenance (O&M) expenses for the assets over the 2024-29 period.
– **Beneficiary Cost:** The ultimate impact on power purchase costs for state distribution companies (DISCOMs) like WBSEDCL, which will flow through to end-consumer tariffs.

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### 3. Procedural Status & Key Developments

| Date of Hearing | 19th March 2026 |
| :— | :— |
| **Coram** | Chairperson and three Members of CERC |
| **Petitioner’s Counsel** | Appeared and submitted that revised tariff forms (incorporating revisions in IDC and Notional IDC) have been filed. |
| **Respondents’ Status** | **None appeared.** No replies filed despite previous notices. |
| **Commission’s Direction** | Respondents (WBSEDCL and Anr.) granted a **final two-week opportunity** to file replies/written submissions. |
| **Next Step** | Petitioner to file rejoinder within **one week** after receiving respondents’ submissions. |
| **Final Disposition** | Subject to the above, the matter has been **reserved for order** by the Commission. |

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### 4. Key Business & Strategic Points

1. **Cost of Delay for Respondents:** WBSEDCL, as the primary respondent and likely the main beneficiary/offtaker of the transmission asset, has not participated in the proceedings. By not filing a reply, they forego the opportunity to contest or seek clarification on:
– The capitalization of IDC (Interest During Construction) and Notional IDC, which directly impacts the project cost and hence the tariff.
– The reasonableness of the capital expenditure.
– The allocation of transmission charges among beneficiaries.

Non-participation may result in the Commission approving DVC’s tariff petition without contest, potentially leading to higher transmission charges for WBSEDCL.

2. **Final Opportunity Granted:** The Commission explicitly stated this is the **”last opportunity”** for respondents to file replies. If no replies are received within two weeks, the Commission is likely to proceed to issue an order solely on the basis of DVC’s petition and submissions.

3. **Reserved for Order:** The matter being “reserved for order” indicates that, barring any new submissions from the respondents, the Commission has completed its hearing and will now deliberate and issue a formal tariff order. This order will be binding on all parties.

4. **IDC & Notional IDC Revision:** The petitioner’s submission regarding revised tariff forms based on changes to IDC and Notional IDC is significant. IDC represents the interest cost incurred during the construction period, which is capitalized and added to the project cost. Any revision in IDC directly increases or decreases:
– The total capital cost base.
– The annual depreciation.
– The return on equity (since ROE is calculated on the equity component of the capital cost).

This is a key area that a vigilant respondent would typically scrutinize.

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